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I
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GISLATTVE HISTORY OF T
ENERGY POLICY ACT OF W
LlBRAh
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I g. Prt. 103-01
COMMITTEE PRINT j VolumeO
LEGISLATIVE HISTORY OF THE
ENERGY POLICY ACT OF 1992
PREPARED FOR THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
BY THE
CONGRESSIONAL RESEARCH SERVICE
LIBRARY OF CONGRESS
VOLUME 6 OF 6
NOVEMBER 1994
Printed for the use of the
Committee on Energy and Natural Resources
U.S. GOVERNMENT PRINTING OFFICE
OC WASHINGTON : 1994
12 'S'3111
03/96 53-€05-0D wc
For sale by the U.S. Government Printing Office
Superintendent of Document*, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-046254-1
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
J. BENNETT JOHNSTON, Louisiana, Chairman
DALE BUMPERS, Arkansas MALCOLM WALLOP, Wyoming
WENDELL H. FORD, Kentucky MARK O. HATFIELD, Oregon
BILL BRADLEY, New Jeraey PETE V. DOMENICI, New Mexico
JEFF BINGAMAN, New Mexico FRANK H. MURKOWSKI, Alaska
DANIEL K. AKAKA, Hawaii DON NICKLES, Oklahoma
RICHARD C. SHELBY, Alabama LARRY E. CRAIG, Idaho
PAUL WELLSTONE, Minnesota ROBERT F. BENNETT, Utah
BEN NIGHTHORSE CAMPBELL, Colorado ARLEN SPECTER, Pennsylvania
HARLAN MATHEWS, Tennessee TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota
Benjamin S. Cooper, Staff Director
D. MlCHABL Harvey, Chief Counsel
PATRICIA A. MCDONALD, Staff Director for the Minority
GARY G. ELLSWORTH, Chief Counsel for the Minority
(ID
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FOREWORD
The passage of the National Energy Policy Act on October 8,
1992 was the culmination of an effort initiated two years earlier,
when I first began working with the members and staff of the
Energy and Natural Resources Committee to fashion a legislative
framework for a balanced and comprehensive national energy pol-
icy.
It was clear at that time, in the autumn of 1990, that the chal-
lenge would be a formidable one. For the past two decades, each
new Congress and each succeeding administration had struggled to
mount a response to America's ever growing dependence on
imported oil. The issue, however, had proved to be as difficult and
divisive as any on the domestic agenda. Lacking a consensus for
any meaningful plan of action, we maintained, by default, an
energy policy that could be summed up in two words: aoil imports."
While domestic energy production continued to decline through-
out the 1970s and '80s, our reliance on imported oil rose to nearly
50 percent of consumption, costing the U.S. treasury nearly $55 bil-
lion per year and accounting for 64 percent of our entire trade defi-
cit. During that period, our economy was rocked by two separate
energy crises — both rooted in our dependence on oil from the Mid-
dle East — and still there was no consensus on a policy to lessen
that dependence.
Then, in August, 1990, came Saddam Hussein's invasion of
Kuwait. America now faced a third energy crisis. We were forced
to respond on a massive scale, committing more than half a million
military personnel to combat in the Persian Gulf.
Observing the buildup of Operation Desert Shield through Octo-
ber and November of 1990, I concluded that the specter of a full
scale war to protect our access to the oil supplies of the Middle
East might finally prove to be the catalyst that could unite Amer-
ica behind a rational and effective energy policy.
The goal I established for the committee was to develop a biparti-
san, balanced, and comprehensive proposal.
Some seven months, 17 hearings, and 13 markup sessions later,
our committee produced legislation containing 16 titles, running to
almost 500 pages of statutory language and covering every facet of
energy policy. The bill drew heavily from the agenda of the
environmental community, proposing the broadest program of
energy conservation measures ever assembled, alone with initia-
tives to promote alternative and renewable fuels. At the same time,
the legislation offered a blueprint for maximizing energy produc-
tion from every available domestic resource including coal, oil,
natural gas, and nuclear energy.
(iii)
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IV
Our committee reported the legislation, then titled The National
Energy Security Act, on May 23. 1991, only to face months of
delays on the Senate floor. In October opponents of two of the more
controversial titles of the bill — a provision to allow oil and gas
exploration in a small portion of the Arctic National Wildlife Ref-
uge (ANWR) and a second title providing for higher corporate aver-
age fuel economy (CAFE) standards for automobiles— joined forces
in a fierce campaign to derail the legislation. A motion to halt their
filibuster failed November 1 on a vote of 50-44 and the legislation
appeared doomed.
Moving the bill forward would require a major compromise, but
even with the removal of the titles pertaining to ANWK and CAFE,
the bill still represented the most sweeping, balanced and promis-
ing energy policy ever to be considered by either the House or Sen-
ate.
On January 29, 1992, I returned to the Senate floor with the
revised legislation. The Senate moved to avert a second filibuster
and on February 19, approved the bill by a vote of 94-4. In the
House, the legislation faced another difficult and prolonged debate
before winning approval May 27.
Returning to the Senate with House amendments, the legislation
encountered a third filibuster. Seven weeks passed before the fili-
buster could be halted. The Senate adopted the bill for a second
time on July 30, 1992, sending it to conference with the House.
Through September, House and Senate conferees attempted to
reconcile differences over key provisions of the bill. With Congress
nearing adjournment, the fate of the bill remained very much in
doubt until the negotiations — stretching into the early morning
hours of October 1— -finally yielded an agreement.
The legislation faced yet another challenge when the conference
report was stalled by a fourth Senate filibuster. Not until the clos-
ing day of the 102nd Congress was the filibuster broken. The
National Energy Policy Act — the product of one of the most dif-
ficult, protracted, and, at times, acrimonious debates in recent Sen-
ate history — was adopted in the end by a voice vote.
While it will be years before the scores of programs set forth in
this law are fully implemented — and longer still before its overall
impact can be accurately assessed — there should be no doubt that
the National Energy Policy Act will, in time, accomplish the impor-
tant objectives for which it was written. It will reduce America's
dependence on imported oil while delivering cheaper and cleaner
energy to the American consumer.
On the morning of October 8, 1992, as the Senate concluded
debate on this bill, I stated my belief that the measure represented
nothing less than "a legislative miracle." The passage of time and
the added perspective it offers have only re-enforced that convic-
tion.
J. Bennett Johnston.
October 20, 1994
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LETTER OF SUBMITTAL
Congressional Research Service,
The Library of Congress,
Washington, DC, September 15, 1994.
Hon. J. Bennett Johnston,
Chairman, Committee on Energy and Natural Resources, Washing-
ton, DC.
Dear Mr. Chairman: In response to your request, we have pre-
Kred a legislative history of the Energy Policy Act of 1992 (Public
w 102-486).
This document contains the major bills, reports, and debates
which comprise the actions of Congress in passing this many-fac-
eted legislation. A section-by-section analysis is included for the
convenience of the reader.
The history should be of considerable aid to legislators, public
officials, industries, and the general public who are affected by its
provisions and wish to understand the intent of Congress. Its
publication will make all of the necessary materials, many of which
are out of print, available in one comprehensive document.
The legislative history was compiled and indexed by Carl E.
Behrens and Duane A. Thompson, with major editorial help from
Diana J. Sloan, all of the Environment and Natural Resources Pol-
icy Division.
We hope this document will serve your Committee's needs.
Sincerely,
Dan Mulhollan,
Director.
(V)
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CONTENTS
it*
Foreword Ill
Letter of Submittal v
Energy Policy Act of 1992 (Public Law 102-486) (Vol. 1) „ 1
S. 341, National Energy Security Act of 1991, as introduced (Vol. 1) 360
S. 1220, National Energy Security Act of 1991, Report 102-72 (Vol. 2) 645
S. 1220, Senate Floor Debate, June 5, 1991-November 25, 1991 (Vol. 2) 1247
S. 2166, National Energy Security Act of 1992, Senate Floor Debate, January
29, 1992-March 3, 1992 (Vol. 3) 1697
HJl. 776, Comprehensive National Energy Policy Act, Report of the Commit-
tee of Energy and Commerce (Rept. 102-474, Part 1) (Vol 4) .„ 2553
HJl. 776, Report of the Committee on Science, Space and Technology (Rept.
102-474, Part 2) (Vol. 4) ~ 2947
H.R. 776, Report. of the Committee on Public Works and Transportation
(Rept. 102-474, Part 3) (Vol. 4) 3149
HJL 776, Report of the Committee on Foreign Affairs (Rept. 102-474, Part
4) (Vol. 4) 3213
HJl. 776, Report of the Committee on Government Operations (Rept. 102-
474, Part 5) (Vol. 4) 3254
HJl. 776, Report of the Committee on Ways and Means (Rept. 102-474,
Part 6) (Vol. 4) ~ 3323
HJl. 776, Report of the Committee on the Judiciary (Rept. 102-474, Part
7) (Vol. 4) 3416
H.R. 776, Report of the Committee on Interior and Insular Affairs (Rept.
102-474, Part 8) (Vol. 5) 3439
HJl. 776, Report of the Committee on Merchant Marine and Fisheries (Rept.
102-474, F&rt 9) (Vol. 5) 3710
H.R. 776, House Floor Debate, May 19-27, 1992 (Vol. 5) 3783
H.R. 776, Senate Floor Debate, July 20-29, 1992 (Vol. 6) 4195
HJl. 776, Energy Policy Act of 1992, Conference Report, Joint Explanatory
Statement (Vol. 6) 4455
HJl. 776, Conference, House Floor Debate, October 5, 1992 (Vol. 6) 4519
H.R. 776, Conference, Senate Floor Debate, October 8, 1992 (Vol. 6) 4680
Index 4944
(VII)
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CONGRESSIONAL RECORD
(SENATE)
July 20, 1002
P«C» 80022
IMPROVED ENERGY EFFICIENCY
MOTION TO PROCEED
CLOTURE MOTION
Mr. BAUCUS. Mr. President, on
behalf of the majority leader, and in
concurrence with the previous consent
agreement, I now move to proceed to
Calendar No. 493, H.R. 776, the ener-
gy bill, and I send to the desk a clo-
ture motion on the motion to proceed.
The PRESIDING OFFICER. The
cloture motion having been presented
under rule XXII, the Chair, directs
the clerk to read the motion.
The assistant legislative clerk read
as follows:
CLOTURE MOTION
W*, Um undersigned Senator*, in accordance
with the provision* of rule XXII of the Standing
Rules of the Senate, hereby move to bring to a
close debate on the motion to proceed to the
consideration of H JL 776, an act to provide for
unproved energy efficiency:
J. Bennett jphnston, David L. Boron, Alan
Cranston, Frits HoUings, Bob Kerrey, Robert
Byrd, Howell Heflin, John Breaux, George Mitch-
ell, Howard M. Metsenbaum, J. Lieberman, J JL
Biden, Jr., P.R. Lautenberg, Jim Saaser, Slade
Gorton, Warren B. Rudman, Phil Gramm, Con-
nie Mack. Jake Garn, Frank H. Murkowaki.
Mr. BAUCUS. Mr. President, I ask
unanimous consent that the mandato-
ry live quorum as required under rule
XXII be waived.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. BAUCUS. Mr. President, I now
withdraw the motion to proceed.
The PRESIDING OFFICER. The
Senator has that right. The motion is
withdrawn.
Mr. BAUCUS. Mr. President, I
suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. LAUTENBERG. Mr. President,
I ask unanimous consent that the
order for the quorum call be rescind-
ed.
ThePRESIDINGOFFICER.
Without objection, it is so ordered.
CONGRESSIONAL RECORD
(SENATE)
July 23, 1992
PAGE S10196
UNANIMOUS-CONSENT AGREEMENT -
DEBATE ON THE MOTION TO INVOKE
CLOTURE ON THE MOTION TO PROCEED
TO H JL 776
Mr. MITCHELL. Mr. President,
pursuant to a previous order, ap-
proved unanimously by the Senate
and printed at page 2 of today's calen-
dar of business, I have the authority
to set the time for a vote on the mo-
tion to invoke cloture on the motion
to proceed to H.R. 776, the energy bill,
following consultation with the Repub-
lican leader.
Mr. President, I have consulted
with the Republican leader, as well as
with the chairman of the Energy
Committee and the manager of the
pending bill, and I now announce that
the vote on the motion to invoke clo-
ture on the motion to proceed to Cal-
endar No. 493, H.R. 776, the energy
bill, will occur at 7:30 p.m. this eve-
ning.
Mr. President, I now ask unanimous
consent that the 40 minutes prior to
that time be for debate on the motion
to invoke cloture on the motion to
proceed to the energy bill with the
time controlled as follows: 10 minutes
each for Senators Bentsen, Packwood,
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Johnston, and Wallop.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
ORDER OF PROCEDURE
Mr. MITCHELL. Mr. President,
I am advised by the Senators involved
in discussion of the pending matter
that negotiations are underway, in-
deed have been ongoing for some time
in an effort to resolve the matter the
way a majority of Senators would find
acceptable. Under this procedure,
that can continue until 6:50 p.m.,
approximately another 1 1/2 hours, at
which time we will turn to the energy
bill. I hope and I encourage my col-
leagues to try to reach agreement in a
way that will permit us to finish the
pending interstate waste bill. If agree-
ment cannot be reached, either be-
tween now and 6:50 or thereafter,
then the cloture motion on the pend-
ing bill, which I earlier filed, will ripen
under the rules on the second legisla-
tive day following today, unless there
is agreement otherwise.
I wish merely to restate my inten-
tion that we will at some point, sooner
or later, I hope sooner, but in any
event sooner or later complete action
on the interstate waste bill. I encour-
age my colleagues to try to do that in
a way that we can complete action on
it this evening.
Again, so that Senators can adjust
their schedules accordingly, between
6:50 p.m. and 7:30 p.m. there will be
40 minutes of debate on the energy
bill, with 10 minutes each under the
control of Senators Bentsen,
Packwood, Johnston, and Wallop and
the vote on the motion to invoke clo-
ture on the motion to proceed to the
energy bill will occur at 7:30 p.m.
Mr. President, I thank my col-
leagues. I yield the floor.
Mr. CONRAD addressed the Chair.
The PRESIDING OFFICER. The
Senator from North Dakota.
Mr. CONRAD. Mr. President, I just
reported to the majority leader, we
are making progress on the pending
matter and hopefully we can complete
that before the end of the day. We
have made substantial progress in the
last hour or so and hopefully it can be
resolved in a way that is acceptable to
all parties.
With that, I yield the floor and
suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. BAUCUS. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. BAUCUS. Mr. President, I ask
unanimous consent that the previous
order relative to debate on the cloture
vote on the motion to proceed to H.R.
776 be modified to delete the 10 min-
utes for debate under Senator
Packwood's control, and that the
cloture vote occur at 7:20 p.m. this
evening.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. BAUCUS. Mr. President, I
suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll
Mr. DOMENICI. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. DOMENICL Mr. President, I
ask unanimous consent that I be per-
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4197
mitted to proceed for 10 minutes as in
morning business.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
IMPROVED ENERGY EFFICIENCY
CLOTURE MOTION
The PRESIDING OFFICER.
Pursuant to the previous order there
will now be 30 minutes of debate rela-
tive to the motion to invoke cloture
on the motion to proceed to H.R. 776.
The Senator from Texas (Mr.
Bentsen), the Senator from Louisiana
(Mr. Johnston), and the Senator from
Wyoming (Mr. Wallop) each control 10
minutes of the debate time.
Mr. BENTSEN. Mr. President,
tonight we can pave the way for the
passage of a very comprehensive ener-
gy bill to help production, to help
conservation, and to curtail depen-
dence on foreign oil.
In accordance with the unanimous
consent agreement reached prior to
the Fourth of July recess, we are
scheduled to vote on cloture today on
the motion to proceed to H.R. 776, the
House-passed energy bill.
As my colleagues are well aware,
the Senate has already considered and
passed energy legislation once this
year. In February, the Senate, after
debating at length, passed by an over-
whelming 94 to 4 vote S. 2166, the
National Energy Strategy Act of 1992.
The House, however, did not act on
that particular bill. Instead, the
House acted on a new bill - H.R. 776.
And they included in it an energy tax
title, in addition to the nontax titles.
Of course, since the Senate had
already acted once on energy legisla-
tion, it would have been easier to have
gone straight to the conference on the
House bill by unanimous consent.
That would have been the most direct
approach. However, some Senators
raised objections to that approach, as
was their right. Thus, H.R. 776 was
referred to the Finance Committee for
review of its tax provisions, and the
Finance Committee promptly reported
out a substitute for the tax title.
When the Senate turns to H.R. 776,
the energy legislation we will consider
will combine this new tax title with
the nontax provisions from S. 2166
passed by the Senate in February.
I urge my colleagues to vote for
cloture so that we can move expedi-
tiously to consider this bill - to debate
and vote on the merits of the legisla-
tion. It is a major energy conserva-
tion measure. It is important to the
future well-being of our country. We
have a lot of work to be done in con-
ference to iron out the differences
between the House and Senate bills,
and we have a short time to get it
done.
Undue delay in the Senate - of a bill
that has, in large part, already been
passed by the Senate - could well be
fatal to passage of energy legislation
in this Congress. But this energy bill
is simply too important to delay indef-
initely on procedural grounds. Most of
us know that. Ninety-four of us have
already voted for S. 2166. And the
Finance Committee has approved the
new tax title.
These are important provisions that
are critical to the development of a
meaningful national energy policy -
something I think this entire country
has been without for far too long. For
many, it took a war in the Persian
Gulf to drive that point home. In fact,
the U.S. energy policy as it exists
today is best described by just two
words: Desert Storm.
We simply cannot continue to go
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4198
down the road of an increasing - and
I believe a very dangerous - depen-
dence on foreign oil. We now import
almost half of the oil we consume -
some 46 percent on a gross basis.
That represents an increase by almost
one-half over our import dependence
in 1985.
This trend of increasing imports is
expected to continue. I do not see it
turning around, even under the most
optimistic production estimates, as-
suming we can maintain current pro-
duction levels, estimates place U.S. oil
dependence in excess of 50 percent by
the middle of this decade. But it is
far from clear that domestic produc-
tion is going to hold. For example, in
the last 6 years, domestic oil produc-
tion has plunged nearly 15 percent,
resulting in production that is at its
lowest level in over 30 years. A quick
look at the active drilling rig count -
which recently dropped to the lowest
level since World War II - does not
bode well for future domestic produc-
tion either.
We talk about the loss of jobs in the
automobile industry. Perhaps we have
had far more loss of jobs in the oil
industry. People do not seem to share
the concern on that. Yet, if you look
at the deficit in trade and merchan-
dise trade, almost 75 percent of that
comes from oil.
If you look beyond the current de-
cade, the Congressional Office of
Technology Assessment suggests that
oil imports could reach almost 70
percent by the year 2010. Let me give
you an example of what that means.
That means 36 supertankers every
day. Thirty-six supertankers every
day to meet that kind of a need. That
is what they will have to deliver.
That kind of dependence has obvi-
ous energy and national security con-
sequences, and so far this is just a
sampling of the possible consequences.
By our dependence on foreign oil, we
have had a very adverse effect on our
economy every year. Look at our
balance of payments deficit. In 1991,
oil imports accounted for about $50
billion, or as I stated earlier, some 75
percent of our $66 billion merchandise
trade deficit. As import levels in-
crease, we can expect our oil import
trade deficit to also mount.
We must act this year to address
this kind of a situation, and we should
not imperil energy legislation by fur-
ther procedural delay.
All of you are familiar with the
nontax provisions that the Senate
passed in February, and I will leave it
to the distinguished chairman of the
Energy Committee to get into that
detail and make those very valid
points. Let me speak to how the Fi-
nance Committee's tax provisions
address the growing dependence on
foreign oil, and also at the same time
doing things to benefit our environ-
ment. I think fending off 36
supertankers filled with oil every day
is one of those things that reflect
concern for the environment.
These provisions follow, to a signifi-
cant extent, the so-called green tax
package that was adopted by the
House. There are three main compo-
nents to the Finance Committee pack-
age.
First, the Finance Committee
amendment encourages energy conser-
vation to reduce our Nation's energy
consumption. For example, it encour-
ages conservation in the transporta-
tion sector - which accounts for al-
most two-thirds of our oil consump-
tion in this country. It does it by
tilting the tax treatment of
employer-provided transportation
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benefits more toward mass transit and
less toward parking provided by em-
ployers for their employees. It also
promotes conservation in the residen-
tial, commercial, and industrial sec-
tors by excluding utility rebates, and
they do that to encourage the use of
conservation machinery and equip-
ment. It excludes those measures
from the taxpayer's income. So he
has a major bonus if he utilizes it.
Second, the Finance Committee
amendment stimulates the develop-
ment of alternative and renewable
energy sources that will lessen our
reliance on foreign oil and also provide
significant environmental benefits.
For example, it provides tax credits
for solar, geothermal, ocean thermal,
wind, and renewable biomass energy
sources. It also provides tax incen-
tives to further the use of domestical-
ly produced, clean-burning fuels in
both cars and trucks used on our
Nation's highways - clean-burning
fuels, such as natural gas, electricity
and, as the Presiding Officer is well
concerned and interested in - metha-
nol and ethanol.
Third, the Finance Committee
amendment provides incentives for
the domestic production of oil and gas
by providing limited relief from the
minimum tax, to reduce our reliance
on foreign oil.
Thus, the Finance Committee
amendment offers a balanced ap-
proach. Its tax components comple-
ment the energy bill that the Senate
has passed. And it has the backing of
major environmental groups, who
recognize the importance that energy
conservation and alternative energy
sources, in particular, will have on our
energy future. These groups, inciden-
tally, also back the excise tax increas-
es on ozone-depleting chemicals that
are used to pay the energy tax provi-
sions in the committee amendment.
I urge my colleagues to vote to in-
voke cloture on the motion to proceed
so we can ensure that these provisions
are enacted this year.
We should at least have the oppor-
tunity to debate the substance of the
provisions, and we should do nothing
that jeopardizes the enactment of this
very important energy policy legisla-
tion. The Senate has spoken very
strongly on the nontax provisions, and
the Finance Committee strongly sup-
ports the provisions it reported out.
I urge my colleagues to support this
piece of legislation and proceed on it.
The PRESIDING OFFICER. The
time has expired.
Mr. BENTSEN. I yield to my distin-
guished friend, the chairman of the
Energy Committee, who has done a
massive, excellent .effort in putting
this legislation together.
The PRESIDING OFFICER. The
Senator from Louisiana.
Mr. JOHNSTON. Mr. President, I
thank my colleague from Texas.
I yield myself 5 minutes.
Mr. President, when we set out to
craft an energy bill some time ago, we
did it in the afterglow of Desert Storm
when we had sent 500,000 American
troops on account of energy to the
Middle East. We did it at a time when
energy production was going down
fast, when energy consumption was
going up fast, when the country was
taking no steps, no steps to reverse
that trend.
So we set about to put together a
comprehensive, balanced, effective
energy bill that would reverse the
trend. And some thousand pages and
over a year later, we have it, and it
has passed this Senate by 94 to 4. A
similar bill, not exactly the same, has
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passed the House by almost a 10 to 1
margin, and the question tonight is
whether the Senate is going to allow
us to consider that bill.
Mr. President, we are being held
hostage to those who want to pass
other legislation or who oppose other
legislation and will not let us get to
the bill.
This is a highly controversial bill
that has many sections that are going
to take a long time to work out We
have transmission access which is part
of the Public Utility Holding Company
Act reform, is one of the most
far-reaching; one of the most contro-
versial, one of the most difficult areas
of the law that anybody ever consid-
ers. I think we can work that section
out, but it is going to take a lot of
time.
We cannot do it overnight. We have
got everything in this bill - from alter-
native fuels that mandates 4 million
vehicles by the year 2000, to use alter-
native fuels. That is in the Senate
bill. The House has no such mandate.
That is a central question that is
going to take a lot of time to work
out.
Mr. President, if we do not get to
this energy bill tonight, if we do not
invoke cloture, I fear for the future of
this bill. I do not think we are going
to have time. I mean you just cannot
get over there and work it out in a
few hours. This is over 1,000 pages
long.
There are a lot of people who would
like to see this bill defeated - big oil
does not much like this bill; some of
the bigger utilities do not particularly
like this bill They like the natural
monopoly they have but across the
broad range of American energy users
and consumers, and environmentalists
and most producers like this bill very,
very much. And to use the words of a
letter just received today, 'it would be
tragic if this well-crafted legislation,
representing strong bipartisan and
multi-interest efforts, were allowed to
founder after having passed both
Houses with an overwhelming majori-
ty of votes/
Mr. President, this letter, by the
way, urges prompt Senate action on
this Comprehensive Natural Energy
Policy Act, and points out that 'The
result, if enacted, will be vigorous
competition in wholesale power gener-
ation and more efficient use of whole-
sale electricity transmission grids,
benefiting electricity consumers, the
environment, and America's interna-
tional competitiveness. '
That letter is signed by the Sierra
Club, the American Wind Energy
Association, Citizen Action, Electricity
Consumers Resource Council, Friends
of the Earth, Integrated Waste Servic-
es Association, National Wildlife Fed-
eration, American Public Power Asso-
ciation, Consumer Federation of
America, Environmental Action, Inde-
pendent Energy Producers, National
Rural Electric Cooperatives Associa-
tion, Texas Industrial Energy Con-
sumers, and the Union of Concerned
Scientists.
Mr. President, I ask unanimous
consent that the letter referred to,
signed by the environmental groups,
be printed in the Record.
There being no objection, the letter
was ordered to be printed in the Re-
cord, as follows:
July 23. 1992.
Ro Cooforonco on S. 2166 and H.R. 776 • Nation-
al Enorgy Stratogy.
Hon. Goorga J. Mitcholl. Majority Laador. VS.
Sonata, Washington, DC.
Daar Sonator Mitcholl: Wo. tho undoraignod,
art a broad and divorao coalition rooroaonting
industrial and laaidontial ■liciridty conauaooni.
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competitive power generators, electric utilities,
and environmental advocates. We write to urgs
prompt Sonata action on tha Comprahenaiva
National Energy Policy Act, recently aant to the
Senate by the Houae and amended by the Senate
Finance Committee.
Each aignatory haa worked closely with Mem-
bora of the Senate and Houae to ensure that the
electricity title - amending the Public Utility
Holding Company Act of 1936 fPUHCA*) and
to electricity tranamiaaion
eontaina atrong incentives to bring
competition and increased efficiency into the
country's wholesale electric power market*.
While the House and Senate bills differ in how
they would achieve auch a wholesale power
market, we are confident that the Senate provi-
sions can be reconciled with the greater competi-
tive incentives and consumer protections con-
tained in the House proposal.
As you know. Congress haa been debating
PUHCA reform for over ten years. In the past
two years, our unique coalition haa found com-
mon ground by integrating PUHCA reform with
to electricity transmission
The result, if enacted, will be vigorous
competition in wholesale power generation and
more efficient use of wholesale electricity trans-
mission grids, benefiting electricity consumers,
the environment, and America's international
competitiveness.
We understand that difficult issues have
delayed Senate action. However, it would be
tragic if this well crafted legislation, representing
strong bipartisan and multi-interest efforts, were
allowed to founder after having named both
Houses with an overwhelming majority of votes.
In closing, we thank you for your leadership
and urge you to bring this important legislation
to the Senate floor and to conference with the
House am soon as possible.
American Wind Energy Association, Citizen
Action, Electricity Consumers Resource Council,
Friends of the Earth, Integrated Waste Services
Association, National Wildlife Federation, Sierra
Club, American Public Power Association, Con-
eumer Federation of America, Environmental
Action, Independent Energy Producers, National
Rural Electric Cooperatives Association, Texas
Industrial Energy Consumers, Union of Con-
cerned Scientists.
Mr. JOHNSTON. Mr. President, I
read this because this is sort of the
environmental side of this equation.
I could have an even longer list of
those who consume, such as the Na-
tional Association of Manufacturers,
such as the Chamber of Commerce,
those who produce, from big utilities
to those who produce natural gas,
down the line.
This is the most balanced bill we
have ever had.
If we do not get cloture tonight,
then just what do we do? We move on
to other legislation. We have a bill in
here that the majority leader has
promised to consider on dealing with
abortion. How long is that going to
take? Before we know, we will be out
for the August recess and we will not
be coming back until September 7.
And there is not going to be time.
This Senate has to make up its
mind whether it is going to sacrifice
this bill which is supported by the
Democrats, supported by the Republi-
cans, supported by the Senate, sup-
ported by the House, supported by the
President, supported by the environ-
mentalists, by the producers, by the
consumers, by everybody, and yet the
question is, are we going to tie our-
selves in knots and not even consider
the bill?
America is watching and America
has been watching, Mr. President, as
we have not acted on various pieces of
legislation. They call it gridlock, and
some people in Congress say, well, the
American people just do not under-
stand, they do not understand how
difficult this legislation is.
Mr. President, the question is the
very simple, straightforward: Are you
going to consider this legislation or
not? And if you vote not to consider it,
then count yourself as a Member who
stands for gridlock. And if this bill
goes down because we do not have
time to work it out, then point the
finger at yourself if you vote no on
cloture. x^" ~ x_
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We need to get to cloture. We need
to do it tonight because we have a lot
of work to do, and I hope the Senate
will invoke cloture.
I reserve the remainder of my time.
The PRESIDING OFFICER (Mr.
Breaux). The Senator has 3 minutes
remaining.
Who yields time?
The Chair will advise that the time
will be deducted equally between the
Senator from Louisiana and the Sena-
tor from Wyoming if no one yields
time.
Mr. JOHNSTON. Mr. President,
who has time remaining?
The PRESIDING OFFICER. The
Senator from Wyoming controls 10
minutes, and the Senator from Louisi-
ana has approximately 3 minutes.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent, since I do not
have but 3 minutes, that the time be
deducted from those who are not here,
since they are not here to defend
themselves, and I do not think they
are coming.
The PRESIDING OFFICER. Is
there objection to the
unanimous-consent request?
Hearing none, it is so ordered. The
time will be deducted.
Mr. JOHNSTON. Mr. President, I
suggest the absence of a quorum, with
the time charged as previously stated.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. WIRTH. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. WIRTH. Mr. President, I realize
that time is controlled by Senator
Johnston. I ask unanimous consent
that the remaining minute be yielded
tome.
The PRESIDING OFFICER. The
Senator from Louisiana has 2 minutes
remaining.
Mr. JOHNSTON. Mr. President, I
yield 1 remaining minute to the Sena-
tor from Colorado.
Mr. WIRTH. I thank the distin-
guished Senator for yielding. I wish
to commend him, Senator Wallop and
others on this legislation. It is abso-
lutely imperative that we vote for
cloture. This is one of the single most
important pieces of legislation that we
are going to face this year.
We have an opportunity now, for
the first time in well over a decade, to
do something about energy. The situ-
ation that we face was clearly illus-
trated over and over and over again.
We are seeing ramifications of that
now with all the potential reaction
from the Persian Gulf war, plus the
enormous hemorrhaging of our scarce
national treasury that is going out for
I just wanted to come over and put
in a word or two in support of the
chairman in proceeding to H.R. 776,
which we have to do as rapidly as
possible.
I hope my colleagues all vote for
cloture, and let us get on with this
very, very important piece of national
legislation.
Let us get to the point. This bill is
our one and only chance to enact an
energy policy this year. If we stop
here, we are not going to get another
chance. If we want an energy bill,
now is the time.
The chairman of the Energy Com-
mittee and the chairman of the Fi-
nance Committee have made clear
their intention to substitute the text
of the energy bill the Senate passed
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last February for the nontax provi-
sions of the House bill, and to resist
all amendments to those provisions.
I am going to support that strategy,
and support it strongly. I urge all my
colleagues to do the same.
The Senate-passed bill was thor-
oughly debated. Dozens of amend-
ments were offered, debated, and
decided. We went through every is-
sue, and everyone had their fair shot.
The chairman had to make major
changes in the bill in order to get a
consensus on moving it forward. To
his credit, he made those changes,
because he was committed to getting
the best bill possible enacted into law.
Not a perfect bill. Not everything I
wanted. Not everything the chairman
wanted. Not everything the adminis-
tration or the ranking member of the
committee wanted. But the best - the
most - that could actually be success-
fully passed by this body.
The bill took the Energy Committee
a year to put together. After it was
reported, it took us months to get to
the point where we could proceed. To
the credit of all involved, we did find
that point, and kept moving forward.
Let us not stop now.
Was the result perfect? No. But it
must have been pretty good, because
we passed it 94-4.
That is the way the legislative pro-
cess is supposed to work. It worked
last February. Let us not forget that.
We passed an enormously complicated,
comprehensive, 400-page energy policy
bill, by an overwhelming margin. Let
us not lose sight of that for one min-
ute.
Let us not lose that now in an ef-
fort to see who can use the threat of
killing this bill to get more into it. We
have already been through that. We
had to set aside some very important
issues in order to reach consensus.
Let us not destroy that consensus, or
kill its product. If we want the Sen-
ate to work, we should honor the
work we have already done.
Mr. President, there is a very
strong argument to be made that the
single best thing we could do for this
country's energy policy would be to
require our automobiles to go further
on less gasoline. This bill would not
do that. But I also know that an
amendment to raise the CAFE stan-
dards would cut the consensus behind
this bill to shreds. So I strongly be-
lieve such an amendment should not
be offered now.
Mr. President, there is strong dis-
agreement on some of the tax items in
this bill. But we will not get to vote
on those issues and move forward if
we do not get cloture on the motion to
proceed.
I want to remind people what is in
this bill, and why we need to move
forward on it. The Senate version of
this bill includes conservation initia-
tives which will cut consumers' energy
bills by more than $30 billion over the
next two decades. It creates a com-
prehensive energy planning process
which, for the first time, will be aimed
at meeting our energy needs at the
least cost. It will change the way we
regulate our utilities to enable far
greater competition in the generation
of electric power, and change utility
regulation to encourage private in-
vestment in even more energy conser-
vation.
It provides a breakthrough in re-
quiring us to develop real, workable
alternatives to gasoline as a fuel for
our cars and trucks. Without those
alternatives, we are doomed to in-
creasing dependence on imported oil.
It takes giant steps in streamlining
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the approval of new natural gas pipe-
lines, and in promoting the use of
natural gas as an efficient,
cleanburning, and domestically pro-
duced fuel for our future.
And the tax provisions of this bill
not only help promote the develop-
ment of solar, wind power, and other
renewable energy resources, but also
provide significant aid to independent
oil and gas producers, enabling them
to continue to explore to replace the
fuel reserves we are using up today.
Can we turn our backs on that? I
hope not. If you are interested in
achieving some real, on-the-ground
progress on energy policy in this coun-
try, please vote for cloture on this bill.
Without that vote, all our work, and
all the on-the-ground results I spoke
of before, will die.
I urge all my colleagues to join in
keeping this energy bill alive.
Mr. President, I think that uses up
my time. I yield the floor and suggest
the absence of a quorum.
The PRESIDING OFFICER. The
absence of a quorum is noted. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. WIRTH. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
CLOTURE MOTION
The PRESIDING OFFICER. Under
the previous order, pursuant to rule
XXII, the Chair lays before the Senate
the pending cloture motion, which the
clerk will now state.
The legislative clerk read as follows:
CLOTURE MOTION
We, tha undersigned Senators, in accordance
with the provisions of rule XXII of the Standing
Rules of the Senate, hereby move to bring to a
close debate on the motion to proceed to the
consideration of H JL 776, an act to provide for
improved energy efficiency:
J. Bennett Johnston, David L. Boren, Alan
Cranston. Fritz Hollings, Bob Kerrey. Robert
Byrd. Howell Heflin. John Breaui. George Mitch-
ell, Howard M. Metienbaum, J. Lieberman, J.R.
Biden, Jr., FJi. Lautenberg, Jim Sasser. Slade
Gorton, Warren B. Rudman, Phil Gramm, Con-
nie Mack. Jake Gam. Frank H. Murkowski.
VOTE
The PRESIDING OFFICER. The
question is, Is it the sense of the Sen-
ate that debate on the motion to pro-
ceed to H.R. 776, an act to provide for
improved energy efficiency, shall be
brought to a close? The yeas and nays
are required. The clerk will now call
the roll.
The legislative clerk called the roll.
Mr. FORD. I announce that the
Senator from North Dakota (Mr.
Burdick) and the Senator from Ten-
nessee (Mr. Gore) are necessarily
absent.
Mr. SIMPSON. I announce that the
Senator from Utah (Mr. Garn), the
Senator from Utah (Mr. Hatch), the
Senator from Oregon (Mr. Packwood),
the Senator from Alaska (Mr.
Stevens), and the Senator from Idaho
(Mr. Symms) are necessarily absent.
I further announce that the Senator
from North Carolina (Mr. Helms) and
the Senator from Delaware (Mr. Roth)
are absent due to illness.
I further announce that, if present
and voting, the Senator from Utah
(Mr. Hatch) would vote 'nay.'
The PRESIDING OFFICER. Are
there any other Senators in the
Chamber who desire to vote?
The yeas and nays resulted - yeas
58, nays 33, as follows:
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(ROLLCALL VOTE NO. 160 LEG.)
YEAS-6S
Adams
Akaka
Baucus
Ben teen
Biden
Bingaman
Bonn
Bradley
Bros us
Bcyan
Bumper*
Byrd
Conrad
Cranston
Dsschle
DeConcini
Dixon
Dodd
Exon
Ford
Fowler
Glenn
Graham
Grassley
Hsrirfn
Heflin
Hollings
Inouye
Johnston
Kennedy
Kemgr
Kerry
Kohl
Lsutenperg
Leahy
Levin
Liebermsn
Metienbaum
Mikulski
Mitchell
Moynihan
Nickles
Nunn
PeU
Pryor
Raid
RiegU
Robb
Rockefeller
Sanford
Sarbsnes
Saaaar
Shelby
Simon
gptrtar
Wellatona
Wirth
Woflbfd
NAYS- 33
Bond
Brown
Burns
Chsfee
CoaU
Cochran
Cohan
Craig
D'Amsto
Danforth
Dole
Domenid
Durenberger
Gorton
Gramm
Hatfield
Jeffords
Kassebsum
Kaaten
Lot!
Lugar
Mack
McCain
McConnell
Murkowski
Premier
Rudman
Seymour
Simpson
Smith
Thurmond
Wallop
Warner
NOT VOT1NC
-9
Burdick
Gam
Gore
Hatch
Helma
Psckwood
Roth
Stevens
Symros
The PRESIDING OFFICER. On
this vote the yeas are 58, the nays are
33. Three-fifths of the Senators duly
chosen not having voted in the affir-
mative, the motion is not agreed to.
Under the previous order, the next
order of business is the vote on final
passage of S. 2877, as amended. The
yeas and nays have been ordered.
The clerk will call the roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that I be al-
lowed to ask the majority leader a
question before we have the vote.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President,
despite the best efforts of the majority
leader and those of us who are trying
to pass this bill seems to be the victim
of what is being called gridlock across
America. I wonder if the majority
leader has any idea about where we
might go from here. Do we reconsider
this at some time or do we abandon
the energy bill? I am wondering if the
majority leader has some advice for
us.
Mr. MITCHELL. Mr. President, I
am disappointed that we were not
able to obtain cloture on the motion
to proceed to this bill. I think it is a
very important measure. It contains
a large number of provisions that are
desirable and in the national interest.
To answer the specific question
raised, it is not my intention to aban-
don the bill, but, rather I think it now
best if the distinguished chairman of
the committee, myself and other inter-
ested Senators meet to consult and
attempt to determine the best course
of action with respect to the bill.
Mr. JOHNSTON. I wonder, Mr.
President, if I may ask whether there
is any hope that those who are work-
ing on the so-called Rockefeller
amendment might be able to resolve
that tonight and we might bring the
bill back tomorrow and perhaps finish
it up at that time.
Mr. WALLOP. Mr. President, will
the majority leader yield?
Let me just say that we worked in
Senator Byrd's office. We were not
able to get to that conference until
5:30. We worked right up until the
moment that the vote was called.
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And in that process we were very
close.
There are not many things that
need to be resolved. There is a scor-
ing problem on one of the resolutions
that we thought we had. It seems to
me that with a good-faith effort we
can get finished so we can proceed to
the bill.
I regret, more than the majority
leader because I think there is more
in this bill that I like than he likes,
that we were unable to do that. But
I think it is important that we resolve
this tax issue, that is, tax applied to
people to sataify an obligation which
was incurred by people other than
themselves. We are trying to solve
the problem in a way that is equita-
ble.
The problem is rather simple.
There are some families and miners in
this country who were, or thought
they were beneficiaries of contracts.
Their companies now no longer exist
or their companies have abandoned or
pulled out of union contracts, one
thing and another, and those are
people whose concern is shared by
Senator Rockefeller, Senator Ford,
and myself. The other concern is
whose obligation it is to satisfy it.
We think we are very close, we are
trying hard, and I believe we will get
it done.
Mr. JOHNSTON. I know the Sena-
tors are working hard, as this has
been pending for 4 or 5 weeks, if I
recall. I just wonder if they are going
to meet again tonight and whether we
might expect to be able to move to-
morrow or is it some undetermined
time next week when the next meet-
ing is?
In other words, a lot of Senators are
going to be heading out tomorrow
unless we are going to be considering
this bill, I guess.
Mr. DOLE. Will the Senator from
Louisiana yield?
Mr. JOHNSTON. Certainly.
Mr. DOLE. I want to underscore
what the Senator from Wyoming has
said. I was sort of an observer in the
meeting in Senator Byrd's office.
There was a lot of progress made. If
we resolve it, there need not be any
motion to proceed; we could proceed
to the bill. It should not take long to
pass it. We passed it once in the Sen-
ate 94 to 4. It has already been
through this body one time. Hopefully,
there would not be any amendments.
So I think with a little more pa-
tience and the good faith negotiations
they were having in Senator Byrd's
office with Senator Rockefeller, Sena-
tor Ford, Senator Wallop, and Senator
Byrd, this could maybe be resolved by
Monday.
Mr. JOHNSTON. I thank
the Senators.
CONGRESSIONAL RECORD
(SENATE)
July 27, 1992
PAGES10S5S
IMPROVED ENERGY EFFICIENCY
CLOTURE MOTION
Mr. MITCHELL. Mr. President,
I move to proceed to the consideration
of H.R. 776, an act to provide for
improved energy efficiency, and I send
a cloture motion on the motion to
proceed to the desk and ask that it be
stated.
The PRESIDING OFFICER. The
clerk will report the cloture motion.
The assistant legislative clerk read
as follows:
CLOTURE MOTION
We, the undersigned Senators, in aeeordancs
with the provision* of rule XXII of the Standing
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Rules of the Senate, hereby move to bring to a
close debate on the motion to proceed to the
consideration of H.R. 776. en set to provide for
improved energy efficiency:
J. Bennett Johnston, David L. Boren, Alan
Cranston, Fritz Hollings, Bob Kerrey, Robert
Byrd, Howell Heflin, John Breaux, George Mitch-
ell, Howard M. Mettenbaum, J. Lieberman, Joe
Biden, Prank R. Lsutenberg. Jim Sssser, Slade
Gorton, Warren B. Rudman, Phil Gramm, Con-
nie Mack, Jake Gam, Frank H. Murkowski.
Mr. MITCHELL. Mr. President, I
withdraw the motion to proceed to the
energy bill, and I ask unanimous con-
sent that the vote on the motion to
invoke cloture on the motion to pro-
ceed to H.R. 776 occur at 2:15 p.m. on
Tuesday, July 28, and that notwith-
standing the invoking of cloture on
the motion, the Senate remain on the
Agriculture appropriations bill until it
has been disposed of.
ThePRESIDING OFFICER.
Without objection, it is so ordered.
CONGRESSIONAL RECORD
(SENATE)
July 28. 1992
PAGES 10397
MANDATORY LIVE QUORUM WAIVED ON
CLOTURE VOTE ON THE MOTION TO
PROCEED TO H.R. 776
Mr. PRYOR. Mr. President, on
behalf of the majority leader, I ask
unanimous consent that the mandato-
ry live quorum, as required under rule
XXII, be waived in relation to the
cloture vote on the motion to proceed
to H.R. 776.
The ACTING PRESIDENT pro
tempore. Without objection, it is so
ordered.
IMPROVED ENERGY EFFICIENCY
MOTION TO PROCEED CLOTURE MOTION
The PRESIDING OFFICER.
Under the previous order, pursuant to
rule XXII, the Chair lays before the
Senate the pending cloture motion
which the clerk will state.
The bill clerk read as follows:
CLOTURE MOTION
We, tho undersigned Senators, in accordance
with the provisions of rule XXII of the Standing
Rules of the Senate, hereby move to bring to a
close debate on the motion to proceed to the
consideration of H.R. 776, an act to provide for
improved energy efficiency:
J. Bennett Johnston, David L. Boren, Alan
Cranston, Fritz Hollings. Bob Kerrey, Robert
Byrd, Howell Heflin, John Breaux. George Mitch-
ell, Howard M. Metzenbaum, J. Lieberman, Joe
Biden. Frank R. Lautenberg, Jim Sasser, Slade
Gorton, Warren B. Rudman, Phil Gramm, Con-
nie Mack. Jake Gam. Prank H. Murkowski.
VOTE
The PRESIDING OFFICER. The
question is, Is it the sense of the Sen-
ate that debate on the motion to pro-
ceed to H.R. 776, the Comprehensive
National Energy Act, shall be brought
to a close?
The yeas and nays are required.
The clerk will call the roll.
The assistant legislative clerk called
the roll.
Mr. FORD. I announce that the
Senator from North Dakota (Mr.
Burdick) and the Senator from Ten-
nessee (Mr. Gore), are necessarily
absent.
Mr. SIMPSON. I announce that the
Senator from Florida (Mr. Mack), is
necessarily absent.
I further announce that the Senator
from North Carolina (Mr. Helms), is
absent due to illness.
I further announce that, if present
and voting, the Senator from North
Carolina (Mr. Helms), would vote
'yea.'
The PRESIDING OFFICER. Are
there any other Senators in the
Chamber who desire to vote?
The yeas and nays resulted - yeas
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93, nays 3,
, as follows:
(ROLLCALL VOTE NO. 164 LEG.)
YEAS- 03
Adams
Akaka
Baucus
Benteen
Biden
Binfaman
Bond
Boren
Bradley
Breaux
Brown
Bryan
Bumpers
Burns
Byrd
Cha/ee
Coats
Cochran
Cohen
Conrad
Craig
Cranston
D'Amato
Danforth
Daschle
DeConctni
Dixon
Dodd
Dole
Domenici
Exon
Ford
Fowler
Gam
Glenn
Gorton
Graham
Gramm
Grassley
Harkin
Hatch
Hatfield
Heflin
Holling.
Inouye
Johnston
Kassebaum
Kasten
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Lavin
Liebennan
Lott
Lugar
McCain
McConneU
MeUenbaum
Mikulski
MitcheU
Moynihan
Murkowski
Nickies
Nunn
Packwood
PeU
Pressler
Pryor
Raid
Riegle
Robb
Rockefeller
Roth
Rudman
Sanford
Sarfaanes
Sasser
Seymour
Shelby
Simon
Simpson
Specter
Stevens
Symme
Thurmond
Wallop
Warner
Welbtone
Wirth
NAYS- 3
Woflbrd
Durenbergsr
Jeflbrdo
Smith
NOT VOTING
-4
Burdick
Gore
Helme
The PRESIDING OFFICER. On
this question the yeas are 93 the nays
are 3. Three-fifths of the Senators
duly chosen and sworn having voted
in the affirmative, the motion is
agreed to.
CONGRESSIONAL RECORD
(SENATE)
Jury ». 1M2
PaisS10668
COMPREHENSIVE NATIONAL ENERGY
POLICY ACT
The PRESIDING OFFICER. Under
the previous order, the Senate will
now proceed to the consideration of
H.R. 776, which the clerk will report.
The assistant legislative clerk read
as follows:
A bill (H.R. 776) to provide for improved ener-
gy efficiency.
The Senate proceeded to consider
the bill (H.R. 776) to provide for im-
proved energy efficiency, which had
been reported from the Committee on
Finance, with amendments; as follows:
(Text of Bill OmittedJ
The PRESIDING OFFICER. The
Senator from Texas is recognized.
Mr. BENTSEN. Mr. President, I
have discussed this matter with the
members of the Finance Committee,
and after doing so, a majority of the
members of that committee have au-
thorized me to withdraw and modify
the reported committee amendments.
Therefore, on behalf of the committee,
I withdraw the first two reported
committee amendments which are
amendments to the table of contents
of H.R. 776, and I modify the third
reported committee amendment. I
send the modified committee amend-
ment to the desk.
The PRESIDING OFFICER. The
chairman as authorized by the com-
mittee has a right to make those ac-
tions. The amendment is so modified.
The third reported committee, as
modified, is as follows:
[Text of Committee Amendment Omitted, except
for Title XXJ
TITLE XX - REVENUE PROVISIONS
SBC. 20101. AMENDMENT OF 1086 CODE.
Eicepl ee otherwiee ezpreeerjr provided, when-
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ever in this title an Amendment or repeal is ex*
pre— od in terms of an amendment to, or repeal
of, a section or other provision, the reference
shall be considered to be made to a section or
other provision of the Internal Revenue Code of
1986.
Subtitle A - Energy Conservation and Produc-
tion Incentives
SEC. 20111. TREATMENT OF
EMPLOYER-PROVIDED TRANSPORTATION
BENEFITS.
(a) Exclusion. - Subsection (a) of section 132
(relating to exclusion of certain fringe benefits) is
amended by striking 'or' at the end of paragraph
(8), by striking the period at the end of para-
graph (4) and inserting ', or', and by adding at
the end thereof the following new paragraph:
'(5) qualified transportation fringe.'
(b) Qualified Transportation Fringe. • Section
182 is amended by redesignating subsections (0,
(g), (h), (i), (j). end (k) as subsections (g), (h), (i),
(j), (k), and 0). respectively, and by inserting after
subsection (e) the following new subsection:
'(0 Qualified Transportation Fringe. -
'(1) In general. - For purposes of this section,
the term 'qualified transportation fringe' means
any of the following provided by an employer to
an employee:
'(A) Transportation in a commuter highway
vehicle if such transportation is in connection
with travel between the employee's residence and
place of employment.
'(B) Any transit pass.
'(C) Qualified parking.
'(2) Limitation on exclusion. • The amount of
the fringe benefits which are provided by an
employer to any employee and which may be
excluded from gross income under subsection
(a)(5) shall not exceed •
'(A) $80 per month in the case of the aggregate
of the benefits described in subparagraphs (A)
and (B) of paragraph (1), and
'(B) $146 per month in the case of qualified
parking.
*(8) Cash reimbursements. • For purposes of
this subsection, the term 'qualified transporta-
tion fringe' includes a cash reimbursement by an
employer to an employee for a benefit described
in paragraph (1). The preceding sentence shall
apply to a cash reimbursement for any transit
pass onry -f* voucher or similar item which may
be exchanged onry for a transit pass is not readily
available for direct distribution by the employer
to the employee.
'(4) Benefit not in lieu of compensation. • Sub-
section (aMo) shall not apply to any qualified
transportation fringe unless such benefit is pro-
vided in addition to (and not in lieu of) any com-
pensation otherwise payable to the employee.
'(6) Definitions. - For purposes of this subsec-
tion •
'(A) Transit pass. - The term 'transit pass'
means any pass, token, farecard, voucher, or
similar item entitling a person to transportation
(or transportation at a reduced price) if such
transportation is •
*(i) on mass transit facilities (whether or not
publicly owned), or
'(ii) provided by sny person in the business of
transporting persons for compensation or hire if
such transportation is provided in s vehicle meet-
ing the requirements of subparagraph (B)(1).
'(B) Commuter highway vehicle. • The term
'commuter highway vehicle' means sny highway
vehicle •
'(i) the seating capacity of which is st least 6
adults (not including the driver), and
'(ii) at least 80 percent of the mileage use of
which can reasonably be expected to be •
'(I) for purposes of transporting employees in
connection with travel between their residences
and their place of employment, and
'(H) on trips during which the number of em-
ployees transported for such purposes is at least
1/2 of the adult seating capacity of such vehicle
(not including the driver).
'(C) Qualified parking. - The term 'qualified
parking' means parking provided to an employee
on or near the business premises of the employer
or on or near a location from which the employee
commutes to work by transportation described in
subparagraph (A), in a commuter highway vehi-
cle, or by carpool. Such term shsll not include
any parking on or near property used by the
employee for residential purposes.
'(D) Transportation provided by employer. -
Transportation referred to in paragraph (I)(A)
shall be considered to be provided by an employer
if such transportation is furnished in a commuter
highway vehicle operated by or for the employer.
'(E) Employee. - For purposes of this subsec-
tion, the term 'employee' does not include an
individual who is sn employee within the mean-
ing of section 401(c)(1).
'(6) Inflation adjustment. - In the esse of any
taxable year beginning in a calendar year after
1908, the dollar amounts contained in paragraph
(2) (A) and (B) shsll be increased by an amount
equal to •
'(A) such dollar amount, multiplied by
'(B) the cost-of-living adjustment determined
under section 1(0(3) for the calendar year in
which the taxable year begins, determined by
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substituting 'calendar year 1902' for 'calendar
year 1939' in subparagraph (B) tbaraof. If any
ineraaaa determined undar tha praoadinf aen-
lanoa ia not a multiple of $6, audi increase ahall
be rounded to tha next lowaat multipla of $6.
'(7) Coordination with other provisions. • For
purposes of this section, tha terms 'working con-
dition fringe' and 'da minimis fringe' ahall not
include any qualified transportation fringe (deter-
mined without regard to paragraph (2)).'
(c) Conforming Amendment - Subsection (i) of
section 182 (am redesignated by subsection (b)) is
amended by striking paragraph (4) and redesig-
nating the following paragraphs accordingly.
(d) Effective Date. - The amendments made by
this section ahall apply to benefits provided after
December 31, 1992.
SEC. 20112. EXCLUSION OF ENERGY CON-
SERVATION SUBSIDIES PROVIDED BY PUB-
LIC UTILITIES.
(a) General Rule. • Part III of subchapter B of
chapter 1 (relating to amounts specifics lly exclud-
ed from gran income) ia amended by redesignat-
ing section 196 §m section 137 snd by inserting
after section 136 the following new section:
'SEC. 136. ENERGY CONSERVATION SUBSI-
DIES PROVIDED BY PUBLIC UTILITIES.
'(a) Exclusion. -
'( 1) In general. • Gross income ahall not include
the value of any aubaidy provided by a public
utility to a customer for the purchase or installa-
tion of any energy conservation measure.
'(2) Limitation on exclusion for nonresidential
property. • In the case of any subsidy provided
with respect to any energy conservation measure
referred to in subsection (c)(1)(B), only 30 per-
cent of such subsidy shall be excluded from gross
income under paragraph (1).
'(b) Denial of Double Benefit. • Notwithstanding
any other provision of this subtitle, no deduction
or credit ahall be allowed for, or by reason of, any
expenditure to the extent of the amount excluded
under subsection (a) for any subsidy which waa
provided with respect to such expenditure. The
adjusted basis of any property shall be reduced by
the amount excluded under subsection (a) which
waa provided with respect to such property.
'(c) Energy Conservation Measure. •
'(1) In general. • For purposes of this section,
the term 'energy conservation measure' means
any installation or modification primarily de-
signed to reduce consumption of electricity or
natural gee or to improve the management of
energy demand •
'(A) with respect to a dwelling unit, and
'(B) on or after January 1, 1994, with respect to
property other than dwelling units. Tim purchase -
and installation of specially defined energy prop-
erty shall be treated as an energy conservation
measure described in subparagraph (B).
'(2) Other definitions snd special rules. -
'(A) Definitions. - For purposes of this subsec-
tion •
'(i) Specially defined energy property. • The
term 'apecially defined energy property' means •
'(I) a recuperator,
'(ID a heat wheel,
'(IID a regenerator,
'(IV) a heat exchanger,
'(V) a waste hest boiler,
'(VI) a heat pipe,
'(VII) an automatic energy control system,
'(VIID a turbulator,
'(DC) a preheater,
'(X) a combustible gas recovery system,
'(XI) an economizer,
'(XII) modifications to alumina electrolytic cells,
'(XIII) modifications to chlor-slksli electrolytic
cells, or
'(XIV) any other property of a kind specified by
the Secretary by regulations, the principal pur-
pose of which is reducing the amount of energy
consumed in any existing industrial or commer-
cial process snd which is installed in connection
with an existing industrial or commercial facility.
'(H) Dwelling unit. • The term 'dwelling unit'
has the meaning given such term by section
230A(0(1).
'(iii) Public utility. • The term 'public utility'
mesne a person sngaged in the ssls of electricity
or natural gas to residential, commercial, or in-
duatrial customers for use by such customers.
For purposes of ths preceding sentence, the term
'person' includes the Federal Government, a
State or local government or any political subdi-
vision thereof, or any instrumentality of any of
the foregoing.
'(B) Special Rulea. •
'(i) Third-party contractors. - If, in connection
with the purchase or installation of an energy
conservation measure for a customer of a public
utility, such public utility provides a subsidy to s
parson other than the customer, such subsidy
shall be excludable under subsection (a) from the
gross income of such other person to the extent
such subsidy would be so excludsbie from the
gross income of the customer.
'(ii) Stste-sponsored programs. - A payment by
a public utility to a customer for the use of a tax
benefit granted to the customer by s State pursu-
ant to a State-sponsored energy conservation
program ahall be excludable under subsection (a)
from the gross income of the customer to the
extent such psymsnt would be so excludable if
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provided a* a subsidy by the public utility.
'(d) Exception. - This section shall not apply to
any payment to or from a qualified cogeneration
facility or qualifying small power production
facility pursuant to section 210 of the Public
Utility Regulatory Policy Act of 1978.'
(b) Clerical Amendment. - The table of sections
for part III of subchapter B of chapter 1 is
amended by striking the item relating to section
136 and inserting:
'Sec. 136. Energy conservation subsidies pro-
vided by public utilities.
'Sec. 137. Cross reference to other Acta.'
(c) Effective Date. - The amendments made by
this section shall apply to amounts received after
December 3 1, 1992.
SEC. 20113. TREATMENT OF CLEAN-FUEL
VEHICLES.
(a) Deduction for Clean-Fuel Vehicles and Cer-
tain Refueling Property. -
(1) In general. - Part VI of subchapter B of
chapter 1 (relating to itemized deductions for
individuals and corporations) is amended by add-
ing after section 179 the following new section:
'SEC. 179A. DEDUCTION PORCLEAN-FUEL
VEHICLES AND CERTAIN REFUELING
PROPERTY.
*(a) General Rule. - There shall be allowed as a
deduction an amount equal to the sum of •
'(1) in the ease of any qualified dean-fuel vehi-
cle property •
'(A) except as provided in subparagraph (B), the
cost of the property, or
'(B) in the case of a vehicle described in subsec-
tion (c)(1)(B) which may be propelled by both a
dean-burning fuel and any other fuel, an amount
equal to the greater of -
'(D $1,200, or
'(ii) the incremental cost of permitting the use
of the dean-burning fuel, plus
'(2) the cost of sny qualified dean-fuel vehide
refueling property. The deduction under the
preceding sentence with respect to any property
shall be allowed for the taxable year in which
such property is placed in service.
'(b) Limitation*. -
'(1) Qualified dean-fuel vehide property. •
'(A) In general. • The cost which may be taken
into account under subsection (a)( 1) with respect
to sny motor vehicle shall not exceed -
'(i) in the ease of a motor vehicle not described
in clause (ii) or (iii), $2,000,
*(i0 in the ease of any truck or van with a gross
vehide weight rating greater than 10,000 pounds
but not greater than 26,000 pounds, $6,000, or
•(iii) $60,000 in the case of -
'(D a truck or van with a gross vehicle weight
rating greater than 26,000 pounds, or
'(ID any bus which has a seating capacity of at
least 20 adults (not induding the driver),
'(B) Phaseout. • In the case of any qualified
dean-fuel vehicle property placed in service after
December 31, 200 1, the limit otherwise applicable
under subparagraph (A) shall be reduced by -
*(i) 26 percent in the case of property placed in
service in calendar year 2002,
'(ii) 60 percent in the case of property placed in
service in calendar year 2003, and
'(iii) 76 percent in the case of property placed in
service in calendar year 2004.
'(2) Qualified clean-fuel vehicle refueling prop-
erty. -
'(A) In general. • The aggregate cost which may
be taken into account under subsection (a)(2)
with respect to qualified clean-fuel vehicle refuel-
ing property placed in service during the taxable
year at a location shall not exceed the excess (if
any) of -
'(i) $76,000, over
'(ii) the aggregate amount taken into account
under subsection (a)(2) by the taxpayer (or any
related person or predecessor) with respect to
property placed in service at such location for all
preceding taxable years.
'(B) Related person. - For purposes of this para-
graph, a person shall be treated as related to
another person if such person bears a relation-
ship to such other person described in section
267(b) or 707(b)(1).
'(C) Election. • If the limitation under subpara-
graph (A) applies for any taxable year, the tax-
payer shall, on the return of tax for such taxable
year, specify the items of property (and the por-
tion of costs of such property) which are to be
taken into account under subsection (a)(2).
'(c) Qualified Clean-Fuel Vehicle Property De-
fined. • For purposes of this section -
'(I) In general. • The term 'qualified clean-fuel
vehicle property' means property which is ac-
quired for use by the taxpayer and not for resale,
the original use of which commences with the
taxpayer, with respect to which the environmen-
tal standards of paragraph (2) arc mot, and which
b described in either of the following subpara-
graphs:
'(A) Retrofit parts and component*. • Any prop-
erty installed on a motor vehide which ia pro-
pelled by a fuel which is not a clean-burning fuel
for purposes of permitting such vehide to be
propelled by a clean -burning fuel •
*(i) if the property b an engine (or modification
thereof) which may use a clean-burning fuel, or
'(ii) to the extent the property is used in the
storage or delivery to the engine of such fuel, or
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the exhaust of gases from combustion of such
fuel.
'(B) Original equipment manufacturer's vehi-
cles. - A motor vehicle produced by an original
equipment manufacturer and designed so that
the vehicle may be propelled by a dean-burning
fuel.
'(2) Environmental standards. - Property shall
not be treated as qualified dean-fuel vehicle
property unless -
'(A) the motor vehide of which it is a part
meets sny applicable Federal or State emissions
standards with respect to each fuel by which
such vehide is designed to be propelled, or
'(B) in the ease of property described in para-
graph (1)(A), such property meets all applicable
Federal and State emissions-related certification,
testing, and warranty requirements.
'(8) Exception for qualified electric vehicles. •
The term 'qualified dean-Aid vehicle property'
does not indude any qualified electric vehide (as
defined in section 30(c)).
'(d) Qualified Clean-Fuel Vehide Refueling
Property Defined. • For purposes of this section,
the term 'qualified dean-fuel vehicle refueling
property' means any property (not induding a
building and its structural components) if •
'(1) such property is of a character subject to
the allowance for depreciation,
'(2) the original use of such property begins
with the taxpayer, and
'(8) such property is -
'(A) for the storage or dispensing of a
dean-burning fuel into the fuel tank of a motor
vehide propelled by such fuel, but only if the
storage or dispensing of the fuel is at the point
where such fuel is delivered into the fuel tank of
the motor vehicle, or
'(B) for the recharging of motor vehides pro-
pelled by dectridty, but only if the property b
located at the point where the motor vehicles are
recharged.
'(e) Other Definitions and Special Rules. • For
purposes of this section -
'(1) Clean-burning fuel. The term
'clean-burning fuel' means -
'(A) natural gas,
'(B) liquefied natural gas,
'(O liquefied petroleum gas,
'(D) hydrogen,
'(E) electridty, and
'(F) any other fuel at least 86 percent of which
is 1 or more of the following: methanol, ethanoi,
any other alcohol, or ether.
'(2) Motor vehide. • The term 'motor vehide'
means any vehicle which is manufactured pri-
marily for use on public streets, roads, and high-
ways (not induding a vehide operated exdushrety
on s rail or rails) and which has st least 4
wheels.
'(8) Cost of retrofit parts indudes cost of instal-
lation. - The cost of sny qualified dean-fud vehi-
de property referred to in subsection (e)(1)(A)
shall include the cost of the original installation
of such property.
'(4) Recapture. - The Secretary shall, by regula-
tions, provide for recapturing the benefit of any
deduction allowable under subsection (a) with
respect to any property which ceases to be prop-
erty eligible for such deduction.
'(6) Property used outside united states, etc.,
not qualified. • No deduction shall be allowed
under subsection (a) with respect to any property
referred to in section 60(b) or with respect to the
portion of the cost of sny property taken into
account under eection 179.
'(6) Beau reduction. •
'(A) In general. • For purposes of this titls, the
basis of sny property shall be reduced by the
portion of the cost of such property taken into
account under subsection (a).
'(B) Ordinary income recapture. • For purposes
of section 1246, the amount of the deduction
allowable under subsection (a) with respect to
sny property which is of a character subject to
the allowance for depreciation shall be treated ss
a dsduction allowed for depreciation under eec-
tion 167.
'(g) Termination • This section shall not apply
to any property placed in service after December
81, 2004.'
(2) Deduction from gross income. • Section 62(a)
is amended by ineerting after paragraph (18) the
following new paragraph:
'(14) Deduction for clean-fuel vehicles snd ear-
tain refueling property. • The deduction allowed
by section 179A.'
(8) Conforming amendments. •
(A) Section 10 16(a) is emended by striking 'end'
at the end of paragraph (28), by striking the
period at the end of paragraph (24) and inserting
', snd', and by adding at the end thereof the
following new paragraph:
'(26) to the extent provided in section
179A(e)(6)(A).»
(B) The table of sections for part VI of subchap-
ter B of chapter 1 b amended by ineerting after
the item relating to eection 179 the following new
item:
'Sec. 179A. Deduction for dean-fud vehicles
snd certain refueling property.'
(b) Credit for Qualified Electric Vehides. •
(1) In gsneral. - Subpart B of pert IV of sub-
chapter A of chapter 1 is smsnded by inserting
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Afar eection 29 the following new section:
•SBC. SO. CREDIT FOR QUALIFIED ELEC-
TRIC VEHICLES.
*(a) Allowance of Credit. - There shell be el-
lowed es e credit Against the tax imposed by this
chapter for the taxable year an amount equal to
16 percent of the cost of any qualified electric
vehicle pieced in eervice by the taxpayer during
the taxable year.
'(b) Limitations. -
'(1) Phaseout. - In the ease of any qualified
electric vehicle placed in eervice after December
91, 2001, the credit otherwise allowable under
subsection (a) shall be reduced by -
'(A) 25 percent in the ease of property placed in
service in calendar year 2002,
'(B) 60 percent in the ease of property placed in
eervice in calendar year 2009, and
*(0 76 percent in the ease of property placed in
eervice in calendar year 2004.
'(Z) Application with other credits. • The credit
allowed by subsection (a) for any taxable year
•hall not exceed the excess (if any) of •
'(A) the regular tax for the taxable year reduced
by the eum of the credite allowable under subpart
A and aectione 27, 28, and 29, over -
'(B) the tentative minimum tax for the taxable
year.
'(c) Qualified Electric Vehicle. • For purposes of
'(1) In general. • The term 'qualified electric
vehicle' mesne sny motor vehicle -
'(A) which is powered primarily by an electric
motor drawing current from rechargeable batter-
ies, fuel cells, or other portable sources of electri-
cal current,
'(B) the original use of which commences with
the taxpayer, and
*(Q which is acquired for use by the taxpayer
and not for resale.
'(2) Motor vehicle. • For purposes of paragraph
(1), the term 'motor vehicle' means any vehicle
which is manufactured primarily for use on pub-
lic streets, roads, and highways (not including a
vehicle operated exclusively on a rail or rails) and
which has at least 4 wheels.
'(d) Specie! Rules. -
'( 1) Bssis reduction. • The basis of sny proporty
for which a credit is allowable under subsection
(s) shall be reduced by the amount of such credit.
'(2) Recapture. • The Secretary ahall, by regula-
tions, provide for recapturing the benefit of sny
credit allowable under subsection (a) with respect
to sny property which ceases to be property eligi-
ble for such credit.
'(9) Property used outside united states, etc.,
not qualified. • No credit ahall be allowed under
subsection (s) with respect to sny property re-
ferred to in section 60(b) or with respect to the
portion of the cost of sny property taken into
account under eection 179.
'(e) Termination. • Thie section shall not apply
to any property placed in service after December
81, 2004'.
(2) Conforming amendments. -
(A) The table of sections for subpart B of part
IV of subchapter A of chapter 1 is emended by
adding after the item relating to section 29 the
following new item:
'Sec. 80. Credit for qualified electric vehicles.'
(B) Section 1016(e), es emended by subsection
(a)(8), is amended by striking 'snd' st the end of
paragraph (24), by striking the period at the end
of paragraph (26) and inserting \ end', snd by
adding st the end thereof the following new para-
graph:
'(26) to the extent provided in eection 80(d)(1).'
(C) Section 63(d)(l)(B)(iii) is emended •
(i) by striking 'section 29(b)(6)(B) or' end in-
serting 'eection 29(b)(6)(B),', end
(ii) by inserting ', or not allowed under eection
80 eolely by reason of the application of eection
30(b)(2)(B)' before the period.
(D) Section 66(c)(2) is emended by striking
'29(b)(6),' snd inserting '29(b)(6), 30(b)(2).'.
(c) Effective Date. - The amendments mede by
this eection shall spply to property pieced in
eervice after June 30, 1993.
SEC. 201 14. CREDIT FOR ELECTRICITY PRO-
DUCED FROM CERTAIN RENEWABLE
SOURCES.
(a) In General. • Subpart D of part IV of sub-
chapter A of chapter 1 is amended by adding at
the end thereof the following new section:
'SEC. 46. ELECTRICITY PRODUCED FROM
CERTAIN RENEWABLE RESOURCES.
'(a) General Rule. • For purposes of section 38,
the renewable electricity production credit for
any taxable year is an amount equal to the prod-
uct of •
'(1) 1.6 cento, multiplied by
'(2) the kilowatt hours of electricity •
'(A) produced by the taxpayer •
'(i) from qualified energy resources, snd
'(ii) st s quelified facility during ths 10-year
period beginning on the date the facility was
placed in eervice, and
'(B) eold by the taxpayer to an unrelated person
during ths taxable year.
'(b) Limitations snd Adjustments. •
'(1) Phaseout of credit. - The smount of the
credit determined under subsection (s) shall be
reduced by sn smount which bears the same ratio
to the amount of the credit (determined without
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regard to thb paragraph) as -
'(A) the amount by which the reference price
for the calendar year in which the aale occur*
exceed* 8 cents, beara to
•(B) S cento.
'(2) Credit and phaaeout adjustment baaed on
inflation. • The 1.6 cent amount in subsection (a)
and the 8 cent amount in paragraph (1) shall
each be adjusted by multiplying such amount by
the inflation adjustment factor for the calendar
year in which the aale occurs. If any amount as
increased under the preceding sentence b not a
multiple of 0. 1 cent, such amount shall be round*
ed to the nearest multiple of 0. 1 cent.
'(8) Credit reduced for grants, tax-exempt
bonds, subsidized energy financing, and other
credits. - The amount of the credit determined
under subsection (a) with respect to any project
for sny taxable year (determined alter the appli-
cation of paragraphs (1) and (2)) shall be reduced
by the amount which is the product of the
amount so determined for such year and a frac-
tion -
'(A) the numerator of which b the sum, for the
taxable yesr end all prior taxable years, of •
Hi) granta provided by the United States, a
State, or a political subdivision of s State for use
in connection with the project,
'(ii) proceeds of sn issue of State or local gov-
ernment obligations uced to provide financing for
the project the interest on which b exempt from
tax under section 108,
'(iii) the aggregate amount of subsidised energy
financing under a Federal, State, or local pro-
gram provided in connection with the project,
end
'(iv) the amount of any other credit allowable
with respect to sny property which b part of the
project, and
'(B) the denominator of which b the aggregate
amount of additions to the capital account for the
project for the taxable year and all prior taxable
years. The amounts under the preceding sentence
for sny taxable year shall be determined as of the
close of the taxable year.
'(c) Definitions. - For purposes of thb section •
'(1) Qualified energy resources. - The term
'qualified energy resources' means •
'(A) wind, and
'(B) closed-loop biomass.
'(2) Closed-loop btomsss. • The term 'closed-loop
biomass' means any organic material from a
plant which b planted exclusively for purposes of
being used at a qualified facility to produce elec-
tricity.
'(8) Qualified facility. - The term 'qualified
facility' means any facility originally placed in
service after December 81, 1998 (December 81,
1992, in the esse of s facility using closed-loop
biomass to produce electricity), and before July 1,
1999.
'(d) Definitions and Special Rules. - For purpos-
es of thb section •
'(1) Only production in the united otatss taken
into account. - Seles shall be taken into account
under thb section only with respect to electricity
the production of which b within •
'(A) the United Statss (within the meaning of
section 688(1)), or
'(B) s possession of the United States (within
the meaning of section 688(2)).
'(2) Computation of inflation adjustment factor
and reference price. -
'(A) In general. • The Secretary shall, not later
than April 1 of each calendar year, determine and
publbh in the Federal Register the inflation
adjustment factor and the reference price for
such calendar year in accordance with thb para-
graph.
'(B) Inflation adjustment factor. • The term
'inflation adjustment factor* means, with respect
to a calendar year, a fraction the numerator of
which b the GDP implicit price deflator for the
preceding calendar year and the denominator of
which b the GDP implicit price deflator for the
calendar year 1992. The term 'GDP implicit price
deflator* means the moot recent revision of the
implicit price deflator for the gross domestic
product as computed end published by the De-
partment of Commerce before March 16 of the
calendar year.
'(C) Reference price. • The term 'reference
price1 means, with respect to s calendar year, the
Secretary's determination of the annual average
contract price per kilowatt hour of electricity
generated from the same qualified energy re-
source and sold in the previous yesr in the Unit-
ed States. For purposes of ths preceding sen-
tence, only contracts entered into after December
81, 1989, shall be taken into account.
'(8) Production attributable to the taxpayer. - In
the case of s facility in which more than 1 person
has sn interest, except to the extent provided in
regulations prescribed by the Secretary, produc-
tion from the facility shall be allocated smong
such persons in proportion to their respective
interests in the gross sslee from ouch facility.
'(4) Related persons. • Persons ohsll be treated
ss related to each other if such persons would be
treated ss s single employer under the regula-
tions prescribed under section 62(b). In the case
of s corporation which b a member of an affiliat-
ed group of corporations filing a consolidated
return, such corporation shall be treated ss sell-
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ing electricity to en unrelated person if such
electricity b sold to such a person by another
member of such group.
'(6) Pass-thru in the case of estates and trusts.
- Under regulations prescribed by the Secretary,
rules similar to the rules of subsection (d) of sec-
tion 62 shall apply.'
(b) Credit To Be Part of General Business Cred-
it • Subsection <b) of section 38 is amended by
striking 'plus' at the end of paragraph (6), by
striking the period at the end of paragraph (7)
and inserting \ plus', and by adding at the end
thereof the following new paragraph:
'(8) the renewable electricity production credit
under section 45(a).'
(c) Limitation on Carryback. • Subsection (d) of
section 39 is amended by redesignating the para-
graph added by section 1 151 1(b)(2) of the Reve-
nue Reconciliation Act of 1990 as paragraph ( 1),
by redesignating the paragraph added by section
11611(b)(2) of such Act as paragraph (2), and by
adding at the end thereof the following new para-
graph:
'(3) No carryback of renewable electricity pro-
duction credit before effective date. • No portion
of the unused business credit for any taxable year
which is attributable to the credit determined
under section 46 (relating to electricity produced
from certain renewable resources) may be carried
back to any taxable year ending before January 1 ,
1993.'
(d) Clerical Amendment. • The table of sections
for subpart D of part IV of subchapter A of chap-
ter 1 is amended by adding at the end thereof the
following new item:
'Sec 46. Electricity produced from certain
renewable resources.'
(e) Effective Date. - The amendments made by
this section shall apply to taxable years ending
after December 31, 1992.
SBC. 20116. REPEAL OF MINIMUM TAX
PREFERENCES FOR DEPLETION AND IN-
TANGIBLE DRILLING COSTS OF INDEPEN-
DENT OIL AND GAS PRODUCERS AND ROY-
ALTY OWNERS,
(a) Depletion. -
(1) Paragraph (1) of section 67(a) (relating to
depletion) is amended by adding at the end there-
of the following new sentence: 'Effective with
respect to taxable years beginning after December
31, 1992, this paragraph shall not apply to any
deduction for depletion computed in accordance
with section 613A(c).'.
(2) Subparagraph (F) of section 66(g)(4) is
■mended to read as follows:
•(F) Depletion. -
*G) In general. - The allowance for depletion
with respect to any property placed in service in
a taxable year beginning after December 31,
1989, shall be cost depletion determined under
section 611.
*(ii) Exception for independent oil and gas pro-
ducers and royalty owners. - In the case of any
taxable year beginning after December 31, 1992,
clause (i) (and subparagraph (C)(i)) shall not
apply to sny deduction for depletion computed in
accordance with section 613A(c).'
(b) Intangible Drilling Costs. •
(1) Section 67(a)(2) is amended by adding at the
end the following new subparagraph:
'(E) Exception for independent producers. • In
the esse of any oil or gas well •
'(i) In general. - In the case of any taxable year
beginning after December 31, 1992, this para-
graph shall not apply to any taxpayer which is
not an integrated oil company (as defined in
section 291(b)(4)).
'(ii) Limitation on benefit. - The reduction in
alternative minimum taxable income by reason of
clause (i) for any taxable year shall not exceed 40
percent (30 percent in cose of taxable years begin-
ning in 1993) of the alternative minimum taxable
income for such year determined without regard
to clause (i) and the alternative tax net operating
loss deduction under section 56(a)(4).'
(2) Clause (i) of section 66(g)(4)(D) is amended
by adding at the end thereof the following now
sentence: 'In the case of a taxpayer other than an
integrated oil company (as defined in section
291(b)(4)), in the case of any oil or gas well, this
clause shall not apply in the case of amounts paid
or incurred in taxable years beginning after De-
cember 31, 1992.'.
(c) Conforming Amendments. -
( 1) Section 66 is amended by striking subsection
(h).
(2) Section 66(d)(1)(A) is amended to read as
follows:
'(A) the amount of such deduction shall not
exceed 90 percent of alternate minimum taxable
income determined without regard to such deduc-
tion, and*.
(3) Section 69(a)(2)(A)(ii) is amended by striking
'and the alternative tax energy preference deduc-
tion under section 56(h)' and inserting 'and sec-
tion 67(a)(2)(E)'.
(4) Section 69A(b)( 1) is amended by striking 'or
the alternative tax energy preference deduction
under section 66(h)'.
(d) Effective Dale. • The amendments made by
this section shall apply to taxable years beginning
after December 31, 1992.
SEC. 20116. INCREASED BASE TAX RATE
ON OZONE-DEPLETING CHEMICALS.
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(a) In General. - Paragraph (1) of section
468 1(b) (relating to amount of tax) is amended fay
adding at the end thereof the following new sub-
paragraph:
'(D) Additional baae tax amount. • The baae tax
amount for purposes of subparagraph (A) with
respect to any sale or use of an ozone-depleting
chemical for any calendar year (determined with-
out regard to this subparagraph) shall be in-
creased by the amount determined under the
following tables for such calendar year:
'(i) Initially listed chemicals. •
The baae tax amount
'For calendar year: ie increased by:
1992 $0.18
1993 0.10
1994 1.00
1996 and each calendar
year thereafter 1.46.
'(ii) Newly luted chemicals. -
The baae tax amount
Tor calends* yaaressed by:
1992 $0.48
1998 1.08
1994 0.66
1996 and each calendar
year thereafter 1.46.'
(b) Conforming Amendments. •
(1) Rates retained for chemicals used in rigid
foam insulation. - The table in subparagraph (B)
of section 4682(g)(2) (relating to chemicals uesd
in rigid foam insulation) is amended -
(A) by striking ' 16* and inserting ' 18.6', and
(B) by striking ' 10' and inserting '9.6'.
(2) Floor stock taxes. -
(A) Subparagraph (C) of section 4682(h)(2) (re-
lating to other tax-increase dates) is amended by
striking 'January 1 of 1991. 1992, 1998. and
1994' and inserting 'January 1 of 1991 and 1992.
October 1. 1992. and January 1 of 1998 and each
calendar year thereafter'.
(B) Paragraph (8) of section 4682(h) (relating to
due date) is amended •
(i) by inserting 'or October 1' after 'January 1'.
and
(ii) by inserting 'or March 81 of the suceading
calendar year, respectively,' after 'audi year'.
(c) Effective Date. • The amendments made by
this section shall apply to taxable chemicals sold
or used on or after October 1, 1992.
SEC. 20117. TREATMENT OF CERTAIN
OZONE DEPLETING CHEMICALS.
(a) Treatment of Certain Halons. • The table
contained in subparagraph (A) of section
4682(g)(2) is amended to read as follows.
In the case
of
The applicable
percentage is:
For sales
or use
during
1992
Forsake
or use
during
1999
1 Lion- 12 11
Hslon-1901
Halon-2404
4.8
1.4
23
9.0
0.9
1.6'.
(b) Chemicals Used for Sterilizing Medical De-
vices. -
(1) In general. - Subsection (g) of section 4682
is amended by adding at the end thereof the fol-
lowing new paragraph:
'(4) Chemicals used for sterilizing medical devic-
es. •
'(A) Rate of tax. •
'(i) In general. - In the case of •
'(I) any uae after September 30. 1992. and be-
fore January 1, 1994. of any substance to steril-
ize medical devices, or
'(II) any qualified aale during such period by
the manufacturer, producer, or importer of any
substance, the tax imposed by section 4681 shall
be the applicable percentage (determined in ac-
cordance with the following table) of the amount
of such tax which would (but for this subpara-
graph be imposed):
'In the case of sales The applicable
or use during percentage ia:
1992 90.3
1993 60.7.
'(ii) Qualified sale. • For purposes of clause (i).
the term 'qualified sale' means any aale by the
manufacturer, producer, or importer of any sub-
stance •
'(I) for use by the purchaser to sterilize medical
devices, or
'(II) for resale by the purchaser to s 2d purchas-
er for auch use by the 2d purchaser. The preced-
ing sentence shall apply only if the manufactur-
er, producer, and importer, and the let and 2d
purchasers (if sny) meet such registration re-
quirements aa may be prescribed by the Secre-
tary.
'(B) Overpayments. • If any substance on which
tax waa paid under thb subchapter is used after
September 80. 1992. and before January 1, 1994.
by any person to sterilize medical devices, credit
or refund without interest shall be allowed to
auch person in sn amount equal to the excess of
'(i) the tax paid under this subchapter on such
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substance, or
'(H) the tax (if any) which would be imposed by
section 4681 if such substance were used for such
use by the manufacture, producer, or importer
thereof on the date of its use by such person.
Amounts payable under the preceding sentence
with respect to uses during the taxable year shall
be treated as described in section 34(a) for such
year unless claim thereof has been timely filed
under this subparagraph.'
(c) Effective Date. - The amendments made by
this section shall apply to sales and uses on or
alter October 1, 1992.
SEC. 20118. PERMANENT EXTENSION OF
ENERGY INVESTMENT CREDIT FOR SOLAR.
GEOTHERMAL, AND OCEAN PROPERTY.
(a) General Rule. • Paragraph (2) of section
48(a) (defining energy percentage) is amended -
(1) by striking 'Except as provided in subpara-
graph (B), the' in subparagraph (A) and inserting
'The'.
(2) by striking subparagraph (B), and
(3) by redesignating subparagraph (C) as sub-
paragraph (B).
(b) Ocean Thermal Energy. - Subparagraph (A)
of section 48(a)(3) is amended by striking 'or' at
the end of clause (i), by inserting 'or' at the end
of clause (ii), and by adding at the end the follow-
ing new clause:
'(Hi) equipment, placed in service after June 30,
1992, at either of 2 locations designated by the
Secretary after consultation with the Secretary of
Energy, which converts ocean thermal energy to
usable energy,'.
(c) Effective Date. - The amendments made by
this section shall take effect on June SO, 1992.
SEC. 20119. NUCLEAR DECOMMISSIONING
FUNDS.
(a) Repeal of Investment Restrictions. • Sub-
paragraph (O of section 468A(e)(4) (relating to
special rules for nuclear decommissioning funds)
is amended fay striking 'described in section
601(c)(21)(B)(ii)'.
(b) Effective Date. • The amendment made by
subsection (a) shall apply to taxable years begin-
ning after December 81, 1992.
SEC. 20120. ALCOHOL FUELS.
(a) Reduced Rate of Tax on Gasoline Mixed
with Alcohol. -
(1) In general. • Paragraph (1) of section 4081(c)
(relating to gasoline mixed with alcohol at refin-
ery, etc) is amended to read as follows:
'(1) In general. • Under regulations prescribed
by the Secretary, subsection (a) shall be applied
by multiplying the otherwise applicable rate by a
fraction the numerator of which is 10 and the
denominator of which is -
'(A) 9 in the case of 10 percent gasohol,
'(B) 9.23 in the case of 7.7 percent gasohol, and
'(C) 9.43 in the case of 5.7 percent gasohol, in
the case of the removal or entry of any gasoline
for use in producing gasohol at the time of such
removal or sale. Subject to such terms and con-
ditions as the Secretary may prescribe (including
the application of section 4101), the treatment
under the preceding sentence also shall apply to
use in producing gasohol after the time of such
removal or entry.'
(2) Conforming amendments. • Section 4081(c)
is amended •
(A) by striking '6.1 cents a gallon' in paragraph
(2) and inserting 'an otherwise applicable rate',
and
(B) by striking paragraph (4) and inserting the
following new paragraph:
'(4) Otherwise applicable rate. - For purposes of
this subsection •
'(A) In general. - In the case of the Highway
Trust Fund financing rate, the term 'otherwise
applicable rate' means -
'(i) 6.1 cents a gallon for 10 percent gasohol,
'(ii) 7.342 cents s gallon for 7.7 percent gasohol,
and
'(in) 8.422 cents a gallon for 5.7 percent gaso-
hol. In the case of gasohol none of the alcohol in
which consists of cthsnol, clauses (i), (ii), snd (iii)
shall be applied by substituting '5.5 cents' for
'6.1 cents', '6.88 cents' for '7.342 cents', and
'8.08 cents' for '8.422 cents'.
'(B) 10 percent gasohol. - The term ' 10 percent
gasohol' means any mixture of gasoline with
alcohol if at least 10 percent of such mixture is
alcohol.
'(B) 7.7 percent gasohol. • The term '7.7 percent
gasohol' means any mixture of gasoline with
alcohol if at least 7.7 percent, but not 10 percent
or more, of such mixture is alcohol.
'(B) 5.7 percent gasohol. • The term '5.7 percent
gasohol' means any mixture of gasoline with
alcohol if at least 5.7 percent, but not 7.7 percent
or more, of such mixture is alcohol.'
(3) Effective date - The amendments made by
this subsection shall apply to gasoline removed
(as defined in section 4082 of the Internal Reve-
nue Code of 1986) or entered after September 30,
1992.
(b) Alcohol Fuels Credit May Offset Minimum
Tsx. -
(1) In general. • Subsection (c) of section 38
(relating to limitation based on amount of tax) is
amended by adding at the end the following new
paragraph:
'(3) Alcohol fuels credit may offset minimum
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'(A) In general - The amount determined under
paragraph (1)(A) shall be reduead by the lesser of
*(i) the portion of the alcohol fueb credit deter-
mined under section 40(a) not used against the
normal limitation, or
*(ii) 60 percent of the taxpayer's tentative mini-
mum tax for the taxable year.
'(B) Portion of the alcohol fuels credit not used
against normal limitation. - For purposes of sub-
paragraph (A), the portion of the alcohol fuels
credit determined under section 40(a) not used
against the normal limitation is the excess (if
any) of -
'(i) the portion of the credit under subsection
(a) which is attributable to such alcohol fuels
credit, over
'(ii) the limitation of paragraph (1) (without
regard to this paragraph), reduced by the portion
of the credit under subsection (a) which is not so
attributable.'
(2) Effective date. -
(A) In general. - The amendment made by para-
graph (1) shall apply to taxable years beginning
after September SO, 1092.
(B) Exception. • The amendment made by para-
graph (1) shall not apply to •
(i) any credit which was determined in a taxable
year, or
(ii) any credit which is carried back to a taxable
year, beginning on or before September SO, 1002.
SEC. 20121. DETERMINATION OF INDEPEN-
DENT PRODUCERS.
(a) Retailers. -
(1) In general. - Section 61SA(d)(2) is amended
(A) by inserting 'and sales of natural gas by a
regulated public utility' after 'users', and
(B) by inserting 'and sales of products derived
from natural gas by a regulated public utility'
after 'Defense'.
(2) Definition. - Section 61SA(d)(2) is amended
by adding at the end thereof the following new
sentence 'For purposes of the first sentence, the
term 'regulated public utility' means a utility
described in section 7701(a)(SS) at least 60 per-
cent of the gross income of which is derived from
sources described in subparagraphs (A), (B), and
(Oof section 7701(a)(SS).'
(b) Refiners. - Section 61SA(d)(4) (relating to
certain refiners excluded) is amended to read as
follows:
'(4) Certain refiners excluded. - If the taxpayer
or 1 or more related persons engage in the refin-
ing of crude oil, subsection (c) shall not apply to
such taxpayer during any taxable year if the
aggregate average daily refinery rune of the tax-
payer and such persons for the taxable year ex-
ceed 60,000 barrels.'
(c) Effective Date. - The amendments made by
this section apply to taxable years beginning after
December SI, 1992.
SEC. 20122. TAX-EXEMPT FINANCING FOR
ENVIRONMENTAL ENHANCEMENTS OF
HYDROELECTRIC GENERATING FACILITIES.
(a) In General. - Subsection (a) of section 142
(relating to exempt facility bonds) is amended -
( 1) by striking 'or' at the end of paragraph ( 10),
(2) by striking the period at the end of para-
graph (11) and inserting ', or', and
(S) by adding at the end the following new para-
graph:
'(12) environmental enhancements of hydroelec-
tric generating facilities.'
(b) Definition and Special Rules for Environ-
mental Enhancements of Hydroelectric Generat-
ing Facilities. -
(1) In general. - Section 142 is amended by
adding at tho end the following new subsection:
'(j) Environmental Enhancements of Hydroelec-
tric Generating Facilities. -
'(1) In general. • For purposes of subsection
(a)( 12), the term 'environmental enhancements of
hydroelectric generating facilities' mean* proper-
ty-
'(A) the use of which is related to a federally
licensed hydroelectric generating facility owned
and operated by a governmental unit, and
'(B) which -
'(i) protects or promotes fisheries or other wild-
life resources, including any fish by-paae facility,
fish hatchery, or fisheries enhancement facility,
or
'(ii) is a recreational facility or other improve-
ment required by the terms and conditions of any
Federal licensing permit for the operation of such
generating facility.
'(2) Use of proceeds. • A bond issued as part of
an issue described in subsection (a)(12) shall not
be considered an exempt facility bond unless at
least SO percent of the net proceeds of the issue
of which it is a part are used to finance property
described in paragraph (l)(B)(i).'
(2) Financed property must be goveminentally
owned. • Subparagraph (A) of section 142(b)(1)
(relating to certain facilities must be
governmentally owned) is amended by striking
'(2) or (S)' and inserting '(2), (S), or ( 12)'.
(S) Ex cl union from volume cap. • Paragraph (S)
of section 146(g) (relating to exception for certain
bonds) is amended -
(A) by striking 'or (2)' and inserting ', (2), or
(12)'. and
(B) by striking 'and docks and wharves' and
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inserting ', docks and wharves, end environmen-
tal enhancements of hydroelectric generating
facilities'.
(c) Effective Date. - The amendments made by
this section shall apply to bonds issued after the
date of the enactment of this Act.
SUBTITLE B - OTHER REVENUE PROVI-
SIONS
SBC. 20131. ELIMINATION OF DEDUCTION
FOR CLUB MEMBERSHIP FEES.
(a) In General. - Section 162 (relating to trade
or business expenses) is amended by redesignat-
ing subsection (m) as subsection (n) and by in-
serting after subsection (1) the following new
subsection:
*(m) Club Membership Dues. - No deduction
shall be allowed under this chapter for amounts
paid or incurred for membership in any club
organized for business, pleasure, recreation, or
other social purpose.'
(b) Effective Date. • The amendment made by
this section shall apply to dues paid after the
dste of the enactment of this Act.
SBC. 20132. MODIFICATIONS TO TAX ON
INSURANCE POLICIES ISSUED BY FOREIGN
INSURERS.
(a) Increase in Tax on Certain Reinsurance
Contracts. - Paragraph (3) of section 4371 (relat-
ing to imposition of tax) is amended to read as
follows:
'(3) Reinsurance. •
'(A) 4 cents on each dollar (or fractional pert
thereof) of the premium paid on the policy of
reinsurance covering any of the contracts taxable
under paragraph (1).
'(B) 1 cent on each dollar (or fractional part
thereof) of the premium paid on the policy of
reinsurance covering any of the contracts taxable
under paragraph (2).'
(b) Retention of Existing Tax Rate in Certain
Cases; Limitation on Treaty Benefits. •
(1) Section 4371 is amended by adding at the
end thereof the following new subsection:
'(b) Special Rules. -
'(1) Lower rate on certain reinsurance premi-
ums. • Subparagraph (A) of eubsection (a)(3) filial!
bs applied with respect to any premium by substi-
tuting ' 1 cent' for '4 cento' if -
'(A) such premium is paid to a foreign insurer
or reinsurer which is a resident of a foreign
country,
'(B) the insurance income (including investment
income) relating to the policy of reinsurance is
subject to tax by a foreign country or countries at
an effective rate that is substantial in relation to
the tax imposed by chapter 1, and
'(C) the risk with respect to which such premi-
um is paid is not reinsured (directly or through
a series of transactions) by a resident of another
foreign country who does not moot the require-
ments of subparagraph (B).
'(2) Application of relief. • In applying para-
graph (1) or any troaty, no person shall be re-
lieved of the requirement to remit any tux im-
posed by this chapter on any premium unless the
parties to the transaction satisfy such require-
ments as the Secretary may prescribe to ensure
collection of tax due on any reinsurance of the
risk with respect to which such premium was
paid.
'(3) Secretarial authority. •
'(A) Enforcement procedures. - The Secretary
may prescribe regulations setting forth such
procedures as the Secretary may deem appropri-
ate to ensure compliance with the requirements
of paragraph (1).
'(B) Waiver. - The Secretary may by regulations
waive the requirements of puragruph (1)(C) in
such circumstances and subject to such condi-
tions as he may deem appropriate'
(2) Section 4371 is amended by striking 'There
is hereby' and inserting the following:
'(a) General Rule. • There is hereby'.
(c) Effective Date. - The amend men Is made by
this section shall apply to premiums paid after
the date of the enactment of this Act but only to
the extent allocable to reinsurance for periods
after December 31, 1992.
SUBTITLE C - HEALTH CARE OF COAL
MINERS
SEC. 20141. SHORT TITLE.
This subtitle may be cited as the 'Coal Industry
Retiree Health Benefit Act or 1992'.
SEC. 20142. FINDINGS AND DECLARATION
OF POLICY.
(a) Findings. • The Congress finds that -
(1) coal provides a significant portion of the
energy used in the United States;
(2) the production, transportation and use of
coal affects interstate and foreign commerce and
the national public interest;
(3) a significant portion of the national work
force has been employed in the production of coal
for interstate and foreign commerce and in the
national interest;
(4) the Government of the United States has
regulated the coal industry, employment in the
industry, and the provision of retirement benefits
within the industry;
(5) the continued well-being and security of
employees, retirees and their dependents within
the coal industry are directly affected by the
provision of health benefits to retirees and their
dependents;
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<6) for many decades, the provision of adequate
health care for retirees has been an essential
element in maintaining a stable and strong coal
industry as an important component in a strong
United States economy;
(7) an important element in the privately main-
tained benefit plans now experiencing financial
difficulty has been the provision of health bene-
fits for retirees of companies no longer in busi-
ness; and
(8) withdrawals of contributing employers from
privately maintained benefit plans under collec-
tive bargaining agreements derived from an
agreement with the United States, covering retir-
ees within the coal industry, result in substan-
tially increased funding burdens for employers
that continue to contribute to such plans, ad-
versely affect labor-management relations and
the stability and strength of the coal industry,
and impair the provision of health care to retir-
ees.
(b) Additional Findings. • The Congress further
finds that -
(1) it is necessary to modify and reform the
current private benefit plan structure for retirees
within the coal industry in order to stabilize the
provision of health care benefits to such retirees;
and
(2) it is necessary to supplement the current
private benefit plan structure with a benefit pro-
tection program that will assure continued fund-
ing and contain program costs.
(c) Declaration of Policy. • It ia hereby declared
to be the policy of this subtitle •
(1) to remedy problems that discourage the
provision, funding, and delivery of health care to
coal industry retirees;
(2) to provide reasonable protection for the
health benefits of coal industry retirees;
(3) to require use of state-of-the-art cost con-
tainment and managed care measures as pert of
the overall package of health care delivery and
financing; and
(4) to provide a financially self-sufficient pro-
gram for the provision of retires health benefits
in the coal industry.
SEX:. 20 MS. COAL INDUSTRY HEALTH BENE-
FITS PROGRAM.
(a) In General. • The Internal Revenue Code of
1986 ia amended by adding at the end thereof the
following new subtitle:
'SUBTITLE J - COAL INDUSTRY HEALTH
BENEFITS
'Chapter 99. Coal industry health benefits.
•CHAPTER 99 - COAL INDUSTRY HEALTH
BENEFITS
'Subchapter A. Coal Industry Retiree Health
Benefits Corporation.
'Subchapter B. Eligibility for and payment of
benefits. 'Subchapter C. Other provisions.
'SUBCHAPTER A - COAL INDUSTRY RETIR-
EE HEALTH BENEFIT CORPORATION
'Sec. 9701. Establishment of the Corporation.
'Sec. 9702. Directors of Corporation.
'Sec. 9703. Powers; tax status.
'Sec. 9704. Operation of Corporation.
'SEC. 9701. ESTABLISHMENT OF THE COR-
PORATION.
'There is hereby created the Coal Industry Re-
tiree Health Benefit Corporation (hereafter in
this chapter referred to as the 'Corporation'),
which shall be a governmental body corporate
under the direction of a board of directors. With-
in the limitations of law and regulation, the
board of directors shall determine the general
policies that govern the operations of the Corpo-
ration. The principal office of the Corporation
shall be in the District of Columbia or at any
other place determined by the Corporation.
•SEC. 9702. DIRECTORS OF CORPORATION.
'(a) Appointment. • The board of directors of the
Corporation shall consist of 5 persons, who shall
be appointed by the Secretary of Labor. The
board shall at all times have the following as
members:
'(1) 2 persons from employers in the
coal-mining industry (only 1 of whom shall be
from an ontity that is or was a settlor of a plan
described in section 404(c));
'(2) 1 person from an organization that repre-
sents coal industry employees (and that is or was
a settlor of a plan described in section 404(c)),
'(3) 1 person from another labor organization
representing employees (whether or not in the
coal industry); and
'(4) 1 other person who shall serve ss the chair-
man.
'(b) Terms of Office, Successors. • Each director
shall bo appointed for a term of 3 years, except
for the initial term. The initial terms of the
directors shall be as follows:
'Coal industry employee representative 4 years
(section 404(c) settlor)
'Coal-mining industry employer 3 years
(section 404(c) »eltlor)
'Other employee representative 3 years
'Other coal-mining industry employer 2 years
'Chairman I year
A vacancy on the board shall be filled in the same
manner as the original appointment was made
Any director appointed to fill a vacancy occurring
prior to the expiration of tho term for which the
predecessor was appointed shall be appointed for
the remainder of such term. A director easy
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■imn after the expiration of a tana until a suc-
cessor has taken office.
'(e) Quorums. • Vacancies on the board shall
not impair the powers of the board to execute the
functions of the Corporation so long as there srs
8 msmhsra in office. The presence of 3 membora
shall constitute a quorum for the transaction of
the business of the board.
•(d) Independent Audit - The Corporation shall
annually employ an independent certified or
licensed public accountant who shall examine and
audit the books and financial transactions of the
Corporation. The Corporation shall, not later
than June 80 of each year, submit to the Con-
grass a report describing the activities of the
Corporation under this chapter.
'(e) Adoption of Bylaws; Amendment; Alter-
ation; Publication in the Federal Register. - As
soon ae practicable, but not later than 180 days
alter the dato of the enactment of this chapter,
the board shall adopt initial bylawa and raise
relating to the conduct of the business of the
Corporation. Thereafter, the board may alter,
supplement or repeal any existing bylaw or rule,
and may adopt additional bylawa and rules from
time to time as may be necessary. Any bylaw or
rule relating to the conduct or business of the
Corporation shall be adopted jn compliance with
the Administrative Procedure Act, including the
notice and comment provisions thereof.
•SBC. 9708. POWERS; TAX STATUS.
'(a) Powera of Corporation. - The Corporation
and use s corporate seal;
until dissolved by Act of
'(8) to make and enforce auch bylaws, rules, and
regulations aa may be necessary or appropriate to
carry out the purposes or provisions of this chap-
ter;
'(4) to make and perform contracts, agreements,
and commitments;
'(8) to prescribe and impose fees and charges for
services by the Corporation;
'(6) to settle, adjust, and eom|»romise, and with
or without consideration or benefit to the Corpo-
ration, to release or waive in whole or in part, in
advance or uthsi wiss, any claim, demand, or
right of, by, or against the Corporation;
'(7) to sue and be sued, complain and defend, in
any State, Federal, or other court;
'(8) to acquire, take, hold, and own, and to deal
with and dispose of any property;
'(9) to determine its necessary expenditures and
the manner in which the same shall be incurred,
allowed; and paid, and to appoint, employ, and fix
and provide for the compensation and benefits of
'(Dto
'(2) to neve
officers, employees, attorneys, end agents;
'(10) to borrow funds from ths United States
Treasury for startup and operating costs;
'(11) to collect delinquent accounta; and
'( 12) to execute instruments, to incur liabilities,
end to do any and all other sets and thinga ea
may be necessary or incidental to the conduct of
its business snd the exercise of all other rights
and powers granted to the Corporation by this
chapter.
'(b) Exemption From Taxation. - The Corpora-
tion, its property, its franchise, capital, reserves,
surplus, snd its income (including but not limited
to, any income of any fund established under
section 9704(0), shall be exempt from all taxation
now or hereafter imposed by the United States
(other than taxes imposed under chapter 21,
relating to the Federal Insurance Contributions
Act and chapter 28, relating to the Federal Un-
employment Tax Act) or by any State or local tax-
ing authority, except that any real property and
any tangible personal property (other then cash
snd securities) of the Corporation shall be subject
to State and local taxation to the same extent
according to its value as other real and tangible
personal property is taxed.
'(c) Corporation aa Agency. - Notwithstanding
section 1849 of title 28 or any other provision of
law-
'(1) the Corporation shall be deemed to be an
agency included in sections 1845 snd 1442 of
such title 28;
'(2) all civil actions to which the Corporation ia
a party shall be deemed to arise under the laws
of the United States, and the district courts of
the United States shall have original jurisdiction
of all such actions, without regard to amount or
value; and
'(8) any civil or other action, case or controver-
sy in s court of a State, or any court other than
a district court of the United States, to which the
Corporation ia a party may at any time before the
trial thereof be removed by the Corporation to
the United States district court for the district
and division embracing the place where the same
is pending, or if there ia no such district court, to
the diatrict court of the United States for the
district in which the principal office of the Corpo-
ration ia located, by following any procedure for
removal of causes in effect st the time of such
removal. No attachment or execution shall be
issued against the Corporation or any of its prop-
erty before final judgment in any State, Federal,
or other court.
'(d) Report to Congress. • No later than 1 year
after the effective date of this chapter, the Corpo-
ration shall present s report to Congress on its
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activities, including an evaluation of the econom-
ic impact of this chapter on email coal companies
and an evaluation of the effectiveness of the
Corporation in achieving its goals, and recom-
mending any changes to this chapter as it consid-
ers beneficial, including any recommended chang-
es in premiums considered warranted to mini-
mise any undue economic impact on email coal
companies. At such tarns. Congress shall review
the activities and operations of the Corporation.
'SBC. 9704. OPERATION OP CORPORATION.
'(a) Investigatory Authority. •
'(1) The Corporation assy make such investiga-
tions es it deems necessary to enforce any provi-
sion of this chapter or any rule or regulation
thereunder, and may require or permit any per-
son to file with it a statement in writing, under
oath or otherwise es the Corporation shall deter-
mine, es to all the facta and circumstances con-
cerning the matter to be investigated.
'(Z) The Corporation shall keep strictly confi-
dential all information received relating to •
'(A) trade secrets or financial or commercial
information pertaining specifically to s given
person, the disclosure of which could cause com-
petitive injury to such person, or
'(B) personnel or medical data or similar data,
the disclosure of which would constitute s clearly
unwarranted invasion of personal privacy, unless
the portions containing such matters, informa-
tion, or data have been excised, but may use such
information to the extent necessary to enforce
the premium obligation imposed under subsection
(g).
'(b) Discovery Powers Vested in Board or Desig-
nated Officers. • For the purpose of any investi-
gation described in subsection (a), or any other
proceeding under this chapter, the board or any
officer designated by the board, may administer
oaths and affirmations, subpoena witneesss, com-
pel their attendance, take evidence end require
the production of sny books, papers, correspon-
dence, memoranda or other records which the
Corporation deems relevant or material to the
inquiry.
'(c) Contempt. - In esse of contumacy by, or
refusal to obey, a subpoena issued to sny person,
the Corporation assy invoke the aid of any court
of the United States within the jurisdiction of
which such investigation or proceeding is carried
on (or where such person resides or carries on
business) in requiring the sttendanoo and testi-
mony of witnsssss and the production of books,
papers, eorrsspondenes, memoranda and other
records. The court may issue an order requiring
auch person to appear before the Corporation,
and to produce records or to give testimony relat-
ed to the matter under investigation or in ques-
tion. Any failure to obey such order of the court
msy be punished by the court am s contempt
thereof. All process in sny such esse msy be
served in ths judicial district in which such per-
eon b an inhabitant or may be found.
'(d) Cooperation With Governmental Agencies.
• In order to avoid unneosssary expense and du-
plication of functions among government egsn-
dss, ths Corporation msy make auch arrangs-
mente or sgreements for cooperation or mutual
assistance in the performance of ita functions
under this chapter as is practicable and consis-
tent with lsw. The Corporation may utilize the
facilities or services of sny department, agency or
establishment of the United Statee or of any
State or political subdivision of s State, including
ths services of sny of its employees, with the
lawful consent of such department, agency or
establishment. The head of each department,
agency or estsblishment of ths United States
shall cooperate with the Corporation and, to the
extent permitted by law, provide such informa-
tion and facilities ss it msy requeet for its assis-
tance in the performance of ita functions under
this chsptsr.
'(e) Civil Actions. •
'(1) Civil actions may be brought by the Corpo-
ration for appropriate relief, legal or equitable or
both, to enforce the provisions of this chapter.
'(2) Except ss otherwise provided in this chap-
ter, if an action ie brought in s district court of
ths United Statee, it msy be brought in ths dis-
trict where the Corporation is administered,
where the violation took place, or where a defen-
dant resides or may be found, snd process msy be
ssrved in sny othsr district where s defendant
resides or may be found.
'(8) The district courts of the United Statee
ehall have jurisdiction of actions brought by ths
Corporation under this chsptsr without regard to
the amount in controversy in sny such action.
4 (4) (A) An action under this subsection msy not
be brought after the later of -
'(i) 6 years after the date on which the cause of
action arose; or
'(ii) Syesrs siter the spplicsbls date specified in
subparagraph (B).
'(B) Ths applicable date specified in this sub-
paragraph is the earliest date on which the Cor-
poration acquired or should have acquired actual
knowledge of the existence of auch cauae of ac-
tion.
'(C) For purposes of this paragraph, in an ac-
tion by the Corporation to collect premiums due
under this chsptsr, ths cauae of action shall be
treated ss having arisen no esrlier than ths data
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on which the premium was due.
'(6) In any action brought under this chapter,
whether to collect premiums, penalties (in the
amount determined by the Corporation, which
•hall be no greater than the greater of interest on
the unpaid premium or 20 percent of the amount
of the unpaid premium), or interest (at the rate
determined by the Corporation) or for any other
purpose, in which a judgment in favor of the
Corporation is awarded, the court shall award
the Corporation ite costs and reasonable counsel
lees.
•(f) Establishment of Coal Industry Retiree
Benefit Fund. -
*(1) The Corporation ahall establish a Coal In-
dustry Retiree Benefit Fund (hereafter in thia
chapter referred to as the 'Fund'). Except as
provided in paragraph (2), all amounts received
by the Corporation ahall be deposited in the
Fund, and all expenditures made by the Corpora-
tion ahall be made out of the Fund.
'(2) The Corporation ahall transfer to the Secre-
tary of the Treasury for deposit in the general
fund of the Treasury of the United State, any
portion of the premiume received. under subsec-
tion (g) which are allocable to the portion of such
\ which are imposed to offset Federal
losses by reason of deductions being
allowed under chapter 1 with respect to such
'(8) Except as otherwise provided in this chap-
ter, the balance of the Fund ahall at any time
consist of the aggregate at such time of the fol-
lowing; items:
'(A) Cash on hand or on deposit.
'(B) Amounts invested in United States Govern-
ment or agency securities.
'(g) Imposition of Premium Payment Obligation.
'(1KA) There ie hereby imposed on each person
that produces bituminous coal for use or for sale
the obligation to pay to the Corporation an hour-
ly premium equal to -
'(i) in the case of bituminoue coal produced in
an eastern State, the rato for each hour worked
in coal production work by euch person's employ-
ess determined in accordance with the following:
'In the ease
of calendar year
The rate ia:
1992
$1.18
1993
$1.18
1994
$1.19
1996
$1.19
1996 or thereafter
$1-20,
*(ii) in the esse of bituminous coal produced in
a western State, 16 cento on each hour worked in
coal production work by such person's employees.
*(B)(i) There is hereby imposed on bituminous
coal imported to the United States, for use or for
sale, a per-ton premium obligation to be paid to
the Corporation. Such premium is intended to be
equivalent to the premium imposed on domesti-
cally produced bituminous coal.
'(ii) The amount of the per-ton premium shall
be equal to 89 centa per ton.
'(Hi) For purposes of this subparagraph, the
term 'ton' means 2,000 pounds, and the term
'United States' means any State of the United
States, the District of Columbia, Puerto Rico, the
Virgin Islands, American Samoa, Guam, Wake
Island, the Canal Zone, and the Outer Continen-
tal Shelf lands defined in the Outer Continental
Shelf Lands Act (48 U.S.C. 1831-1848).
'(CMi) In addition to the amounts specified in
subparagraphs (A) and (B), each last signatory
operator and each other employer referred to in
this subparagraph shall pay to the Corporation
an annual per beneficiary premium. The amount
of the annual per beneficiary premium ahall be
the product of the total number of orphan min-
ers, spouses, surviving spouses, and dependents
(determined under section 9711) attributable to
such lest signatory operator or employer and the
per beneficiary premium as calculated in clause
(iii).
'(ii) For purposes of thia subparagraph, an or-
phan miner (and his spouse, surviving spouse
and dependents) shall be attributable -
'(D to an employer if his employment with such
employer resulted in his eligibility under section
9711(b)(1)(E); or
'(II) to a laat signatory operator meeting the
conditions described in section 9723(6) with re-
spect to such orphan miner.
'(iii)(I) The amount of the per beneficiary pre-
mium ahall be determined in accordance with the
following table:
'In the case
of calendar year The premium ia:
1992 $1216
1998 $2632
1994 $2746
1996 $2973
1996 or thereafter $3479.
'(II) As of the date any per beneficiary premium
obligation is due under this subparagraph, the
persona described in section 9723(6) (B) and (C)
with respect to any laat signatory operator or
employer ahall be treated as such laat signatory
operator or employer, and ahall be jointly and
severally liable for such obligation.
'(iv) A last signatory operator shall have no
liability under thia subparagraph if •
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'(I) ss of November 6, 1990, and for all periods
thereafter, euch last signatory operator, and the
persons described in section 9723(6) (B) and (Q
with respect to such last signatory operator, have
ceased ail involvement in the mining, production,
preparation, marketing, sale, distribution, trans-
portation, leasing or licensing of coal; and
'(ID such last signatory operator, and the per-
sons described in section 9723(6) (B) and (C) with
respect to such last signatory operator, were, in
the aggregate, involved in the production of fewer
than 60,000 tons of coal during each of the 8
years immediately preceding the cessation of such
involvement. The limitation of liability set forth
in the preceding sentence shall cease to apply at
any time that a last signatory operator, or any
persons described in section 9723(6) (B) and (C)
with respect to such last signatory operator,
ceases to meet the conditions described in sub-
clause 0).
*(v) The annuel per beneficiary premium shall
be payable in equal monthly installments, due by
the tenth day of each month. In no event shall
a last signatory operator be obligated to pay a per
beneficiary premium for an individual for any
month for which the last signatory operator has
paid its required assessment for such individual
under section 9713(d).
*(vi) A last signatory operator shall have no
liability under this subparagraph if as of January
1, 1992, such last signatory operator and the per-
sons described in section 9723(6) (B) and (C) with
respect to such last signatory operator, have
ceased ell involvement in the production, sale,
distribution, transportation, or use in processss
for producing products of the operator and such
persons, of bituminous and sub-bituminous coal
(other than the sale or leasing of any interest in
coal reserves).
'(2)(A) In the event that a person required to
make payments under paragraph (1) fails to do
so, the Corporation shall assess liability against
the person, based upon the Corporation's esti-
mate of the person's liability.
•(B) No later than 90 days after the assessment
of liability by the Corporation, the person may
request administrative review of the
Corporation's assessment, in accordance with
procedures adopted by the Corporation.
'(C) Notwithstanding the pendency of adminis-
trative review of any assessment of liability, the
person shall, no later than 30 days after the
assessment of such liability, pay all amounts
required by the assessment in accordance with
any payment schedule applied by the Corpora-
tion. In the event a person fails to make such
payments, all amounts owed by the person shall
become immediately due and payable.
'(D) In the event the person that has made
payments in accordance with subparagraph (C) is
ultimately determined, in accordance with sub-
paragraph (B), to have paid in excess of the
amounts actually due, the person shall receive a
refund of auch excess amounts, with interest.
'(3) The Corporation shall report to the Con-
gress before the done of any calendar year with
respect to any adjustment in the amount of the
premiums imposed under subparagraphs (A)(i)
and (B) of paragraph (1) for the following calen-
dar year which the Corporation determines nec-
essary to enable the provision of benefits under
section 9712. Any recommendation with respect
to sny adjustment shall reflect the reduction in
Federal revenues by reason of deductions being
allowed under chapter 1 with respect to such
premiums.
'(4) Premiums owed under subparagraphs (A)
and (B) of paragraph (1) shall be due on the
tenth dsy of each calendar month immediately
following the month in which the coal is pro-
duced or imported, end shall be paid to the Cor-
poration in accordance with forma and schedules
promulgated by the Corporation.
'(6) The premium obligation imposed under this
section shall take effect on July 1, 1992. Premi-
ums paid under this section shall be deemed to be
fully deductible under this title without regard to
any limitation on deductibility set forth in this
title.
'(6) For purposes of this subsection •
'(A) the term 'bituminous coal' means coal clas-
sified ss bituminous coal according to the publi-
cation of the American Society for Testing and
Materials under the title 'Standard Classification
of Coals by Rank' (ASTM D 336-9U), aa in effect
on the date of the enactment of this chapter, and
'(B) the term 'Eastern States' includes Alabama,
Connecticut, Delaware, the District of Columbia,
Florida, Georgia, Illinois, Indiana, Kentucky,
Maine, Maryland, Massachusetts, Michigan, Mis-
sissippi, New Hampshire, New Jersey, New York.
North Carolina, Ohio, Pennsylvania, Rhode la-
land. South Carolina, Tennessee, Vermont, Vir-
ginia, West Virginia, and Wisconsin; and
'(C) the term 'Western States' includes Alaska.
Anions, Arkansas, California, Colorado, Hawaii,
Idaho, Iowa, Kansas, Louisiana, Minnesota, Mis-
souri, Montana, Nebraska* Nevada, New Mexico,
North Dakota, Oklahoma, Oregon, South Dakota,
Texas, Utah, Washington, and Wyoming.
'SUBCHAPTER B • ELIGIBILITY FOR AND
PAYMENT OF BENEFITS
'Sac 9711. Eligibility; orphan miners.
'Sec 9712. Payment of benefits.
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•Sec 9713. Establishment of Cod Industry 1991
Benefit Fund.
'Sec 9714. Obligation of last signatory operator
to provide benefits to retirees.
'Sec 97 16. Transition benefits; premium nonpay-
ment; transfere between 199 1 Fund and Corpora-
tion.
•SBC. 9711. ELIGIBILITY; ORPHAN MINERS.
'(a) In General. - Any person who is an orphan
miner, as defined in subsection (b), or who meete
the conditions set forth in subsection (c), ahall be
eligible to receive benefit* provided by the Corpo-
ration pursuant to section 9712, except that no
person shall be eligible to receive benefits from
the Corporation because of a failure to receive
benefite resulting from a temporary labor dispute.
'(b) Orphan Miner Status. • For purposes of
'(1) An orphan miner is any person who •
'(AMD as of the date of enactment of this chap-
ter, was eligible to receive benefite as a retiree
from a plan described in section 9721(d) (or, but
for the enactment of this chapter, would be eligi-
ble to receive benefits as a retiree from the plan
described in section 9721(d)(2)(A)), and
'(ii) b not receiving benefits as a retiree from a
plan described in section 9721(d) or from the
plan established pursuant to section 9713;
*(B) is not described in subparagraph (A), but
was eligible to receive benefits ss a retiree from
the plan established pursuant to section 9718
and is not receiving benefits from such plan;
'(O(i) is receiving s pension from the defined
benefit pension plan maintained pursuant to the
in section 9723(7) (other
section 9721(c)),
'(ii) but for the enactment of thia chapter,
would be eligible to receive medical benefits ss s
retiree ss of February 1, 1993, from ths plan de-
scribed in section 9721(d)(2)(B), and
'(iii) is not receiving medical benefits ss s retir-
es from the plan described in section
9721(dX2XB) or from sny other plan;
'(DHi) ie receiving s pension from the defined
benefit pension pun maintained pursuant to the
agreement described in section 9723(7) (other
than the plan described in section 9721(c));
'(ii) ss of February 1, 1993, had earned 20 years
of credited service under such plan;
'(iii) is st sny time after beginning to receive
such pension not receiving retiree medical bene-
fite equal to the benefite in effect at that time
under the plans described in section 9712(b)(3);
'(iv) meete the eligibility requirements for retir-
ee medical benefite then in effect under such
'(ED(i) wss eligible as a result of cosl production
work performed in the bituminous, sub-bitumi-
nous or lignite coal industry to receive retiree
medical benefits from a health care plan that met
the requirements of subparagraphs (D) and (E) of
paragraph (2);
'(ii) initially ceased to receive retiree medical
benefits on or after the date of enactment of this
chapter, despite continued eligibility therefore;
'(iii) had been receiving such benefits from s
plan that had been in existence for at least 3
years prior to the cessation of benefits; and
'(iv) was included in s category of retirees that
had been eligible to receive benefits for at least 3
years prior to the cessation of benefits.
'(2) For purposes of paragraph (IKE), the fol-
lowing rules shall apply:
'(A) Eligibility ia continuing where benefits
cossod incident to en employer's cessation of
operations, but is not continuing where benefits
cossod pursuant to a lawful termination or modi-
fication of a plan (under circumstances other
than a eessstion of operations).
'(B) In the case of sny individual who has 20
years of credited service under a defined benefit
pension plan maintained pursuant to the agree-
ment described in section 9723(7), or who wss
otherwise eligible to receive retiree medical bene-
fits from s single employer health care plan pur-
euant to a coal wage agreement, all health care
plana in which such individual was a participant
during a period of such credited service or during
such period of eligibility shall be taken into ac-
count in determining whether the 3-year tests
have been met.
'(C) In the case of an employer that established
a new heelth care plan as a replacement for a
prior plan, auch prior plan shall be taken into
account in determining whether the 3-year tests
have been met.
'(D) A heelth care plan meets the requirements
of this subparagraph if the employer maintaining
the plan, a labor organisation representing the
employees of the employer, or en employee of the
employer submits a copy of the plan to the Cor-
poration within 130 days from the later of •
'(i) the date of establishment of the plan; or
'(ii) the date of enactment of this chapter.
'(E) A health care plan meets the requirements
of this subparagraph if the employer maintaining
the plan, a labor organization representing the
employees of the employer, or en employee of the
employer submits s copy of sny smsndment or
modification to the plan to the Corporation with-
in 130 days from the later of •
*(i) the date of auch amendment or modification;
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'(ii) the date of enactment of this chapter.
'(c) Eligibility of Spouses and Dependents. -
'(1) A spouse, surviving spouse or dependent of
an orphan miner or a deceased coal miner meets
the conditions of this section if such individual
was eligible to receive benefits from a plan de-
scribed in section 9721(d) ss of the date of enact-
ment of this chapter, and is not receiving benefits
from that plan or from the plan established pur-
susnt to section 9713.
'(2) A spouse, surviving spouse or dependent of
sn orphan miner or a deceased coal miner meets
the conditions of this section if such individual is
not described in paragraph (1), but was eligible to
receive benefits from the plan established pursu-
ant to section 97 IS and is not receiving benefits
from such plan.
'(8) In the case of any spouse, surviving spouse
or dependent of sn orphan miner described in
subsection (b)(1)(A) or (b)(1)(C) of this section,
eligibility shall be based upon the rules aet forth
in the plans described in section 972 1(d) ss of the
date of enactment of this chapter. In the case of
any spouse, surviving spouse or dependent of an
orphan miner described in subsection (b)(1)(D),
eligibility shall be based upon the rules aet forth
in individual employer plans maintained pursu-
ant to ths agreement described in section 9723(7)
on the date thet the orphan miner first became
eligible for benefits from ths Corporation. In all
other esses, eligibility shall be based upon ths
rules of the plan that was or would have been
applicable to the orphan miner or deceased coal
miner for the 3-year period preceding eligibility
for benefits from ths Corporation. Ths Corpora-
tion is authorised to promulgate regulations
consistent with this paragraph establishing ths
eligibility of other ■pouses, surviving spouses and
dependents of orphan miners or deceased coal
miners for health benefits.
'(d) ReenroUment of Orphan Miners and Benefi-
ciaries. • Ths Corporation and the Joint board of
trustees of ths plan established pursuant to sec-
tion 9713 shall cooperate to review the eligibility
of individuak under this section. Pending such
review, any individual receiving benefits from s
plan described in section 9721(d) ss of ths date of
enactment of this chapter shall be presumed to
meet the first part of the eligibility tests of sub-
sections <bM IMA) and (cM 1). However, no individ-
ual shall be considered eligible to receive benefits
provided by the Corporation unless s determina-
tion is mads that such individual in fact met or
meets all eligibility requirements necessary to
receive benefits ss required under subsection (b)
or (c). No individual shall be eligibls under sub-
section (bMlHA) or (eMl) if such individual was
finally determined to be ineligible to receive bene-
fits from a plan described in section 9721(d) prior
to the date of enactment of this chapter.
'SEC. 9712. PAYMENT OF BENEFITS.
'(s) In General. • The Corporation shall provide
medical benefits to orphan miners, their spouses,
surviving spouses and dependents, who meet the
eligibility requirements of section 97 1 1, and shall
provide coverage for death benefits to orphan
miners eligible for such benefits. Ths board shell
estsblish schedules of benefits applicable to class-
es of orphan miners, their spouses, surviving
spouses and dependents, in accordance with this
section. All benefit obligations of the Corpora-
tion shall be contingent upon the continued im-
position of an hourly premium payment obliga-
tion as specified in section 9704(g)(1)(A).
'(b) Benefit Levels. •
'( 1) An orphan miner eligible for benefits pursu-
ant to soction 9711(b)(1)(A) or 971 1(b)(1)(C) shall
be entitled to benefit coverage that is substantial-
ly ths same ss (but not exceeding) the coverage
provided by the plans described in section 9721(d)
ss of the date of enactment of this chapter, and
shall be subject to all limitations of such covcr-
egs. Such orphan miner shsll also be eligible for
death benefita, which shsll be equsl to ths death
benefits provided ss of the date of enactment of
this chapter under the plan described in section
9721(c).
'(2) An orphan miner eligible for benefits pursu-
ant to section 97 1 l(b)( 1)(B) or 97 1 l(b)( IKE) shsll
be entitled to s level of benefits and benefit cover-
age that is substantially the asms ss (but not
exceeding) the retiree benefit coverage applicable
to him immediately preceding his eligibility for
benefits from the Corporation, and shall be sub-
ject to sll limitations of such coverage. Notwith-
standing ths foregoing, the following rules shall
apply:
'(A) Ths level of benefits snd benefit coverage
provided under this paragraph shall not exceed
that which is provided under paragraph (1) of
this subsection.
'(B) In determining the retiree benefit coverage
applicable to sn orphan miner for purposes of
this paragraph, ths Corporation shsll disregard
any increases or decreases in benefits or benefit
coverage thst were in effect for fewer then 3
years preceding the orphan miner's eligibility for
benefits from the Corporation, except thst •
*(i) sny death benefit applicable to an orphan
miner ss s result of 1991 amendments to the
agreement described in section 9723(7) shall not
be disregarded; snd
'(ii) increases or dec re as ee in benefits or benefit
coverage that were ths subject of s collective
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bargaining agreement shall not be disregarded.
*<3) An orphan minor eligible for benefits pursu-
ant to aaetion 9711(bMlMD) ahaU be enUUed to a
level of benefit* and benefit coverage equivalent
to the level of benefits and benefit coverage, if
any, provided under individual employer plane
maintained pursuant to the agreement described
in section 9723(7) on the date thst the orphan
miner first became eligible for benefits from the
Corporation, and shall be subject to all limita-
tions of such coverage.
'(4) An individual eligible for benefits pursuant
to section 9711(c) shall be entitled to medical
benefit coverage that does not exceed the medical
benefit coverage that is or would have been appli-
cable to the coal miner through whom the indi-
vidual claims eligibility, and the individual shall
be subject to all limitations of such coverage.
'(6) The Corporation msy make increases to its
schedules of benefits that are desirable for effi-
ciency of administration, except that such adjust-
ments to benefits may not result in sn increase
in cost to the Corporation or sn increase in sny
premium under section 9704(g).
'(c) Mandatory Managed Care. - The Corpora-
tion shall develop managed care rules which shall
be applicable to the payment of benefits under
this eeetion. The rules shall preserve freedom of
choice while reinforcing managed care network
use by allowing a point of service decision es to
whether a network medical provider will be used.
Major elements of such rules shall include, but
not be limited to -
'( 1) implementing formulary for drugs and sub-
jecting the prescription program to a rigorous
review of appropriate use;
'(2) obtaining a unit price discount in exchange
for patient volume and preferred provider ststus,
with the amount of the potential discount vsry-
ing by geographic region;
'(3) limiting benefit payments to physicians to
the medicare allowable charge, while protecting
beneficiaries from balance billing by providers;
'(4) utilising Medicare's 'Appropriateness of
service' protocols in the claims payment function
where they are more stringent;
'(6) creating mandatory utilisation review (UR)
procedures, but placing the responsibility to fol-
low such procedures on the physician or hospital,
not the beneficiaries;
'(6) selecting the most efficient physicians and
state-of-the-art utilisation management tech-
niques, including ambulatory care techniques, for
medical services delivered by the managed care
'(7) utilising a managed care network provider
system ee practiced in the health care industry at
the time medical services are needed (point of
service) in order to receive maximum benefits
available under this section. Any managed care or
cost containment program ahall have as its pri-
mary goal the provision of quality medical care.
In no event ahall any such program result in the
reduction of the quslity of care provided to par-
ticipanta and beneficiariee consistent with sound
medical practice.
'(d) Effective Date. - Benefit* shsll be payable
under this section as of July 1, 1992. Pursuant to
section 97 15, the Corporation shsll psy the trust-
ees of the plana described in section 9721(d) and
the plan established pursuant to section 9713 for
all benefit and administrative costs expended
with respect to eligible orphan miners, spouses,
surviving spouses and dependents, from the effec-
tive date to the date that such individuals are
transferred to the Corporation.
'(e) Elective Coverage. •
'(1) An employer may elect to provide retire-
ment health coverage to its employees by meeting
the following conditions:
'(A) The employer must employ workers in the
coal industry.
'(B) The employer agrees to psy sn annual pre-
mium, as determined by the Corporation, suffi-
cient to provide retirement health coverage to all
of ita employees who perform classified work as
determined under the agreement described in
section 9723(7), or any successor agreement, who
have worked s total of 20 years, including both
service with thst employer, service for any other
employer described in this subsection, end service
for sny other employer thst is credited for pur-
poses of eligibility by a plan described in section
404(c).
'(C) The employer is not currently obligated by
s collective bargaining agreement to make contri-
butions to the plan established pursuant to sec-
tion 9713.
'(D) The employer's election, once made, is
irrevocable.
'(2) Upon the retirement of an employee of an
employer described in paragraph (1), with 20 or
more years of service, upon such terms snd con-
ditions as established by the Corporation, such
employee and his or her dependents shsll receive
benefits, upon such terms snd conditions ss de-
termined by the Corporation.
•SEC. 9713. ESTABLISHMENT OF UNITED
MINE WORKERSOP AMERICA 1991 BENEFIT
FUND.
'(s) Merger of Retiree Benefit Plana. •
'( 1) As soon ss practicable slier the ensctment
of this chapter, and in no event later than 60
days, the settlors of the plans described in section
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9721(d) shall cause such plana to be merged, and
•hall appoint a joint board of trustees to manage
the operation and administration of the merged
plan. The merged plan shall be known as the
United Mine Workers of America 1991 Benefit
Fund (hereinafter referred to as the '1991
Fund'). The 1991 Fund shall be an employee
welfare benefit plan within the meaning of sec-
tion 3(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(1)) and a
multiemployer plan within the meaning of sec-
tion 3(37) of such Act (29 U.S.C. 1002(37)).
'(2) The settlors shall design the structure and
administration of the 1991 Fund. The settlors
may at any time and for any reason change the
number and identity of the members comprising
the board of trustees of the 1991 Fund.
'(b) Eligibility. -
'( 1) The following individuals shall be eligible to
receive benefits from the 1991 Fund:
'(A) Any individual who, as of the date of enact-
ment of this chapter, was eligible to receive bene-
fits from the plan described in section
9721(d)(2)(A) (or who, but for the enactment of
this chapter, would be eligible for benefit* from
such plan), and with respect to whom the last
signatory operator ia and remains signatory to an
agreement that ia described in section 9723(7) or
that contains provisions relating to pension and
health care benefits that are the same as those
contained in such agreement.
'(B) Any individual who retired from classified
employment under an agreement that is de-
scribed in section 9723(7) or that contains provi-
sions relating to pension and health care benefits
that are the same as those contained in such
agreement, and any spouse, surviving spouse or
dependent of such retiree, with respect to whom
the last signatory operator makes an election
prior to February 1, 1993, to pay premiums to
the 1991 Fund for such benefits snd is and re-
mains signatory to an agreement that ia de-
scribed in section 9723(7) or that contains provi-
sions relating to pension snd health cars benefits
that are the same ss those contained in such
agreement. Any election made pursuant to this
subparagraph must cover, at a minimum, all of
the last signatory operator's retirees who retired
from clsssified employment ss of February 1,
1993.
'(2) No individual shall be eligible under sub-
paragraph (A) of paragraph (1) unless the joint
board of trustees of the 1991 Fund determines
that such individual in fact met all eligibility
requirements of the plan described in section
9721(d)(2XA) as of the date of enactment of this
chapter. Any individual who was finally deter-
mined to hsve been ineligible for benefits from s
plan described in section 9721(d)(2)(A) prior to
such date of enactment shall be ineligible under
subparagraph (A) of paragraph (1).
'(c) Benefits. •
'(1) Except as otherwise provided in this subsec-
tion, health care benefits provided under the
1991 Fund shall be identical to the benefits pro-
vided under the plana described in section
9721(d). The 1991 Fund shall provide coverage
for death benefits to retirees, equal to the death
benefits provided under the plan described in
section 9721(c).
'(2) The joint board of trustees of the 1991
Fund shsll develop managed care rules, subject to
section 9714(b), which shall be applicable to the
payment of benefits under this section. The
rules shsll preserve freedom of choice while rein-
forcing managed care network use by allowing s
point of service decision ss to whether s network
medical provider will be used. The board of
trustees shall permit any last signatory operator
subject to section 9714 to utilize the managed
care and cost containment rules snd programs
developed pursuant to this paragraph, at the
election of such last signatory operator. Msjor
elements of such rules shsll include, but not be
limited to •
'(A) implementing formulary for drugs and
subjecting the prescription program to a rigorous
reviow of appropriate use;
'(B) obtaining a unit price discount in exchange
for patient volume snd preferred provider status,
with the amount of the potential discount vsry-
ing by geographic region;
'(C) limiting benefit payments to physicians to
the medicare allowable charge, while protecting
beneficiaries from balance billing by providers;
'(D) utilizing medicare's 'appropriateness of
service' protocol* in the claims peyment function
where they ere more stringent;
'(E) creating mandatory utilization review (UR)
procedures, but plscing the responsibility to fol-
low such procedures on the physician or hospital,
not the beneficiaries;
'(F) selecting the most efficient physicians snd
state-of-the-srt utilization management tech-
niques, including ambulatory cars techniques, for
medical services delivered by the managed care
network; and
'(G) utilizing a managed care network provider
system aa practiced in the health care industry st
the time medical services are needed
(point-of-service) in order to receive maximum
benefits available under this section. Any man-
aged care or cost containment program shall have
as its primary goal the provision of quality modi-
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eel ear*. In no •wot shall any such program
result in the reduction of the quality of cars
provided to participants and beneficiaries consis-
tent with sound medical practice.
'(1) As of November SO of each plan year, the
joint board of trustees of the 1991 Fund shsll set
a monthly assessment for each person required to
pay assessments pursuant to paragraph (2). The
monthly assessment for each such person shall
be equal to 1/12 of the product of -
'(A) the projected cost of operating the 1991
Fund during the succeeding plan year (less any
■seats received from a plan described in section
9721(c) and any other surplus assets) divided by
the number of participants and beneficiaries for
the current plan year; and
'(B) the projected number of the 1991 Funds'
eligible participants and beneficiaries attributable
to such person, determined am of the nearest
November 1. In projecting the cost of operating
the 1991 Fund, the board of trustees shall take
into account the anticipated benefit experience
and administrative expenses of the 1991 Fund am
a whole, and amounts needed to eliminate any
accumulated deficit. The monthly assessment
determined under this paragraph shell be verified
by an independent auditor, and shall continue in
effect for each month of the succeeding plan year,
except that the joint board of trustees shall deter-
mine a monthly assessment for any new contrib-
utor or other person for whom a monthly assess-
ment hss not been established, and a revised
monthly assessment for any last signatory opera-
tor that makes the election described in subsec-
tion (bMIMB) and with respect to which new
participants and beneficiaries become eligible for
benefits. Any new monthly assessment or revised
monthly assessment shall be based upon the
number of projected participants and beneficiaries
attributable to the contributor as of the date the
new or revised sssessment is msde. Each person
required to pay assessments pursuant to pars-
graph (2) shsll continue to pay to the plana de-
scribed in section 9721(d) the contributions re-
quired under the applicable coal wags agreement,
until the first month for which the aseeesment
described in this paragraph is set. In no event
shell a person required to pay assessments pur-
euant to paragraph (2) be required to make any
payment to the 1991 Fund for the same period
for which a contribution to a plan described In
section 9721(d) is required.
'(2) Each last signatory operator with respect to
any person described in subsection (bM 1)(A), and
each last signatory operator with respect to any
I in subsection (b)( 1MB) that has
agreed to provide benefits coverage through the
1991 Fund, shall pay to the 1991 Fund for each
month the assessment determined by tho joint
board of trustees pursuant to paragraph ( 1). The
assessments paid under this section shall be
deemed to be fully deductible under this title
without regard to any limitation on deductibility
set forth in this title.
'(3) Either of the settlors shall have the right to
audit the accounta, books and records, and opera-
tion of the 1991 Fund, at any time and for any
reason, upon reasonable notice to the joint board
of trustees. The joint board of trustees shall
cooperate fully with the settlors in connection
with any such audit and shall make available
appropriate personnel and records deemed neces-
sary by the auditors for inspection and copying at
reasonable times and places.
'(4) Each last signatory operator obligated to
pay assessments to the 1991 Fund pursuant to
paragraph (2) shall be bound by sll of the provi-
sions of Uie plsn and trust documents establish-
ing and governing the 1991 Fund.
'(6) As of the date any assessment owed under
this subsection is due. the persons described in
section 9723(5) (B) or (C) with respect to any last
signatory operator shsll be treated as such last
signatory operator and shall be jointly end sever-
ally liable for such assessment.
'(e) Exclusive Obligation. • Except ss provided
in this chapter, no employer that was a signatory
to the 1978 or any subsequent coal wage agree-
ment and that had an obligation to provide
health care benefits to coal mine retirees shall be
obligated to provide benefits to individuals cov-
ered by the plans described in section 9721(d), or
to make contributions to sny plan described in
section 9721(d), or to the 1991 Fund, with re-
spect to work performed or coal mined after the
date of enactment of this chapter, or to pay with-
drawal liability to a plan described in section
9721(d) as s result of the change in the contribu-
tion obligation required by this chapter.
'SEC. 9714. OBLIGATION OF LAST SIGNA-
TORY OPERATOR TO PROVIDE BENEFITS
TO RETIREES.
'(a) Duration of Obligation. • The last signatory
operator of any individual receiving retiree
health care benefits as of February 1. 1993 (in-
cluding retiree, spouse, surviving spouse end
dependent benefits) from an individual employer
plan maintained pursuant to a coal wage agree-
ment (or who has applied for such benefits as of
February 1. 1993, and has met every eligibility
requirement for such benefits as of such date)
shall provide retiree health care benefits to such
individual equal to the benefits required to be
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provided by such last signatory operator's indi-
vidual employer plan ee of January I, 1992, aa
limited by any managed care or coat containment
rules of the type described in sections 9712(c)
and 9713(c)(2), and subject to subsection (b), for
ss long ss the last signatory operator remains in
business. The existence, level and duration of
benefits provided to a last signatory operator's
former employees (and their spouses, surviving
spouses and dependents), other than those de-
scribed in this subsection, who are or were cov-
ered by a coal wage agreement, shall only be ss
determined by and subject to collective bargaining
or lawful unilateral action, except that this sub-
section shall not be construed to impair the eligi-
bility of any individual described in section
9711(b)(1)(D) for the benefit coverage described
in section 9712(b)(3).
'(b) Managed Care Provider System Quality
Control. • Any managed care provider system
adopted by a last signatory operator ss permitted
under subsection (a), or by the joint board of
trustees of the 1991 Fund, pursuant to section
9713(c)(2), shall be subject to the following re-
quirements of this subsection:
'(1) The settlors shall establish a medical peer
review panel, which shall determine standards of
quality for managed cars provider systems. Stan-
dards of quality shall include accessibility to
medical care, taking into account that accessibili-
ty requirements may differ depending upon the
nature of the medical need. Each settlor shell
have the power to appoint and remove 2 individu-
als who shall ssrve on the panel. A panel mem-
ber shall be either a medical practitioner knowl-
edgeable in managed care, or an individual who
is expert in managed care.
'(2) Each last signatory operator and the joint
board of trustees of the 1991 Fund shall submit
a description of any managed care provider sys-
tem to the panel prior to implementation of the
system, and shall, on the same date or prior to
such submission, provide notice of the submis-
sion to the participants of the affected employee
benefit plan or plans. The last signatory employ-
er or the joint board of trustees may implement
the proposed system on a provisional basis on or
after the 120th day after the submission to the
panel, unless the panel issues a preliminary de-
termination thet the system has not been shown
to meet the requieite standards. The require-
ments of this paragraph shall not apply to a last
signatory operator electing to utilise the managed
care provider system established by the 1991
Fund if the panel has issued a favorable determi-
nation lor such system.
'(3MA) Upon receipt of a submission by a last
signatory operator or by the joint board of trust-
ees, the panol shall conduct s preliminary exami-
nation of the managed care provider system. In
the event that the preliminary review reveals a
failure to show compliance with established stan-
dards such thst provisional implementation by a
last signatory operator or by the joint board of
trustees rosy be detrimental to participants sub-
ject to the system, the panel shall, within 120
days of the submission, issue a preliminary deter-
mination that the system has not been shown to
meet the requisite standards.
'(B) Within 240 days from the date of any sub-
mission, the panel shall issue a final determi-
nation of whether the system has been shown to
meet the established standards of quality. In the
event of a negative determination, the panel shall
list specific steps thet may be taken by the last
signstory operator or by the joint board of trust-
ees to qualify the system under the eetablished
etandarde.
'(C) The first-named settlor in section 9723(3)
shall have the authority to review submissions
mads under paragraph (2), and to designate the
order in which such submissions shall be consid-
ered by the panel.
*(D) In the event that the members of the panel
deadlock on a determination to be made under
this paragraph, they shell, by majority vote, ap-
point a neutral person, who would be qualified to
serve es s panel member, to break such deadlock.
'(4) In the event of a negative determination by
the panel, the last signatory operator shall have
the optione described in subparagraph (A), (B), or
(C), and the joint board of trustees shsll have the
options described in subparagraphs (A) and (B):
'(A) implementing the specific steps outlined by
the panel pursuant to paragraph (3);
'(B) consistent with the requirements of this
subsection, establishing a new managed care
provider system that meeta the requisite stan-
dards; or
'(C) electing to utilise the managed care provid-
er system established by the 1991 Fund if the
panel hes issued a favorable determination for
such system.
'(6) The panel shell develop rules for the peri-
odic review of determinations made, except that
reviews shall be no more frequent than once
every 3 years; and for the reconsideration of any
prior determination upon a showing that the
managed care provider system does not or hes
ceased to meet the eetablished standards. Ths
panel may take into account written complaints
received from affected participants and beneficia-
ries, but the euthority of the panel shall be limit-
ed to determining the continued qualification of
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a managed ear* provider system under the estab-
lished standards, and shall not extend to resolv-
ing dsims of medical maipractice or any other
'(6) The panel shall withhold from all persons
not connected with the conduct of a reconsidera-
tion or review described in paragraph (6) (other
than the first-named settlor in section 9728(8))
all information relating to the subject of any
written complaint received by an affected partici-
pant or beneficiary; and may not be compelled in
any Federal, State, or local civil, criminal, admin-
istrative, legislative, or other proceedings to iden-
tify such information. Notwithstanding ths fore-
going, the panel shall provide the last signatory
operator or the Joint board of trustees of ths 1991
Fund with a copy of any written complaint relat-
ing to a managed care provider system main-
tained by such last signatory operator or joint
board of trustees.
'(7)(A) Ths panel, any pereon acting ss s mem-
ber or staff to the panel, any person under s
contract or other formal agreement with the
panel, and any pereon who partidpetes with or
assists the panel with respect to any action taken
pursuant to this subsection, shall not be liable in
damsges under any law of the United States or of
any State (or political subdivision thereof) with
respect to the action. The preceding sentence
shall not apply to damsges under any law of the
United States or any State relating to the civil
rights of any person or persons, including ths
Civil Right. Act of 1964 (42 U.S.C. 2000e et eeq.)
end the Civil Rights Acts (42 U.S.C. 1981 et
eeq.). Nothing in this subparagraph shall pre-
vent the United States or sny attorney general of
s State from bringing an action, where such sn
action is otherwise authorised.
'(B) Notwithstanding any other provision of
law, no person (whether ss a witness or other-
wise) providing information to the panel regard-
ing the competence or professional conduct of s
physician shall be held, by reason of having pro-
vided such information, to be liable in damages
under any law of the United States or of any
State (or political subdivision thereof) unless
such information is false and the person provid-
ing it knew that such information wss false.
'(8) The joint board of trustees of the 1991
Fund and each last signatory operator that
makes s submission pursuant to subsection (b)(2)
shall be liable for reasonable fees sssessad by the
panel in connection with the review of managed
'(c) Satisfaction of Obligations. - Subject to the
provisions of sections 9711 and 9718, the obliga-
tions of a last signatory operator under thm sec-
tion may be satisfied for any period with respect
to any individual by payment of the required
assessment under section 9713(d) or the premi-
um under section 9704(g)(1)(C), or by the provi-
sion of the required benefits under an individual
employer plan.
'(d) Control Group Liability. - As of the date
that any benefit obligation owed pursuant to this
section is due, the persons described in section
9728(6) (B) and (O with respect to any last sig-
natory operator shall be treated as such last
signatory operator, and shall be jointly and sever-
ally liable for such benefit obligation.
'SEC. 9715. TRANSITION BENEFITS; PRE-
MIUM NONPAYMENT; TRANSFERS BE-
TWEEN 1991 FUND AND CORPORATION.
'(a) Payment of Benefita to Orphan Miners. -
The plana described in section 9721(d) end the
1991 Fund shall continue to provide benofits to
orphan miners, spouses, surviving spouses end
dependents described in section 97 1 1 (b) and (c),
until the end of the second month beginning
after the ofToctive date of section 9712(d). Such
orphan miners, spouses, surviving spouses snd
dependents shall be transferred to the Corpora-
tion as of the first day of the third month follow-
ing the effective date of section 9712(d). Tlie
defined benefit pension plans maintained pursu-
ant to the agreement described in section 9728(7)
shell, on bohslf of the Corporation snd the 1991
Fund, continue to provide death bonefits to or-
plisn miners described in section 971 Kb) snd to
retirees described in section 9713(b)(1) until the
end of the second month beginning after the
effective date of section 9712(d). Such pension
plans shall have no liability for death benefita for
the orphan miners described in section 9711(b),
or for the retirees described in section 97 13(b)( 1),
ss of tho first day of the third month following
the effective date of section 9712(d). The Corpo-
ration msy elect to pay the plana described in
section 9721(d), the 1991 Fund, or the defined
benefit pension plsns maintained pursuant to the
agreement described in section 9723(7) to contin-
ue to provide transition benefits slier the end of
the second month beginning sfter the effective
date of section 9712(d), and for a poriod not to
exceed 6 months. If the Corporation so olects, it
shall pay auch plans all amounts necessary to
enable the provision of benefita and to cover all
costs of administration associated with the provi-
sion of benefits. The schedule for such payments
shall be determined by the boards of trustees of
the plsns, snd may require advance payments.
Amounts paid pursuant to this subsection shall
not be included in the amounts to bo reimbursed
pursuant to subsection (b).
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'(b) Reimbursement of Cost for Transition Ben-
efits. • No later then the first dsy of the fourth
month slier the effective dete of section 9712(d),
the Corporation shell reimburse the plans de-
scribed in section 9721(d) and the 1991 Fund,
with interest, for the amounts of benefits paid
and administrative expeness incurred pursuant to
subsection (s). No later than the first dsy of ths
fourth month slier the effective date of section
9712(d), the Corporation and the 1991 Fund
shall reimburse the defined benefit pension plans
msintsined pursuant to ths agreement described
in section 9723(7), with interest, for ths amount
of death benefits paid and administrative expens-
es incurred pursuant to subsection (s).
'(c) Access to Records. - The joint boards of
trustees of the plans described in section 9721(d)
and the 1991 Fund shall share with the Corpo-
ration all records, files end documents related to
the orphan miners, spouses, surviving spouses
and dependents transfsrred to the Corporation,
to the extent necessary for the Corporation to
sdminister the psymenl of benefits to such indi-
viduals.
'(d) Premium Nonpayment. •
'(I) No individusl shsll be eligible for benefits
from the 1991 Fund during any month for which
the assessments required under section 9713(d)
hsvs not been psid by such individusl's last sig-
natory operator. Such individual shall be imme-
diately eligible to receive benefit* from the Corpo-
ration and the Corporation shall have a cause of
sction sgsinst such individusl's last signatory
operator for the per beneficiary premium imposed
under section 9704(g)( IXC).
'(2) Ths 1991 Fund shsll continue to treet an
individusl described in paragraph (1) ss if he or
she were eligible for benefits until the end of the
third month for which sn sssessment due has not
been psid. If the last signatory operator with
respect to such individusl hss not paid ita assess-
ments due by the end of such month (with such
interest and liquidated damages imposed by the
board of trustees in their discretion, up to the
amounts provided in section 9722(d)(2) (B) end
(O). the 1991 Fund snail notify ths Corporation
that ths individusl is transferred to the Corpora-
tion pursuant to paragraph (I), and the Corpo-
ration shsll reimburse ths 1991 Fund, with inter-
est, for sny benefits psid to or on behalf of such
individual for all months for which assessments
hsvs not been peid.
'SUBCHAPTER C - OTHER PROVISIONS
'Sec. 9721. Determination and disposition of ex-
'Sec. 9722. Civil enforcement.
'Sec. 9723. Definitions.
'Sec. 9724. Shsm transactions.
'SEC. 9721. DETERMINATION AND DISl*OSl-
TION OF EXCESS PENSION ASSETS.
'(s) Determination of Excess Pension Assets. •
'(1) Within 30 dsys slier the enactment of this
chapter, the joint board of truatees of the plan
doscribed in subsection (c) shall, through the
independent actuaries of the plan, calculate the
amount of the excess pension assets. The truat-
ees of the plsn described in subsection (c) shall
recalculate the excess pension assets at any timo
that they are directed to do so by the settlors.
'(2) Immediately following the calculation (or
recalculation) of the excess pension assets, the
trustees of the plsn described in subsection (c)
shall segregate the excess pension assets from the
remaining sssets of such plsn. The segregated
exceee pension sssets (including sll earnings
thereon) shall be held in the plan until disbursed
pursuant to subsection (b).
'(b) Disposition of Exceee Pension Assets. •
Not wit hats niling sny other provision of law, the
excess pension sssets (including sll osrnings
thereon) shsll be expended in the following order:
'CD Fifty million dollars shall be sdded to the
general sssets of the Corporation.
'(2) The deficits in the plans described in sub-
section (d) as of the date of enactment of this
chapter shall be reduced to zero.
'(3) Fifty million dollars shall be added to the
general sssets of the 1991 Fund.
'(4) The remainder of the excess pension sssets,
if sny, shall be added to the general BMsets of the
1991 Fund, st such times and in such amounts
ss msy be directed by the settlors.
'(c) Plsn Containing Excess Pension Assets. • A
plsn is described in this subsection if it is a pen-
aion plan and •
'(1) it ia a plan described in section 404(c) or s
continuation thereof; and
'(2) participation in ths plsn is substantially
limited to individuals who retired prior to Janu-
ary I, 1976.
'(d) Related Welfare Plana. - A plan is described
in this subsection if •
'(1) it is a plsn described in section 404(c) or s
continuation thereof; snd
'(2) it provides hcslth benefits to retirees snd
beneficiaries of the industry which msintsined
the plsn described in subsection (c); snd
'(A) participation in the plsn is substantially
limited to individuals who retired prior to Janu-
ary I. 1976; or
'(B) participation in the plan is substantially
limited to individuals who retired on or alter
January I. 1976.
'(e) Tax Treatment, Validity of Transfer of Ex-
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'(1) No deduction shall bo allowed under this
title with respect to the expenditure of excess
pension assets pursuant to subsection (a), but
such transfer shall not adversely aiTsct the de-
ductibility (under applicable provisions of this
title) of contributions previously made by employ-
ers or amounts hereafter contributed by employ-
ers to the plana described in subsection (c) or (d),
or to the 1991 Fund.
'(2) The expenditure of excess pension assets
pursuant to subsection (b) •
'(A) shall not be treated as an employer rever-
sion from a qualified plan for purposes of section
4980. and
'(B) shall not be includible in the cross income
of any employer maintaining a plan described in
subsection (c).
'(3) Neither the segregation of excess pension
assets pursuant to subsection (a)(2), the expendi-
ture of excess pension assets pursuant to subsec-
tion (b), nor any direction made by the settlors
pursuant to subsection (a)(1) or (b)(4) shall be
deemed to violate or be prohibited by any provi-
sion of law, or to cause the settlors, joint board of
trustees, employers or any related person to in-
cur or be suqjsct to taxes, lines, or penalties of
any kind whatsoever.
'SEC. 9722. CIVIL ENFORCEMENT.
'(a) Civil actions may be brought by the 1991
Fund for appropriate relief, legal or equitable or
both, to enforce the provisions of this chapter.
'(b) Except as otherwise provided in this chap-
ter, where such an action ia brought in a district
court of the United States, it may be brought in
the district where the 1991 Fund is administered,
in the district where the violation took place, or
where s defendant resides or may be found, and
process may be served in any other district where
a defendant resides or may be found.
'(c) The district courts of ths United States
shall have jurisdiction of actions brought by the
1991 Fund under this chapter without regard to
the amount in controversy in any such action.
'(dH 1) In sny sction brought under subsection
(a) (other than an action described in paragraph
(2)). the court in its discretion msy award to the
1991 Fund all or a portion of the costs of litiga-
tion, including reasonable attorneys' fees, in-
curred by the 1991 Fund in connection with such
'(2) In any action by the 1991 Fund to enforce
section 9713(d)(2), in which a judgment in favor
of the 1991 Fund is awarded, the court i
award the 1991 Fund -
'(A) the unpaid assessments;
'(B) interest on the unpaid assessments;
'(C) an amount equsl to the groator of -
*(i) interest on the unpaid assessments; or
'(ii) liquidated damages in the smount of 20
percent of the amount determined by the court
under subparagraph (A);
'(D) reasonable attorneys' foes and costs of the
action, to be paid by the defendant; and
'(E) audi other legal or equitable relief aa the
court deems appropriate. For purposes of this
paragraph, interest on unpaid assessments shall
be determined by using the rate provided under
the rules of the 1991 Fund, or, if none, the rate
prescribed under section 6621.
'(e)(1) Except as provided in paragraph (2), an
action under this subsection msy not be brought
after the later of •
'(A) 6 years slier the date on which the cause of
action arose; or
'(B) 3 years alter the earliest date on which the
1991 Fund acquired or should have acquired
actual knowledge of the existence of such cause
of action.
'(2) In the case of fraud or concealment, the
period described in paragraph (1Kb) shall be ex-
tended to 6 years after the applicable dute.
'(0 Any person who is an employer, a last sig-
natory operator, a person described in section
9723(6) (ID or (C) with respect to an employer or
last signatory operator, a bituminous coal indus-
try retiree, or any spouse, surviving spouse or
dependent of a bituminous coal industry retiree,
and is adversely affected by any act or omission
of any party under this chspter, or who is an
employee organization of which such a coal in-
dustry retiree is a member, or an employer asso-
ciation of which such an employer is a member,
may bring an action for appropriate equitable
relief in the appropriate court.
'(I) During the pendency of any proceeding
under this subsection by an employer, employer
association, last signatory operator, or person
described in section 9723(6) (ID or (C) with re-
spect to an employer or last signatory operator,
all potentially affected retirees, spouses, surviv-
ing spouses and dependents eligible for benefits
from the 1991 Fund shall be transferred to the
Corporation, which shall -
'(A) provide such benefits as would have been
provided from the 1991 Fund, and
'(B) have and exercise all of the rights and obli-
gationa of the 1991 Fund with respect to -
'(i) the collection of assessments relating to
audi retirees and spouses, surviving spouses and
dependents, and
'(ii) the defense of the proceeding.
'(2) In the event that a laat signatory operator
or other person pays to the 1991 Fund the as-
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■a— menU required pursuant to Motion 9713(d)
for any month during the pendancy of a proceed-
ing described in paragraph (1). the 1991 Fund.
and not the Corporation, •hail be responsible for
providing any benefits required to be paid for
that month to eligible individual, under section
9713(b).
'(g) In any action brought under subsection (0,
the court may award all or a portion of the costs
and expenses, including reasonable attorneys'
fees, incurred in connection with such action to
any party that prevails or substantially prevails
in such action.
'(h) This subsection shall be the exclusive
means for bringing actions against the Corpora-
tion or the 1991 Fund under this chapter.
•OKI) Except as provided in paragraph (2), an
action under this subsection may not be brought
after the later of -
'(A) 6 yeare after the date on which the cause of
'(B) 3 yeara after the earliest date on which the
plaintiff acquired or should have acquired actual
knowledge of the existence of such cause of ac-
tion.
'(2) In the case of fraud or concealment, the
period described in paragraph (1KB) shall be
extended to 6 yeara after the applicable date.
'(j) The district courts of Che United States have
jurisdiction of actions brought under this subsec-
tion without regard to the amount in controver-
*(k) In any suit, action or proceeding in which
the 1991 Fund Is a party, in any State court, the
1991 Fund msy, without bond or security, re-
move such suit, action, or proceeding from the
State court to the United States district court for
ths district or division in which such suit, action
or proceeding Is pending by following any proce-
dure for removal now or hereafter in effect.
'SBC. 9723. DEFINITIONS.
'For purposes of this chapter •
'( 1) The term 'coal production work' shall mean
work in which an individual engages in physical
operations consisting of the mining, preparation,
handling, processing, cleaning and loading of
coal, including removal of overburden and coal
waste, the transportation of coal (except by wa-
terway or rail not owned by an employer engaged
in the production of coal), repair and mainte-
nance work normally performed at a mine eite or
central shop of an employer engaged in the pro-
duction of coal, maintenance of gob piles and
mine roads, construction of mine or mine-related
facilities including the erection of mine tipples
and sinking of mine shafts or slopes performed
by employees of the employer engaged in the
production of coal, and work of the type custom-
arily related to the foregoing; except that the
term shall not mean managerial, supervisory,
warehouse, clerical or technical work, unless
such work is performed subject to a coal wage
agreement binding the employer engaged in the
production of coal.
'(2) The term 'coal wage i
'(A) the National Bituminous Coal Wage Agree-
'(B) any agreement substantially identical or
substantially similar to such agreement, but only
if, ss of the date of enactment of this chapter,
such agreement provided for contributions to be
msde to the plans described in section 9721(d); or
'(C) any othsr agreement entered into between
en employer in the bituminous coal industry and
the United Mine Workers of America that re-
quires the provision of health benefits to retirees
of such employer, eligibility for which is based on
yeara of service credited under a plan established
by the settlors and described in eection 404(c) or
a continuation of such plan.
'(3) The term 'credited service' shall have the
same meaning as determined under the applica-
ble defined benefit pension plan, but only if such
service wss of the type used to determine eligibil-
ity under the plan described in eection
9721(d)(2)(B).
'(4) The term 'excess pension assets' shall mean
the excess of the current value of plan eessts (ss
defined in eection 3(26) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C.
1002(26)) of the plan deecribed in section 9721(c)
ovsr the actuarial present value of all benefits for
all plan perticipanta under such plan, determined
ss of the date of enactment, in accordance with
the actuarial assumptions and methods which
reflect the plan actuary's best estimate of antici-
pated experience under such plan, except that
where excess pension assets are recalculated as
required under section 9721(a)(1), the amount of
excess pension assets shall be determined as of
the July 1 next preceding the date of the recalcu-
lation.
'(6) A last signatory operator shall be consid-
ered to be in business for purposes of this chap-
ter if any of the following conducts or derives
revenue from any business, whether or not with-
in the coal industry •
'(A) such lsst signatory operator,
'(B) any member of the controlled group of
corporations (within the meaning of eection
414(b)) of auch last eignatory operator, or
'(C) any trade or business which is under com-
mon control (as determined under section 4 14(c))
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with Mich last signatory operator. If a laat signa-
tory operator is no longer in buaineaa and there
is no eucceeeor, the relationahipe described in
paragraphs (2) and (3) ahall be determined at the
time it ceased to be in business.
'(SKA) The term 'last signatory operator' shall
mean, with respect to any orphan miner or other
coal industry retiree eligible for medical benefits,
a person that meets or at one time met the fol-
lowing condition*:
*(i) A person meets the conditions of this clause
*(D an owner, lessee or other person who oper-
ates, controls or supervises a coal mine;
'AD an independent contractor who operates,
controls or supervisee a coal mine; or
'(TO) in the event a parson described in (I) or
(D) is no longer in business, any successor to
such person, except that a purchaser shall not be
considered to be a successor with respect to any
orphan miner or other coal industry retiree eligi-
ble for medical benefits, if responsibility for the
medical benefits of such orphan miner or other
coal industry retiree wss retained by the seller in
the purchase and sale transection.
'(ii) A person meets the conditions of this clause
if euch person or, in the cess of s person ds-
ecribsd in dauss (i)uH), such person's predo
'(D wss s signatory to a 1978 coal wage agree-
ment, or any subsequent coal wage agreement;
end
'(II) wee the last coal industry employer of such
orphan miner or other retiree.
'(B) Notwithstanding subparagraph (A), if, as of
the date of enactment of this chapter, a person
has assumed or retained responsibility for retiree
medical benefit obligations for individuals who
retired from employment under s coal wage
agreement, then such person shall be treated es
the last signatory operator with respect to such
individuals for purposes of this chapter, and any
person from whom such responsibility wss as-
sumed ahall not be treated as the last signatory
operator.
'(C) For purposes of this chapter, the last signa-
tory operator of any orphan miner or other coal
industry retiree shsll be considered to be the lest
signatory operator with respect to such orphan
miner's or other coal industry retiree's spouse,
surviving spouss end dependents, if any.
'(7) The term 'National Bituminous Coal Wags
Agreement' shall mean the collective bargaining
agreement negotiated by the eeltlors.
'(S) The term 'settlors' means the United Mine
Workers of America and the Bituminous Cosl
Operators' Association, Inc. (hereinafter referred
to es ths 'BCOA'), except that if the BCOA cesses
to exist, members of ths BCOA representing more
than 60 percent of the tonnage membership of
BCOA on the date of enactment of this Act ehsll
collectively be considered s settlor.
'SEC. 9724. SHAM TRANSACTIONS.
'If s principal purpose of sny transaction is to
evade or avoid liability under this chapter, this
chapter shall be applied (and liability shall be im-
poeed) without regard to auch transaction. A
bona fide, arm's-length sale of an entity subject
to liability under this chapter to an unrelated
party (within the meaning of section 4204(d) of
the Employee Retirement Income Security Act of
1974, es amended), shall not by itself be suffi-
cient to establish a principal purpose to evsde or
svoid liability within the meaning of this section.'
(b) Conforming Amendment. • The table of sub-
titles for the Internal Revenue Code of 1986 is
emended by sdding at the end thereof the follow-
ing new subtitle: 'Subtitle J. Coal Industry
health benefits.'
(c) Effective Date. - The amendments made by
this section ehsll apply on and after the date of
the enactment of this Act.
Mr. BENTSEN. Mr. President, I
have just sent that modified Finance
Committee amendment to H.R. 776 to
the desk. The modified amendment is
a complete substitute for H.R. 776. It
contains the Finance Committee ener-
gy related revenue title. That replac-
es title XIX of H.R. 776. In addition,
the substitute strikes all remaining
language in that particular piece of
legislation and replaces it with the
text of S. 2166, the energy bill as
passed by the Senate in February.
This substitute abides by all Budget
Act rules and is now the pending busi-
ness before the Senate.
Mr. President, as the Senate turns
to consideration of this substitute, we
revisit a subject of great importance
to our country, the vital task of devel-
oping an effective energy policy for
this country.
The Senate has already spoken once
on the subject, voted 94 to 4 in Febru-
ary, to pass S. 2166, an energy bill
without tax provisions. Now we are
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taking up the energy legislation that
includes the provisions of the bill as
well as energy tax provisions approved
by the Finance Committee which I
believe furthers the energy policy
objectives of S. 2166. The Senate's
overwhelming approval of energy leg-
islation in February indicates that we
are aware of the need for moving
responsibly in devising a meaningful
national energy policy.
We learned some important lessons
from the Persian Gulf. We understood
the need for greater energy efficiency,
development of alternative energy
sources, and a solid base of domestic
production. All of those are a part of
the solution, trying to get them to fit
together effectively.
We just cannot continue down the
road of increasing reliance on foreign
energy production in this country. We
now import almost half the oil we are
consuming, some 46 percent of it.
Within 3 years, it is estimated it will
go over 50 percent. Without action by
the Congress, this picture is not going
to get any better. We can expect a
continued increase in the reliance on
imports. Even in an optimistic view,
you are going to see imports reach
almost 70 percent by the year 2010 -
70 percent.
Let me see if I can give you an ex-
ample of what that means. That
means 36 supertankers a day - 36
supertankers a day coming in, with all
that does to our trade imbalance, all
that does to our environmental con-
cerns, about possible accidents with
those tankers.
The Finance Committee tax title
complements the energy bill we have
already passed. It addresses our
country's energy needs and I think in
doing so benefits our environment.
These provisions follow to a signifi-
cant extent the so-called grain tax
package developed in the House ener-
gy bill that roughly breaks down into
three components: energy conserva-
tion, renewable, and alternative ener-
gy sources, and domestic oil and gas
production.
First, the Finance Committee
amendment includes several provi-
sions that encourage energy conserva-
tion. For example, the bill increases
the current $21 per month exclusion
for employer-provided subsidies for
mass transit by $56 per month. It
also caps the current unlimited exclu-
sion for employer-provided partner
subsidies at $145 per month.
The combination of those two provi-
sions tilt the tax treatment of
employer-provided transportation
benefits toward mass transit and less
toward parking provided by the em-
ployer for their employees. Increases
in the use of mass transit in this way
will not only reduce the energy con-
sumption in the transportation sector,
but should also help reduce traffic
congestion and environmental degra-
dation.
In addition, the Finance Committee
amendment includes a provision that
promotes energy conservation in our
residential, commercial, industrial
sectors. That is done by providing an
exclusion from customers' income for
rebates that are provided by the utili-
ties for the purchase and the installa-
tion of energy conservation compli-
ance system measures.
The Finance Committee amend-
ment also offers a number of provi-
sions designed to bolster the develop-
ment of environmentally sound renew-
able energy sources and alternative
fuels. It permanently extends the
10-percent investment tax credit for
solar and geothermal energy problems
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that expired on June 30 and expands
that credit to include ocean, thermal
energy properties. It also provides a
production-based tax credit for elec-
tricity generated from qualifying wind
or renewable biomass facilities.
In addition, the Finance Committee
amendment includes provisions that
will facilitate the growth of alterna-
tive fuel vehicles on our Nation's
streets and highways, vehicles that
run on domestically abundant clean
burning fuels such as natural gas,
methanol, ethanol, and electricity. It
provides a deduction of up to $2,000
for the purchase of these vehicles -
more for trucks and buses; provides a
15-percent tax credit for electric-pow-
ered vehicles as well as tax incentives
for clean vehicle refueling facilities.
The Finance Committee amend-
ment also includes provisions that
encourage and provide for flexibility
for the use of blended fuels such as
ethanol-gasoline blends. It does this
by providing a proportional excise tax
exemption for gasoline that is mixed
with ethanol and other alcohol at
levels lower than the 10-percent
blends as current law allows and pro-
viding some limited minimum tax
relief in connection with the alcohol
fuels credit.
These provisions will help our ener-
gy sector provide the country with the
oxygenated fuels it needs to comply
with air quality rules such as called
for by the Clean Air Act.
In developing a meaningful national
energy policy, we also have to address
the decline in domestic production.
This decline has contributed mightily
to our growing dependence on foreign
oils, and in the last 6 years, domestic
oil production has plunged nearly 15
percent, and as a result, production is
at its lowest level in over 30 years.
The future does not look much better.
The count recently fell to the lowest
level in 50 years. Our domestic pro-
duction capacity is further deteriorat-
ed with the loss of thousands of jobs
with the domestic oil and gas indus-
try. We heard a lot about that in the
automobile industry but for some
reason we do not talk about it in the
oil and gas industry and yet this has
been dramatic and far reaching, not a
question of just protecting Texas or
Wyoming. It affects our entire coun-
try.
The Finance Committee amend-
ment provides incentives for the do-
mestic production of oil and gas by
providing limited relief in the mini-
mum tax which has a substantial
dampening effect on the exploration
and development of our domestic re-
serves.
The Finance Committee amend-
ment like the House bill repeals the
minimum tax preferences for percent-
age depletion and intangible growing
cost for independent producers. How-
ever, it does not for the limitation
regarding searching out tax liability
for these producers to ensure that the
tax is still paid.
To pay for these provisions, the
Finance Committee amendment looks
to several sources.
First, it increases the tax on ozone
depleting chemicals to foster their
productions in their use and to speed
the search for environmentally safe
alternates.
Second, it disallows the deduction,
including those in business, for social,
athletic, luncheon, and sporting goods.
Third, it increases the excise tax on
certain reinsurance policies issued by
foreign companies relating to U.S.
risk.
Let me conclude by making some
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comments regarding our consideration
ofH.R. 776.
First, in the President's interest of
moving quickly on this bill, I strongly
urge Senators to limit any tax amend-
ments on this bill to thoughts that are
related to energy policy.
I will oppose ail tax amendments
that are not related to energy policy
as well as any amendments not relat-
ed to taxes. We simply do not have
the time to have a broad-ranging tax
debate on nonenergy matters in the
context of this energy bill. Doing so
will certainly not improve prospects
for enactment of this important legis-
lation, and I also might add that the
energy bill is not a particularly good
vehicle for moving tax amendments
unrelated to energy given that the
House will undoubtedly insist when
getting to conference with them on
cropping such unrelated amendments
to conference, and I may be somewhat
sympathetic to that approach on their
part.
A second point concerning amend-
ments: The Finance Committee has
structured its amendment to comply
with the budget rules. I will oppose
any amendments that bring the bill
out of compliance with the budget
rules, and that means that amend-
ments should not only be paid for over
the 5-year budget horizon but must
also leave the bill in compliance with
fiscal year 1992 and fiscal year 1993.
I urge my colleagues to move as
expeditiously as possible to pass this
energy bill.
I know the distinguished Senator,
the chairman of the Energy Commit-
tee, the Senator from Louisiana, the
ranking member from Wyoming have
worked long and hard on that bill and
it deserves your immediate consider-
ation and passage. We have a lot of
work to do in conference in trying to
settle the differences between the
House and the Senate bill. We have a
short time to do it.
Mr. President, thank you very
much. I look forward to my col-
leagues passing this important piece of
legislation.
Mr. WALLOP addressed the Chair.
The PRESIDING OFFICER. The
Senator from Wyoming.
Mr. WALLOP. Mr. President, let me
echo the prayer and the plea of the
chairman of the Finance Committee,
that we try to limit our exercise of
senatorial privilege to amend on this
to thingB that are directly related to
I look down the list of proposed
amendments on both sides. I see
some that would like to make this
vehicle a tax horse for all the day-
dreams of this Congress, and it simply
will not be able to carry and provide
us at the end with an energy policy
which I believe to be a nonpartisan
goal or a bipartisan goal.
I see some who would like to turn it
into an agricultural bill, some who
would like to turn it into an environ-
ment and public works bill, some who
would like to turn it into a Finance
Committee wearing its Social Security
hat bill, some who would turn it into
a Commerce Committee bill dealing
with financing. What that has to do
with energy policy, I cannot tell. And
some who would turn it into a Labor-
HHS bill, and some who would turn it
into a transportation bill.
Mr. President, this Senate spoke
and spoke well on the energy bill
when we passed it. We spoke 94 to 4
and we resisted all attempts to change
its purpose from energy policy to oth-
er kinds of policies with maybe admi-
rable social goals. But trying to main-
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tain its integrity as energy policy was
not an easy chore, but it was a very
successful chore, and the Senate spoke
time and time and time again reject-
ing policies, rejecting amendments
that changed the thrust of the bill.
When the Senator from Texas made
his comments about the American oil
industry, I really and genuinely hope
that our colleagues heard what he
said, and I hope that Americans heard
what he said.
There are those who believe that if
we strangle our oil industry, then we
will somehow or other stop using oil.
But in fact what we will be doing, Mr.
President, is intensifying America's
vulnerability to foreign source supply
operations. America's oil production
capability is No. 1 in the world. It is
hands down the world's best, and is
rapidly becoming America's No. 1
export.
This bill passed with the Finance
Committee amendments, and the few
production incentives contained in the
Energy Policy Act will not provide the
sole means of survival for America's
oil industry. But what we tried to do
from the very beginning, Mr. Presi-
dent, in ail of this was to put in play
America's energy resources, without
choosing amongst them, and to have
failed to address the very significant
self-imposed problems of oil produc-
tion, would have been to move away
from that idea that ail of America's
energy resources should be in play,
without prejudice from the Congress.
So we will have, should we be able
to pass this bill more or less intact, an
oil and gas industry, a coal industry, a
uranium industry, a renewables indus-
try, an alternative fuels industry - we
will have all of those - and the Con-
gress will have spoken to this need for
America's energy future. To the ex-
tent that we can maintain the integri-
ty of the vehicle that underlies it - the
Finance Committee amendments -
and the underlying S. 1220, it would
be in the interest of both parties, and
certainly of America, that we get to
conference, and that we present at
long last, out of several decades of
trying, an energy policy worthy of its
name to guide America into the fu-
ture.
Mr. President, I yield the floor.
UNDER SECTION 9 OF THE CONCURRENT
RESOLUTION ON THE BUDGET
Mr. SASSER. Mr. President, I here-
by submit revised budget authority
and outlay allocations to the Senate
Committee on Finance and aggregates
under section 9 of the concurrent
resolution on the budget for fiscal
year 1992, House Concurrent Resolu-
tion 121, and section 9 of the concur-
rent resolution on the budget for fis-
cal year 1993, House Concurrent Res-
olution 287.
Section 9(c) of the 1992 budget reso-
lution states:
SEC. 9. DEFICIT-NEUTRAL RESERVE FUND
FOR FAMILY AND ECONOMIC SECURITY
INITIATIVES IN ACCORDANCE WITH PRO-
VISIONS OF THE SUMMIT AGREEMENT.
• • • • •
(c) Continuing Improvements in Ongoing
Heelth Cere Programs end Pheeing in of Health
Insurance Coverage for All Americana. -
(1) In general. - Budget authority end outlays
may be allocated to e committee or commit lees
for legislation that increases funding to make
continuing improvements in ongoing health care
programs or to begin phasing-in health insurance
coverage for ell Americans within such a
committee's jurisdiction if such a committee or
the committee of conference on such legislation
reports such legislation, if, to the extent that the
costs of such legislation are not included in this
concurrent resolution on the budget, the enact-
ment of such legislation will not increase the
deficit (by virtue of either contemporaneous or
previously passed deficit reduction) in this reso-
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lution for fiscal year 1992, and will not increase
the total deficit for the period of fiscal yeara 1992
through 1996.
(2) Revised allocations. - Upon the reporting of
legislation pursuant to paragraph (1), and again
upon the submission of s conference report on
such legislation (if a conference report is submit-
ted), the Chairman of the Committee on the Bud-
get of the Senate may file with the Senate appro-
priately revised allocations under sections 802(a)
and 602(a) and revised functions! levels end
aggregates to carry out this subsection. Such
revised allocations, functional levels, and sggre-
gatee shall be considered for the purposes of the
Congressional Budget Act of 1974 as allocations,
functions! levels, end aggregates contained in
this concurrent resolution on ths budget.
(S) Reporting revised allocations. • Ths appro-
priate committee may report appropriately re-
vised allocations pursuant to sections 302(b) end
602(b) to carry out this subsection.
Similarly, section 9(c) of the 1993
budget resolutions states:
SEC. 9. DEHCIT-NEUTRAL RESERVE FUND
IN THE SENATE FOR FAMILY AND
ECONOMIC SECURITY INITIATIVES IN
ACCORDANCE WITH PROVISIONS OF THE
SUMMIT AGREEMENT.
e e e • •
(c) Continuing Improvements in Ongoing
Health Care Programs snd Phasing in of Health
Insurance Coverage for All Americans. •
(1) In general. - Budget authority and outlays
may be allocated to a committee or committees
for legislation that increases funding to make
continuing improvements in ongoing health cars
programs or to begin phssing in health insurance
coverage for all Americans within such a
committee's jurisdiction if such s committee or
the committee of conference on such legislation
reports such legislation, if, to the extent that the
costs of such legislation are not included in this
concurrent resolution on the budget, the enact-
ment of such legislation will not increase the
deficit (by virtue of either contemporaneous or
previously passed deficit reduction) in this reso-
lution for fiscal year 1993, and will not incresss
the total deficit for the period of fiscal years 1999
through 1997.
(2) Rsvissd allocations. • Upon the reporting of
legislation pursuant to paragraph (1), and again
upon ths submission of s conference report on
such legislation (if a conference report is submit-
ted), the Chairman of the Committee on the
Budget of the Senate may file with the Senate
appropriately revised allocations under sections
302(a) and 602(a) of ths Congressional Budget
Act of 1974 snd rsvissd functional levels and
aggregates to carry out this subsection. Such
revised allocations, functional levels, snd aggre-
gates shall be considered for the purposes of the
Congressional Budget Act of 1974 ss ailocationa,
functional levels, and aggregates contained in
this concurrent resolution on ths budget.
(3) Reporting revised ailocationa. • The appro-
priate committee may report appropriately rs-
vissd ailocationa pursuant to sections 302(b) snd
602(b) of the Congressional Budget Act of 1974 to
carry out this subsection.
On June 18, 1992, the Finance
Committee reported H.R. 776, the en-
ergy bill, together with a committee
amendment. Chairman Bentsen, on
behalf of the Finance Committee, has
just submitted a modification of that
committee amendment.
H.R. 776 as reported and modified
includes provisions that would create
two new entities - the Coal Industry
Retiree Health Benefits Corp. and the
1991 benefit fund - to replace two coal
industry health funds that are experi-
encing financial difficulties. These
provisions will ensure that retired coal
miners, their widows, and their depen-
dents continue to receive the health
benefits for which they contracted. In
the words of section 9(c) of both the
1992 and 1993 budget resolutions,
these two provisions 'increase funding
to make continuing improvements in
ongoing health care programs.'
H.R. 776 as reported and modified
meets the other requirement of sec-
tion 9 of the 1992 budget resolution
that 'to the extent that the costs of
such legislation are not included in
this concurrent resolution on the bud-
get, the enactment of such legislation
will not increase the deficit • • • in
this resolution for fiscal year 1992,
and will not increase the total deficit
for the period of fiscal years 1992
through 1996.'
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H.R. 776 as reported and modified
also meets the other requirement of
section 9 of the 1993 budget resolution
that 'to the extent that the costs of
such legislation are not included in
this concurrent resolution on the
budget, the enactment of such legisla-
tion will not increase the deficit * * *
in this resolution for fiscal year 1993,
and will not increase the total deficit
for the period of fiscal years 1993
through 1997.'
Both the 1992 and 1993 budget
resolutions created rules for the Sen-
ate embodied in these provisions. The
later-adopted 1993 budget resolution
covers the fiscal years 1993 through
1997 and supersedes the 1992 budget
resolution with regard to those fiscal
years. Nonetheless, the 1992 budget
resolution continues to have validity
with regard to fiscal year 1992, as the
1993 budget resolution did nothing to
modify that resolution's provisions
with regard to that fiscal year.
Note that the health provisions
covered by this filing are the same as
provisions included in S. 2325 earlier
this year. On the day that the Senate
began consideration of S. 2325, 1 filed
revised allocations and aggregates for
those provisions. Those revised alloca-
tions and aggregates appear at page
S2951 of the Congressional Record for
March 10, 1992. Similarly, I filed re-
vised allocations and aggregates when
the committee of conference on H.R.
4210, the House companion measure,
submitted the conference report on
that bill. Those revised allocations
and aggregates appear at pages S4055
and S4056 of the Congressional Re-
cord for March 20, 1992. The Presi-
dent vetoed that bill the same day and
the House sustained the President's
veto on March 25, 1992.
The budget resolution provision
under which I filed the revised alloca-
tions and aggregates earlier this year,
section 9 of House Concurrent Resolu-
tion 121, is, except for fiscal years,
identical to the sections under which
I make this filing today. For legisla-
tive history of the 1993 budget resolu-
tion provision, see pages 61 and 62 of
conference report 102-529. As the
Senator responsible for the drafting of
this section of the budget resolutions,
let me make clear that I used the
language from the previous budget
resolution with the exception that it
would continue to apply in the case
before us today.
As H.R. 776 as reported and modi-
fied complies with the conditions set
forth in the budget resolutions, under
the authority of section 9(c)(2) of the
1992 and 1993 budget resolutions, I
hereby file with the Senate appropri-
ately revised budget authority and
outlay allocations under sections
302(a) and 602(a) of the Congressional
Budget Act of 1974, 2 U.S.C. sections
633 and 665a • 1988 and supplement
II 1990 • and revised functional levels
and aggregates to carry out section 9
of the budget resolutions.
There being no objection, the table
was ordered to be printed in the Re-
cord, as follows:
••• TABLE DATA UNAVAILABLE •••
Mr. JOHNSTON. Mr. President, at
long last, it appears that we are going
to finish this energy bill today and get
to conference where we have some
1,500 pages of bill to work out in con-
ference.
It is essential, Mr. President, that
we get this bill completed early today
so that we can get to conference. So
we want to put all Senators on notice
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that if they do have amendments - in
the first place, if they are not energy
amendments, they are likely to be
opposed. But, in any event, we urge
Senators to come and quickly deal
with their amendments.
Mr. President, as I understand it,
the amendment from the Finance
Committee is at the desk; is that cor-
rect?
The PRESIDING OFFICER. The
modified amendment of the chairman
is the pending question.
Mr. JOHNSTON. Does that include
the text of S. 2166, as passed by the
Senate?
The PRESIDING OFFICER. The
chair does not have knowledge of the
substance of the amendment; that
inquiry would be better made of the
chairman.
Mr. JOHNSTON. Well, Mr. Presi-
dent, I ask my colleague, the chair-
man of the Finance Committee, if this
amendment does include the text of S.
2166, and if the amendment at the
desk is adopted, would it be subject to
further amendment?
Mr. BENTSEN. Yes; that is correct.
The PRESIDING OFFICER. The
chair informs the Senator from Loui-
siana that the amendment at the desk
is a complete substitute and, there-
fore, would not be amendable after its
adoption.
Mr. JOHNSTON. Well, Mr. Presi-
dent, I ask unanimous consent that
the amendment at the desk, if adopt-
ed as a substitute, be regarded as
original text for the purpose of fur-
ther amendment.
The PRESIDING OFFICER. Is
there objection?
Mr. WALLOP. Reserving the right
to object, Mr. President. I suggest the
absence of a quorum.
The PRESIDING OFFICER. The
derk will call the rolL
The bill derk proceeded to call the
roll
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President, I
am advised that it would not be neces-
sary to seek unanimous consent; that
the amendment is now at the desk,
and it is amendable in two degrees,
and we will not call for its adoption at
this time.
The PRESIDING OFFICER. The
Senator is correct. The Senator asked
the chair whether it is subject to
amendment after adoption. It is
amendable prior to adoption and,
therefore, the Senator is correct.
There was no requirement for unani-
mous consent.
Mr. JOHNSTON. But it includes
the text of the Energy Bill, as adopted
by the Senate, and the text of the
Finance Committee reported provi-
sions.
Mr. President, I withdraw the
unanimous consent request.
Mr. President, I think we are then
ready for amendments to be offered at
this time.
Mr. FOWLER addressed the Chair.
The PRESIDING OFFICER. The
Senator from Georgia.
Mr. FOWLER. Mr. President, if we
are going to have an extended quorum
call, I ask the chairman if I may speak
out of order. But if the Chair is ready
to conduct business, I will certainly
yield to him.
Mr. BENTSEN. I say to the distin-
guished Senator, my good friend, that
we are prepared to move on. I am
about to ask unanimous consent for a
time limitation on the amendment of
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the Senator from New Jersey.
Mr. FOWLER. The business of the
Senator from Georgia can wait.
UNANIMOUS-CONSENT AGREEMENT
Mr. BENTSEN. Mr. President, I
ask unanimous consent that we have
a time agreement of not to exceed 2
hours on the amendment about to be
offered by the Senator from New Jer-
sey; that the time be equally divided
between the proponents and oppo-
nents of the amendment, to be con-
trolled by the manager of the tax
portion of this legislation and the
Senator from New Jersey, and that
there be no second-degree amend-
ments.
The PRESIDING OFFICER. Is
there objection?
Without objection, it is so ordered.
AMENDMENT NO. 2782
(Purpose: Striking repeal of minimum Ui prefer-
ences for depletion end intangible drilling costs)
Mr. BRADLEY. Mr. President, I
send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read
as follows:
The Senator from New Jersey (Mr. Bradley)
proposes an amendment numbered 2782.
Strike section 20115.
Mr. BRADLEY. Mr. President, this
amendment strikes the provision in
the bill which provides $1 billion in
tax relief to independent oil and gas
producers. The bill currently elimi-
nates the alternative minimum tax
preferences for intangible drilling
costs and percentage depletion.
Mr. BENTSEN. Mr. President, will
my colleague yield a minute so I might
amend the unanimous consent re-
quest?
Mr. BRADLEY. I yield.
Mr. BENTSEN. Mr. President, I
also ask unanimous consent that
there be no amendments to the lan-
guage to be stricken.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The Senator from New Jersey is
recognized.
Mr. BRADLEY. Mr. President, as I
was saying, the amendment that I
have sent to the desk eliminates the
provision of the bill which provides $1
billion in tax relief to independent oil
and gas producers. The bill that we
are considering provides that tax re-
lief by eliminating the alternative
minimum tax preference for intangi-
ble drilling costs and percentage deple-
tion.
It does so even though the ordinary
tax treatment of intangible drilling
costs and percentage depletion gives
producers a leg up on other industries
and over integrated oil and gas pro-
ducers. We are making more gener-
ous a provision of the Tax Code that
is already very generous, and is al-
ready much more generous than that
provided other similarly situated in-
dustries.
Like others, I feel we need to take a
harder look at how the alternative
minimum tax is affecting national
investment. I think that this is a
legitimate inquiry. It is also impor-
tant to recognize why the alternative
minimum tax was instituted. We
wanted to make sure that corpora-
tions could not zero out their tax
liability by taking advantage of the
loopholes which were left untouched
in the 1986 Tax Reform Act.
In other words, it made no sense if
we eliminated some loopholes and left
others in, then put in the alternative
minimum tax to assure that all tax-
payers would pay some tax, and then
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removed preferences from the alterna-
tive minimum tax calculation.
As you recall, we were in a situation
prior to 1986 where there were very
high tax rates. There were very high
tax rates. The only problem was,
nobody paid the tax rates because the
tax base was riddled with loopholes.
So for those who were interested in
equity, they could argue: Well, we
have a 70-percent or a 50-percent tax
rate. Therefore, we are really hitting
the rich; even though the rich did not
pay anywhere close to a 50-percent
tax rate. It was more like a 19- or
20-percent tax rate, because they had
loopholes that allowed them to lower
their tax liability. So in 1986, we
eliminated the loopholes and lowered
the rate, a victory for both growth
and equity.
Since that time, of course, there
have been attempts to put back in
various tax loopholes. This is another
attempt to do that.
While I continue to think that the
best solution would be not to put
these loopholes in the Tax Code in the
first place, I do not think that we
should get in the habit of practices of
selectively taking them out of the
alternative minimum tax whenever an
industry is temporarily in trouble.
There are, in effect, many industries
which face tougher times in this peri-
od of sluggish growth. It is not clear
to me why independent oil and gas
producers should be treated better
than a lot of other industries.
For example, with the independent
oil and gas producers, you have the
immediate expense of intangible drill-
ing costs. Up to 70 percent is expend-
able. While in virtually every other
industry, what you have is capitaliza-
tion, what you have is depreciation of
up to 20 years. The oil and gas indus-
try already has some very strong pref-
erences in the Tax Code.
This would simply increase those
preferences for only the oil and gas
industry - not for automobiles; not for
airlines; not for any other industry.
Mr. President, just a few weeks ago,
we were debating the balanced budget
amendment on this floor. During that
debate, there was a lot of tough talk
about the need to curb spending and
to make tougher choices. Nearly ev-
ery supporter of the balanced budget
amendment decried the runaway Fed-
eral spending. It is important to re-
member, however, that we spend mon-
ey not only through the appropria-
tions process, but we also spend mon-
ey by giving tax breaks to various
special-interest groups.
If you do something - invest in this
equipment or drill wells • then you do
not have to pay taxes for a specific
amount. Your taxes are reduced.
That also increases the deficit.
But unlike the appropriations pro-
cess, which is subject to annual re-
view, our tax expenditures become, in
essence, quasi-entitlements which
remain until, in those rare moments,
we can muster the courage to take on
the narrow group that benefits from
the special tax break. Remember: The
cost of the narrow group benefiting
from the special tax break is that all
of us pay higher tax rates than we
otherwise would have to pay, and we
increase the Federal budget deficit.
So this amendment that I am offer-
ing would attempt to retain some
equity. The provision strikes $1 bil-
lion over the next 5 years, $1 billion
that would be tax relief to a very nar-
row group of taxpayers: Independent
oil and gas producers.
This $1 billion cost, over the next 5
years, would continue over the next 5
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years, and even more over the next 5
years. If a $400 billion budget deficit
should do anything, I think it should
make us think twice about creating
yet another leak in our tax base.
We can talk about tax rates, but
then you have to consider loopholes.
Those tax rates are just not paid. You
can talk about putting an alternative
minimum tax in to assure that people
will pay their taxes; and then, of
course, you put loopholes into the
alternative minimum tax. This is a
giant leak in the alternative minimum
tax base. The result will be that inde-
pendent oil and gas producers will pay
much less tax - $1 billion less tax.
Mr. President, during that balanced
budget debate, there was also a lot of
talk about the need to set national
priorities. That means ensuring that
each dollar of new investment goes to
our most pressing national problems.
Just a month ago, for example, in this
body, we agonized over whether we
could afford to spend $1 billion to
respond to the crisis in our cities. But
today, we seem quite willing to spend
$1 billion on oil and gas interests
without thinking twice about it.
Before we do, we should pause to
consider where the $1 billion that we
are now prepared to give to oil and
gas interests will not be spent.
It will not be spent to rebuild
burnt-out buildings in Los Angeles. It
will not be spent to fund Head Start
and provide thousands of children
with the start in life that should be
their right. It will not be spent on the
infrastructure our Nation needs to
build economic growth in the future.
It will not be spent on child care, on
AIDS, on research, on education, on
police. It will not be spent to reduce
the deficit, which is strangling the
credit markets and crippling our com-
petitiveness.
So when we spend $1 billion for the
oil and gas interests, we have to take
into consideration what we are not
spending the money on. All of those
other interests are competing for a
very limited amount of money.
We have big budget deficits. The
question is, Is there any principle that
we can follow to cut those budget
deficits? One principle might well be
equity. It is a fact that if you earn
more than $100,000 in America, your
average spending benefit is $9,280.
It is a fact that, if you earn $10,000
in America, your average Federal
spending benefit is $5,690. If you talk
about the tax benefits, people who
make more than $100,000 in America
get an average tax benefit, a benefit
from loopholes that have been put in
the code to avoid that individual pay-
ing taxes of about $9,280. While all of
us are paying more, the average Fed-
eral tax benefit to people making
more than $100,000 is about $9,280.
The average Federal tax spending
benefit for people earning under
$10,000 is about $5,690.
So, clearly, if we were approaching
this issue of the deficit, one principle
we might apply is, well, who needs
taxpayer help? People over $100,000
or people under $10,000?
Another principle might be, well,
where does the money go
generationally? The bulk of it, about
$400 billion, goes to people who are
over 62 years of age, while three pro-
grams, Head Start, child-maternal
health, the Women, Infants and Chil-
dren Feeding Program, get $5 billion.
That might be another way to look at
how we go about cutting the deficit,
maybe a generational adjustment.
A third might be, well, what do we
want the Federal Government to
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spend its money on to do things that
only the public representatives, gov-
ernment, can do - like police or educa-
tion or roads? Or do we really, at this
time of $400 billion budget deficits,
want the Federal Government to con-
tinue, as this provision envisions, to
expand specific subsidies to specific
industries?
It is my hope that people, when
they look at the deficit and what it is
doing to us in terms of crowding out
the financing in the credit markets
and what it is doing to us in terms of
things we are not able to spend money
on, would look very carefully at how
we spend money. We need to consider
both how we spend money through
the appropriations process and
through the Tax Code, by subsidizing
specific industries.
This is a classic amendment of sub-
sidizing specific industries, by provid-
ing $1 billion for the oil and gas indus-
try; not for automobiles, not for air-
lines, not for magazines or television,
not for anything but one industry.
We have a $400 billion budget deficit.
Is that the way we should proceed,
without recognition that times have
changed? I do not think so.
Mr. President, I am not arguing
here that our independent drillers are
not having tough times. I know the
rig count is down. I do not believe
that the alternative minimum tax,
however, is the primary cause of the
industry's problems.
Under the regular Tax Code, these
companies are allowed to immediately
write off costs which other taxpayers
have to capitalize and depreciate over
their useful lives. What does that
mean? That means, if you invest $1
million in a machine, you write off
that $1 million over 20 years or over
15 years. If you spend $1 million
making an investment under intangi-
ble drilling costs, you write off $1
million in that first year. This
amounts to a tremendous subsidy for
the oil and gas industry.
In addition, under the regular Tax
Code, these companies can knock off
15 percent of their income as a deple-
tion allowance, even after they have
fully recovered their capitalized cost.
In other words, they just continue to
write off 15 percent of their income
off the top, off the top.
All the alternative minimum tax
does is to ask them to give back a
portion of these breaks. It says, if you
have managed, through your intangi-
ble drilling costs or your depletion
allowances, essentially to zero out, to
pay no taxes because you have these
special benefits, then the alternative
minimum tax would ensure that you
pay some tax. That is all the alterna-
tive minimum tax does.
This amendment would allow, when
you combine the intangible drilling
costs and the depletion allowance, a
near zeroing out of liability. Now, if
you only had percentage depletion
allowances, you might end up having
to pay some taxes. Because there still
will be restrictions in the code, you
cannot take more than a 50-percent
credit. But, if you combine intangible
drilling costs and depletion, you are
still in that rare position of being able
to zero out, or, if not zero out, let me
say, get very close to zeroing out tax
liability.
But we have been down this path
before. In 1990, we gave the oil and
gas industry $1.1 billion of alternative
minimum gas relief under the guise of
a special energy deduction. In 1990,
we gave $1.1 billion. The deficit, as I
recall, was around $340 billion in
1990. And now, when the deficit is
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$400 billion, we give another $1 billion
in relief to one industry.
Given the very real fiscal crises our
country is facing, we simply cannot go
on with business as usual. We simply
cannot provide tax breaks to every
industry which is facing the bottom of
a business cycle.
Does anyone believe drillers are in
bad shape because they are not al-
lowed to fully write off their intangi-
ble drilling costs? Does anybody in
here believe that? Drillers are in bad
shape because oil and gas prices are
low. If natural gas was selling at $2
or $2.50 per mcf or oil was selling at
|30 per barrel, we would not be debat-
ing this provision today.
But this bill does not say that these
tax breaks will be taken back when
the industry recovers. If you were
just providing relief to an industry,
you could say these are tough times,
we will give it a little help, but when
the industry gets flush again we will
take it back. That is not what this
provision says. This provision does
not acknowledge that we are at the
bottom of the business cycle. Let us
give them some help and it will stay
in the Tax Code forever.
So when oil prices go up to $30 or
$25, the oil industry will still have the
benefit of these tax breaks because
these tax breaks are permanent.
Prices are low today, so we are sup-
posed to react by throwing $1 billion
to the independent oil and gas produc-
ers.
I am a Senator from a consumer
State. When prices go back up for
New Jerseyites, who are struggling to
pay higher prices for oil and gas, or
when the residents of distinguished
Presiding Officer's State of Massachu-
setts are paying higher prices for their
heating oil, are we going to step in
and give those consumers a tax break
for their higher heating oil bills? No
way. The tax break will be perma-
nent for the oil and gas industry and
the consumer will get nothing in ex-
change.
Mr. President, I opposed the bal-
anced budget amendment because I
saw it as a substitute for real leader-
ship and making tough choices. We
are all elected to make tough tradeoffs
and choices. That comes with the
office. The question I would like the
Members to think about today is,
given the $1 billion - $1 billion - we
have here, should we spend it to rein-
state tax breaks for the independent
oil and gas industry or should we
spend it on children, on deficit reduc-
tion, and on our future? This amend-
ment is offered to make that point:
That we cannot, with $400 billion
budget deficits, proceed with business
as usual.
Business as usual has always im-
plied that whoever can exert the
greatest power and influence on the
process always takes home more than
those who do not exert power in the
process. It is not a mystery why the
oil and gas industry has managed to
recoup better than any other industry
from the efforts in 1986 to remove
special interest tax provisions. They
are big and they are powerful.
In 1990, they got $1.1 billion. This
is an amendment to give them anoth-
er $1 billion. But that billion dollars
will be money that will be taken away
from deficit reduction, from invest-
ment in education, from the cleanup
of the environment and all the other
purposes which, if Government does
not do them, will not get done. It is
that simple choice that I pose today
for the Senate in this amendment.
I reserve the remainder of my time.
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The PRESIDING OFFICER. Who
yields time?
Mr. BENTSEN. Mr. President, I
yield myself 10 minutes.
I listened with great interest to my
friend from New Jersey talking about
tax expenditures, subsidies to specific
industries, interest groups. New Jer-
sey is the home of great pharmaceuti-
cal companies, major companies, pow-
erful companies with great influence.
Today they get a tax break of a mini-
mum of $70,000 per employee they
hire in Puerto Rico; up to $150,000
per employee. The Joint Tax Commit-
tee says that is $3 to $3.5 billion a
year - $3.5 billion a year cost to the
Treasury - cost to the taxpayers, cost
to dependent children, cost to Medic-
aid. All of those people my friend from
New Jersey discussed.
Are we to turn our backs on the
fact that 75 percent of the merchan-
dise deficit that we have today in
trade is attributable to oil imports?
That is how much more money we
owe to the people of the world. That
is how much more we are going back
into debt.
Powerful interests? What we are
talking about here is not the big oil
companies. They are headed overseas,
that is where they have gone for their
exploration and their development.
We are talking about the independent
producer. We are talking about the
fellow who has some marginal wells
that may be producing 5 to 6 barrels
a day with substantial costs in keep-
ing them open. If he does not get
some relief he caps them. You cannot
blame him for that. We are trying to
keep them working at it, keeping
them open.
This is an industry that is going to
be restored to great prominence? I do
not know anybody who really believes
that We are talking about slowing
the decline, that is what it amounts
to. We are talking about some
400,000 jobs lost in the domestic oil
and gas industry in just the last de-
cade. We are talking about those
independent producers being thinned
by at least 50 percent in the last de-
cade. The rest gave up, went broke,
out of the business. Domestic oil and
gas production has been reduced by 15
percent in the last 6 years; production
is at the lowest rate it has been in 30
years. And I sure do not see much of
a bump coming out of this piece of
legislation. But I do think it can slow
the decline and it can help.
What we have also put in this legis-
lation is other things to urge conser-
vation and to put in incentives for
conservation and alternative fuels -
that is a Senator from Texas talking
- alternative fuels to try to cut down
the dependence on oil and gas in this
country. That is what we are talking
about, concern for the future of our
country. This is not something
dreamed up in the last minute. This
was in the February tax bill, this is in
the House bill - a deep concern. And
we made sure they could not zero out
on it, even so, insofar as paying for
those taxes.
It is a significant problem we are
facing and it is important that we
address it. We have been down this
road before. What we are talking
about is trying to help stem the de-
cline in the production in this coun-
try, help reduce the amount of depen-
dence on foreign interests, help en-
courage the use of alternative fuels.
So I urge my colleagues to oppose this
amendment by my distinguished
friend and see if we can make some
headway on this problem.
Mr. JOHNSTON. Will the Senator
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yield 7 minutes?
Mr. BENTSEN. I would be pleased
to yield 7 minutes to the distinguished
chairman of the Energy Committee.
Mr. JOHNSTON. Mr. President, I
wonder if Americans understand just
how bad the situation is in this coun-
try with respect to oil and gas. I won-
der how much the Congress knows
about it. Mr. President, the Congress
could not know how bad the situation
is and still offer up this kind of
amendment to strike the AMT.
The house is on fire. It is time for
people to wake up and to take action.
In the last 10 years we have lost more
oil and gas jobs in this country than
we have in steel, than we have in
textiles, or than we have in automo-
biles. We lost 50,000 jobs last year.
Mr. President, we are due to lose
another 50,000 it is estimated by
PWA, this year - this year. We have
the lowest rig count in over 50 years,
the lowest rig count in history. In the
last 5 months we have had the lowest
production rate in this country in 40
years. Oil and gas people are bailing
out of this country, at least the ma-
jors are, just as fast as they can get
out of the country.
Their attitude is, Mr. President,
they are subject to environmental
terrorism, to use their phrase. Maybe
that is the wrong phrase. Maybe it is
environmental sensitivity. They re-
gard it as environmental terrorism.
In any event they are leaving. Any-
body who thinks the majors still want
to drill in America, you better wake
up and smell the coffee.
Mr. President, as we speak there is
an Interior Appropriations markup
going on downstairs, and I understand
an amendment may be offered to can-
cel all the leases in Bristol Bay in
Alaska, cancel outright, which would
be a taking under the fifth amend-
ment and would subject us to one-half
billion dollars in payments. Who does
this come from? From the majors.
They want to sell out and get out.
They want to leave.
Down in the Gulf of Mexico in the
last lease sale, there were fewer acres
offered, there were less dollars paid
than in the last four decades. Mr.
President, they are bailing out. They
are leaving. And what is the trend?
Mr. President, this is it - here is con-
sumption and here is production. And
everybody knows those figures.
So what do we want to do? In this
country do you know what the effec-
tive tax rate on independents is? The
effective tax rate? It is 72.5 percent;
72.5 percent.
We are sending the majors out of
the country. We are inviting them
out because every time they make a
discovery here, we will not let them
drill, we will not let them produce.
They have production off the State
of California now that has been dis-
covered and ready to go. But they
will not let them produce that for
various environmental reasons. OK,
that is our decision. We have now
provisions pending in this energy bill
and the House provisions that would
say with respect to a trillion cubic feet
of gas discovered off Florida that you
cannot produce it. OK, if that is the
way the House wants to play. But do
we want to run the independents out
of this country, as well as the majors?
That is what the tax policy of the
United States now says because the
effective tax rate is 72.5 percent. The
foreign tax rate, the effective tax rate,
for the same oil produced elsewhere
averages 42.9 percent, or almost it is
a little more than half as much the
effective tax rate.
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Mr. President, it strikes very dose
to my home State where the predic-
tion is that we will lose 2,500 addition-
al jobs this year. Bankruptcies are at
an all-time high, and they have been
for these last 3 or 4 years. There are
closures of all the people in the drill-
ing industry and the service industry,
who produce muds, who make pipe,
who produce drill bits, who have off-
shore boats. They are leaving in
droves and, Mr. President, it is the
biggest economic bombshell that this
country has seen this decade in terms
of jobs, exceeding automobiles. Oh, we
hear our friends from the automobile
producing areas come in and talk
about automobiles and we agree with
them. But, Mr. President, it is not as
bad as oil and gas.
So what did the Finance Committee
do, Mr. President? It said that these
two items, intangible drilling costs and
depletion, would no longer be prefer-
ence items for the purpose of the al-
ternative minimum tax. Why is this
so important? It is so important now
because the independents who are
subjected to this alternative minimum
tax are basically not making any mon-
ey because the price of crude oil is
down. In real terms, the price of
crude oil is selling for less than a
third of what it was at its peak. So
they are not making any money now.
My friend from New Jersey says
that this alternative minimum tax
would remain a preference item - that
if we pass this, it would remain a
preference for the independents even
when the price of oil goes up. Mr.
President, when the price of oil goes
up, then the alternative minimum tax
doss not have its bite because they
would be making money and would be
subjected to the ordinary tax rates.
So this is a problem, Mr. President,
that is brought shout by the relatively
low price of crude oil and by the fact
that independents are, therefore, go-
ing bankrupt in record numbers and
are not making any money.
If we are to avoid the problem with
the low rig count, the only way to do
that is to have some incentive. I have
here, Mr. President, a chart that
shows the rotary rigB in operation. At
their peak, they were at 4,000 in 1981.
The latest count, which is the lowest
count since 1942 when they began to
keep these records, is 667 rigB.
The PRESIDING OFFICER. The
Senator's 7 minutes have expired.
Mr. BENTSEN. I yield an addition-
al 2 minutes to the Senator.
Mr. JOHNSTON. I thank the Sena-
tor. Mr. President, the only way to
reverse this trend and to keep what
few remaining rigB there are is to do
away with this 72.5 percent effective
tax on independents and put them in
a position where they pay the same
tax rates, effectively, as other Ameri-
cans. That was the reason that the
Senator from New Jersey was behind
tax relief, a uniform tax rate.
As it happens, as it effectively
works, Mr. President, the indepen-
dents are subject to this effective rate
of 72.5 percent making it not worth-
while to drill for oil and gas.
I cannot think of anything more
opposite from sound energy policy
than to adopt the Bradley motion to
strike. I commend the Senator from
Texas, the chairman of the Finance
Committee, and what they have done
in putting in this alternative mini-
mum tax provision. It may not save
the independents by itself, but it will
go a long way toward reversing that
trend of bankruptcies, toward revers-
ing that trend of rotary rigB which
continue to drop and toward bringing
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some degree of equity to the Tax
Code, as far as independent drilling
operators in this country are con-
cerned. I stronger support the posi-
tion of the Finance Committee and
strongly oppose the Bradley amend-
ment. I thank my colleague.
The PRESIDING OFFICER. The
Senator from Texas.
Mr. BENTSEN. Mr. President, I
appreciate the comments of the distin-
guished chairman of the Energy Com-
mittee who is well versed in this sub-
ject
I yield 5 minutes to my friend, the
Senator from Oklahoma, whose State
has an imminent knowledge, concern,
and problem with the state of decline
in the oil industry.
Mr. BOREN. I thank the chairman
of the Finance Committee, my col-
league from Texas.
Mr. President, I want to associate
myself with the remarks that have
already been made by the chairman of
the Energy Committee, my colleague
from Louisiana Both the Senator
from Texas and the Senator from
Louisiana have made an enormous
contribution to the energy policy of
this country.
For some reason, Mr. President,
when you mention the word 'oil' as
opposed to some other industry or
some other commodity, it seems to
bias the debate about economic terms
and economic policy. It should not.
We should step back and look at the
facts as they are, without putting on
blinders because oil happens to be the
industry involved.
If there was some other industry,
the kind of rhetoric would be totally
different. If we were talking about
the steel industry, or the textile indus-
try, or the auto industry, we would
not have the same kind of attempt
made to put an unfair tax burden on
those segments of the economy until
we drive them into virtual extinction.
But for some reason, there is some
kind of emotional baggage associated
with the word 'oil* that makes it very
difficult for us to discuss it in an ob-
jective way. I hope we can suspend
that bias for a moment and look at
the facts as they are.
The U.S. oil and gas extraction
industry has lost more than 400,000
jobs since its peak employment in
1962. More jobs were lost than in the
automobile, textile, steel, and electron-
ics industries. So when we talk about
a significant, a critical part of our
economy being devastated, we are all
familiar with what has happened in
the steel industry, we are all familiar
with what has happened in electron-
ics. We know what has happened
with automobiles. But when you look
at the domestic energy extraction
industry, the domestic energy produc-
tion industry in this country, it has
been harder hit than any of these
other industries, losing 400,000 jobs.
Indeed, 45,000 more jobs have been
lost in just the last 10 months.
The rig count for the first week of
July stood at 689, a startlingly high
level. During 1992, in this year alone,
the all-time record for the lowest rig
count in history has been broken five
times. What has this done in terms of
our national economy? It has caused
the importation of foreign oil to go sky
high. This affects our balance of
trade deficit. Last year, crude oil and
petroleum product imports accounted
for more than 50 percent of the
Nation's trade deficit, and in the first
quarter of this year, nearly 75 percent
of the trade deficit was from oil and
petroleum product imports.
Mr. President, we hear people talk
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about the trade imbalance. We hear
talk about needing to rebuild the eco-
nomic strength of this country. We
hear talk on this floor day after day
about the effect on the economic inde-
pendence of this country of continuing
to build up external debt held by
those in other countries. This situa-
tion really strikes at the heart of the
national economic sovereignty of this
country. And, yet, some Senators
want to put one more nail into the
coffin of a domestic industry whose
collapse has led to the greatest in-
crease in the trade deficit of any sin-
gle industrial decline in this country.
This is a clear example of why we
need to look at the facts as they are,
put out of our minds for a moment
that we are talking about 'oil' with all
its political history, and look at eco-
nomic facts and look at the national
interests.
I am not speaking as a Senator
from Oklahoma, which happens to
have an ever-dwindling amount of oil
and gas production because of the tax
climate and other factors. I am talk-
ing about what is good for the United
States of America. It is not good for
the United States of America to con-
tinue to have this kind of decline in
our domestic petroleum industry.
One has only to look at what it has
done to the trade deficit to know that
is true.
In the second place, out tax policy is
absolutely restructuring this industry.
It is very hard for this Senator to
understand why those who have come
to the floor in the past to denounce
the Trig international oil companies' -
that is the term they have used - have
supported tax policies which are virtu-
ally destroying the independent sector
of this industry, the small domestic
sector. Independent producers, on the
average, employ about five full-time
employees other than the drilling
crews which they from time to time
send out, or used to send out, before
the rig count dropped so low.
Why do they want to restructure
the industry by completely removing
the domestic independent producers
from the industry, driving them into
extinction and leaving only a few,
large international companies which
conduct more and more of their pro-
duction and other activities offshore,
and have moved more and more of
their jobs outside the United States?
We have had a 50-percent decline in
the number of independent producers
just since 1986 in this country, falling
from about 15,000 down to 8,000 com-
panies, and that number continues to
drop. And yet it is the independent
producers who bring some balance to
this industry. It is the independent
producers who are active inside the
boundaries of the United States. It is
the independent producers who drill
85 percent of U.S. exploratory wells.
And so we have a tax policy that is
driving these people out of business.
As the Senator from Louisiana just
said, they pay an effective tax rate of
over 72 percent, according to a recent
study by the University of Arizona.
Here we have a chance to finally do
something positive, after all of these
years of decline, to try to put some
balance back into the industry, to try
to bring some vitality back, to try to
put some of these people back to
work, to try to do something to re-
verse the trend in terms of our trade
deficit We have a chance to do some-
thing positive. According to recent
surveys of independent producers, if
the alternative minimum tax can be
amended in this way, it will result in
the drilling of 17 to 25 percent more
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domestic wells in the next year.
Let us do it. Let us take that
chance. Let us turn around the situa-
tion. Let us begin to move in a posi-
tive direction.
Now, Mr. President, no one will
escape tax liability.
I might ask the Senator for 2 addi-
tional minutes.
The PRESIDING OFFICER. The
Senator's time has expired.
Mr. BENTSEN. I yield 2 additional
minutes to the Senator from Oklaho-
ma.
Mr. BOREN. I thank my colleague
from Texas and I thank the Chair.
The way this provision is drawn, a
taxpayer cannot, through the use of
deductions for excess intangible drill-
ing costs, reduce its income more than
40 percent. There are three other
provisions currently in the tax laws
that would make it impossible for any
producer to avoid paying some tax
liability as a result of the change af-
fecting percentage depletion that is
proposed in this bill.
So it is simply not true that there
are going to be people completely
avoiding a tax liability. What they
will have is a little breathing room.
What they will have is a little relief
from a 70-percent effective rate.
What they will have is a chance to
keep some wells in production that
are now at the break-even point and
that are otherwise going to be
plugged, marginal wells by the thou-
sands in this country that are going
out of business every year. These oil
and gas resources are lost forever, and
the resources are ones on which the
environmental costs have already been
paid.
What a mistake it is for us to do
that. What it is going to do is cause
some producers who are now actually
losing money, who have no net in-
come, still having to pay the alterna-
tive minimum tax. We had specific
and concrete testimony in the Taxa-
tion Subcommittee of the Finance
Committee hearings on this point.
People testified who have no net in-
come, who are losing money, but be-
cause they are doing what we told
them we wanted them to do in the
national interest - drill wells, try to
put some reserves back in place in
terms of our national energy security
- they are being penalized under the
alternative minimum tax.
Mr. President, when we had to
make the very difficult and trying
decision to put young Americans at
risk in the Persian Gulf, in conflict,
their very lives at risk, we said never
again are we going to be without an
energy policy in this country that can
begin to chip away at this total depen-
dence on foreign sources of energy.
Finally, we have a chance to take
one small step, not a big step, a tiny
step, toward an energy policy that will
encourage that. And here we have an
amendment that says 'No, we do not
want any progress. For goodness
sakes, let us not do anything that
might help the trade balance. For
goodness sakes, let us not do anything
to preserve the independent sector; let
the big oil companies move all their
jobs, all their production, all their
activity offshore.'
How long are we going to wait, Mr.
President, before we wake up? How
many more times will we have to face
an international emergency of the
kind we faced before? How many
times will we have to look the Ameri-
can people in the eye and say we have
no energy policy; we have nothing to
stop the death of independent produc-
ers in this country, we have nothing
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to increase production of domestic
reserves?
We have a chance to do something.
Let us do it now.
Let us turn down this amendment.
Let us take a small step in the right
direction.
The PRESIDING OFFICER. The
Senator's time has expired.
Who yields time?
Mr. BRADLEY addressed the Chair.
The PRESIDING OFFICER. The
Senator from New Jersey.
Mr. BRADLEY. I yield 10 minutes
to the distinguished Senator from
Oregon.
Mr. PACKWOOD. Ten minutes.
The PRESIDING OFFICER. The
Senator from Oregon is recognized.
Mr. PACKWOOD. I thank the
Chair.
First, let me agree in part with
what the distinguished Senator from
Oklahoma just said about having no
energy policy in this country, and,
indeed, we do not have a very good
energy policy. It is understandable
how we initially got hooked on oil -
and I will use that expression 'hooked
on oil/ and I do not mean it malevo-
lently in any sense of the word.
Oil was plentiful earlier in our his-
tory. It was cheap, comparatively
speaking, and fungible. It was easily
changeable from one form or another
in terms of its uses. And so we used it
not just for gasoline in cars, we used
it to generate electricity, we used it
for all kinds of things because we did
not think we had to save it or con-
serve it.
Gradually, oil is running out in this
country, and what oil there might be
able to be found, we pass all kinds of
restrictions that prohibit the drilling
for it.
So it is no wonder we do not find
some oil when we say this is off limits
and this is off limits and this is off
limits and this is off limits. Now the
oil production is going down.
It is amazing how that happens.
But there is no reason why this coun-
try could not be independent in ener-
gy if it wants to, although it would
probably not be on an oil base; it
would be probably on a natural gas,
North American free trade base or on
coal, of which we have a 400-year
supply. We can produce all the energy
we need in this country from coal and
use oil for what you have to use oil
for, but that is neither here nor there
from the standpoint of this tax.
But we are not short of energy.
Japan is short of energy. We are not.
It is the issue of the minimum tax
itself that bothers me and not because
it is the oil industry.
I do not want my good friend from
Oklahoma or the chairman of the
committee to think I am picking on
the oil industry when I support the
amendment of the Senator from New
Jersey.
I want to go back before we passed
the tax reform bill in 1986 and re-
member what the situation was. Ev-
ery one of us faces this when we go
home. You go home. You go to the
coffee shack, in my State it would be
of the lumber mill. Maybe in South
Carolina, North Carolina it is the
textile mill. The people, if they were
lucky then, were making $19,000,
$20,000 a year in 1985 and 1986. And
just as you would get to the mill out
would come some story from the Trea-
sury Department about the Treasury
Department announced today that
800 people made over $500,000 last
year and paid no taxes, no taxes. And
this poor devil who is working in the
mill and making $20,000 a year paid
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$1,500 or $2,000 in Federal income
taxes last year and cannot understand
how somebody could make $500,000
and pay no taxes. And you would say
to him, well, it is because of preferenc-
es. He bought municipal bonds,
school bonds. You do not have to pay
any taxes on them, and it lowers your
taxes. He gave a great painting to the
Metropolitan Museum of Art.
We had all kinds of devices, dodges,
call them what you want, that allowed
people to have immense gross income,
and by the time they figured their
preferences and deductions, they had
zero taxable income. And it was un-
fair. You cannot explain to somebody
making $20,000 a year how somebody
can make a half a million or more and
pay nothing.
So in 1986 we changed the Tax
Code. We passed a very stiff minimum
tax which was intended to make sure
that all taxpayers would pay a mini-
mum level of tax on their economic
income, no matter what kind of de-
ductions they had. And we did not
try to really go through and say all
right, this is a good deduction, this is
a good deduction, this is a good one,
this is a bad one, because we knew if
we said that, the ones we left as good
deductions, people would use and they
would pay no tax.
We thought it important that every-
body of wealth pay some tax in this
country, no matter how justified their
deductions, so that the public would
conceive that the code had some fair-
ness. Now we are being asked to
carve out a segment of the oil and gas
industry for paying the minimum tax.
Here is my quarrel. I am not berat-
ing the oil and gas industry. It is this
particular industry we are now going
to carve out, because the energy bill
before us today basically guts the
minimum tax rules for a segment of
the oil and gas industry.
The bill permanently repeals the
minimum preference for intangible
drilling costs - IDC's as we say in
Washington • and percentage deple-
tion of independent producers. As a
practical matter, these changes will
exempt most oil and gas producers
from the minimum tax.
The argument is we need to do that
in order to encourage the production
of oil. I am not sure that is right, but
that is the argument that is made.
Although this is not the first time
the oil and gas industry has received
minimum tax relief, just 2 years ago
in the 1990 budget bill the oil and gas
industry got almost $800 million of
relief from the minimum tax. Now,
not even 2 years later, if this passes,
they will get another $1 billion of
relief.
My quarrel is not with the oil and
gas industry. It is what is going to
happen to all other industries when
they see this, because if you are in the
oil and gas industry you see the world
through the oil and gas industry eyes
and you think this is the be all and
end all of civilization. But if you hap-
pen to be in the banking business or
president of the university, or in the
maritime industries, here is what they
are going to want.
We will go right down the line. In
taking care of it in the tax bill we are
going to consider something for educa-
tional institutions. It is called what is
known as donation of appreciated
property.
Prior to 1986, if you had a painting
you bought for $100,000, you are rich,
you keep it 10 years, worth $1 million,
you donate it to a university, took a
$1 million tax deduction, and you
found many people were escaping the
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minimum tax in this way, partially.
So we said henceforth you can only
deduct the value of it when you got it:
$100,000. There were tremendous
objections from universities and art
museums. It turns out they were
concerned with not the painting; they
are concerned with the value of stock
from $100,000 to $1 million. You give
them the stock, they do not keep it.
They sell it to get the money. But
they do not get as many donations if
you can only deduct your basis,
$100,000. So they want an exemption
from the minimum tax.
The geothermal industry now has a
tax credit for the production of geo-
thermal energy. They, however, can-
not use the credit against the mini-
mum tax. They would like an exemp-
tion to use it against the minimum
tax.
Companies with overseas opera-
tions, with foreign tax credit, can now
be offset. They would like it offset.
The maritime industry has what is
known as the capital construction
fund. They can put aside funds in the
capital construction and pay no taxes.
They can invest in the construction,
but they would like it to operate in
conjunction with the minimum tax
and be given an offset against it.
Banking: bad debts. A bank has
bad debts. They try to get the debts
down. They cannot offset them
against the minimum tax. And then
all capital intensive industries - steel
and autoe - that have immense capital
investments want a dramatic change
in the minimum tax so they are not as
adversely affected as they had imag-
ined in their mind about it.
So as we start down this road you
are hard pressed to say to the auto
industry, to the steam industry, to the
shipbuilding industry, charities, mari-
time industry, well, the oil and gas
industry is unique. Yes indeed. Ev-
ery industry is unique. Oil and gas is
different from shipbuilding. Ship-
building is different from auto con-
struction. They are all different from
running universities.
Each of the industries that wants
an exemption from the minimum tax
says we are unique and the merit for
us is greater than for any other indus-
try, and if you gave it to the oil and
gas industry how in good conscience
can you not give it to us?
There is no way you can explain it
to them. If you are a university presi-
dent, or a bank president that has bad
debts from your predecessor through
no fault of your own, you are trying to
get the bank into some kind of liquid
position, the bank president comes
and looks you in the eye, says it is not
fair that you give this to the oil and
gas industry and not give to the bank-
ing industry, which is the very heart-
beat of America, that finances all the
small businesses in the country. How
can you deny it to us?
The university president comes in
and says we have needs for buildings
and educating people, and the Govern-
ment is not giving us enough money
for education, and you are taking it
away. They are raising money for the
oil and gas industry, and how can you
say no in good conscience?
So that is my quarrel. It is not a
quarrel with the oil and gas compa-
nies.
I can see what is going to happen.
We will start to grant these exemp-
tions from the minimum tax, and it
will eat away at our tax base. And
then we will raise the tax rates to
make up for the money that we have
lost - exemptions from the minimum
tax, and because we raised the tax
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rate it makes it more difficult for
industries to amass profits. They will
want more exemptions from the high-
er tax rate, which will diminish the
amount of money. We raise the rates
maybe in 10 or 15 or 20 years when
the rates are going up, 45, 50 percent
on corporations, and 60 or 70 percent
on individuals. We will go through
the whole thing we went through in
1986, and we will say this is ridicu-
lous.
We raise the rates and give exemp-
tions from the rates because the rates
are so high that we cannot get the
people to do the economic activities we
want. We will give them exemptions,
and we will be right back to what we
found in the millions when we will
have the IRS and Treasury Depart-
ment saying, how many people last
year made $1 million and paid no tax?
So that is my quarrel, Mr. Presi-
dent. I hate to see us start down that
road. But it is so easy at this time to
say yes, your case is justified, Mr.
College President; your case is justi-
fied, Madam Bank President; your
case is justified, entrepreneurs. For
geothermal energy, I will make an
exemption for you. But it becomes a
'for you and you and you.'
That is why I very strongly support
the amendment of the Senator from
New Jersey.
Mr. DOLE addressed the Chair.
The PRESIDING OFFICER. The
Senator from Kansas.
Mr. DOLE. Mr. President, there is
only one good reason for including the
alternate minimum tax proposal in
this bill - it is the single most impor-
tant provision in this legislation to
stimulate the exploration and produc-
tion of oil and natural gas in the Unit-
ed States.
And I want to remind my colleagues
what oil and gas means to us as a
nation. I have heard speech after
speech on this floor, in political cam-
paigns and in the media that our
foreign trade deficit is too high, that
America is not competitive, that our
trading partners are simply leaving us
in their dust. But, fully two-thirds -
that is two-thirds - of our foreign
trade deficit is due to imported oil.
The only trading partners leaving us
in their dust are the foreign oil pro-
ducers. No one in this body, no one in
any other forum, should be allowed to
utter the word 'competitiveness1 with-
out suggesting a way to reduce the oil
deficit.
The AMT provision addresses the
trade deficit, the oil deficit. It will
help draw necessary capital to the oil
drilling business in our own country.
It is unfortunate that my colleagues
do not support the other big key to
reducing the foreign trade deficit -
allowing the environmentally responsi-
ble development of the Outer Conti-
nental Shelf and Arctic National Wild-
life Refuge. We have handcuffed our
Nation and our economy. We have
said, Let us start our competitiveness
at a disadvantage, let us agree to step
up to the plate with two strikes al-
ready against us.
The Finance Committee recognized
these facts in our markup, we had a
vote on the Bradley amendment, and
the committee voted we simply could
not, as a country, afford to let this
trend continue.
We have heard about the rig count,
the key figure to our energy future.
The rig count is down all right, right
down to the lowest levels of all time.
As a matter of fact, just this year we
have set six all-time low rig count
records - six all-time low level records.
This is no give away to the oil in-
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dustry. The oil industry is unique in
its need for huge amounts of up front
capital. So unique that under current
tax law has the highest effective tax
rates of any industry in the country.
I ask unanimous consent that a
copy of a table from Tax Notes of May
4, 1992, be printed in the Record at
this point.
There being no objection, the mate-
rial was ordered to be printed in the
Record, as follows:
••• TABLE DATA UNAVAILABLE •••
Mr. DOLE. Mr. President, let me
tell you one thing the chart shows.
The oil industry has an effective tax
rate of 72.5 percent. That compares
to a national average of 31.5 percent.
The chairman of the Finance Com-
mittee mentioned the pharmaceutical
industry in New Jersey. That industry
has a tax rate of 30.6 percent, less
than half the effective tax rate on the
oil industry.
How can somebody say we are pro-
posing a big giveaway when we are
just trying to level the playing field?
Once again, Mr. President, the only
way we can make a big dent in the
foreign trade deficit is to decrease oil
imports by increasing energy produc-
tion in this country.
The measure before us is the most
effective way to do that. I urge my
colleagues to reject the Bradley
amendment and to make the United
States competitive again.
Let me add one other thing. We
had the big gulf crisis, and it was all
about oil. So we spent billions and
billions of dollars, going to the gulf,
and most of it we got back from our
allies. We were only there for three
letters • o-i-1. We have had war after
war, and crisis after crisis, because of
oil. We are becoming more and more
dependent.
If we want additional gulf crises, or
other crises about oil, we can continue
to shut down the oil industry. I might
also say we are talking about, primari-
ly, the small producers - independents.
There are not many left; do not bury
this industry. We may need oil again
in a future crisis in America.
Mr. BENTSEN. I yield 5 minutes to
the distinguished Senator from Colo-
rado.
Mr. WIRTH. Mr. President, I thank
the chairman for yielding. I wanted
to take a few minutes to once again
remind my colleagues of what it is
that we are about here on the Senate
floor today, and what we are about in
the Congress over the next few weeks.
We are about passing the first ma-
jor energy bill that we have done,
probably ever. This is an enormously
important endeavor, at a time when
the country is looking with some skep-
ticism at Congress and what it does;
and can we deliver, and can we do
this and that.
We are on the edge of a major
achievement. We should all feel very
good about that set of accomplish-
ments. We are coming down the line,
and we have to go through conference.
But this is a singular achievement for
this Congress.
Central to this energy bill is a major
change in our national thinking. For
the first time, we have an energy bill
saying that we are not going to con-
tinue the same course. We are going
toward a course on energy that has a
number of other alternatives to it -
not just traditional oil; not just tradi-
tional dependence on fossil fuels. But
we are going to change our way of
thinking. We are going to put a much
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greater emphasis on conservation. We
have done that, and the House has
done it, and we have the strongest
conservation measures we can develop
and get passed.
We are also - and this is very impor-
tant to this amendment - changing
fundamentally our view of the fossil
fuel mix. For the first time, we have
said that natural gas, as an industry
- that this enormously promising
American industry - has the opportu-
nity now to come fully into its own.
And that by increasing our depen-
dence on natural gas - which is a fuel
right here at home; which is a fuel
that is clean, environmentally benign;
which is a fuel that is going to gener-
ate more American jobs; it is going to
cause less export of scarce American
capital; it is going to be good for our
national security; natural gas is this
win, win, win fuel • that by encourag-
ing natural gas, with respect to how
utilities are operating, we are moving
away from this terrible dependence on
imported oil. This is a major accom-
plishment and change in this legisla-
tion.
One of the keys to this is taking
advantage of the reserves of natural
gas that are available to us. In Loui-
siana, in the San Juan Basin, and in
New Mexico, going up into Colorado,
in the overthrust bill, we have im-
mense reserves of natural gas, and
they are finding them all the time.
If this amendment passes, what we
are going to do is take a great deal of
the work we have done on this bill
and say we were not really serious
about it. We are not going to say to
this industry, which - as the Senator
from Oklahoma pointed out and the
Senator from Louisiana pointed out -
has been decimated over the years:
We are going to further decimate this
industry. We are not serious about
the energy bill. We are not serious
about taking advantage of this domes-
tic resource. We are not serious about
going out and finding new reserves.
We are not serious about developing
new technologies to develop the re-
serves we already have.
Rather, what we are going to do is
go around and once again punish this
industry that we have said, on the
other hand, we wanted to encourage
and support.
This does not make any sense at all.
If we are serious about this as a com-
prehensive energy bill and a bill that
is making a major transition - and a
lot of my friends who view the world
in something of a similar way, the way
that I do, in terms of our need to
make a change; in terms of skepticism
of the old ways of doing business in
energy; of moving toward conservation
and natural gas; and moving toward
domestic fuels - we are doing that in
this bill. And one of the ways that we
can continue to do that is to encour-
age exploration of the natural gas
industry.
This amendment would have exact-
ly the opposite effect. If we are seri-
ous about this bill, let us be consistent
in this legislation. Let us be consistent
in the transition to natural gas and
consistent in our support and encour-
agement of that key domestic indus-
try.
If you vote for the Bradley amend-
ment, what you are doing is saying:
That rhetoric was all very nice about
what we were going to do in the ener-
gy bill, but we were not really serious
about it.
I think we ought to be serious about
the energy bill. We ought to pass the
bill as rapidly as possible. I think we
ought to turn down this amendment,
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and most of the other amendments, as
well, and get to conference and get
this bill in front of the President, who
is going to sign it and make it part of
national law. It is very important for
us to do.
I thank the chairman for yielding
time.
Mr. BRADLEY. Mr. President, I
yield 10 minutes to the Senator from
Minnesota.
Mr. WELLSTONE. Mr. President,
first of all, let me just respond to a
couple of statements that have been
made on the floor. I consider myself
to be a Senator that is very serious
about energy policy: one that is re-
spectful of the environment that
makes us more independent and en-
hances national security.
I think we have a transition we
have to make, with an emphasis on
renewables and safe energy. We have
yet to even reach the potential of
domestically produced clean fuels, like
ethanol and all of the rest.
But I reach a different conclusion
about this particular proposal. It is
much like the Statement of the Sena-
tor from Oregon. This $1 billion in tax
breaks is a tax expenditure, and ex-
penditure of money - money that we
do not have. It is a loss of revenue.
The oil industry asks for relief.
They already have some relief from
the alternative minimum tax, and
now they want more. I just do not
think this proposal meets the stan-
dard of equity.
The auto industry is in trouble.
Senator Packwood said it well. The
steel industry is in trouble. Bankers
are in trouble. A lot of business peo-
ple are in trouble who do not get relief
in this bill. There does not seem to
me to be equity to this. I do not see
how we explain this proposal.
Moreover, a lot of people in our
country, regular people, are really
feeling the strain. They really feel the
strain, and they do not see the relief
coming.
Mr. President, I wanted to take a
somewhat different cut, and explain
my opposition to this proposal, since
there are Senators who support it
that I certainly respect.
Last week, before the Subcommittee
on Families and Children, Senator
Dodd's subcommittee, a woman
named Bernice Price testified.
Bernice Price is 13 years old. She
lives here in Washington, DC, and she
testified before our Subcommittee on
Families and Children. She lives in a
housing project. She told us:
We did not know that being s poor child in the
United States was going to be so very hard.
We weren't born to do poorly in school!
Or to suffer bad health!
Or to take drugs!
Or to catch sexually transmitted diseases!
Or to kill or be killed on the streets of Ameri-
ca!
When we were born, we were beautiful, happy,
smart and good! We were just like your own
babies. In God's eyes, poor babies and rich babies
are equal. They can be anything they want to be
- including the President of the United States!
But God is no politician. He doesn't make
social policies that can harm poor children.
So . . . those babies who are equal in the hospi-
tal are unequal when it comes time to go home.
Then she goes on:
When you were s child, you were sble to play
outside, right? Today, millions of American
children can't play outside anymore. We're afraid
of what might happen to us out there!
In this testimony, I bring a message from
Bullions of American children. We are not asking
for special privileges. We are asking for the
chance to be healthy like other kids. We are
asking for safety against druge and violence. We
are asking the people who are paid to help us to
do their jobs. We are asking to play outside like
you did when you were young. We are asking for
safe schools and for teachers who urge us to
'reach for the stars.' We are asking for laeee to be
changed so our fsthers can come home to us.
We're only kids.
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We're i
We're sad.
Sometimes we fesl like America has forgotten
us just like it did our mothers and fathers. The
drug pusher knows that. And ha'a waiting just
around the corner for us with his drup and his
Senators, and other honored guests • • • I
challenge you to look deep into the eyes of a poor
American child. In the eyes of that child, you
will And America's greatest tragedy.
If you won't help us today, you are going to
The day before yesterday Arthur
Ashe came in and testified before our
subcommittee. He made reference to
some facts having to do with Ameri-
can youth in crisis. I will not read
them all but just a few.
Today, 6 million students will carry a weapon
to school, 136,000 will have a gun.
Today, 16,000 crimes will take place on or near
a school campus - one every 6 seconds.
Today, 22 16-24 year olds will be murdered.
Today, 8 million American adolescents live in
poor or near poor families.
Today, half of all black, Hispanic, and Native
American Indian adolescents are poor or near
poor.
Today 6 million adolescents who need mental
health services do not receive them.
Today, 2,739 adolescents will run away from
Mr. President, my point is simple:
This tax break to the oil companies
does not meet the test of equity. It is
not fair to other businesses. It is a
tax expenditure. It is erosion of our
revenue base. We talk about the defi-
cit all the time, the budget deficit.
You can argue why are we eroding the
revenue base as well as talk about
reducing the deficit. There is an in-
vestment deficit, and I am talking to-
day about where the money is not
spent.
Mr. JOHNSTON. Will the Senator
yield for a question?
Mr. WELLSTONE. If I could just
finish the statement. I want to make
myself perfectly clear. As long as we
are saying to Bernice Price and other
children in this country, we do not
have the money to feed you, we do not
have the money for health care, we do
not have the money to support educa-
tion, we do not have the money to
fully fund Head Start, we do not have
the money for any of these programs,
I am certainly unwilling to support a
$1 billion further erosion in the reve-
nue base of our country.
Mr. JOHNSTON. Mr. President,
will the Senator yield for a question?
Mr. WELLSTONE. I certainly will.
Mr. JOHNSTON. The Senator said
there is a tax break for the oil compa-
nies. He understands this is not for
major oil companies; these are for
independents.
Mr. WELLSTONE. I understand
that full well.
Mr. JOHNSTON. The Senator also
understands we had this tremendous
erosion of jobs in the oil industry,
upwards of 400,000 in the last 10
years, which is more than automo-
biles, more than textiles, more than
any other industry in America, and we
are due to lose another 50,000 by
some estimates this year. Does the
Senator have anything he might sug-
gest to the children of those who are
likely to lose their jobs, for whom I
also feel, as I do for this person who
testified before that committee and
talked about poverty? Does he have
anything to suggest for those who are
likely to lose their jobs and for, in-
deed, the American economy, which
will have to import that oil if it does
not produce it?
Mr. WELLSTONE. I have a lot to
suggest. First of all, I say to the Sen-
ator from Louisiana that I do not see
the oil industry in trouble because it
has not received exemption from this
minimum tax. I see the oil industry
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in trouble because the prices are down
for oil. I see the oil industry in trou-
ble because our economy is in a reces-
sion. I see the oil industry in trouble
and other industries in trouble, I say
to the Senator from Louisiana, be-
cause we have failed to be involved in
serious strategic investment in our
own economy. I see the oil industry in
trouble because, essentially, we have
not been minding our own store here
in our own country.
And my second point, if I could just
go on, is, I say to the Senator from
Louisiana, that when I talk about
children in this country and not being
able to come up with $1 billion and
more to respond to the needs and
circumstances of children, of course, I
am talking about children in all fami-
lies, in all States in the country, in-
cluding Louisiana. But I simply do not
believe that the oil industry is in trou-
ble because of this minimum tax. I
have heard other people argue that on
the floor as well.
Mr. JOHNSTON. Does the Senator
see any connection between an effec-
tive tax rate of 72.5 percent, which
you have with the alternative mini-
mum tax now with some indepen-
dents, but does he see no connection
between that and the fact that we are
losing up to 50,000 jobs this year in
the oil industry in America?
Mr. WELLSTONE. Again, a lot of
industries can talk about the strain
they are under. My understanding -
and the Senator from New Jersey may
want to add to this - is that the oil
industry, the domestic producers,
have already received some exemp-
tion. Now the industry wants more.
Once again, I do not believe that the
evidence, if you want to look at the
economy of this country, is that there
is a 1-to-l correlation between what
you are asking for and a dramatic
improvement in this industry. I think
we can talk about other, more pro-
found problems in the economy of this
country.
Moreover - let me just say one other
thing to the Senator from Louisiana,
which is there are a lot of people that
can come before us right now from
the business community and say the
same kind of things in terms of tax
relief that they seek. The point is we
are not talking about tax relief for
these other industries. We are not
talking about this kind of tax relief
for those other businesses. I do not
think, if we look at whole economic
picture, there is any equity.
Finally, I say one more time, it is
interesting to me that the Bernice
Prices of this world do not really get
heard so clearly on the floor of the
Senate. What they would like to say is
they need some relief, but we do not
give them the relief.
The PRESIDING OFFICER. The
Senator from Texas.
Mr. BENTSEN. Mr. President, I
yield 5 minutes to the distinguished
Senator from New Mexico who has
knowledge in this matter.
The PRESIDING OFFICER. The
Senator from New Mexico is recog-
nized for 5 minutes.
Mr. DOMENICI. Mr. President, I
rise not only because my State is a
large producer of natural gas and
crude oil, but because, for the first
time in about 10 years, we are doing
something about America's energy
dependence. We are doing something
about jobs that we do not have to lose.
We are finally cutting the noose which
has been around the necks of
America's independent oil and gas
producers ever since the 1986 AMT
was enacted.
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Mr. President, for an America that
has announced over the last 7 years
hundreds of thousands of working
men and women have been laid off in
the Oil and Gas Patch of America, for
an America that is growing day by day
in dependence upon foreign oil, send-
ing billions of our dollars to Saudi
Arabia every year, and we sit by with
one of the most punitive tax systems,
the AMT on the books, and we say to
America's investors, to America's
independent oil and gas risktakers, we
say to them, 'We want you to produce
oil and gas, but we want you to run
uphill. We want you to run up a wa-
terfall, because we want to tax you at
an average effective rate of 72 per-
cent.' Just think of it. If we came to
the floor and said we have a new poli-
cy for America's competitiveness, we
are going to tax America's industry at
72 percent, would that not be a mar-
velous policy for jobs, economic
growth, and competitiveness? I make
that statement to emphasize how
ludicrous the AMT tax policy is.
Now, Mr. President, there is no
mystery about what an AMT is. We
have said to the independent oil pro-
ducers, other businesses can deduct
depreciation but you cannot deduct
depletion, because you put it back into
your minimum tax return.
Other businesses deduct trucks,
hauling, supplies, and fuels. They
deduct all the labor expenses of doing
their work. We say to the oil and gas
industry where these expenses are
incurred in your industry, they get a
different name. They get called intan-
gible drilling costs and they receive a
very unfavorable AMT tax treatment.
I say to my friend from Louisiana, you
cannot deduct them. You put them
back into the AMT tax base and we
tax them.
Now, Mr. President, it is absurd to
throw away jobs and to sit back for no
reason and say, we would rather the
Saudi Arabians get our money; we do
not want independent oil and gas
producers to get out of bankruptcy
and get back in the field; we do not
want the rigs that are idle all over
America back in the field producing
oil and jobs. Instead, we want to tax
the independent oil producers as a
confiscatory rate. Confiscatory rate is
the term they use when I go to oil
patch and have a meeting. They
stand up and say, Senator do you
know my company went out of busi-
ness because on the last AMT tax
return I filed I had to pay an effective
tax rate of 70 percent. We quit.
Is that not absurd that, in the name
of some ridiculous concept, the inde-
pendent oil and gas producers were
making too much money, we are going
to fix them, we are going to fix Ameri-
ca, we are going to fix thousands of
people that would have jobs in oil
patch and good jobs.
So I say the Bradley amendment is
an antyobs bill. The Bradley amend-
ment is an amendment encouraging
us to send our hard-earned American
dollars and net savings to foreign
countries instead of wanting to spend
it in America. Very interesting. Send
it overseas. It is not enough to have
had a war to defend that oil in the
Middle East. Now just keep on send-
ing them our money because we want
to put a 72 percent effective tax rate,
a rate that is substantially higher on
the independent oil producers.
My last thought. For those who do
not think they ought to deduct intan-
gible drilling costs, who do not think
they ought to deduct ordinary busi-
ness expenses and depletion which are
no different than ordinary business
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expenses and depreciation for other
types of businesses. Remember, oil
and gas producers do not find oil ev-
ery time they drill for oil. Do you
want them to quit taking the risk, or
do you want them to say the risk is
worth taking because when we strike
oil and get some money coming in we
are going to get back what reasonable
businessmen get and deduct what
they deduct, or do you want them to
say, 'we quit!'
This energy bill, for the first time,
has a rational energy policy. It will
not solve America's oil needs but it
will cause more millions of barrels,
barrels of ours, to be produced rather
than foreign. It will put thousands of
people to work here in the United
States rather than taxing them out of
work. It will bring investment into oil
patch, and I do not know why we
should not all want that.
The tax title of the energy strategy
is an important part of the overall
energy strategy. It includes provisions
to increase exploration, development
and production of oil and gas; the
conservation of energy; and tax cred-
its for renewable energy among oth-
ers. It is a balanced strategy designed
to give us flexibility in the future to
meet our energy needs.
I want to begin my remarks with a
discussion about oil and gas produc-
tion because I represent one of the big
oil- and gas-producing States. While
rigs sit idle in my State, and while
wells are shut-in throughout the Na-
tion, we are importing almost half of
the oil we consume on a gross basis.
That represents an increase by almost
one-half over our import dependence
in 1985.
The Office of Technology Assess-
ment has predicted that oil imports
could reach almost 70 percent by the
year 2010. Leaving his scenario unad-
dressed would not be an energy strate-
gy, it would be a national tragedy.
The tax title contains some of the
most important energy provisions for
independent producers. Right now,
they are being taxed out of business
by the alternative minimum tax.
Independent producers have been
stuck in the alternative minimum tax
(AMT) since it was enacted in 1986.
Under the AMT, there are four big
penalties imposed upon investments
made by U.S.-based taxpayers who
explore for, and produce U.S. oil and
gas reserves. These penalties hit the
independent oil and gas producers
who drill 85 percent of all domestic
wells. There are two tax penalties on
drilling investments and two penalties
on asset depletion. Without the inde-
pendent oil and gas producer's explo-
ration and development activities the
options for an energy strategy would
be greatly limited. The President
recognized this, and fully supports
AMT relief for independent oil and
gas producers.
The simplest explanation of the
AMT exploration and production pen-
alties is this: Current law requires
U.S.-based taxpayers to add back to
regular taxable income a portion of
both drilling costs and asset depletion
when computing alternative minimum
tax liability.
The practical impact on the oil and
gas producers is that production in-
centives are on the books, but can't be
used because of the AMT. In essence,
it is a nonrepeal repeal of ordinary
business expenses that other business-
es are allowed to deduct. I call it a
nonrepeal repeal because the provi-
sions are as unusable as if they had
been repealed. The tax writing com-
mittees have included $1 billion in
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alternative minimum tax relief.
The alternative minimum tax is one
of the worst enemy's of the oil inde-
pendence and an effective energy
strategy. The alternative minimum
tax is driving oil producers out of
business because its provisions dis-
courage domestic exploration and
production. The alternative minimum
tax is pushing independent producers
into bankruptcy. It worsens our trade
deficit. It weakens our energy securi-
ty. And its punitive tax treatment
has wrecked almost half our domestic
oil production.
In February 1992 I had a meeting
with some of the independent produc-
ers in New Mexico. I want to quote a
few of the oil and gas producers who
attended the meeting. I think they
speak eloquently about the problem.
Theirs is the voice of experience.
Ted McVay, of McVay Drilling told
me the following:
I know how a dinosaur fell when even though
ho was making hia bast effort to survive, the
environment in which he waa working ultimately
caused hia extinction. We are in an adversarial
relationahip with Government. • • • The alterna-
tive minimum tax (AMT) haa had a devastating
impact upon investment resources available to
these different companies from not onty within
the industry but from outside investors thus
drying up one of our primary sources of funding
for development and exploration.
I did some research myself, and
found that the AMT is the only tax
imposed any government which re-
sults in a higher effective tax rate as
income declines.
Another independent oil and gas
producer struggling to survive, AJ.
Brune, of Wagner & Brown, head-
quartered in Midland, TX, with explo-
ration and production operations in
the Permian Basin, the Rocky Moun-
tains, Oklahoma, New Mexico, and
Michigan said:
The alternative minimum tax, despite its well
intended purposes, hss become a noose around
the neck of independents diverting money from
drilling and exploration into the Federal treasury
at a time when the domestic oil and gaa industry
needs every available dollar. The alternative
minimum tax increases the effective rate, elimi-
nates incentives and discourages investment, all
at a time when oil and gaa prices and production
are declining, the national economy is in a reces-
sion, traditional financing sources have dried up
and foreign import of oil are approaching 60
percent.
Another constituent, the general
partners from Parker & Parsley Pe-
troleum Co. told me that the biggest
problem is alternative minimum tax
(AMT) including the ACE adjustment.
It serves se a deterrent to drilling, se the price
of oil goes down, so does the net income from oil
and gaa making the preference intangibles high-
er, resulting in a larger tax bill. This is exsctly
the opposite of whst should happen when trying
to have a viable economy.
Unlike other small businesses, inde-
pendent oil and gas producers are not
allowed to deduct ordinary business
expenses incurred in their line of busi-
ness. These expenses are intangible
drilling costs and percentage deple-
tion. This results in effective tax
rates of 70 percent for some oil and
gas producers as compared to regular
34 percent for nonpetroleum business-
es.
By adopting the Finance
Committee's AMT provisions we can
begin to reverse this trend and begin
to put back to work the thousands of
individuals who have been forced to
leave this industry. Studies show that
if these AMT penalties were removed,
the industry could mobilize 1,200 rigs
- compared to the recent record low of
653.
Without AMT relief the only
self-help available to the independent
producer is to stop drilling. When an
independent stops drilling he goes out
of business. Let me repeat this: The
AMT is driving the independent oil
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and gas producers out of business. It
is impossible to have an energy strate-
gy without an oil and gas exploration,
development and production industry.
Yet we have a tax system that is a
modern day example of the power to
tax being the power to destroy an
industry.
The AMT is not just a little bit bad
for the oil and gas industry, it is very,
very bad because oil and gas produc-
tion is one of the most capital inten-
sive industries in the United States.
Capital intensive industries bear the
heaviest burden of the alternative
minimum tax due to the many adjust-
ments required of capital outlays.
For my colleagues who are not from
oil patch, you might ask, 'Well, Pete,
just how bad is it?'
The statistics are dry but stark:
192,000 jobs lost in the extraction
portion of the oil and gas industry,
from the 583,000 level in 1985 to
391,000 in 1991, a 33-percent decline.
That is, on the average 32,000 jobs
per year; 2,667 jobs per month; 615
jobs per week; or SS jobs per day.
This trend has continued into 1992.
Nearly 17,000 jobs were lost in the oil
and gas industry in just three States
• New Mexico, Texas, and Louisiana
between March 1991 and March 1992.
Some 380 drilling companies have
gone out of business; from 778 in 1985
to 398 in 1991; a 49-percent decline.
That averages more than five com-
panies per month going out of busi-
ness for the last 6 years.
There are 1,120 active drilling rigs
lost; from 1,980 in 1985 to 860 in
1991; a 57-percent decline.
That is the equivalent to 15.6 active
rigs each month over the last 6 years
being shut down.
We are seeing a deliberate and rapid
shift away from domestic oil explora-
tion in the United States among the
major oil companies. ARCO Chevron,
Mobil, Marathon, and Phillips are all
companies that have recently an-
nounced sales of domestic reserves or
large cutbacks in their domestic explo-
ration and production staffs.
Some erroneously believe that the
United States is drilled out. But the
University of Texas has done an ex-
tensive analysis that shows that there
is in excess of 100,000 intermediate
fields to be found in this country. The
Colorado School of Mines has quanti-
fied the remaining gas to be found in
this country, and it far exceeds that
which has already been produced
throughout history.
The plight of the oil and gas indus-
try even made it into the 'Talk of the
Town' section of the February 10,
1992, New Yorker.
Looking up at the silent, rusting rigs from the
riverbank, we felt aa if we had wandered into a
graveyard for sci-fi monsters. The rig* were
gargantuan. They also are fantastically expen-
sive . . . and when there was no immediate pros-
pect of them operating profitably , thoir owners
often had them cut up for scrap • * * which ia
what a lot of them are doing right now.
The tax title of the energy strategy
bill includes some important provi-
sions to reverse this trend:
Repeals the excess IDC preference
and the excess percentage depletion
preference for oil and gas for taxpay-
ers other than integrated oil compa-
nies. Repeal of the excess IDC prefer-
ence may not result in more than a 30
percent reduction in AMT tax liability
for tax year 1993, and 40 percent for
taxable years after 1993. This should
reduce independent producers' taxes
by $1 billion between 1992 and 1997.
For corporations other that inte-
grated oil companies, the bill would
repeal the accumulated current earn-
ings adjustment (ACE) for: First,
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IDC's paid or incurred in taxable
years beginning after December 31,
1992; and second, percentage deple-
tion for oil and gas. The bill also re-
peals the AMT energy deduction.
Other important energy tax provi-
sions include:
Providing favorable tax treatment
of public utility rebates. Customers
would not have to report as taxable
income and consequently pay taxes on
the value of any rebate provided by a
utility for residential energy conserva-
tion equipment. Beginning in 1993,
the exclusion would be available for 80
percent of the value of any rebate
provided to a commercial or industrial
customer. It is an equitable provision
because the conservation promoting
provisions apply to both electric and
gas utilities. Rural electric co-opts,
State and municipality owned utilities
are also eligible.
This provision accomplishes many of
the same objectives as a bill I intro-
duced earlier this session, S. 1305, the
Conservation and Energy Efficient
Investment Act. My approach would
have conditioned the favorable tax
treatment upon the customer pur-
chasing the most energy efficient
equipment available in the market-
place. I think this is a better ap-
proach, but I am nonetheless pleased
that natural gas utilities' rebate pro-
grams are eligible for the tax incen-
tive.
The bill includes a tax deduction for
the purchase of alternative fuel vehi-
cles; a lesser deduction for flexible fuel
vehicles that can use both convention-
al fuel; and alternative fuels and a tax
credit for electric cars.
My State is a tremendous natural
gas producer and I am looking for-
ward to the day I can buy my first
natural gas powered car. Natural gas
is an environmentally preferable fuel.
These incentives are an important
component of an energy strategy.
The bill also makes the 10-percent
solar and geothermal credit perma-
nent.
The two national laboratories in my
State and many New Mexico compa-
nies have been at the forefront of
developing solar energy technology. I
am please that this credit is becoming
permanent.
I think that the tax title of the
energy strategy is an important con-
tribution to America's energy policy
and I am pleased that the Senate is
including the tax title in this compre-
hensive package.
I thank the Senator for yielding.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The
Senator from Oklahoma.
Mr. NICKLES. I ask the Senator
from Texas if he would yield me 5
minutes.
Mr. BENTSEN. I yield 5 minutes to
the distinguished Senator from Okla-
homa.
The PRESIDING OFFICER. The
Senator from Oklahoma is recognized
for 5 minutes.
Mr. NICKLES. I thank my friend
and colleague, Senator Bentsen from
Texas, and also Senator Wallop for his
leadership, in addition to Senator
Domenici for his excellent statement,
as well as the statement made by my
friend and colleague, Senator Boren
from Oklahoma.
I rise in very strong opposition to
the Bradley amendment which would
strike out the provisions in the pend-
ing bill dealing with the alternative
minimum tax.
Mr. President, I would just like to
say that I think a lot of my colleagues
do not really understand the provi-
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sions of alternative minimum tax as it
pertains to the oil and gas industry.
Because this industry, is unlike any
other industry, when you are talking
about intangible drilling costs - and
most people do not know what intan-
gible drilling costs are. Intangible
drilling costs are the costs you incur
when you drill a well. When you drill
a well, sink a hole in the ground, you
have nonrecoverable expenses. And in
any other business in America - and I
happen to know a little bit about that
because I ran and operated a manu-
facturing company - we expense ex-
penses. But not in the drilling indus-
try today because of the tax change
that we made in 1986.
A serious mistake was made. It
placed a tax surcharge on drilling
expenses. Now that makes no eco-
nomic sense whatsoever. You are sup-
posed to tax net income. You are not
supposed to have a tax surcharge on
an expense item. And if you have a
tax surcharge on an expense item, you
are going to drill a lot less. You are
going to have a lot less of that ex-
pense item.
It was ridiculous tax policy, a seri-
ous mistake that was made in 1986
and it needs to be reversed.
The bill does not reverse it totally,
but it is a step in the right direction.
It minimizes the damage, and I wish
we could go further. We should de-
duct 100 percent of expense items on
intangible drilling costs. They should
not be subjected to the alternative
minimum tax in any way, shape or
form, the committee bill did not go
that far. So to some extent I am dis-
appointed. We really did not go far
enough toward sound economics and
allow business people to deduct their
expenses.
But if we pass the Bradley amend-
ment, we will be doing great damage
and continued harm to our country;
not just to the oil and gas industry,
but to our country as well.
Last year, we spent $44 billion im-
porting oil; 66 percent of our negative
trade imbalance was the cost of im-
ported oil, not to mention the impact
in the oil patch. Not to mention the
fact, as my colleague, Senator
Johnston mentioned earlier, 400,000
jobs have been lost in the last 10
years, not to mention the fact that we
are hardly drilling anything in this
country.
Today we have an active number of
drilling rigB of 688. We actually dipped
below 600 earlier year this year. Let
me put that in perspective.
I will tell my colleagues, we were
right at 4,000 rigs about 10 years ago.
Today, we are at 600-something. We
are at the lowest number of active
rigs that we have had since we kept
records, going all the way back to the
late thirties.
We are in a depression in the drill-
ing industry. And you might say,
why? One of the reasons is because we
have a tax surcharge in drilling. It
makes no sense. It needs to be re-
pealed. Not to mention the jobs, not
to mention the economic activity, not
to mention the fact that we want to
reduce our dependence on imported
oil.
I just fear for the fact that a lot of
our colleagues, I think, have very little
understanding of the Tax Code, and
particularly when it comes to busi-
ness. And for crying out loud, we
should make a common-sense ruling
that we do not place tax surcharges
on out-of-pocket, nonrecoverable, busi-
ness expenses.
This amendment that we have in
this bill will go a long way toward
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doing that. If we adopt the Bradley
amendment we are going to say, no,
we want higher AMT even on expense
items. We are going to keep a tax
surcharge on drilling expenses.
That does not make sense. If we
allow that to happen, we are going to
devastate this industry and continue
to import more and more oil. That
makes no sense whatsoever. It makes
no economic sense. And I would just
hope that my colleagues would show
great wisdom and defeat the Bradley
amendment and, I hope, defeat it
overwhelmingly, because it does not
make sense.
We have several provisions in this
energy bill that will help. Certainly, if
we pass the Bradley amendment we
will be doing great harm.
Mr. President, I strongly oppose this
motion to strike on several grounds;
not the least being that our domestic
oil and gas industry is bleeding to
death increasing our Nation's contin-
ued dependence on foreign oil. Mr.
President, we are debating a national
energy bill that is intended to help
reverse this trend of increasing depen-
dence. The Bradley amendment, if
adopted, would eliminate one of the
most necessary provisions in this bill
that would have direct impacts on
increasing domestic exploration and
help decrease the need for foreign
imports.
Independents drill 85 percent of the
oil and gas wells in the United States.
Over two-thirds of these independents
are small, often family-run, businesses
with less than 20 employees. The
AMT in its current form has an espe-
cially punitive impact on these small
producers, denying them the deduc-
tion of their most fundamental ordi-
nary and necessary business expenses.
Because the amount of IDC allowed
under the AMT is tied to the
producer's net income from oil and
gas, the lower the amount of produc-,
tion, the lower the deduction for drill-
ing costs. In addition, the percentage
depletion deduction, which allows
smaller producers to replace increas-
ingly costly reserves and prevents the
premature abandonment of many
properties, is disallowed under the
AMT.
If the AMT provisions in this bill
are passed, drilling would increase
between 17 and 24 percent and would
result in almost 7,000 new wells
drilled each year. This would increase
the rig count by at least 200. On aver-
age, each rig operating full time di-
rectly creates 150 to 200 new jobs.
Therefore, between 30,000 and 45,000
additional jobs could be created in the
United States in the first year alone
as a direct result of eliminating the
nondeductibility of drilling costs and
percentage depletion under the AMT.
As you know, current provisions in
the Tax Code treat intangible drilling
costs and percentage depletion as
preference items for purposes of calcu-
lating a taxpayer's alternative mini-
mum tax obligation. These provisions
are causing irreparable harm to an
industry that is vital to our national
security.
A rig count of 688 indicates that the
industry has entered a period of accel-
erated decline. The Nation's domestic
oil production is falling at annual rate
of 300,000 barrels a day, and foreign
imports are rapidly approaching 50
percent of our domestic needs. We
have lost nearly 400,000 jobs, almost
half of the oilfield worker jobs since
1981 when the rig count reached
4,000.
Independent producers have been
devastated by a combination of low oil
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and gas prices and high taxes. Every
rig that shuts down means jobs that
are lost and increased dependency
upon foreign oil for our energy needs.
I strongly believe that tax relief is
needed to save the domestic industry
from collapse.
The time to act is now. The inde-
pendent procedures say that unless
tax relief is provided, the industry will
collapse. With the energy bill on the
floor of the Senate it is time to act
and act decisively.
I am convinced that the alternative
minimum tax relief is the single most
important agenda item for the oil and
gas industry. It does little good to
talk about extending incentives unless
we remove alternative minimum tax
impediments.
When a recession coincides with
sustained low oil and gas prices, the
alternative minimum tax works like
severe penalty that gets progressively
worse the longer the taxpayer fails
under it. The longer prices are low
and profits thin, the harsher is the
alternative minimum tax's impact.
Under current law, when percent-
age depletion and intangible drilling
costs are added back to income in
calculating alternative minimum tax
tax liability, it can result in a 70- to
80-percent effective tax rate for some
producers. The result is indisputedly
punitive, if not confiscatory.
Including intangible drilling costs
and percentage depletion as prefer-
ence items in 1986 was a mistake. It
has been referred to by some Ameri-
cans trying to increase oil production
here in the United States as a drilling
penalty tax for independents. In the
fall of 1990, Congress made a change
to these provisions by reducing the
amount of intangible drilling costs
that independents must include in the
alternative minimum tax by 75 per-
cent for exploratory wells and 15 per-
cent for nonexploratory wells. But
the penalty is still 25 percent for ex-
ploratory wells, including all develop-
mental wells, We need to eliminate
IDC's entirely from the alternative
minimum tax.
IDC's are the only out-of-pocket
business expense in any industry or
profession that are treated as a pref-
erence item in the alternative mini-
mum tax. Inclusion of IDC's was
unfair, and another example of treat-
ing the domestic industry as a cash
cow to be milked every time revenue
is needed.
Taking IDC's and percentage deple-
tion out of the alternative minimum
tax is appropriate not simply because
they are a unique penalty on oil and
gas producers, but because in practice
these provisions have been both
anticimpetitive and regressive and
have had the effect of significantly
reducing drilling activity in the Unit-
ed States.
It is imperative that the Bradley
amendment be defeated. The inde-
pendent oil and gas producers are
being unfairly penalized by the 1986
tax amendments. If the AMT tax
provisions contained in this bill are
not adopted the results will be a con-
tinued decapitalization of a strategic
sector of our industrial economic base,
a continued loss of jobs and a contin-
ued risk to our Nation's ability to
respond to requirements for domestic
oil and gas production. The AMT tax
provisions of this bill must be enacted
now if this industry is to survive and
the national security of this Nation be
preserved from further reliance on
foreign energy sources.
I thank my friend and colleague
from Texas.
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The PRESIDING OFFICER. Who
yields time?
Mr. WALLOP. Mr. President, I ask
the Senator from Texas if I could
have my 2 minutes.
Mr. BENTSEN. I yield that time to
the distinguished Senator from Wyo-
ming; the ranking member of the
committee.
The PRESIDING OFFICER. The
Senator from Wyoming.
Mr. WALLOP. Mr. President, I
thank the Senator from Texas.
I was amused by the arguments of
the Senator from Oregon (Mr.
Packwood) and indeed those of the
Senator from New Jersey (Mr.
Bradley) for eliminating the whole of
the alternative minimum tax. I was
on the exalted Finance Committee at
the time that concept arrived on the
Tax Code in 19S6. 1 characterized it at
that time as an admission of
tax-writing incompetence. It was
done to satisfy the needs that every-
body should pay tax, literally, whether
they made any money or not during
the course of the year. They did not
want to have a taxpayer with zero
income.
Now I warned of the consequence
late at night on this floor of what it
would do to the oil and gas industry,
and it has. One of the thingB that
just seems to be lost in the argument
of the Senator from New Jersey, the
Senator from Minnesota, and the
Senator from Oregon, is that there
are occasions when people in the oil
and gas industry are obliged to pay
taxes when they have made no in-
come, because of the peculiar quirks
of tax treatment of the oil and gas
industry.
I have friends in Wyoming. I have
letters, which I will happily supply to
the Senator from New Jersey, of peo-
ple who go through in detail how they
owed taxes, having made no money.
That is ridiculous and it is one of the
reasons why we are driving people out
of the industry.
Last, Mr. President, Senator
Johnston and I and others, when we
started trying to craft this bill, tried
to pay equal attention, equal heed to
both the production of and the conser-
vation of energy. This is one of the
critical points in the production of
energy and it is also a critical point in
a whole lot of other things that have
been described - jobs, balance of pay-
ments, and other kinds of things. But
it makes environmental sense that
America uses the resources that it
has, that it produces well and under
much more environmental stricture
than anywhere else in the world. So
there is no more important section of
this bill for the domestic oil produc-
tion side and it will help us seek the
balance that we have tried to achieve
from the beginning.
The PRESIDING OFFICER. The
time of the Senator from Wyoming
has expired. Who yields time?
The Senator from New Jersey.
Mr. BRADLEY. Mr. President, how
much time is left on the side of the
proponents of the amendment?
The PRESIDING OFFICER. The
Senator from New Jersey has 16 1/2
minutes.
Mr. BRADLEY. Mr. President, let
me see if I cannot deal with some of
the issues that have been raised in
this debate and then close off our side
of the debate.
Let me begin by saying that I think
the Senators who have spoken on this
issue are very strong advocates of the
interests of their States. There is no
question about that. In the States of
all the speakers - from Texas, Louisi-
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ana, Oklahoma, Colorado, Kansas, and
New Mexico • there is an influential
oil and gas industry. It is understand-
able that those Senators would be
defending their States' industry. And
they do a very able job of it. So let me
begin by telling the full Senate that I
respect their advocacy for their
States1 positions.
I also think other States have other
concerns, and it is those that I want
to try to address.
First, the point was made that we
should provide this benefit to the oil
and gas industry and if I seek to pre-
vent this benefit from being provided,
that somehow or other because we
have not eliminated all benefits pro-
vided to all industries, that there is
something questionable about this
activity.
Let me say frankly, I would like to
eliminate more than these benefits for
the oil and gas industry. I would like
to eliminate many more of the loop-
holes that remain in the tax base. I
would like to go further than in 1986,
as long as the money is used to either
reduce the deficit or to reduce tax
rates.
So let me be very clear about that.
But we do not have the whole Tax
Code before us now. We only have
this provision before us.
The second point: The distinguished
Senator from Louisiana made a point
about environmental terrorism in the
Appropriations Committee. I am not
on the Appropriations Committee and
this amendment does not deal with
matters that relate to the Appropria-
tions Committee. This amendment
deals with whether we should provide
over $1 billion in tax benefits to one
industry, pure and simple.
Third, the distinguished Senator
from Colorado raised the question
that, would this be inconsistent be-
cause the bill is trying to promote
natural gas? Somehow or other, this
amendment would run counter to
attempting to promote natural gas.
He made the environmental argu-
ment.
I think natural gas has to be a ma-
jor part of our future. I think natural
gas is clean; it is efficient; it is abun-
dant; it should be developed. But this
provision is not directed only at natu-
ral gas, it is also directed at oil. So,
while natural gas may be the clean
lady at the dance, the partner is not
so clean when it comes to environ-
mental purity. That point should be
made. If we were only dealing with
natural gas maybe we would have
another dynamic here.
Fourth, what about the price? What
is the problem in the oil industry? Is it
that they do not have special tax ben-
efits, or is it that the price has
dropped? The proponents of our
amendment asserted it is that price
has dropped. I believe if the oppo-
nents of this amendment were serious,
they would propose this limited tax
relief until the price of oil reached a
certain level. At some level, why does
the industry need that tax relief?
Because they are making more and
more money? That is not what is pro-
posed here. This is a permanent bene-
fit for the oil and gas industry. It is
not temporary. It is not price contin-
gent. It is permanent.
Fifth, the argument was that, if we
simply had this tax benefit, we would
not have had a war in the Persian
Gulf. If we simply had this tax benefit,
there would have been no war in the
Persian Gulf.
I think that argument on its face is
ludicrous and I hope it is not made
seriously. Do we have a problem with
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foreign oil? Absolutely. Insecure sourc-
es of foreign oil? Absolutely. Is it more
secure to get the oil in the United
States than the Persian Gulf; from
the United States than from Venezue-
la; from the United States than from
Mexico? Yes. But this tax provision is
not the difference between the United
States going to war in the Persian
Gulf and the United States not going
to war in the Persian Gulf.
Sixth, there was a great case made
for those who have lost their jobs in
the oil industry. Let me tell you I
have a personal feeling for people who
lose their jobs in the oil industry, just
as I have a personal feeling for resi-
dents of my State over the last several
years who have lost their jobs. Many
people thought they had lifetime em-
ployment with some of the major com-
panies of America: IBM, AT&T. And
they lose their jobs. If we simply put
back in $1 billion in special tax relief,
that is not going to save their jobs.
The industry's fate is a function of
price, not tax subsidies.
Next there was the argument made
about trade; our trade partners are
fully competitive; bur trade partners
are more competitive than we are.
And we are burdened because we do
not get enough oil domestically.
A lot of those trade partners of
course get no oil domestically. They
get no oil domestically.
Mr. President, another argument
has been built, of course, around the
famous 72 percent effective tax rate.
Not that anybody is going to under-
stand this, totally. Sometimes when I
go through it, I do not know if you
can make it dear. That is a part of
the tax process, I think.
But, if you consider the effective tax
rate, using the alternative minimum
tax beae, you discover that the rate is
not 70 percent. It is 24 percent. Not
70 percent, 24 percent. So let us not
parade the 70-percent effective tax
rate on the regular tax base as if that
is the answer. No, it is economic in-
come that we are measuring under
the alternative minimum tax, econom-
ic benefit. And the effective tax rate
there is 24 percent, not 70 percent
that we have heard on this floor for
the last 2 hours.
But, Mr. President, all of these
issues are somewhat secondary to the
real question here, and that is what
do you want a billion dollars to be
spent for? We have a $400 billion bud-
get deficit; this will increase it to $401
billion. We have pressing needs in
this country, pressing needs that will
remain unaddressed.
The billion dollars that we give to
the oil and gas industry over 5 years
is the billion dollars that we do not
have for education, the billion dollars
we do not have for cleaning up the
environment, the billion dollars we do
not have to reduce the deficit. These
are not small questions.
The distinguished Senator from
Minnesota, I thought, made several
very important points about the cry-
ing needs of this country that remain
unaddressed because we cannot find
the money. But we can certainly find
the money when it comes to a particu-
lar industry that petitions Congress
very effectively.
Mr. President, let me share just a
brief story with the Senate. I am a
member of a commission called the
Commission on the African-American
Male, with Kurt Schmoke, the mayor
of Baltimore.
We had one of our first meetinp
since we have taken over
cochairmanship of that commission
net so lonf s^p at Moffsn State/ One
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of the witnesses was * young
15-year-old African-American male; he
was strong and handsome. And he
was asked by the commission to tell us
what his hopes were and what his
fears were.
He came before the commission that
morning and said: Well, I hope I can
become a player in the NBA, but, you
know, not many people can make the
NBA. So if I cannot make the NBA,
what I want to do is work for the CIA.
And if not the CIA, the FBI. That is
my aspiration.
What about fears?
He said: I have four fears. The first
fear I have is when I walk out of my
house I might be killed because three
or four people have been killed in my
neighborhood in the last month. Ify
second fear is that my parents would
be killed and I would have to go live
with another family member who
would not love me so much, or maybe
a foster parent who would not create
the environment where I could study
and advance. My third fear is HIV.
He said, I do not fool around, but look
at the great Magic Johnson. It oiuy
takes once. He said, my fourth fear is
if I was good enough, I know I could
make the NBA. I know I could if I was
good enough. He said, if I am good
enough, I do not know if I could get
into the CIA or the FBI. He said, I did
not bring drugs into this country. I
did not make money off the sale of
guns. I do not close the schools on
the weekends in the summertime. I
do not fail to fund programs that help
our neighborhood. I am just trying to
do the best I can under difficult cir-
cumstances.
Point: What are we going to say to
that young man about the billion
dollars we have just given to the oil
and gas industry as opposed to the
billion dollars that might have made
some difference in his life?
Choice, that is what this amend-
ment is about. We can debate the
narrow aspects of it, the effective tax
rates of it, the trade balance, et cet-
era. The basic question is: How do
you want a billion dollars of your tax
money spent? Do you want that billion
dollars going to one industry, a nar-
row element of that industry, the
independent oil and gas producers, or
do you want it for some other pur-
pose, from deficit reduction to trying
to change the circumstances under
which this young man at Morgan
State was growing up? That is the
basic question.
We are going to face this. This is
not a moment that is going to pass.
We are going to have to respond to
some basic questions in the next cou-
ple of years if we are serious about the
deficit, and all the rhetoric actually
means something.
How are we going to go about cut-
ting that deficit? Are we going to cut
it on the basis of equity and need?
Does it really make sense to have a
tax system where people who make
more than $100,000 get a benefit
greater than people who make under
$10,000?
Generational issues are going to be
another way to look at this. Does it
make sense to continue to funnel
money to people who are older or for
people who are young?
Do we want the market to allocate
resources in this country? Do we beat
our chest and say, yes, we think that
is the most efficient way to allocate
resources in this country except when
I can get a little favorable benefit
through a subsidy in the Tax Code or
a subsidy through the spending pro-
cess? Then I will take that. I will still
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talk about markets, but I will want
the step ahead that my subsidy gives
me.
We are going to face this question
because if you look at the Tax Code,
there are billions of dollars in subsi-
dies to this industry or that industry
or another industry. These all distort
the functioning of the market and
take money away from other pressing
public needs.
So, Mr. President, I look at this
amendment as really the opening bell
on what over the next few years I
hope we are going to be able to do to
focus on in getting control of this
deficit. I hope that we will not decide
to follow business as usual, and keep
putting money in the pockets of this
industry or that industry under the
guise that this billion dollars will pre-
vent the Persian Gulf war or make us
immediately trade competitive or
whatever. This is a moment for can-
dor. I believe it is a moment for de-
ciding. The time has now come to
decide not to provide this billion dol-
lars for the independent oil and gas
industry.
The PRESIDING OFFICER (Mr.
Robb). Who yields time?
Mr. BENTSEN. Mr. President, I
yield 5 minutes to my distinguished
colleague, Senator Gramm.
The PRESIDING OFFICER. The
Chair recognizes the Senator from
Texas (Mr. Gramm).
Mr. GRAMM. I thank the distin-
guished chairman of the Finance
Committee.
Mr. President, I always enjoy listen-
ing to our colleague from New Jersey.
I have to say the last time I looked we
were not short of NBA players and
since the candidate of the party of our
colleague from New Jersey wants to
cut defense intelligence by a billion
dollars, I submit we are not short of
people who can or would work at the
CIA. But the provision that we are
debating today is about the fact that
we are short of oil and gas in America
produced at home at a price consum-
ers, industry and farmers can afford
to pay.
Second, I want to correct one point,
and that is, we are not adding a bil-
lion dollars to the deficit. There is a
corresponding revenue increase to pay
for this tax change. The bill before us
would be subject to a 60-vote point of
order if it were not revenue neutral,
and while we are talking about chang-
ing tax policy, we are not talking
about raising the deficit.
Let me say a little bit about the
alternative minimum tax because our
dear colleague from New Jersey and I
are 180 degrees apart on this issue.
I do not believe that we ought to
have an AMT. I agree with our col-
league that our Tax Code contains
preferential treatment. I think we
give people tax benefits for a lot of
thingB we ought not to give it to them
for. I would very much like to see us
change some of these thingB and lower
rates. But the problem with AMT is
that we provide incentives with one
hand and then we come back in under
the table and take them back. We say
the Federal Government ought not to
tax cities by taxing interest paid on
municipal bonds and, therefore, mu-
nicipal bonds sell at a discount be-
cause their interest is tax free. But
then we come in through the
backdoor with AMT and try to seize
some of the benefits we have given the
cities. If we are going to give them
the benefit, let them have it, and let it
encourage people to buy municipal
bonds. But we ought not to be coming
in through the backdoor. I submit
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that while AMT may be good political
policy, it is not good tax policy.
I wish the day would come when we
could debate tax policy in terms of
encouraging people to pull the wagon
rather than lamenting the fact that if
America is saved it is going to be
saved at a profit.
Quite frankly, I do not think Ameri-
ca is going to be saved unless it is at a
profit, and I do not understand people
who love investment but - to para-
phrase a Democratic candidate for
President - hate the people who en-
gage in investing.
I do not hate poor people. I do not
hate rich people. I want more people
to be rich, and I want the people who
have money to put it to work, and
that is what the debate is about.
Let me talk about energy. If we
were talking about a program - and
we have thousands of them - to spend
taxpayers' money to help some indus-
try, very few people would be talking
about unfairness. But somehow the
concept of incentives, a concept that is
accepted in all the world • is rejected
only in Cuba and North Korea and
here in Washington • is somehow
wrong.
Here is the problem in a nutshell.
If you look at this chart, you see what
has happened to exploration expendi-
tures on discovery and development of
new natural gas and oil by our inde-
pendent producers.
Well, what has happened is that in
the last 10 years our expenditures
have fallen by three-fourths.
•If you look at what has happened to
drilling for oil and for natural gas is
that both have fallen through the
floor.
What we are trying to do is very
simply this: We want more energy
from reliable domestic sources to turn
the wheels of industry and agricul-
ture. We can provide a very strong
incentive for a very modest change in
the Tax Code by exempting a portion
of the expenditures for drilling from
the alternative minimum tax. We do
it only for independent producers with
a very minor benefit for the larger
companies. Quite frankly, I wish we
could do it across the board. This is a
change that needs to be made because
America needs more oil and gas pro-
duced at home.
The PRESIDING OFFICER. The 5
minutes allocated to the junior Sena-
tor from Texas have expired. Who
yields time?
Mr. BENTSEN. I yield 2 minutes to
the distinguished Senator from Missis-
sippi.
The PRESIDING OFFICER. The
Senator from Mississippi is recognized.
Mr. COCHRAN. Mr. President, I
thank the distinguished chairman of
the Finance Committee for yielding
me this time.
I want to add my voice to those who
are saying today that this amendment
would continue to undermine the
ability of a very important industry in
the United States to produce oil and
gas in an effort to help reduce our
unnecessarily large dependence upon
imported oil and other foreign energy
sources.
The bill has a number of provisions
in it that seek to help reduce our
dependence on imported energy.
Some of the provisions relate to in-
creasing energy efficiency, encourag-
ing the use of alternative fuels, and
trying to develop electricity from
nonfossil fuel sources. These are all
very important provisions to be con-
sidered by the Senate. But the most
important and the most helpful provi-
sion in this energy legislation is the
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repeal of the alternative minimum
tax. This would do more, Mr. Presi-
dent, than any other provision in the
bill, according to what I am told by
people who are experts and under-
stand the economic impact of that
provision, to help stimulate the oil
and gas industry so that it can pro-
duce again.
We are seeing more people go out of
business in the oil and gas industry
than almost any other industry I
know of, except the defense industry
maybe. Numerous layoffs have oc-
curred in my State. One oil and gas
producer, who is a small independent
businessman, told me the other day he
is having to cut back. He even had to
lay off his own son. He has just a
small number of employees, but the
fact is they are not able to stay in
business under the tax treatment, the
regulations, the climate that exists for
the industry in our country today.
They are having to look to offshore
opportunities, go to foreign countries,
train workers there.
Driving American oil and gas pro-
ducers out of business is not in our
national interest because that will
surely increase our dependency on
imported energy. It is completely
inconsistent with our efforts to reduce
our dependence on foreign oil for the
Senate to approve this amendment.
The amendment would impose a tax
burden on independent oil and gas
producers that will increase the likeli-
hood that this important industry will
continue to suffer. Relief from the
alternative minimum tax for the small
businesses who do 85 percent of the
oil and gas exploration in the United
States must be enacted to help resur-
rect this sector of our economy.
This industry has been devastated
by the AMT treatment of their ex-
penses. The practical effect of the tax
treatment of intangible drilling costs
and percentage depletion is that the
ordinary business expenses of these
producers are not deductible. This is
different from the treatment of other
businesses, which are allowed to de-
duct from their taxable income their
ordinary business expenses.
When combined with the dramatic
drop in gas prices since 1986; the wild
fluctuation of oil prices during that
time; and the increase in regulation of
the oil and gas business, this tax has
helped to eliminate an estimated
398,000 jobs that were once provided
by this industry, including the produc-
ers themselves as well as those who
contract with producers to do the
actual drilling work. What that
means is that half the jobs that exist-
ed 10 years ago in oil and gas and
related industries do not exist today.
Another indication of the dismal
health of this industry is the rig count
- the number of rigs being used in oil
or gas exploration in the United
States. In 1982 there were 3,105 drill-
ing rigs in operation; today there are
less than 700.
The few independent producers that
can afford to explore overseas are
entering into what in many cases are
high-risk ventures to produce oil in
developing countries. This means two
thingB: First, more oil will be coming
to our country from foreign sources
and less from domestic sources; and
second, jobs that would exist in the
United States are going overseas. In
an April 20 article in the Wall Street
Journal, a Pakistani employee of an
American independent oil producer is
quoted as saying, 'We'll be hiring
workers, and the contract will proba-
bly call for building a small colony of
schools and public facilities. ' Those
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are benefits, Mr. President, that we
used to enjoy in this country as a
result of a vibrant oil and gas sector.
Relieving the burden of the alterna-
tive minimum tax on independent
producers will certainly not solve all
of the problems in the industry. But
it will remove an artificial, counter-
productive, government-imposed im-
pediment to domestic production. The
Office of Technology Assessment has
recommended AMT relief as one way
to help stabilize this industry.
Mr. President, the amendment be-
fore us is shortsighted and runs coun-
ter to the purpose of the underlying
bill, and I urge the Senate to maintain
the provision in the bill as reported by
the Finance Committee.
The PRESIDING OFFICER. The
time allocated to the Senator from
Mississippi has expired.
Who yields time?
Mr. BENTSEN. Mr. President, I
yield 2 minutes to the distinguished
Senator from Alaska.
The PRESIDING OFFICER. The
Senator from Alaska is recognized for
up to 2 minutes.
Mr. MURKOWSKI. Mr. President,
I thank my colleague, the floor man-
ager.
I rise in support of the continuation
of the alternative minimum tax. lam
not going to speak at length about the
merits of the tax; they have been
addressed by my colleagues. But real-
ism dictates that this body recognize
oil imports are at their highest level
since 1978. That is a fact. Domestic
production is decreasing steadily.
That is a fact. Imports again are over
50 percent. That is a fact. The num-
ber of active oil and gas drill rigp hit
its lowest level ever recorded. That is
a fact. Offshore drilling in this coun-
try fell by 47 percent this year alone.
That is a fact.
Mr. President, the American oil
industry and gas industry is moving
overseas before our very eyes. Ameri-
can jobs are being filled in other coun-
tries, and Congress' inability to make
tough decisions is allowing this to
happen.
Mr. President, other countries en-
courage oil and gas development and
exploration, and in the United States
we are shutting off the most promis-
ing areas. Endless Federal regulatory
hurdles prevent oil and gas explora-
tion and development both offshore
and on shore.
Mr. President, I could go on and on
and on, but time is limited. I think it
is time to reflect on the reality that
we need to bring this industry back to
America where it was initially found-
ed. We need to reduce our depen-
dence on imported oil. We need to
recognize that half our trade deficit is
the cost of imported oil. We do not
have to put up with that, Mr. Presi-
dent.
I do not intend to pursue it now,
but I will later in the day propose an
amendment to study the future of gas
potential and economic impact on our
society.
The PRESIDING OFFICER The
Senator's 2 minutes have expired.
Who yields time?
Mr. BENTSEN. Mr. President, how
much time do I have?
The PRESIDING OFFICER The
Senator from Texas controls 6 min-
utes and 23 seconds.
Mr. BENTSEN. The alternative?
The PRESIDING OFFICER The
alternative is 49 seconds controlled by
the Senator from New Jersey.
Mr. BENTSEN. Mr. President, I
have listened to my friend from New
Jersey, his eloquent statement con-
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cerning individual concerns, plights,
problems in the country, and how we
devote $1 billion to try to assist in
that regard. They are valid points.
But I also look at the situation
where the principal industry in his
State under section 936 gets from $3
to $3.5 billion a year in subsidies -
three times as much as we are talking
about in the amendment he is attack-
ing. They are different industries.
The pharmaceutical industry is a
booming industry, doing a marvelous
job - growth, helping the economy.
But we are looking at an industry
that is in trouble and has lost over
400,000 jobs. We must realize that oil
is a depleting resource in this country.
Look at situations like the automo-
bile industry, which is in trouble. And
what have we done? We entered into
an agreement with Japan on just how
many cars can come in. We are not
talking about entering into an agree-
ment with Saudi Arabia as to how
much oil can come in.
Those are the kinds of concerns we
are currently facing and trying to
address.
We are looking at something where
75 percent of the merchandise deficit
last year in this country was oil, and
we have a bill where we are talking
about alternative sources and conser-
vation and trying to not depend so
much on foreign oil. That is what we
are talking about. It is supported by
people from oil States, because we
know the dependence is dangerous for
us, and it is terribly important we
keep that domestic production going.
I know we need to sustain the jobs.
It is important that we have someone
left who still understands geology and
petroleum engineering and who is able
to bring about some of the alternative
sources, whether we are talking about
coal seam gas or we are talking about
natural gas, a relatively clean-burning
fuel.
That is what we are talking about.
We are talking about increasing the
foreign debt of our country, and we
are trying to do what we can to not
increase that dangerous dependence
on oil.
Mr. President, I hope my colleagues
will do as we did in the Finance Com-
mittee and defeat this amendment by
a substantial margin.
The PRESIDING OFFICER. All
time controlled by the Senator from
Texas has expired. Who yields time?
Mr. BRADLEY. Mr. President, how
much time do I have?
The PRESIDING OFFICER. The
Senator from New Jersey controls 45
seconds.
Mr. BRADLEY. Mr. President, 45
seconds; let me make one final point
to the distinguished Senator from
Texas (Mr. Gramm). Allow me to
make it by using this chart that he
used. The number of oil wells drilled
in this country dropped from about
65,000 in 1981, to about 26,000 in
1986.
And then it went down a little bit,
by about 4,000, from 1986 to 1989.
And lo and behold, it increased after
1989.
So, to those who say that the tax
benefit is the thing that will stimulate
this drilling back to 65,000, or any-
where close, it just does not bear re-
semblance to reality.
The fact is, it was the price drop; it
was not the tax benefit lost. And
there it is, in black and white.
Mr. SIMPSON. Mr. President, I
want to express my strong personal
admiration for the distinguished floor
managers of this legislation. My old
friend senior Senator from Wyoming,
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Malcolm Wallop, the ranking member
of the Energy Committee, and the
able Senator from Louisiana, Senator
Johnston, have worked doggedly on
this legislation.
What the Senate has before it today
is the culmination of years of hard
work by all the members of the Ener-
gy Committee and their fine stalls.
I would like to say a few words
about the revenue provisions that are
contained in this bill. These provi-
sions represent the sort of bipartisan,
thoughtful, productive effort that is
becoming increasingly rare in this
election year.
The debate on this issue smacks of
election year politics, however.
This is not a debate about tax bene-
fits to a single industry as my fine and
respected friend, the distinguished
Senator from New Jersey suggests.
This is a debate about whether or
not, as the distinguished Senator from
Louisiana so succinctly and forcefully
pointed out - whether or not we as a
nation are going to keep American
companies working and producing oil
and gas in America and not overseas.
Who will benefit when the decline in
domestic exploration and production
reaches zero?
Certainly not the U.S. economy and
certainly not the consumer.
This energy bill is about charting
the course for national energy inde-
pendence. This amendment will do
exactly the opposite: It will encourage
dependence on foreign production.
I especially commend my distin-
guished senior colleague, Senator
Wallop, who while working vigorously
on all of the issues surrounding ener-
gy security, did one excellent job of
focusing his eye on the most helpful
and important changes in the tax law.
We are faced with real difficulties
throughout the oil and gas industry.
This body hears a lot of contradictory
messages regarding what needs to be
done • this amendment is just an ex-
ample.
Senators Bennett Johnston, Lloyd
Bentsen, and Malcolm Wallop have
kept their eye on the rabbit through-
out this process and have been most
careful to make sure that the tax
writing has taken our real energy
problems into account.
The AMT was intended to prevent
people from bucking the system dur-
ing good times, but it has proved to be
a dangerous double whammy during
these most difficult times.
I am pleased that this has been
correctly noted as the single most
important tax issue pertaining to our
energy self-sufficiency.
I would strongly encourage my col-
leagues in the Senate to reject the
Bradley amendment.
Mr. BINGAMAN. Mr. President, I
rise today to oppose the amendment
by my colleague from New Jersey to
delete language in the Comprehensive
National Energy Policy Act which
provides tax relief to our Nation's
independent oil and gas producers.
The energy bill we consider today
minimizes the damage inflicted on
producers by the current Tax Code
and recognizes the importance of
items such as intangible drilling ex-
penses to those producers as a legiti-
mate cost of doing business. We need
to produce more oil and gas here at
home and reduce our growing depen-
dency on foreign oil. That dependency
now exceeds 50 percent.
A total of 400,000 jobs in this sector
have been lost in the last decade.
Additionally, spending on exploration
and production has decreased dramat-
ically in the past 10 years by almost
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75 percent. Active drilling rigs in the
United States have decreased from
4,000 to approximately 688 rigs today,
the lowest number since records have
been kept. In New Mexico this num-
ber has dropped from 135 in 1981 to
34 as of July 24 of this year.
Adopting the Bradley amendment
will drive even more independent oil
and gas producers out of business and
further reduce our ability to meet our
domestic energy needs. I encourage
my colleagues to join me in opposing
the amendment.
The PRESIDING OFFICER. All
time on the amendment has expired.
The question occurs on amendment
2782.
Mr. BENTSEN. Mr. President, I
move to table the amendment. I ask
for the yeas and nays.
The PRESIDING OFFICER. Is
there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The
question is on agreeing to the motion
of the Senator from Texas (Mr.
Bentsen) to lay on the table the
amendment of the Senator from New
Jersey (Mr. Bradley).
On this question, the yeas and nays
have been ordered, and the clerk will
call the roll.
The assistant legislative clerk called
the roll.
Mr. FORD. I announce that the
Senator from Louisiana (Mr. Breaux),
the Senator from North Dakota (Mr.
Burdick), the Senator from California
(Mr. Cranston), and the Senator from
Tennessee (Mr. Gore) are necessarily
absent.
Mr. SIMPSON. I announce that the
Senator from North Carolina (Mr.
Helms) is absent due to illness.
I further announce that, if present
and voting, the Senator from North
Carolina (Mr. Helms) would vote 'yea.'
The PRESIDING OFFICER (Mr.
Robb). Are there any other Senators
in the Chamber who desire to vote?
The result was announced • yeas 63,
nays 32, as follows:
(ROLLCALL VOTE NO. 169 LEG.)
YEAS-63
Akaka
Bsucus
Bentsen
Bingaman
Bond
Boren
Brown
Bumpers
Burns
Byrd
Chafee
Coats
Cochran
Conrad
Craig
D'Amato
Danforth
Daschle
Dixon
Dole
Domenid
Exon
Ford
Gam
Glenn
Gorton
Graham
G run in
Grassley
Hatch
Hatfield
Heflin
Inouye
Johnston
Kassebaum
Kerrey
Lott
Lugar
Mack
McCain
McConnell
Moynihan
Murkowski
Nickles
Nunn
Preealer
Pryor
Riegle
Robb
Rockefeller
Sanford
Seymour
Shelby
Simon
Simpson
Smith
Specter
Stevens
Symms
Thurmond
Wallop
Warner
NAYS • 32
Wirth
Adams
Biden
Bradley
Bryan
Cohen
DeConcini
Dodd
Durenberger
Fowler
Harfcin
Hollings
Jeffords
Hasten
Kennedy
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Metxenbaum
Mikulski
Mitchell
Packwood
Pell
Reid
Roth
Rudman
Sarbanes
Sasser
Wellstone
Woflbrd
NOT VOTING - 6
Breaux Burdick Cranston
Gore Helms
So the motion to lay on the table
the amendment (No. 2782) was
agreed to.
Mr. BOREN. Mr. President, I
move to reconsider the vote.
Mr. BENTSEN. I move to lay that
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motion on the table.
The motion to lay on the table was
agreed to.
The PRESIDING OFFICER The
Chair recognizee the Senator from
Pennsylvania (Mr. Specter).
AMENDMENT NO. 27S3
Mr. SPECTER. Mr. President, I
send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER The
amendment will be stated.
The assistant legislative clerk read
as follows:
Th« Senator from Pennsylvania (Mr. Specter)
proposes an amendment numbered 27SS.
Mr. SPECTER. Mr. President, I ask
unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER With-
out objection, it is so ordered.
(The text of the amendment is
printed in today's Record under
'Amendments Submitted.')
The PRESIDING OFFICER The
Senator from Pennsylvania is recog-
nized.
Mr. SPECTER Mr. President, this
amendment essentially contains the
provisions of two bills introduced
many months ago, last November,
Senate bill 1936 and Senate bill 1995.
Senate bill 1936 is a bill which was
cosponsored by 17 Senators with the
principal sponsor being Senator
Chafee. I have discussed with my
distinguished colleague from Rhode
Island, Senator Chafee, my intent to
offer most of his bill for which I was
an original cosponsor, and adding to it
the provisions of S. 1995, a bill which
I introduced, captioned the Health
Care Access and Affordability Act.
Mr. President, the problems of
health care are well known in this
country. There is an urgent need to
provide affordable health care to all
Americans. There are many bills
which are pending and precisely how
we get there is a very, very difficult
matter.
After extensively studying the mat-
ter and after working on the Labor,
Health and Human Services, Educa-
tion Subcommittee of Appropriations
for the 11 1/2 years that I have been
in the Senate, it is my sense that we
can provide affordable health care for
all Americans within the range of
expenditures which are currently
being made.
The best estimate which I have seen
for last year puts the total cost of
health care in the United States at
$738 billion. It is my sense, that we
can extend affordable health care to
the 37 million Americans now not
covered and, in fact, reduce health
costs as well within that range by
undertaking a number of lines of ac-
tivity.
One line of activity is managed
health care, which has the potential
for savingB in the range of 20 percent
or perhaps even more.
Another line of health care savings
lays in preventive care on a program
now incorporated in Healthy Start. I
was amazed to find several years ago
that Pittsburgh, PA, had the highest
infant mortality rate of any major city
in the United States for
African-American babies. I was
amazed the first time I saw a 1-pound
baby, a baby about the size of a
person's hand. It is a human tragedy
for a child to come into this world
weighing, 16, 18, 20 ounces, and that
is something which can be prevented
by proper nutrition, by proper diet,
really informing the many teenage
young women who give birth to
1-pound babies about what they have
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to do to take care of their bodies and
to take care properly of their child to
be.
I am working, as a matter of fact,
on some supplemental legislation on
this subject in an effort to quantify
what the savings would be or will be
through Healthy Start, and I think it
will range into the high billions.
In conjunction with Dr. Louis
Sullivan, Secretary of Health and
Human Services, a program has been
introduced called Healthy- Start to
give adequate nutrition to the moth-
ers so that children will not be born
weighing 16, 18, 20 ounces. I am
pleased to note that two of those
Healthy Start units are in Pennsyl-
vania.
Mr. President, beyond managed
health care and the Healthy Start
Program there are enormous saving?
which can be achieved through
cracking down on fraud which is esti-
mated to range into the $60 billion
and upward category. There is anoth-
er range of savingB which may be
possible with so much of the cost of
medical care being occasioned in the
last few days, few weeks, or few
months of a person's life, and that is
also legislation which I am working on
at the present time.
The amendment which I have pro-
posed moves to some very, very impor-
tant items which will make material
benefits in our health care delivery
system in the United States today.
The major provision of S. 1936,
which is incorporated into this
amendment, provides for full deduct-
ibility of insurance for self-employed
individuals. Currently small
self-employed individuals can deduct
oiuy 25 percent of their health insur-
ance costs, while employers may de-
duct 100 percent of what they pay for
the health insurance costs of their
employees.
It is hard to fmd a provision in the
Internal Revenue Code which is more
discriminatory than this one. There
have been many proposals to try to
make this modification. I am pushing
it today because I think it is high time
action was taken on this very impor-
tant and fundamental inequity.
S. 1936 had some other provisions
which have not been included in the
amendment which I have submitted
because of the impossibility of getting
a precise fix on how much the cost
would be. We have a precise item on
the cost providing full deductibility for
individuals for self-insured individuals
of $8.7 billion, and it is covered with
offsets which were provided within
the text of this bill, offsets on this
item, as well as offsets on other items.
Other provisions, Mr. President, of
S. 1936 provide for small business
purchasing groups, which would au-
thorize the Secretary of Health and
Human Services to make grants to
approved groups which have been
certified by the State where these
nonprofit groups would help enhance
the purchasing power and consolidate
administrative costs for small busi-
to pool resources for the pur-
chase of group health insurance. This
would, through the pooling approach,
involve very considerable savingB for
small businesses.
Another key part of S. 1936, which
is incorporated into my pending
amendment, is important insurance
regulation reform. The bill would
establish a small business insurance
market to accomplish quite a number
of improvements.
First of all, to preempt
State-mandated benefits for small
To qualify for the preemp-
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tion, the insurance policy would have
to meet a minimum health package
which would be established by the
Secretary of Health and Human Ser-
vices.
Next, there would be a provision for
the guaranteed availability and renew-
al of a basic health package for viable
small businesses that wish to pur-
chase them.
There also would be a limited
insurer's coverage restriction, such as
exempting individuals with known
health risk from coverage under a
group plan.
That is one of the exclusions, Mr.
President, which has cost more in
litigation and travail than it is really
worth. This is part of an evolving
system where the question of preexist-
ing conditions will be ruled out as a
matter of some State laws and this
advances that general public policy to
some extent at the Federal level.
Another provision under the insur-
ance regulation reform would be to
limit rates for new policies to between
80 and 120 percent of the average
rate of the class.
Next, limit the annual rate of
changes to the level of rates charged
to new businesses with adjustments
for changes in a group's coverage.
Another provision from S. 1936
would relate to State barriers to man-
aged health care plans by providing
for an insurance to require the Insti-
tute of Medicine of the National Acad-
emy of Sciences to develop standards
for managed health care plans. Plans
which then meet these standards
would be exempt from State laws
which impede the development and
cost-effective operation of managed
health care insurance plans.
Mr. President, I compliment my
distinguished colleague from Rhode
Island, Senator Chafee. and the other
cosponsor3 of S. 1936 for all the con-
structive work which they have done.
My amendment does not take all of
the provisions of S. 1936 but takes key
provisions which should materially
enhance the delivery of health care
services in this country.
Other provisions in the pending
amendment, Mr. President, are taken
from the legislation which I intro-
duced last November captioned
'Health Care Access and Affordability
Act,' S. 1995.
This proposal builds upon existing
Federal programs to reduce the need
for treatment of disease, expand the
availability of federally supported
primary care clinics, and reduce the
cost of care.
It includes the following items: An
expansion of federally supported pri-
mary care clinics by $380 million to
improve access to care in medically
underserved areas to reduce costly
emergency room care.
Next, an expansion of federally
supported health promotion and pre-
vention services by some $720 million,
with programs being focused upon
reducing health risk through changing
the behavior of both providers and
consumers, and encouraging greater
responsibility for healthy behavior.
Another provision would encourage
the modification of provider practice
styles by changing provider behavior
through medical effectiveness research
and direct modification of medical
practices.
Next, the establishment of an initia-
tive on drug development, with the
focus on the diseases that have high
mortality and societal costs, with an
authorization of some $120 million.
In addition, this bill directs the
Secretary of Health and Human Ser-
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vices to issue a report to the Congress
regarding the feasibility of establish-
ing national spending targets for
health care and health care services
as a means of controlling health care
costs.
This would focus attention in a very
constructive way, on cost contain-
ment.
Those are the essentials of the
amendment, Mr. President.
I thank the Chair and yield the
floor.
The PRESIDING OFFICER. Is
there further debate?
Mr. BENTSEN addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Texas (Mr. Bentsen).
Mr. BENTSEN. Mr. President, I
would like to see if we can arrive at
an agreed time limitation. I have
discussed this with the distinguished
Senator from Pennsylvania. Would an
hour and 20 minutes, equally divided,
suffice?
Mr. SPECTER. That would be ac-
ceptable.
Mr. BENTSEN. All right. If there
is no objection, I ask unanimous con-
sent that we limit the debate on this
amendment by the Senator from
Pennsylvania, and that there be no
amendments thereto to the amend-
ment, to an hour and 20 minutes,
equally divided, under the control of
the manager of this particular piece of
legislation on this side of the aisle,
and the Senator from Pennsylvania
managing the other side of it.
The PRESIDING OFFICER. Is
there objection to the unanimous
consent request propounded by the
senior Senator from Texas?
If not, that will be the order of the
Senate.
Who yields time?
Mr. BENTSEN. Mr. President, we
have just received the amendment,
which makes it very difficult to fully
debate it, so we are perusing it now,
studying it, to see the application of it.
What I have seen thus far, part of it,
four points of it look like they have
been taken out of S. 1872, a piece of
legislation sponsored by the Finance
Committee's chairman of the subcom-
mittee on health care.
As I have seen the amendment thus
far, it has nothing to do with the en-
ergy bill. It is not a part of the energy
bill and really should not be the sub-
ject of debate during our study and
our debate on the energy bill and the
tax portions of it.
The other point is, I looked for the
revenue sources by which he would
pay for this piece of legislation. It
appears that much of that comes from
revenue sources we have discussed in
previous bills from the Finance Com-
mittee - one that we are considering
at the present time on enterprise
zones, which hopefully will be a bipar-
tisan piece of legislation that I will be
bringing before the Finance Commit-
tee this afternoon for determination
as to its final form.
If we were to lose those revenue
sources by an amendment to be
agreed to this afternoon here, it would
throw us totally out of compliance on
the Finance Committee bill for enter-
prise zones, for the extenders, for the
repeal of the luxury tax, for the appli-
cation of the IRA's - expansion of the
IRA's. Frankly, I do not know where
we would turn in order to accomplish
that objective.
So I strongly urge the Members of
this body to deny this amendment. It
really should not be on the energy bill,
and it gives us serious problems inso-
far as addressing the President's re-
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quest for enterprise zones and the
other things we have put in that piece
of legislation to encourage savings in
our country so we can have more
capital so we can do things about the
productivity and international com-
petitiveness of our country. Those
things are in that piece of legislation.
In addition to that, we have legisla-
tion, S.4, which will help us in some of
these areas insofar as substance
abuse, pregnant mothers on drugs,
trying to assist in that regard, trying
to bring families back together and
trying to do something to help chil-
dren who end up with no parents at
all - trying to see that we do some-
thing about the incredible increase in
children being forced into foster
homes because of lack of parental
supervision or attention or care or
love.
Those are all in this piece of legisla-
tion before the Finance Committee
this afternoon and, frankly, if this
amendment would be agreed to and
deny us the sources of revenues to
comply with the Budget Act, we would
be running aground. I do not know of
any way we could accomplish our
objectives here. So I strongly urge my
colleagues to turn down this amend-
ment, as well-intentioned as I am sure
it happens to be.
Mr. President, I suggest the absence
of a quorum. I ask that time be
charged equally to both sides.
The PRESIDING OFFICER (Mr.
Graham). Without objection, the time
of the quorum call will be charged to
each side equally.
The clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. WALLOP. Mr. President, there
is about this amendment, as there will
be about other amendments that are
offered to the energy package, a good
deal of what might best be called po-
litical sex appeal.
The topic is popular. The need
exists. The solution is, at best, awk-
ward. The chairman of the Finance
Committee will have more to say
about that later. But these are signif-
icant actions that are proposed by the
Senator from Pennsylvania, the most
significant of which will be paying for
it.
I will allow that argument to be
developed to its greatest extent by the
chairman of the Finance Committee.
But where I come in is that this, Mr.
President, is an energy bill. It is a tax
bill only insofar as the energy portions
of it require certain tax treatment, as
in the alternative minimum tax that
has just been adopted.
We have struggled mightily since
the initial introduction of this legisla-
tion to keep it from being anything
but an energy bill for a lot of reasons,
Mr. President. One is that this Con-
gress has never politically been able to
restrain itself when it came to energy
policy, and it used the pack mule
called energy policy to take out all the
other daydreams of Congress. What
has happened time after time after
time is that it has been energy policy
that was sacrificed in conference.
This is not an environmental bill.
This is not a health and human ser-
vices bill. It is not a farm bill. It is
not a transportation bill. It is - and
must remain - an energy bill.
So I register my opposition to the
amendment of the Senator from
Pennsylvania. Not that it is a wrong
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thing to do to provide these deduc-
tions, but the forum is the wrong
place to do it. These complicated
issues over how payment under the
Budget Act is satisfied, revenue neu-
trality, cannot be done on the floor of
the Senate.
We can propose, as has been, a
means of payment. But we, on the
floor of the Senate, will not be able to
weigh all the things the Finance Com-
mittee must weigh before entering
into these thingB, balancing this need
against other needs within the con-
fines of the Budget Act and the bud-
get agreement.
So what we have is a very politically
attractive attempt to use the very
politically attractive pack mule called
energy policy to haul out extraneous
matter from this Chamber. If experi-
ence has any validity, this amend-
ment, and others like it allowed to
proceed, will ultimately break the
back of this mule we call energy poli-
cy.
And, once again, Congress, in its
politically motivated self-interest, will
have sacrificed energy policy, through
the motivation of very sexy political
bullets that are attractive, that are
useful, that have a place in the dialog,
but not just rained from on high, but
having been seriously and carefully
considered by the committees of juris-
diction.
So as much as I am in sympathy
with the ultimate goal of the Senator
from Pennsylvania, I must say, Mr.
President, that I will do whatever it is
that I possibly can to see to it that it
does not become a part of this energy
bill. We have come too far. We find
ourselves now too close to lapse into
the traditional behavior and indulge
ourselves at the expense of finally
getting a coherent, balanced national
energy strategy for America.
Mr. President, I yield the floor, and
I suggest the absence of a quorum,
with the time to be charged equally.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. SPECTER. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, rath-
er than allowing the time to elapse on
a quorum call, there are a few re-
sponses I think are worth making at
this time.
When my distinguished colleague
from Wyoming, Senator Wallop, com-
ments about this amendment having,
as he puts it, political sex appeal, I
think a more accurate characteriza-
tion would be that it has great nation-
al importance. It has great national
importance because there is an urgent
need for Congress to act to provide
affordable health care for all Ameri-
cans.
There are many bills which are
pending, but this issue has not been
taken up by the Senate of the United
States. In offering this amendment at
this time, it is an effort to bring cer-
tain important aspects of health care
to the floor for decision. This will not
solve all the problems, but it will be a
very significant step forward by en-
couraging self-employed individuals to
become insured, because the deduct-
ibility will be 100 percent, which is the
same as it is for their counterparts
who are employees of corporations, for
example, or employees of other em-
ployers. I
It is a very important matter to be j
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taken up. That is why I am pressing
it at this time.
I hope that this amendment might
bring other amendments to the floor
on this issue, because while energy is
a matter of enormous importance for
America, it is no more important than
national health coverage.
When the distinguished Senator
from Wyoming (Mr. Wallop) as well as
the distinguished chairman of the
Finance Committee (Senator Bentsen)
say that this amendment has nothing
to do with energy, this amendment is
being offered because there is a tax
component to the pending legislation.
Under the rules of the Senate, it is
not possible to bring up this amend-
ment unless there is a tax component.
The legislative measures, the so-called
vehicles which come to this floor with
a tax component, are very few and far
between.
This is an occasion to put on the
floor of this Senate the tax issue, to
make fully deductible the insurance
premiums paid by self-employed indi-
viduals. It is a travesty, Mr. Presi-
dent, that self-employed individuals
can only deduct 25 percent of their
health insurance costs, where employ-
ees in other standing have a
100-percent deduction.
So the matter is being brought at
this time because it is possible under
the rules. It could not be done on the
Agriculture appropriations bill, which
was on the floor yesterday, or the
appropriations bill for State, Com-
merce, and Justice, which was on the
floor the day before. There is a very
definite reason and purpose for why
this amendment is being offered on
this bill.
When my distinguished colleague
from Wyoming, Senator Wallop, says
that it is too much to do on the Sen-
ate floor, I have to disagree with him
categorically. The measures compre-
hended here have been pending in the
Senate for months.
Senator Bentsen had made a com-
ment that a good bit of this was taken
from S. 1872.
Well, it is not taken from S. 1872.
As outlined initially, it has been taken
from S. 1936, where this Senator was
an original cosponsor, with Senator
Chafee's task force, and from S. 1995,
which this Senator authored.
Now, it may be that some of the
provisions overlap with S. 1872. S.
1872 was passed by the Senate and
was not ultimately enacted into law.
So to the extent that some of these
provisions have been considered be-
fore, it negates the argument Senator
Wallop has made that there is too
much to do on the floor.
These issues are not too complicat-
ed. They have been with us for some
time. They are well known, and we
could act upon them today. We could
act, for that matter, Mr. President, on
a broader range of issues. I think
back to the Clean Air Act of 1990,
which was passed by this body, a very
complicated piece of legislation
brought to the floor of the Senate.
There were groups which worked on
the legislation off the floor and ulti-
mately crafted a very comprehensive
Clean Air Act, taking 10 million tons
of sulfur dioxide out of the air every
year, important provisions on tailpipe
emissions, important provisions on
industrial pollution. When health
care comes to the floor of this Senate,
Mr. President, it is going to be very
complicated, but it is not going to be
solved until it comes to the floor of
the Senate. This is a start, I think a
significant start and an important
start.
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One final issue which was raised by
the distinguished Senator from Texas
was about the offsets being used in
some other bills.
Well, no one owns offsets, Mr. Presi-
dent. There are possible ways of sav-
ing money on other tax changes to
finance a new bill. The offsets which
are set forth here, Mr. President, were
taken from S. 2612 where Senator
Domenici and I had cosponsored an
economic recovery program. WhenS.
2612 was put on the Senate floor and
there was a need for some $12.6 bil-
lion in offsets, Senator Domenici and
I took a close look at the possible off-
sets. Every time there is an offset,
somebody will be hurt, to some extent.
My analysis, when S. 2612 was in-
troduced, was that these were the best
offsets to make. This needed more
than $8 billion, and that is why I uti-
lized that prior work of S. 2612 to put
it on this bill, so that this would satis-
fy the provisions of the Budget Act,
since we cannot increase spending
without an appropriate offset.
I offer these words of rebuttal very
briefly, Mr. President, since no one
else is seeking the floor, but that sum-
marizes or takes care of the conten-
tions which have been advanced by
the distinguished Senators from Wyo-
ming and Texas. That concludes my
argument for the moment, Mr. Presi-
dent, so I suggest the absence of a
quorum.
The PRESIDING OFFICER. The
absence of a quorum having been
suggested, the clerk will call the roll.
Mr. SPECTER. With time charged,
Mr. President, equally to both sides.
The PRESIDING OFFICER. Time
will be charged equally to each side.
The legislative clerk proceeded to
call the roll.
Mr. MITCHELL. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. MITCHELL. Mr. President, I
yield myself such time as I may use.
Mr. President, over a year ago I
joined with other Senators in intro-
ducing the legislation to provide com-
prehensive reform of our health care
system. Having served as chairman of
the Senate Finance Committee's Sub-
committee on Health, I have been and
continue to be aware of the need for
comprehensive reform of our system
of health care. I strongly favor such
reform.
I give that background to urge my
colleagues not to support the pending
amendment. I hope that if and when
a motion is made to table the amend-
ment that our colleagues will join with
us in tabling this amendment.
First, as has been stated by the
distinguished chairman of the Finance
Committee - and I believe the distin-
guished Republican manager of the
bill - it has nothing to do with the
subject of the energy bill which is
comprehensive in nature, important
to our Nation's future, and is a bill
that we have been struggling with
over a very long period of time trying
to advance.
Adoption of this amendment will
greatly complicate and retard, perhaps
fatally, the prospects of trying to get
action on energy legislation.
Second, I think Senators should be
aware that the provisions in this
amendment to pay for the costs in-
curred by the amendment are already
used to help pay for other pending
legislation, including some aspects of
the energy bill itself, but most notably
they are intended to be used to pay
for the provisions in the urban aid
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package which has now been expand-
ed to an economic growth program
that the Finance Committee by previ-
ous scheduling is to mark up at 5
o'clock this afternoon.
So that this amendment with the
payment provisions in it in effect pre-
empts the ability of the committee to
act on the measure which includes
enterprise zones, the repeal of luxury
excise taxes, extension of expiring
provisions of law such as the
low-income housing tax credit, the
research and development tax credit,
and other measures such as the ex-
pansion of individual retirement ac-
counts.
In effect, Senators would be pre-
cluding action on those measures at
least to the extent that the financing
mechanisms which were to be utilized
for those measures will have been
consumed in paying for this amend-
ment.
In addition, I am advised by staff
that one of the payment provisions in
this amendment takes money in from
legislation now pending in the
Veterans' Committee, which has been
intended there to pay for reform of
the veterans' disability program; that
again we would either have to not act
on reform of the veterans' disability
program or would have to find some
other revenue source different from
that which has previously been identi-
fied and intended to be allocated for
that purpose.
So I hope that Senators will realize
that adoption of this amendment
would first seriously impair the possi-
bility of getting action on the energy
bill, which in and of itself in my view
is a sufficient reason to oppose the
amendment because I believe that we
need a comprehensive energy bill.
And it is for that reason that I am so
committed to moving this energy legis-
lation forward.
Second, it will have the same effect
with respect to the tax urban aid and
economic growth legislation that is
being developed in the Finance Com-
mittee, and is to be marked up today
in the Finance Committee.
Again, if these tax provisions are
utilized with respect to this amend-
ment, they will be unavailable for use
by the committee in the other legisla-
tion, and therefore, will seriously jeop-
ardize any prospect of enterprise
zones being adopted, the luxury excise
tax being repealed, the extension of
expiring provisions of law such as I
previously identified, the research and
development tax credit, the
low-income housing tax credit, and
others.
So, Mr. President, while I believe
that the objective of changes in health
care is an appropriate one, I do not
think this to be the appropriate legis-
lation on which to attempt to do that,
nor do I believe this to be the proper
amendment by which to do that.
I urge and encourage all of our
colleagues to join the distinguished
managers of the bill, the chairman of
the Finance Committee and others,
who have spoken in opposition to the
amendment, to defeat the amend-
ment, and permit us to complete ac-
tion on the energy bill so that that bill
can go to conference and we can hope-
fully have a comprehensive energy bill
passed during this Congress.
Mr. President, I yield the floor.
Mr. SPECTER addressed the Chair.
The PRESIDING OFFICER. The
Senator from Pennsylvania (Mr. Spec-
ter) is recognized.
Mr. SPECTER. Mr. President,
would the distinguished majority lead-
er be willing to answer a question?
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Mr. MITCHELL. Yes. Certainly.
Mr. SPECTER. Mr. President, I can
understand the concerns about these
offsets being used, although I must
say that when it comes to a matter of
repealing the luxury excise tax, I
would think that those offsets would
better be used on programs for ex-
panding health coverage in this coun-
try. When the distinguished majority
leader talks about enterprise zones,
and a variety of other legislative pro-
posals, I do not disagree with their
importance; but I do not think they
supersede the importance of health
care.
My question is whether the distin-
guished majority leader, on the sched-
uling, has in mind a timetable for
taking up the issue of extension of
health care in America.
Mr. MITCHELL. As I have stated
many times publicly, from the very
place that I am standing now, as well
as others, comprehensive health care
reform is one of my highest legislative
priorities, and it is my hope and inten-
tion to bring to the Senate this year,
if at all possible, such legislation.
Mr. SPECTER. Well, Mr. President,
if the majority leader would be in a
position to make a commitment - 1 am
not saying he should be, because I
understand the complications of his
work, and I am on the floor a great
deal, but I have never heard the state-
ment made that the majority leader
just made.
But if the majority leader is in a
position to make a commitment to
bring health care legislation to the
floor this year, this Senator would be
willing to withdraw this amendment.
Mr. MITCHELL. Mr. President, I
am not able to make a commitment,
as the Senator full well knows, be-
cause under the rules of the Senate, I
do not have control over how long it
takes to consider legislation. A bill
comes up one day, and it may take a
day, a week or a month.
Therefore, since certain actions are
required by law - particularly the 13
appropriations bills - and since, as we
all know, many Senators regularly use
the delaying tactics permitted by the
rules to delay action, I cannot foresee
how long it is going to take to do vari-
ous bills.
It is a high priority of mine. I have
made the statement many, many
times, and I repeat it. I hope very
much, and I expect to, and it is my
intention to bring a bill to the floor, if
we can. But to make an absolute com-
mitment is really beyond my authority
or beyond my ability at this time.
I do not want to make a commit-
ment that I am not certain I can com-
ply with, because of so many other
factors - primarily, the limited legisla-
tive time, the large amount of busi-
ness that we have to do, and my in-
ability, because of the rules of the
Senate, to control the length of time
which the Senate takes to consider
any measure.
Mr. SPECTER. I appreciate what
the distinguished majority leader has
said, and I note the complexities of
scheduling and the responsibilities
which he has, and only he has.
I just say in passing that, as I un-
derstand it, there has been a date set
for product liability legislation, a date
fixed immediately after we come back
in September. I know, from what I
have heard the majority leader say
publicly and on television, that he
regards extending health coverage to
be second to none among the priori-
ties.
It would just be my hope that the
distinguished majority leader would
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bring this issue to the floor at the
earliest possible time, which is what
he has said. This Senator would cer-
tainly like to see it done this year, as
the majority leader said he would like
to see it done. But if it is not possible
to make a commitment, I repeat that
I understand the distinguished majori-
ty leader's situation, and I am under
no illusion that when the majority
leader makes a request, Senators from
a majority side of the aisle are gather-
ing. I do believe firmly that this is an
important amendment, and that the
offsets are better used for this amend-
ment than they are for items like the
repeal of luxury taxes.
I thank the Chair and yield the
floor.
The PRESIDING OFFICER. Who
yields time?
Mr. MITCHELL. Mr. President, I
yield 3 minutes to the Senator from
Oregon.
Mr. PACKWOOD. Mr. President, I
will echo everything the majority lead-
er said, and this is indeed kind of a
'race to the courthouse' as to who
uses up which money first.
Tonight, at 5 o'clock, the Finance
Committee is meeting on what will be,
I think, the only major tax package of
this session, and it has to be revenue
neutral. It has been structured in
such a way that it raises as much
money as it spends.
I will give one example of the tax
that is being used. It is the excise tax
on ozone depleting chemicals. Those
are chemicals that go into the air and
deplete the ozone, and it is bad for the
health of humans and the health of
the Earth. It raises about $1.4 billion.
That is part of the tax package to
achieve the balance - one of the taxes
that the Senator from Pennsylvania
takes to pay for his health bill. I am
not in any way critical of him. He
uses a number of other taxes also, but
it means, therefore, in that case that
there will be no tax bill tonight, and
probably no tax bill at all, including a
great variety of provisions that 95
percent of the Senate is going to sup-
port.
So I think we have no choice in this
case but to defer to the committee
that has to balance this and has juris-
diction over health care; I might add,
it has to balance all of the equities,
revenues, and expenses. I project, if
not in this Congress, by the end of the
next Congress, we will have passed a
health plan that will cover everyone
in America, with few exceptions; and
we will have taken care of the prob-
lem that the Senator from Pennsylva-
nia now is talking about.
I have to encourage all Senators on
both sides of the aisle to vote against
this amendment, or else assume that
anything they might have wanted in a
tax package, which will come out of
the committee tonight, simply will not
come out.
I thank the Chair.
The PRESIDING OFFICER Who
yields time?
Mr. SPECTER. Mr. President, I
yield 5 minutes to the distinguished
Senator from Minnesota.
Mr. DURENBERGER. Mr. Presi-
dent, I came to the floor somewhat
ambivalent on this issue, because
many of the people you see standing
here on the floor speaking today are
members of the Finance Committee,
and we are all going in our usual bi-
partisan or nonpartisan fashion to
markup a tax bill that some of us
believe in and some of us do not be-
lieve in.
When I got here and listened to the
debate, I must say I have a great deal
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of - not sympathy for my colleague
from Pennsylvania, but I think it is
important that those of us who are
here in the last few weeks of this
session recognize the fact that, back
in Pennsylvania, in November of last
year, the whole country was awakened
to what many of us knew was a major
problem facing the people in this
country, and that is that we are de-
priving a lot of people in this country
of access to health care, because we
cannot do anything about containing
its costs or reorganizing the way
health care is delivered.
As I say, the public woke up to the
problem, and a lot of the people in the
electoral process woke up to the prob-
lem. I must say that my colleague
from Pennsylvania did not have to
have an election on the other part of
the representation from the State to
wake him up. He has been the chair-
man of the appropriations subcommit-
tee, and the ranking member of the
appropriations subcommittee on Labor
and HHS, for much of the time that I
have known him in this body.
He is not putting before us a
so-called comprehensive health care
reform bill. It is a relatively elemen-
tal, but very, very critical, and very
important beginning to deal with the
problems that we face.
In fact, the first part would be re-
form - small business reform - and the
full deductibility for self insured.
We have been debating that in the
Finance Committee for 10 years. We
can never get the money to take it
100 percent. There is a consensus in
the country that we ought to give the
self-employed the same financial crack
at Federal subsidies that the people
working in big companies get.
Then he gets to insurance regula-
tion reform, and I introduced the first
bill on that a year and a half ago - S.
700. The distinguished chairman of
the Finance Committee and I are the
coauthors of the bill to do it. All of
those measures, including State barri-
ers to managed care plans, have al-
ready been passed out of the Finance
Committee, and on the floor of the
Senate, where they got tossed out,
because they were tied to a tax bill
that we did not prefer earlier in the
year.
So this is nothing new. This has
been around. It is something that
some of the States are working on.
They are working on small group
insurance reform.
I have a lot of sympathy for the fact
the Senator would like to see this
passed. The remainder of the money
goes to primary care, clinics, and pre-
ventive services. These are the things
the Senator from Pennsylvania has
been trying to work on in the subcom-
mittee for a long time. So the issue is,
one, is this the right place to do it
and, two, are you using somebody
else's money.
I am in the minority. I cannot deal
with the first of these. I raised this
same argument in the Finance Com-
mittee markup. I said why cannot we
do S. 1872, the small group insurance
reform and State barriers to managed
care plan; why cannot we do what the
Senator from Pennsylvania asked us
to do on this tax bill this afternoon? I
was told by the majority this is not
the time to do this sort of thing; may-
be we will do it in September.
Mr. President, I do not think it is
our party and I do not think it is our
representatives in this body that are
keeping tax reform bottled up in this
country. It looks to me as though
some vague plan either coming out of
the House or the Senate, both of them
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controlled by the other party, is going
to produce some form of comprehen-
sive tax reform. But nobody will tell
us when.
The majority leader talks about the
busy schedule and this is not the vehi-
cle using somebody else's money.
When do we do it? When do we pass
the Democratic reform plan? When do
we pass the plan of the chairman of
the Senate Finance Committee, S.
1872?
I think there is not a consensus on
comprehensive reform. There is not a
consensus on the Democratic side.
There is not a consensus on our side.
That is because there is not a consen-
sus in America.
But we have something right here
that most of us agree on and it is
presented to us by our colleague from
Pennsylvania.
I just rise to urge the majority to
think about the difficult position that
this statement puts us all in. If, in
fact, we cannot do it on this bill, then
what bill can we do it on?
I rise to send that same message to
my colleague from Oregon, who is my
ranking member on the Finance Com-
mittee. I we cannot do it on this bill
and we cannot use the money from
the tax bill, because at 5 o'clock we
are going to use it for something else,
at least tell us what money can we use
and when can we use it?
Mr. President, if I cannot get an-
swers to those two questions I intend
to support my colleague in his amend-
ment.
I yield the floor.
The PRESIDING OFFICER The
time of the Senator has expired.
Who yields time?
Mr. SPECTER Mr. President, how
much time remains on this side?
The PRESIDING OFFICER The
Senator from Pennsylvania controls
14 minutes and 14 seconds; the man-
agers control 13 minutes and 30 sec-
onds.
Mr. SPECTER. Mr. President, I
yield 5 minutes to Senator Chafee.
The PRESIDING OFFICER The
Senator from Rhode Island is recog-
nized for 5 minutes.
Mr. CHAFEE. Mr. President, I com-
mend the Senator from Pennsylvania
for his concern in connection with
these health care matters. It is some-
thing that he has been involved with.
As he mentioned earlier, he was an
original cosponsor of the measure
which I introduced last November,
which has more cosponsors than any
other single health measure before the
Senate. That is S. 1936.
Mr. President, I share the concern
that the Senator from Pennsylvania
has voiced, and it seems to me it co-
mes down to this: Should we do some-
thing or should we wait for the great
supermea8ure that might someday
come through here? I very strongly
believe that we ought to take those
steps that we can agree upon and take
them now.
I think it is critical that we move
forward. I think now is the time to
act.
This measure that the Senator from
Pennsylvania has brought before the
Senate is helpful to low- and
middle-income families, it is helpful to
small businesses, and I think he has
done a good job.
Now the argument is that it soaks
up money that is involved with other
programs. I might say some mention
was made of the luxury tax - and I did
look over the items that the Senator
provides for his source of revenues,
and it does not involve those moneys
that were to pay for the elimination of
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the luxury tax.
I will say this, that these issues that
come before us now, as has been men-
tioned before, are not new issues; they
are issues that are common to all the
various health care measures that are
put before the Senate currently.
What are some of the measures we
are talking about? There are the small
business purchasing groups. The
distinguished majority leader has
legislation in and it involves the small
business purchasing groups. So does
the legislation that I have, S. 1936. So
do a series of other measures.
There are insurance regulation
reform, the preempting of
State-mandated benefits, the guaran-
teed availability and renewal of basic
health packages for small businesses.
And, so these measures, State barri-
ers to managed care plans, we all have
that. We all recognize that in certain
States there are barriers to managed
care plans.
So, Mr. President, this is not new
territory that is being plowed here.
What the Senator from Pennsylvania
has done is very carefully selected to
those measures that are pertinent to
many others that we have before us.
So I commend him for his concern
and urge that the Senate adopt the
amendment which the Senator from
Pennsylvania has proposed.
The PRESIDING OFFICER. Who
yields time?
Mr. BENTSEN. I yield 4 minutes to
the distinguished Senator from Ar-
kansas.
The PRESIDING OFFICER. The
Senator from Arkansas is recognized
for 4 minutes.
Mr. PRYOR. Mr. President, I thank
the distinguished chairman for giving
me this opportunity to talk on the
Specter amendment just for a mo-
ment.
Mr. President, the Specter amend-
ment has embodied within it many,
many of the proposals that many of us
on the floor this afternoon have
worked very hard for and have dili-
gently strived to have enacted into
law.
One of those, and I think it is cer-
tainly one that the Senator from
Pennsylvania will certainly recognize
that the distinguished chairman of
the Finance Committee, Senator
Bentsen, and the distinguished Sena-
tor from Minnesota, Senator
Durenberger, have long fought for, is
the 100-percent deduction for the
self-employed for insurance premiums.
This is, of course, embodied in the
amendment of the Senator from
Pennsylvania and this is one of the
very, very attractive features, and it is
for this reason that this amendment,
that includes the 100-percent deduc-
tion and many other items, I might
add, I find very difficult to oppose on
the floor at this time.
Mr. President, I applaud the Sena-
tor from Pennsylvania for attempting
to do this. The bottom line is this: We
have only a very few minutes remain-
ing on this amendment. This amend-
ment consists of 120 pages. None of
us have really had an opportunity to
see what is in this amendment. None
of us have had an opportunity to real-
ly sit in a hearing and listen to the
pros and cons of what this amend-
ment entails.
Mr. President, I think it is very,
very necessary at this point to point
this out, and we just asked if it would
be permissible to quote him, and I am
going to quote John Motley, who is
with the NFIB, the National Federa-
tion of Independent Business. We
called him. We said, 'Mr. Motley, are
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you supportive of Senator Specter's
amendment on the 100-percent deduc-
tion?' He said, 'Of course I support
the substance of this. This has been
one of NFIB's goals; however, we did
not seek for this proposal to be includ-
ed in the Specter amendment. We did
not encourage it. In fact, you may
quote me by saying we feel that it will
damage future efforts to bring
100-percent deductibility for the
self-employed for health insurance
premiums.'
I think, too, Mr. President, it is very
necessary to note that we do not know
where the revenues are coming from.
We do not know which of these reve-
nues are real revenues. We do not
know which of these might be classi-
fied somewhere down he line as
'funny money.' I do not want to imply
in any way that the Senator from
Pennsylvania would engage in trying
to pay for a serious program like this
or a series of programs with funny
money.
Mr. President, there is a time for
everything, there is a place for every-
thing, but this is not the time nor is
this the place to have a major health
care bill where we do now know what
is in the legislation, we do not know
how we are going to pay for it, we do
not have time to debate as we speak,
and I urge my colleagues to vote
against the Specter amendment.
The PRESIDING OFFICER. The
Senator from Texas.
Mr. BENTSEN. Mr. President, the
pending amendment would increase
and extend deductions for
self-employed individuals. That provi-
sion, thus, would reduce Federal reve-
nues. The Senator seeks to offset
that revenue loss with both revenue
increases and outlay reductions. The
Congressional Budget Act distinguish-
es between revenues and outlays. In
the absence of a budget resolution
provision, called a reserve fund, the
Budget Act does not allow legislation
to pay for tax cuts with outlays reduc-
tions.
The pending amendment would
reduce revenues on a net basis by in
excess of $4 billion over 5 years. The
adoption of the amendment would,
cause the current level of revenues to
fall below the revenue floor in the
most recent budget resolution. It,
thus, violates section 311(a) of the
Congressional Budget Act. It takes the
affirmative vote of 60 Senators to
waive section 311(a).
At the appropriate time, Mr. Presi-
dent, after all time has been yielded
back on the amendment, I shall raise
rf point of order against the amend-
ment.
Mr. President, how much time do
we have remaining?
The PRESIDING OFFICER. The
Senator from Texas controls 8 min-
utes and 41 seconds. The Senator
from Pennsylvania, 10 minutes and 45
seconds.
Mr. BENTSEN. Mr. President, this
amendment is not germane to the
energy bill. We sure do not need to
open up this debate to unlimited tax
amendments. I understand the desire
of the Senator from Pennsylvania to
promote his agenda; much of it comes
in a bill that I have introduced myself,
and that we have passed before
through the Senate. So I am sympa-
thetic to those objectives.
But, frankly, we have been working
on the enterprise zone bill; and with
that, a restoration of the IRA, and
with that the utilization of S. 4, which
addresses some of the problems of
drugs and substance abuse, and moth-
ers and parents, and trying to help
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those children see that they have care
and love and are not forced into foster
homes. Those are parts of the legisla-
tion we are talking about.
We are addressing the problem of
the 58 people who were killed in the
riots in Los Angeles, and trying to
respond to the President's request
insofar as enterprise zones. We are
seeing to it in that legislation that we
put money in there to train those
young people, to find jobs for them, to
give a wage credit for them. We put
incentives in there to encourage in-
vestments in that enterprise zone; to
bring back that neighborhood; to turn
it around. That is a part of the legis-
lation that we will be considering in
the Finance Committee this after-
noon.
We also have to pay for it, to be in
budget compliance. If this amend-
ment is adopted, we would not be in
budget compliance, and you can forget
it. There is no way we can pay for it
and bring it about. The problem you
have is you can only spend that mon-
ey once.
So a vote for this amendment is
against the low-income housing credit
that we have in that piece of legisla-
tion. It is against the extension of the
Research and Development Act. It is
against the repeal of the luxury tax
on boats and aircraft. Frankly, it is
against the President's own initiatives
insofar as economic growth.
So I am deeply concerned about the
Senator's offering it. I urge very
strongly that my colleagues defeat this
amendment.
I withhold the remainder of my
time.
The PRESIDING OFFICER (Mr.
Sanford). Who yields time?
Mr. BENTSEN. Mr. President, I am
prepared to yield back the remainder
of my time, if we have no further
speakers on my side.
Mr. SPECTER addressed the Chair.
The PRESIDING OFFICER. The
Senator from Pennsylvania.
Mr. SPECTER. Mr. President, how
much time remains on my amend-
ment?
The PRESIDING OFFICER. Ten
minutes and forty-three seconds.
Mr. SPECTER. Mr. President, I
think this has been a very illuminat-
ing debate.
Let me deal first with the issue of
funny money. The budget offsets
which are contained in my amend-
ment were a part of the S. 2612,
where Senator Domenici • the ranking
member of the Budget Committee,
and formerly chairman of the Budget
Committee • and I had surveyed ap-
propriate offsets on an economic re-
covery package which Senator
Domenici and I introduced.
I am sure that, given the thorough-
ness and competency of Senator
Domenici in his long practice in the
Budget Committee, and his staff, that
these are accurate.
I am a little perplexed at the refer-
ence by the Senator from Arkansas to
funny money. Although he says he is
not suggesting there is funny money,
I do not know what he is doing when
he talks about funny money, that this
is funny money. I do not think it is
very funny. This is a very serious
matter, and this itemization is very
carefully crafted.
I ask unanimous consent that, at
the conclusion of my remarks, this
schedule be printed in the Record.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(See exhibit 1.)
Mr. SPECTER Mr. President, if
the Senator from Arkansas wants to
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categorize it as funny money, let him
be specific. I consider that a pretty
serious charge. Let him say what is
incorrect about this.
The Senator from Texas plans to
raise a point of order. I have no illu-
sions about how that is going to come
out, either. But I would be interested
to know, from a ruling from the
Chair, what is incorrect about these
figures.
These figures were not drawn out of
the air. These figures have been
pending before the Senator for a long
time in S. 2612, which has been pend-
ing for weeks and months. As I say,
they were crafted by the Senator from
New Mexico, who had been chairman
of the Budget Committee, and is now
the ranking member. They are accu-
rate.
Now, the most revealing part of this
debate, Mr. President, and the reveal-
ing part about the vote will be where
Members place health care on the
range of national priorities. That is
what this vote is going to be about.
The Senator from Texas, on a ta-
bling motion, or the Senator from
Texas, on a point of order, does not
need 60 votes to defeat this amend-
ment. We all know that. There are
57 Members on the other side. And
the balance of power is clearly on the
side of the aisle controlled by the
Democratic Party. So I do not really
care whether the Senator is looking
for 51 votes or 60 votes on this partic-
ular item.
But when Senators vote, they are
going to be voting on what their prior-
ities are, because the people of Ameri-
ca look behind the procedural facade.
Whether it is a point of order, or a
tabling motion, or whatever, they will
say that if someone votes to sustain
the ruling of the Chair, about which I
have no doubt will be adverse to this
Senator - if people vote to sustain the
ruling of the Chair, they are voting
against putting this issue on the bill:
Significant steps for health care, as
identified by two long-standing mem-
bers of the Finance Committee who
have taken up these issues in great
detail - Senator Chafee and Senator
Durenberger - pointing out how it is
for small business, regardless of what
representation there may be about the
president of some association, and
how it helps small business and how it
helps middle-income Americans.
When there is an objection raised by
Senators repeatedly on the floor that
if we pass this amendment, we will
not be able to repeal the excise tax on
luxury items, I wonder where I am. Is
a repeal of the luxury tax more impor-
tant than extending health care in
America? That is the quintessential
rhetorical question. Of course, repeal-
ing the luxury tax is not more impor-
tant then extending health care in
America.
I would say to you, Mr. President,
that even when it comes to enterprise
zones, as important as enterprise
zones are • and there is no reason why
we should be, in 1992, with the enter-
prise zone legislation pending for more
than a decade, there is no reason that
we have not passed it long since. I
think it has potential.
This Senator has been an avid sup-
porter of it. But I do not think any-
one would say that it is a higher pri-
ority than extending health care in
America. We all know if an effort is
made by the chairman of the Finance
Committee and by the majority leader
and by the expert staffers, we can find
the money or offsets to pay for it.
So I think it has been a very reveal-
ing debate. I made the flat offer to
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withdraw the amendment if there
would be a time certain fixed for legis-
lation to come to the Senate floor, and
there has been a commitment on some
legislation to come to the Senate floor
by the distinguished majority leader.
I do not think any commitment on
any legislation is more important then
extending health coverage for Ameri-
ca.
So I want to see how the Senators
vote on this issue because the inter-
pretation is clear; if you vote to sus-
tain the ruling of the Chair on the
point of order, you are voting for the
luxury tax over health care.
How much time remains on my
side, Mr. President?
The PRESIDING OFFICER. Four
minutes.
Mr. SPECTER. I thank the Chair
and reserve the remainder of my time.
EXHIBIT f
••• TABLE DATA UNAVAILABLE •••
Several Senators addressed the
Chair.
The PRESIDING OFFICER. Who
yields time?
Mr. BENTSEN. I yield 2 minutes to
the distinguished Senator from Min-
nesota.
The PRESIDING OFFICER The
Senator from Minnesota.
Mr. WELLSTONE. Mr. President,
it is very difficult in 2 minutes to dis-
cuss health care policy, but I do want
to respond to the point that the Sena-
tor from Pennsylvania made. He said
this is a vote about whether or not we
make health care reform a priority. I
say, for those of us who make health
care reform a priority, we want to
make sure there is a package of bene-
fits for citizens in this country that is
tilted toward preventive health care,
and this proposal introduced by the
Senator from Pennsylvania, as far as
I can tell, fails that test. For those of
us who are concerned about health
care as a priority, we do not want to
be just talking about an advisory com-
mittee to deal with the question of
cost control. Businesses and people
throughout this country want to have
assurance that there will be real cost
control, but that does not seem to be
in this proposal.
So, from the point of view of those
of us who make health care a priority,
we will not be able to vote for this
amendment.
Finally, for those of us who care
about health care as a priority, we
want to make sure there are
long-term care provisions to deal with
the problem of costs for older Ameri-
cans and other people with disabili-
ties. This particular proposal seems
to be very ambiguous on that count.
So, I think, if it is a priority for us, we
would have a difficult time.
My point is that we should not be
fooling people in this country. We
should be talking about public policy
that will make a huge difference, re-
sponding to these major concerns
about making sure that health care is
available for citizens, it is affordable,
it is dignified care, and, yes, there is
effective cost control. I do not see
that in this proposal. We have not
even had a chance to debate it. For
that reason alone, it would be irre-
sponsible for Senators to support this.
The PRESIDING OFFICER. Who
yields time?
Mr. BENTSEN. Mr. President, how
much time have I left?
The PRESIDING OFFICER. One
minute - four minutes.
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Mr. BENTSEN. I will take the i
ond ruling. I yield 2 minutes to the
distinguished Senator from Montana.
Mr. BAUCUS. Mr. President, essen-
tially this is not the right time for this
amendment. I think we all know
that. We all know health care policy
is probably, if not the most important,
one of the most important issues this
Congress must face. We know that.
We are grappling with it.
We also know this is the first time
we have seen this quite comprehen-
sive amendment. We have not debat-
ed it. It was not debated in commit-
tee. It has not been debated in any
form whatsoever. Here it is now
thrust upon us.
We also know - at least I have been
told - that we will be considering
health care legislation this fall, in
September. The House will be sending
over a Medicare bill. We will be deal-
ing in this Senate with Medicare.
That will be the appropriate place to
deal with health care legislation, on a
Medicare bill, not out of the blue,
sprung upon us suddenly on a tax
provision in an energy bill.
One of the reasons I think the coun-
try is a bit disappointed with the Con-
gress and thinks it is too gridlocked is
because, under our rules, any amend-
ment generally can be offered on any
subject at any time. And it causes all
kinds of problems here. I do believe,
if we are going to restore the faith of
the American people, we have to be a
bit more orderly. We have to deal
with the most important issues, but
we have to deal with them in an or-
derly way.
We will be dealing in an orderly way
with health care legislation this fall.
We should not be taking up this
amendment at this time. For that
reason I urge Senators to vote to sus-
tain the Chair on the point of order
which will be made shortly.
The PRESIDING OFFICER. The
Senator from Pennsylvania.
Mr. SPECTER. Mr. President, in
response to the Senator from Mon-
tana, if he was correct that we would
be taking it up in the fall, this amend-
ment would have been withdrawn.
He is not the majority leader. The
majority leader refused to give a com-
mitment to take it up in the fall in
the face of my unequivocal offer to
withdraw the amendment if that com-
mitment were to be given.
When the Senator from Minnesota
argues against the pending amend-
ment, Senator Wellstone - distin-
guished from Senator Durenberger
who spoke in favor of it - 1 outlined
during the course of the presentation
that there are programs here for pre-
vention and health promotion. When
the Senator from Minnesota criticizes
the idea of having a committee work
on the targeting of health care costs,
I will say to him and the rest of my
colleagues, that is a more profound
step than no step at all. What ought
to be happening here is the Senator
from Minnesota (Mr. Wellstone) who
has legislation pending, ought to be
pressing to have a commitment to
have his legislation brought up. Or, I
suggest to him, he ought to seek to
have his legislation brought up.
Mr. BIDEN. Mr. President, there is
very little debate in our country or in
Congress on the need for comprehen-
sive health care reform. But there is
much debate over how to go about
that reform. While we need to reform
the health care system - and I believe
it will be reformed and will be re-
formed soon - this bill is neither the
time nor the place.
The various proposals - be they
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play-or-pay, national health insurance,
a voucher system, or the solution
offered in the amendment fay Senator
Specter - should be subject to due
deliberation, thorough consideration,
and a full debate. The Senate and the
American people must understand
what the reforms will achieve and
how they will be achieved. That is not
happening - and cannot happen - with
this amendment on this bill.
The debate is taking place in other
venues in Congress and has been for
several months. The Finance Com-
mittee and the Labor and Human
Resources Committee have been ex-
amining the range of health care pro-
posals that have been offered. Just
yesterday, I chaired a hearing before
the Judiciary Committee on health
care fraud - an important component
of whatever health care reform is
adopted. The Majority Leader has
made it clear that health care reform
will be debated in the Senate - on its
own, not as a last minute, poorly un-
derstood amendment to this impor-
tant bill to establish a national energy
policy.
The Senate's leadership is strongly
committed to health care reform.
While President Bush has given one
speech and sent Congress only parts
of his proposal, the Senate majority
has been working to find a solution to
provide affordable health care to all
Americans.
I support those efforts, and I sup-
port reform of the health care system.
But, I also support undertaking that
reform in a logical, deliberate, and
responsible fashion. Otherwise - if it
is hurried and poorly developed - it
could prove to be more harmful to the
health of America than our current
situation. For that reason, I cannot
support this amendment, and I urge
my colleagues to reject it.
Mr. WELLSTONE. Will the Senator
yield?
Mr. SPECTER. Yes. On your time.
Mr. WELLSTONE. That may not
be possible.
Mr. SPECTER. How much time do
I have left, Mr. President?
The PRESIDING OFFICER. The
Senator has 2 minutes and 18 sec-
onds.
Mr. SPECTER. I will yield for a
question within 30 seconds. I do not
want to yield all my time and have
none left for reply.
Mr. WELLSTONE. Let me just
provide the Senator from Pennsylva-
nia • and I appreciate his courtesy -
with a clarification. My argument
was not that an advisory committee in
and of itself was a bad thing. I just
simply said we are at the point in
time right now where we need to be
introducing legislation that has the
cost control built into it. We do not
need to study it any longer. People are
telling us, 'Do not give us legislation
unless you have the teeth to control
the costs.' That was the point I meant
to make.
Mr. SPECTER. Mr. President, if
that was the point, I say I would be
delighted to see that legislation on the
floor and I would be delighted to vote
on it. That is what I would like to
vote on.
Mr. President, in a nutshell, in the
minute and a half remaining, this
debate really may come down to what
is more important, moving ahead on
health care or standing by procedural
niceties of the Senate. What is more
important, allocating some budget
resources and some money for health
care or repealing the luxury tax?
Mr. President, I move to waive the
Budget Act for consideration of
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amendment 2783.
Mr. President, I ask for the yeas
and nays.
The PRESIDING OFFICER. Is
there a sufficient second? There is not
a sufficient second at this time.
Mr. BENTSEN. It has not been
raised. I will raise it at the appropri-
ate time.
The PRESIDING OFFICER The
motion is in order prior to the point of
order.
Mr. BENTSEN. Well, Mr. Presi-
dent, then I raise the point of order
that the pending amendment violates
section 311(a) of the Congressional
Budget Act of 1974.
Mr. SPECTER. Mr. President, I
again move to waive the Budget Act,
which I believe was in order before.
Mr. President, I ask for the yeas and
nays.
The PRESIDING OFFICER Is
there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. BENTSEN. Point of order.
Has the Chair ruled? Has the Chair
ruled on the point of order?
The PRESIDING OFFICER The
Chair did rule because of the motion,
but the waiver preempts a ruling of
the Chair. All time has expired.
The question is on agreeing to the
motion of the Senator from Pennsyl-
vania to waive section 311(a) of the
Budget Act for the consideration of
amendment No. 2783 to the commit-
tee substitute for H.R 776.
The clerk will call the roll.
The bill clerk called the roll.
Mr. FORD. I announce that the
Senator from Louisiana (Mr. Breaux),
the Senator from North Dakota (Mr.
Burdick), the Senator from California
(Mr. Cranston), and the Senator from
Tennessee (Mr. Gore) are necessarily
absent.
Mr. SIMPSON. I announce that the
Senator from North Carolina (Mr.
Helms) is absent due to illness.
I further announce that, if present
and voting, the Senator from North
Carolina (Mr. Helms) would vote 'yea.'
The PRESIDING OFFICER Are
there any other Senators in the
Chamber who desire to vote?
The yeas and nays resulted - yeas
35, nays 60, as follows:
(ROLLCALL VOTE NO. 160 LEG.)
YEAS -36
Bond
Brown
Chares
Costa
Cohen
Craig
D'Amato
Danforth
Dole
Domenici
Durenberger
Garn
Gorton
Gramm
Graasley
Hatch
Hatfield
Jeffords
KnUn
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Pressler
Roth
Rudman
Seymour
Spoctor
Stevens
Symms
Thurmond
Wsrner
NAYS -60
Adams
Akaka
Baucus
Bantaan
Biden
Bingaman
Boran
Bradley
Bryan
Bumper*
Burns
Byrd
Cochran
Conrad
Daschle
DaConcini
Dixon
Dodd
Eson
Ford
Fowler
Glenn
Graham
Hsrkin
Heflln
Holllnsa
Inouye
Johnston
Kasaebaum
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Levin
Iieberman
Metsenbaum
Mikubki
Mitchell
Moynihan
Nunn
Packwood
Pell
Pryor
Raid
Ricgfte
Robb
Rockefeller
Sanford
Sarbanea
Seaeer
Shelby
Simon
Simpson
Smith
Wsllop
Wellatone
Wirth
Woflbrd
NOT VOTING
-6
Breaux
Burdick
Cranston
Gore
Helms
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The PRESIDING OFFICER. On
this vote, the yeas are 35, the nays are
60; three-fifths of the Senators duly
chosen and sworn not having voted in
the affirmative, the motion is rejected.
The motion to waive having failed,
the Chair responds to the request for
a ruling. The amendment of the Sen-
ator from Pennsylvania would result
in a loss of revenues for the time peri-
od covered by the budget resolution,
causing those revenues to fall below
the revenue floor set out in that reso-
lution. This violates section 311(a) of
the Budget Act. The point of order is
sustained. The amendment falls.
Several Senators addressed the
Chair.
The PRESIDING OFFICER The
Senator from Massachusetts.
CHANGE OF VOTE
Mr. KENNEDY. Mr. President, I
ask unanimous consent that I be per-
mitted to change my vote on Vote No.
157. 1 did not realize it was a tabling
motion. I wish to be recorded as hav-
ing voted 'no/ This will not change
the outcome of that vote.
Mr. JOHNSTON. Mr. President, I
think it is now becoming clear to Sen-
ators that this bill is not to be a grab
bag for all kinds of different unrelated
matters. It is certainly my intention
- 1 think that is shared by the Senator
from Wyoming; the distinguished
ranking minority member, and I know
the chairman of the Finance Commit-
tee has spoken out here about not
bringing up all of these matters which
have not been considered by commit-
tee here.
So I hope Senators will be coopera-
tive and let us move this bill quickly.
I personally have received many,
many requests from Senators who do
not want another late night i
So I will strongly urge Senators not to
bring up matters that are going to go
down to inevitable defeat, and simply
delay the Senate.
I yield the floor.
Mr. WALLOP addressed the Chair.
The PRESIDING OFFICER. The
Senator from Wyoming.
Mr. WALLOP. Mr. President, before
the Senator from Louisiana takes his
seat, it would be my hope that at
some moment, perhaps soon after the
Symms amendment, which I under-
stand is going to be offered next, that
we might begin to propound some sort
of unanimous consent that would
contain the array of amendments so
that we could begin to get some idea
of what it was that we had to accom-
plish.
So I hope that we might begin to
work on such a thing as
unanimous-consent requests to limit
amendments, not necessarily to get
time agreements now, but just to get
them in terms of amendments.
So I would say to colleagues on my
side, if there are amendments, bring
them to me, and do not bring me ones
that have nothing to do with energy.
Mr. JOHNSTON. Mr. President, if
the Senator will yield, I certainly en-
dorse the idea of the Senator from
Wyoming. I would also state that I do
not know whether my distinguished
colleague from Texas is anxious to
hear me say this or not, but I would
invite the Senator's attention to the
fact that the Finance Committee is
having a markup at 5 p.m. today, as I
understand it. Matters such as the
high-speed rail tax are to be consid-
ered in the Finance Committee. It
would certainly be my intention to
move to table without debate the ma-
jor matters, such as the high-speed
rail tax, which have not been consid-
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©red there simply because I think they
have no chance of passage here unless
we have the advice of the Finance
Committee on those matters.
I know the Senator has plenty to
do, our colleague from Texas, in the 5
o'clock markup. But Senators ought
to know that this is not the only op-
portunity Senators have to bring up
major matters of a financial nature.
This is basically an energy bill in
which we have a few tax provisions,
which are good tax provisions. But
there is another major tax bill that is
going to be moving through.
I wish that they would direct their
attention to the committee of jurisdic-
tion rather than to come in with
amendments of first impressions to
the floor of the Senate.
Mr. BENTSEN. I say to my distin-
guished colleagues, the chairman of
the Energy Committee, and the rank-
ing member, that I would also be con-
cerned that we have tax measures
introduced as amendments to this
that do not pertain to the energy
business at all. I really do not think
they are relevant to the debate. We
just disposed of such a matter just a
few minutes ago.
I regret to see them presented.
Mr. SYMMS addressed the Chair.
The PRESIDING OFFICER. The
Senator from Idaho.
Mr. SYMMS. Mr. President, I ap-
preciate and I have great respect for
the Senator from Louisiana - he
knows that - and the chairman of the
committee, the Senator from Texas;
Senator Wallop; Senator Packwood.
But I would just point out that the
reason that this amendment was not
offered to the Finance Committee
energy portion of this - this is clearly
an energy-related amendment that I
plan to offer here in a few moments.
I want to say why.
Trains require one-third as much
energy as cars and one-fourth as
much energy as airplanes. That is
high-speed transportation technology
that we are talking about here. So it
is clearly energy related. It was not
offered in the Finance Committee due
to the deference and the respect I
have for the chairman.
For every Senator in this Chamber,
this is a national issue. It just hap-
pens that the first project of this na-
ture is prepared to be built in Texas.
So it becomes more than a national
issue in Texas. It becomes an issue of
local politics in Texas.
I respect the chairman for that. I
understand that. That is why I did
not offer the amendment at the op-
portunity in the committee. But it will
be my intention to offer this amend-
ment at this markup later in commit-
tee because this is an amendment that
must become law.
My experience in this body is that
you have to catch every train that
leaves the station if you are going to
make it. That is why I think we
should offer this today. I am willing
to expedite the debate. It is an issue
that the majority leader is well aware
of. The minority leader is well aware
of the issue. It is a very simple up or
down issue that will not take a long;
complicated debate. But it is related
to energy policy, and I think it is ap-
propriate.
Having said that, Mr. President, I
have an amendment on behalf of my-
self and Senator Bob Graham from
Florida.
AMENDMENT NO 2784
(Purpose: To amend the Internal Revenue Coda
of 1986 to remove certain high-speed intercity
rail facility bonds from the State volume cap for
tax-exempt I
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Mr. SYMMS. Mr. President, I send
an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The
clerk will report.
The legislative clerk read as follows:
The Senator from Idaho (Mr. Symma), for
him— If and Mr. Graham, proposal an amend-
ment numbered 2784.
Mr. SYMMS. Mr. President, I ask
unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
At the appropriate place insert the following
SECTION l.REMOVALOFVOLUMECAPPOR
CERTAIN HIGH-SPEED RAIL FACILITY
BONDS.
(a) In General. - Paragraph (4) of section
146(g) (relating to exception for certain bonds) is
amended by inserting \ other than any such bond
described in subsection (h)(1)* after 'rail
facilities'.
(b) Conforming Amendment. - Subsection (h) of
section section 146 (relating to exception for
Government-owned solid waste disposal facilities)
is amended -
(1) by striking 'section 142(a)(6)* in paragraph
(1) and inserting 'paragraph (6) or (1 1) of section
142(a)*. and
(2) by inserting 'and high-speed rail' before
'Facilities* in the heading thereof.
(c) Effective Date. - The amendments made by
lall apply to bonds issued after
r 31, 1993.
SBC. 2. DEDUCTION FOR MOVING EX-
PENSE.
(a) In General. - Paragraph (1) of section
217(c) of the Internal Revenue Code of 1986
(relating to Conditions for allowance) is amended
by striking every occurrence of the phrase '36
miles' and replacing it with the phrase '66 miles'.
(b) Effective Date. - The amendment made by
subsection (a) shall apply to expenses incurred
after January 1, 1993.
Mr. SYMMS. Mr. President, I offer
this amendment with Senator Gra-
ham to make a minor modification to
the Tax Code which will have a sub-
stantial positive impact on the
Nation's future transportation envi-
ronmental and energy policies.
This amendment is good economic
policy. It is good transportation poli-
cy. It is good energy policy. And it is
good environmental policy. It is good
tax policy. I urge my colleagues to
support it.
The amendment would simply re-
move the requirement that 25 percent
of each tax-exempt bond issue to fi-
nance inner city high-speed rail facili-
ties be counted toward the State pri-
vate facilities activity bond cap for
publicly-owned facilities.
As many of you are aware, this is a
slight change from the way the
amendment was when it was brought
forward last year, and not actually
offered - it was taken back down •
that I spoke about here on the floor.
But in talking with many of you, lis-
tening to the concerns of Members,
the amendment has been changed to
require public ownership, just like
airports, seaports, and waste facilities.
This amendment has support from
both sides of the aisle. The adminis-
tration has spoken out in favor of
high-speed rail numerous times.
Governor Clinton, the Democratic
Presidential nominee says, '* * * new
high-speed rail and maglev technolo-
gies offer ways to improve competi-
tiveness, create jobs, reduce pollution,
combat gridlock, and provide access
for disabled citizens and save energy *
* *. Only with strong leadership in
Washington can we encourage the
kinds of innovative public-private
partnerships necessary for success in
such large infrastructure projects.'
Currently, high-speed rail facilities
can be financed with tax-exempt
bonds. I will repeat that to my col-
leagues. Under current law, you may
now finance high-speed rail facilities
with tax-exempt bonds. However,
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there are two conditions that first
must be met: First, the private owner
must waive any claim to depreciation.
Second, 25 percent of each bond is-
sued must receive an allocation under
a State's private activity cap. That is
why this is necessary. These projects
cost enough money that it crowds out
the other public tax-free bonds that
the State would like to sell under the
cap. That is why it is necessary.
Most airports and seaports are paid
for and financed with these kinds of
bonds. In this instance, the project
that has heralded so much controver-
sy in Texas is a $7 billion project, and
it is projected that $5.1 billion of the
financing will be equity and taxable
bonds, private financing, and $1.9
billion will be tax-free bonds. So it is
not going to be a project that is en-
tirely financed with tax-free revenue
bonds.
This amendment is simply a perfect-
ing amendment to existing policy. It
is not a debate on whether high-speed
rail facilities should be financed
through tax-exempt bonds. The issue
has been decided. High-speed rail
facilities can be financed through
tax-exempt bonds. Currently, airports
and seaports are exempted from the
State activity bond cap, simply be-
cause they are too expensive to fit
under the State cap for precisely the
same reason. Mr. President,
high-speed rail tax-exempt bonds must
be exempt from the cap.
Some will argue that this exemption
from State bond caps for inner city
high-speed rail is not comparable to
the exemption provided under current
law for airports and seaports. Let us
look at the facts. The last major air-
port built in the United States was
the $1 billion Dallas-Fort Worth Air-
port. That, like most airports before,
was financed primarily with
tax-exempt bonds. The next major
airport is being built in Denver, for
which nearly $3 billion is tax-exempt
revenue bonds have already been sold.
Neither of these projects • both vital
to the Nation's modern transportation
system - would have been possible had
the tax-exempt revenue bonds been
limited by State bond caps. Further,
airports are eligible to receive direct
Federal support through the Federal
Aid Construction Grant Program.
These grants are an important source
of the construction funds.
The infrastructure for high-speed
rail - the rights-of-way, the rail bed
materials, the bridges, and other
structures • can be built with
tax-exempt revenue bonds. But un-
like airports, there is no program
providing direct Federal subsidies for
high-speed rail construction, and the
tax-exempt revenue bonds sold for
high-speed rail projects must be
counted against the State's bond cap.
In other words, the current law
creates an uneven playing field among
differing modes of high-speed trans-
portation. The amendment I offer
simply treats high-speed rail construc-
tion the same as airport construction,
or Government waste facilities. This
is not a tax subsidy.
Mr. President, I also want to re-
mind my colleagues that this amend-
ment does not change current law
with respect to the applicability of
tax-exempt revenue bond financing
for high-speed rail. These bonds can
only be issued for high-speed rail in-
frastructure, which does not include
the rolling stock. Our amendment
does not change the law with respect
to that provision.
What is at issue is whether 25 per-
cent of those bonds must remain
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stuck under the State cap. Sixty per-
cent of the bonds to be issued for the
Texas project are taxable. I am afraid
those opposed to high-speed rail just
want to keep out the competition. I
understand that, Mr. President, and I
cannot blame anyone for trying, if
they are going to be in direct competi-
tion with the high-speed rail train.
If is true that high-speed rail offers
an alternative to flying for relatively
short distances. But competition
leads to innovation, which is vital to
our domestic and international eco-
nomic health. Protection will lead
only to stagnation, which will ulti-
mately put us at a disadvantage.
I also understand that there is a
concern about removing caps from
privately owned facilities, because
under current law, only publicly
owned facilities are exempted. My
amendment would require public own-
ership similar to airports and Govern-
ment waste facilities.
Mr. President, you can see from my
first chart that high-speed rail pro-
jects create tens of thousands of jobs.
This chart represents an example of
the potential range of employment
generated by the Philadelphia Pitts-
burgh line.
The small revenue loss of $178 mil-
lion will actually be buying a
multibillion-dollar investment which
would create a tremendous amount of
taxable income. With a small amount
of Federal participation, billions of
dollars of private capital will be un-
leashed to finance the much-needed
high-speed rail infrastructure.
This is undoubtedly the most cost
effective method of expanding our
transportation system. The revenue
loss caused by this amendment is
because the interest generated by
those bonds is not taxable. There will
be no Federal money used to buy the
bonds or back the bonds. All of the
tax-exempt bonds will be backed by
private entities. Private citizens will
be able to buy the bonds and then
take a deduction for the interest gain
on the bonds. They actually will not
take a deduction. They simply will
not pay taxes on the revenue that
they generate from the bonds.
Although the Joint Tax Committee
scores the bonds as a revenue loss, I
must once again point out that these
are static revenue losses, static esti-
mates, and I challenge the very prem-
ise of these estimates. These static
revenue estimates do not include the
taxable bonds which will be issued
along with the tax exempt bonds and
will generate revenues.
It also does not take into consider-
ation all of the revenue created by the
FICA and payroll taxes resulting from
the jobs created. This is not a time,
however, Mr. President, to get into a
debate over static versus dynamic
revenue estimates. It is important to
understand where the revenue loss
comes from, and that it is in no way a
Government subsidy.
In any case, we are left with the
current system, and we are required
by the 1990 budget agreement to pay
for the amendment. So Senator Gra-
ham and I have this method to pay
for this amendment. To offset the cost
of this proposal, the amendment will
increase the mileage required for the
moving expense deduction from the
current 35 miles to 55 miles. The
50-mile requirement was the law prior
to 1978.
According to the Joint Tax Commit-
tee estimates, this change in the mov-
ing expense deduction will raise the
adequate amount of revenue to offset
this. So that makes it a revenue neu-
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4308
tral amendment.
I want to make it clear to all of my
colleagues that I do have a constituent
interest in this. Morrison-Knudsen is
an Idaho-based company, who won the
contract to build the Texas high-speed
rail system. I want you to note the
substantial number of jobs for the
project, which I have just mentioned.
These jobs are not going to be in Ida-
ho. The job potential in Texas for this
project will be substantial. It is going
to be a $7 billion investment, creating
12,500 jobs initially, and then 2,500
jobs once the system is operating, to
operate the trains themselves.
High-speed rail will play a major role
in our future transportation policy. It
is safe and efficient. The United
States, is the only industrialized coun-
try in the world that has not devel-
oped a high-speed rail system.
Right now, the British are working
to connect themselves to the conti-
nent with high-speed rail, and to con-
nect that to an expanding European
rail system.
We are always talking about the
importance of the United States inter-
national competitiveness. Japan has
its bullet train and the entire Europe-
an Community is covered with
high-speed rail lines and working on
more. Is this yet another develop-
ment that the United States wants to
ignore - so that in 10 years we can say
we should have pursued high-speed
rail?
All we are doing here is giving the
United States an opportunity, if pri-
vate entrepreneurs want to invest in
high-speed rail, that there will be a
method that they can do it.
I would like to refer to the second
chart, Mr. President, and that is a
chart that will demonstrate why I
think this is an important
energy-related amendment.
Passenger energy efficiencies, Btu to
move the passenger one mile. Inter-
city bus is the most efficient, .939.
The TGV technologies that will be out
with this dispersed high-speed train
project in Texas, 1.147. And it comes
on down way to the end, air commer-
cial, 4.7 Btu's to move people, per
person per mile. So I think that this
is clearly energy related.
It is efficiency related. The trains
run on time. They do not have to
wait for the weather. They do not
have to wait for the FAA to decide
whether or not they can take off and
go. They can run the trains on time
and clearly improve efficiencies for
people.
The other thing that is happening
with population growth in this coun-
try, one study showed that a 44-lane
highway from Miami to Orlando will
be necessary to meet the needs of local
population. I am sure my good friend
from Florida will have more to say
about that. We need to address how
we are going to move the people be-
tween cities during the next century.
Building 44-lane highways is not going
to be the answer.
High-speed rail is one of the an-
swers, and it is one of the keys to our
future transportation infrastructure.
High-speed rail offers a safer, energy
efficient, and environmentally sound
way to move people. These systems
conserve space: A 600-mile high-speed
rail system requires less space - 1 want
my colleagues to get this point • than
the most recently built major airport
When you talk about taking up
ground to be used, the space used for
a 600-mile high-speed rail system is
less space than a major metropolitan
airport the size of the Dallas/Fort
Worth Airport. This is a significant
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reason why we need this amendment.
We simply cannot continue -and, as
a matter of met, Mr. President, I men-
tioned the project that is being built
in Denver, CO, right today, the air-
port that is being built in Denver. It
will make Stapleton obsolete. It is
further out of town. And I say that,
probably with respect to Denver and
the West, it will be a long, long time
before anyone will not want to fly by
air or travel by air because of the
magnitude of the distances. But it is
questionable to me, when I look at
what the United States is doing with
our transportation infrastructure
dollars, how could we be spending all
these billions of dollars to further
consolidate airport hubs in major
cities such as Denver when, in fact,
we could be spending money efficient-
ly to make it possible for people to
travel intercity on very fuel-efficient,
time-efficient, on-time, comfortable
schedules. I say to any of my col-
leagues, if they have not had the op-
portunity to do so, I urge them, if
they are in France, to ride the TGV
train in France. I have had that op-
portunity and have done that, and it
is a very highly efficient, comfortable
way to move people, very safe and
certainly very comfortable for the
passengers and a very attractive, I
think, method of transportation for
people.
Mr. President, as I said, airports are
almost entirely funded by tax-exempt
bonds, Federal aid, and airport con-
struction grants. Highways are built
with substantial Federal support in
the form of fuel taxes and other user
fees. Highways traditionally have
been built almost entirely with public
funding.
We are talking about allowing peo-
ple to sell a percentage of the cost of
a project in tax-free bonds, which will
then generate huge, enormous invest-
ments of private capital into the over-
all running and operating of the pro-
ject, for the rolling stock, for the in-
frastructure that goes with it, and it
will make a very, very positive invest-
ment and a very positive, competitive
way to move people.
I know that some of my colleagues
think that this amendment will only
benefit Texas. This is simply not the
case. This is not, I repeat not, just a
Texas amendment. It is important to
remember that we have to start some-
where. It just happens that the Texas
project is the one on the starting
blocks.
I would like to refer you, Mr. Presi-
dent, to the chart showing the many
proposed high-speed rail projects
across the country. Right now, there
are groups studying the feasibility of
at least 10 high-speed rail systems in
the United States. These include -
A Chicago, Minneapolis, St. Louis
and Detroit hub;
A Florida hub;
A Pacific Northwest hub;
A Pittsburgh to Philadelphia hub;
and
A Las Vegas to Los Angeles hub,
just to mention a few.
But access to capital is the problem,
and the simple fact is, if the Congress
does not pass this amendment and
remove high-speed rail from the State
caps, there will be no high-speed rail
systems in the United States for the
rest of this century. I do not know
who long it will take for another
American corporation to take the risk
that has been taken by the groups
that have put together this coalition
in Texas to build this system, Mr.
President, if we refuse them the op-
portunity now.
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So I think what we are saying is
that there is a lot at stake in this, and
I hope my colleagues will vote for it.
For those of you that I know have
concern - and I hate to be in here
asking you to go against my own com-
mittee chairman, Senator Packwood,
Senator Wallop, and Senator Johnston
on what it is they wish. They have
their mission, I understand that. In
my opinion, this amendment in no
way, absolutely in no way, should in
any way stop the energy bill from
becoming the law. I am a strong sup-
porter of this energy bill that is before
the Senate.
But for those Senators who vote for
it, it will be a very positive vote with
many of our constituents, and I see
my good friend from Ohio on the
floor, and he will start laughing when
I tell him this, Mr. President, because
Friends of the Earth is for this legisla-
tion, as well as the National Audubon
Society, the Sierra Club, the National
Wildlife Federation, the Environmen-
tal Defense Fund, and so on and so
forth.
I can see that my colleague from
Ohio is saying, Symms is offering this
amendment. This is a very positive
amendment for this bill. It is good for
America's energy policy. The reason
that these people are supporting this
is because high-speed rail will give
people a choice of rides in transporta-
tion, these trains will require
one-third as much energy as cars,
one-fourth as much energy as air-
planes, and for every person traveling
by high-speed rail rather than by car,
there will be an enormous reduction
in carbon monoxide hydrocarbons and
nitrogen oxide.
This amendment, as I said at the
outset, is good economic policy, good
transportation policy, it is good energy
policy, it is good environmental policy,
and it is good tax policy. I urge my
colleagues to vote for it. I say to my
colleagues, if you get in your car and
start driving from the Nation's Capi-
tal, say, to Atlanta, you will be
amazed at the kind of traffic on 1-95
day and night around the clock. If
you can think down the road 25 years,
if we make this possible for the pri-
vate sector to develop and operate
these systems and people can ride the
trains, there will be a lot more room
on the roads then, and, as population
grows, it may not seem like there is
more room, but it will make those
roads more adequate for what is need-
ed to be done.
Second, it is very important in this
country that we have a good, integrat-
ed intermodal transportation system
so that trucks can run and automo-
biles can run and other systems. And
this will make more room on those
interstates for other transportation
vehicles. So I urge my colleagues to
support Senator Graham and myself
on this amendment.
I yield the floor, Mr. President.
The PRESIDING OFFICER (Mr.
Lieberman). Who seeks recognition?
The Chair recognizes the Senator
from Ohio (Mr. Metzenbaum).
Mr. METZENBAUM. Mr. President,
this is deja vu. This is a matter of
now going back to industrial revenue
bonds. This body spent a considerable
amount of time some years ago trying
to get rid of industrial revenue bonds,
because they were eating up the Fed-
eral budget. Here we have a new one.
Now we have one for intercity
high-speed rail.
I do not have any problem about
the concept. I do have a problem
about digging into the Federal Trea-
sury to ask all the people of the coun-
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try to subsidize this proposition. That
is not right. The American people
have been burdened with sufficient
amount of taxes without calling upon
them to pay additional taxes in order
to pay for this subsidy now.
What we are talking about is
whether or not one area or several
areas that are interested in high-speed
intercity rail, whether or not they are
going to be able to issue revenue
bonds, tax-exempt bonds, in order to
pay for that facility. Well, if they
issue tax-exempt bonds, then they are
going to have some impact upon the
Federal Treasury. And so you are
going to cost the American people a
certain number of dollars by the per-
mission to issue revenue bonds.
We used to have a situation in this
country where you could issue reve-
nue bonds for almost everything un-
der the Sun. I remember debating
that subject many a night here on the
floor of the U.S. Senate. And I remem-
ber that finally we were able to elimi-
nate some and keep in just a few, but
we eliminated most of them. And we
got rid of that concept.
Now this is the first foot in the door
to open the door again to industrial
revenue bonds. And so the argument
is made, 'Well, wait a minute, Sena-
tor. This is not going to cost all the
people of this country this money.'
No, it is just going to cost the work-
ing people. It is not going to be a tax
on the corporations to make up the
money. It is not going to be a surtax
on the rich people of the country to
make up the money. No, it is not
going to be a special tax on the biggest
States to make up the money. No, it
is going to be a tax on the blue-collar
worker.
And once again we see my col-
leagues on the other side of the aisle,
an aisle that seems more disposed to
levy taxes upon the average Joe and
Joanna working in the job to pay for
the special projects they are interested
in.
Let us look at how the money is
going to be made up. Right now, if
you travel, if you move to a distance
more than 35 miles from your home,
your moving expenses are deductible.
Under this amendment, they change
the 35 miles to 55 miles. So if you
move to a distance that is more than
55 miles from your home instead of 35
miles it is deductible. But if it is
somewhere in between, what will hap-
pen is, if you make that move under
the proposal of the Senator from Ida-
ho, you are going to be stuck in 1993
with $5 million, $46 million in 1994,
$50 million in 1995, $53 million in
1996, and $57 million in 1997. So this
is a new way of taxing blue-collar
workers in this country.
And if this body is prepared to say
to the blue-collar workers in this
country who are moving from one job
to another, and certainly they are
trying to find a place of employment,
certainly it is not easy to find a job,
but they are saying, your moving ex-
penses are deducted if you only go so
far, but we change the limits. We
change the limits.
It is unfair. It comes in the dead of
the night. Nobody is paying much
attention to it. We slide an amend-
ment like this through. The Ameri-
can people are not aware of what is
happening, and so we say: 'One of
those things.' Joe working-collar guy,
or gal, is stuck with the bill.
This amendment should not be
considered as an amendment on the
floor of the Senate. We are dealing
with an energy bill.
Now we have, as part of that energy
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bill, some portions having to do with
Internal Revenue, with the Finance
Committee. And what we now have is
an amendment that belongs directly
in the lap of the Finance Committee.
Hearings should be held, consideration
should be given to both aides. The
question of where the money should
come from should be determined by
the Finance Committee and by all the
Members of the U.S. Senate.
But, no, we get an amendment here
on the floor in the middle of the after-
noon. Nobody knows it is coming.
And, as a consequence, working people
in this country are going to be asked
to pay for one high-speed railroad in,
I think it is supposed to be, Texas;
maybe there is one going from Texas
to Florida, I am not sure what the
story is.
But whatever the case, it is not
right if there is a high-speed railroad
in Ohio, it is not rijght if there is a
high-speed railroad in Florida, it is
not right if there is a high-speed rail-
road in Idaho, it is not right to come
to this floor and propose this new tax
exemption and then to shift the bur-
den of paying for that tax exemption
on the average working people. This
amendment should be defeated.
Mr. WOFFORD. Mr. President, I
support the amendment to remove
State caps from tax-exempt bond
funding for high-speed rail and mag-
netic levitation projects. Bringing
down this tax barrier will encourage
investment in magnetic levitation and
other high-speed rail projects.
This amendment is especially impor-
tant to my State of Pennsylvania, a
leader in the development of maglev
technology. MAGLEV, Inc., a unique
public/private/labor partnership, has
been working to develop a regional
maglev system with a planned demon-
stration line running from downtown
Pittsburgh to the new airport. Share-
holders and members in MAGLEV,
Inc. include the Commonwealth of
Pennsylvania, Allegheny County, Car-
negie Mellon University, the United
Steelworkers of America, and other
labor, industry and Government
groups.
Maglev and high-speed rail would
update our outdated transportation
infrastructure, giving our citizens a
convenient and affordable travel op-
tion. Technology development, plan-
ning and construction would bring
thousands of much-needed jobs to
Pennsylvania and other States. And
the trains would do much to ease
urban and suburban grid-lock and
pollution, improving our citizens'
quality of life.
France, Germany, and Japan have
been quick to capitalize on maglev
and high-speed rail technology. We
can't afford to ait idly by. Projects
such as MAGLEVs show what can be
accomplished when business, govern-
ment, academia and labor work to-
gether toward a common goal. We
should be encouraging this type of
project and I believe this amendment
would be a significant step in the
right direction. I hope my colleagues
will join me in supporting this amend-
ment.
Mr. KERRY. Mr. President, the
pending amendment offered by the
Senators from Florida and Idaho per-
tains to a matter I believe is critical to
meeting the Nation's transportation,
environmental, and energy needs.
The enactment of this amendment
will facilitate the development of
high-speed rail and maglev systems in
the United States.
The objective of the amendment is
to eliminate the requirement that an
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allocation from State volume limita-
tions must be obtained for 25 percent
of all tax-exempt bonds issued to fi-
nance intercity high-speed facilities.
Eliminating this requirement is a
necessary step if such projects are to
secure the enormous amounts of pri-
vate investment capital they need to
cover the costs in the high density
corridors where they are most needed
and which they can service most effi-
ciently.
Importantly, and responding to
some of the points made by my friend
the Senator from Ohio, making this
Tax Code alteration would provide
high-speed rail and magiev with the
same access to tax-exempt bonds cur-
rently afforded to airports and other
transportation systems. It levels the
playing field. This amendment does
not offer an unequal tax preference to
high-speed ground transportation,
although some of us might argue that
it would be in the best interests of the
Nation to do so. It would provide for
equal treatment.
Further, this amendment is not
about providing a cushy tax benefit to
moneyed special interests; it is de-
signed to make financially feasible
publicly approved efforts with sub-
stantial if not preponderant public
involvement to establish functioning
high-speed ground transportation
systems for the public's benefit.
Support is growing in this country,
Mr. President, for developing an
up-to-date national transportation
system by bringing high-speed rail and
magiev into a revitalized intermodal
travel network. High-speed rail is a
proven technology with years of very
successful operating experience in
Europe and Japan. Magiev is a new,
cutting-edge technology nearing de-
ployment overseas and in intensive
development in the United States.
Plagued by years of disinterest,
miscalculation and footdragging by
Federal officials, high-speed ground
transportation won a strong endorse-
ment from Congress in the Intermodal
Surface Transportation Efficiency Act
last year. The environmental commu-
nity has provided its support, because
high-speed ground transportation
offers the promise of a safe,
energy-efficient, and environmentally
sound way of moving passengers be-
tween cities.
Eliminating the applicability of a
State's tax-exempt bond ceiling to
high-speed ground transportation
projects will facilitate the formation of
the creative public-private partner-
ships required to successfully pursue
these large infrastructure projects
which I believe will make tremendous
contributions to a strong, competitive
economy.
Mr. President, this is an energy
issue. That's why it is appropriate
that it has been offered to this bill. It
is an environmental issue. It is a tax
policy fairness issue. It is a transpor-
tation issue. It is a lifestyle issue. It
is a technology development issue, and
it is a competitiveness issue.
On all of these grounds, the calcu-
lus suggests the wisdom of approving
this amendment. I enthusiastically
support the amendment, and I urge
all Senators to join in supporting it.
Mr. GLENN. Mr. President, I rise
today in support of the goals of the
Symms-Graham amendment. But I
am constrained to vote against this
amendment based upon the revenue
offset that has been chosen by its
authors. I am committed to work
with the authors so that in the future
we can develop a more appropriate
offset for this worthy proposal.
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Recent studies show that our
Nation'stxansportationinfrastructure
is not adequate to meet America's
future needs. It is estimated that
increased highway congestion of 300
to 400 percent fay the year 2010 will
result in annual costs from delays of
$30 billion. High-speed rail technolo-
gy will not only alleviate these costs,
but will reduce costs associated with
transportation-related pollution and
accidents.
Given Ohio's global leadership in
science and innovation, it is not sur-
prising that the Ohio Legislature had
the foresight to create the Ohio
High-Speed Rail Authority (OHSRA)
in 1986. The authority has adopted
plans for a high-speed rail system that
will link Cleveland, Columbus, and
Cincinnati. A bullet train traveling
between these cities at speeds of up to
186 mph will take passengers from
Cleveland to Columbus in just 69
minutes. And passengers can travel
from Columbus to Cincinnati in only
72 minutes.
The system will not only offer con-
venience and accessibility to Ohioans,
it will foster a new industry for Ohio.
This industry will create 16,000 con-
struction jobs over 5 years and pro-
vide almost 4,000 permanent jobs for
Ohioans. It will help to revitalize
Ohio's steel industry. And high-speed
rail in Ohio will reduce travel time
and congestion, save fuel, improve air
quality, and promote travel safety.
But none of this is possible unless
the authority can attain the financing
necessary to undertake its ambitious
project. Competition for allocations
under the State of Ohio's private
activity bond cap is heated. Many
worthy projects involving critical pub-
lic purposes such as housing and envi-
ronmental cleanup are unable to ob-
tain adequate financing under the
volume cap restrictions. This volume
cap is now more strained than ever
because the recently enacted Clean
Air Act has resulted in more solid
waste cleanup from coal scrubbing
which is competing under the cap.
If the current 25 percent allocation
under the cap for high-speed rail re-
mains, it will hamper the ability of
the Ohio High-Speed Rail Authority to
attain the necessary $3 billion in fi-
nancing for its system. And it will
similarly hold back other high-speed
rail systems throughout the Nation.
Mr. President, I commend the dis-
tinguished Senators from Idaho and
Florida for their efforts on behalf of
high-speed rail development and look
forward to working with them in the
future to obtain a viable offset.
Mr. LAUTENBERG. Mr. President,
I am going to reluctantly support the
motion to table the amendment by the
distinguished Senator from Idaho.
Mr. President, I stand second to no
one in my support of high-speed rail
development in the United States. It
should be a central element of our
Nation's transportation infrastruc-
ture. In fact, in my view, the Federal
Government should develop a compre-
hensive policy on the development of
high-speed rail. That policy should
address a range of related issues, in-
cluding project financing, technology
selection, location, and regulatory
mechanisms.
While I support the goals of the
Senator from Idaho, his amendment,
in my view, is premature. The Con-
gress has not thought through the
proper manner by which high-speed
rail should be financed, or any of
these other issues. And there is no
comprehensive policy in place.
Mr. President, high-speed rail is too
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4315
important for us to deal with in a
piecemeal manner. It may well be
that federally tax-exempt financing is
an appropriate element of such a poli-
cy. However, Mr. President, there is
no pressing need to enact this propos-
al at this time. Few high-speed pro-
jects are close to realization. In fact,
most of the benefits of this amend-
ment in the immediate future are
likely to flow only to the State of Tex-
as. That project may well be worthy.
But if we want to support that pro-
ject, we should do so only after care-
fully examining its merits. To adopt
a national policy on the financing of
high-speed rail only so that this one
project can move forward, is short-
sighted and unnecessary.
Again, Mr. President, as chairman
of the Transportation Appropriations
Subcommittee, I want to emphasize
that I believe strongly in the value of
high-speed rail. In fact, as chairman
of the Transportation Appropriations
Subcommittee, I've fought to keep
passenger rail service alive in this
country. And, I'm working to expand
and improve that rail service, includ-
ing thorough electrification of the
Northeast corridor from New Haven,
CT, to Boston. This afternoon, as
chairman, I presented the subcommit-
tee with the fiscal year 1993 transpor-
tation appropriations bill, which I am
pleased to say was approved by the
subcommittee. The bill contained
$204.1 million for the Northeast Cor-
ridor Improvement Program, which
includes not only safety and efficiency
upgrades, but also the electrification
project. I note for my colleagues that
neither the House nor the Bush ad-
ministration would provide one dune
for this high-speed-rail program.
But it's because I feel so strongly
about this that I cannot support 1
amendment. High-speed rail is too
important for piecemeal policymaking,
Mr. President.
Mr. JOHNSTON addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Louisiana (Mr.
Johnston) is recognized.
Mr. JOHNSTON. Mr. President, in
exactly 1 hour and 35 minutes the
Senate Finance Committee is going to
meet in markup. The distinguished
Senator from Idaho is a member of
that committee. I urge him - 1 believe
he said he was going to bring up this
amendment at that time. The matter
to be considered by them, as I under-
stand it, is the tax extender bill in the
Senate Finance Committee. And that
is exactly what this should be a part
of. There he can make the arguments,
and those who feel strongly on both
sides can be heard in the committee of
jurisdiction.
Mr. President, on a matter this
far-reaching, this important, it ought
to be considered by the committee of
jurisdiction. And so I am therefore
ready to make a motion to table.
Does the distinguished Senator
from Florida wish to make some com-
ments?
Mr. GRAHAM. Yes.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that I be rec-
ognized to make a motion to table
immediately after the presentation of
the Senator from Florida,
Mr. SYMMS Would the Senator
allow me 2 minutes right now before
he pom to the Senator from Florida?
If I could just have the floor for 2
Mr. JOHNOTON Mr President, I
ask unanimous consent that the Sena-
tor from Idaho be recognized for 2
minytas, followed by the Senator from
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Florida, and then I be recognized to
make a motion to table.
The PRESIDING OFFICER With-
out objection, it is so ordered.
Mr. SYMMS. Mr. President, first
off, the Senate has been well aware of
this amendment. I hear the Senator
from Ohio. But this bill itself has
transportation energy items in the
finance part of the bill. Deductions
for employee-provider parking, allow-
able employer-provided transit passes,
provides a deduction for a portion of
the cost of clean burning motor vehi-
cles. So it has transportation taxes in
it.
The Senator was not on the floor,
but I said earlier the reason it was not
offered in the committee is the chair-
man asked me not to offer it in the
committee. The Senate has been
blanketed with 'Dear Colleague' let-
ters. This is no surprise and no secret
to the Senate. This is an issue that
has been well ventilated in the Senate.
So Senators do not need to think this
is some surprise attack.
Second, the Senator says that we
are trying to subsidize some project
somewhere. That is simply not the
case, Mr. President. The decision is
already made in the United States
that tax exempt bonds may be sold for
high-speed rail.
The problem is that in the dark of
the night once before, 25 percent of
that part was put into the State cap
to generate a little revenue on our
static bookkeeping here, which now
has dislocated the level of the playing
field of the competitiveness between
building airports and building
high-speed rail.
The way it is right now, you may
end up - and I want the Senators to
hear this - you may end up building
airports that you really do not need
because they can build them with
tax-free revenue bonds.
We are talking about projects that
will be probably 20 percent financed
by tax-free revenue bonds, 80 percent
financed by private equity, and then
you have competition in it.
So, I really think that the Senator
from Ohio, if he examined this a little
more carefully, would be on the side of
allowing this cap to make it even. We
make the playing field level between
airports and seaports and high-speed
rail beds. The way it is now, they are
going to be building airports that they
do not need because they can sell
revenue bonds outside the State cap,
and they will not be building
high-speed rail beds that they do need
because they cannot get them outside
the State revenue cap and they can-
not get the bonds sold that way. So
this is clearly a competitive issue. It
is clearly a transportation issue.
I urge my colleagues to vote against
the tabling motion.
The PRESIDING OFFICER Under
the previous order, the Chair recog-
nizes the Senator from Florida.
Mr. GRAHAM. Thank you, Mr.
President.
Mr. President, it was about 100
years ago that a question was asked of
the American railroad industry.
The question that was asked is,
what business are you in? The indus-
try thought that was a fairly simple
question to answer. We are in the
railroad business.
That answer to that question con-
signed the railroad industry to bank-
ruptcy, bankruptcy because they were
committing themselves to a form of
technology which would, over this
century, be increasingly competed
with and technologically overtaken for
many of the railroads' historic tunc*
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4317
dons.
Could there have been a different
answer to that question, what busi-
ness are you in? Of course. And what
should the answer have been? The
answer should have been, we, the
American railroads, are in the trans-
portation business. And, has they
answered it in that manner, they then
would have broadened their concept of
their future and their potential, to the
substantial change of their own
well-being and probably the nature of
the American transportation system
as we near the end of the 20th centu-
ry. We would have had a different
transportation system had the rail-
road seen their role as a broader one
than operating a railroad.
I think in many ways we face that
same question today. What is the
character of the American transporta-
tion system? Essentially, we are chal-
lenged by the issue, are we going to
take the same approach that was
taken 100 years ago, and that is de-
fine it in static - status quo terms? Or
are we going to see the kind of chal-
lenges and opportunities that exist in,
not revolutionary forms of transporta-
tion, but the application in America of
the highest forms of technology to
ground transportation which are be-
ing utilized today in most of our major
economic competitor nations - in the
European Community and in Japan
specifically?
I think there are many reasons why
we should take a broader view of what
our transportation future should be
and to incorporate within that view
the opportunities for the United
States taking a leading position in the
21st century in the development of
high-speed rail. Is this an energy
issue? I have had some questions, and
the chairman of the Energy Commit-
tee knows this because we have dis-
cussed it, as to how we should diag-
nose America's energy problem. What
is it that challenges us in terms of
energy policy for America?
I will define what I think the chal-
lenge is. I think the challenge is to
conserve the rapidly diminishing
storehouse of energy resources and
particularly petroleum that we have
within the United States of America.
Here are the statistics. The United
States is currently consuming some-
thing over 6 billion barrels of petro-
leum per year. We are importing
about half of that. Half of it is com-
ing from domestic sources.
The United States, by the most
liberal estimates, has approximately
75 billion barrels of reserves and re-
sources within the continental United
States, including Alaska. That in-
cludes all the offshore petroleum re-
sources and resources throughout
Alaska - 75 billion barrels.
It does not take much of a mathe-
matician to divide half of 6, or 3, into
75 and say that we have approximate-
ly 25 years of domestic petroleum left
at pur current level of total consump-
tion and the proportion of that con-
sumption coming from domestic re-
sources.
One of the stated goals of the ener-
gy bill is to reduce our level of depen-
dence on foreign energy sources in-
cluding petroleum. If we do that and
make no other changes, what we are
doing is, instead of having 25 years of
domestic petroleum remaining, we will
be down to 20 or 15 years or less.
So I believe fundamental to a na-
tional energy strategy is a strategy to
conserve that 75 billion barrels that
stands between the United States and
total dependence on non-U.S. sources
for petroleum. One of the keys to do
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that is to develop within our economy
means by which we can be lees depen-
dent on petroleum. We know
petroleum's principal use in the Un-
tied States is for transportation.
Therefore, if we are going to attack
the challenge of reducing our level of
dependence on petroleum, we must
find alternative forms of transporta-
tion that will be less petroleum de-
manding. High speed rail for those
persons who would find it as an op-
tion to the use of their automobile
requires one-third of the energy that
would be required to propel those
people from their place of origin to
destination than would the use of an
automobile. For those who are using
an airplane, it uses one-quarter of the
energy that would be utilized in an
airplane.
But beyond the fact it is more ener-
gy efficient, we would also have a
chance to be using alternatives to
petroleum as the means of providing
that energy. Many of these
high-speed trains will be electrified.
They will be operating on energy
sources such as coal, an important
new market for that very available
domestic source of energy. They will
be operating on electricity generated
by natural gas, an increasingly impor-
tant area for the electric energy pro-
duction of America and a resource of
which we believe there is considerable
domestic abundance. We will be oper-
ating these trains on electrified sys-
tems where the source of power is
nuclear, an item which this bill in-
tends to encourage by making it more
feasible for utility companies to con-
struct nuclear facilities.
I believe rather than question
whether this is an energy proposal,
this goes directly to the core issue
that any American energy policy must
address, and that is how to reduce our
overall utilization of petroleum in
order to conserve the 75 billion barrels
remaining petroleum within the conti-
nental United States.
Is this a transportation issue? We
cannot, as a nation, continue our level
of reliance on the automobile and on
the airplane for intercity - particularly
relatively closely related intercity
areas. We have reached almost grid-
lock on our highway system.
In 1991, the Senate passed a Sur-
face Transportation Act. As one of the
provisions of that act, we have put
severe limitations on the expansion of
the Interstate System to meet capaci-
ty purposes. We came close to adopt-
ing a policy that said the only expen-
ditures on the Interstate System will
be for maintenance purposes and safe-
ty purposes but not to add lanes for
capacity.
As was indicated, if we continue in
my State to add the population that
we are doing; which is about 1,000
people a day, we are going to be up to
30 and 40 lanes of traffic to gat people
between south Florida and central
Florida; between Orlando and Tampa.
Clearly, that is contrary to national
policy. Clearly, it is even more con-
trary to any sense of logic
We also know that many of our
close intercity air routes are reaching
capacity. How many planes can you
fly between Los Angeles and San
Francisco? How many planes can you
fly between Washington and New
York? How many planes can you fly
between New York and Chicago, be-
fore you reach a level of congestion
that becomes a daily threat to the
safety and well-being of the commer-
cial aviation passengers and communi-
ty?
I believe it is critical we begin to
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provide, today, for the complimentary
transportation system that we must
have, a system which virtually very
other nation that is facing the same
challenges that the United States is
facing has found to be that comple-
mentary system, which has been
high-speed rail.
The Senator from Ohio raises a
question of subsidization. The Sena-
tor from Ohio understands who is
going to be paying for those 40 lanes
of interstate, if that is the way we
move people between Orlando and
Tampa. That is not going to come
from Santa Glaus. That is going to be
subsidized by the taxpayers through
the form of all of the taxes that will
be paid directly and all of the public
expenses that will come indirectly to
build that kind of massive highway
system.
Mr. METZENBAUM. Will the Sena-
tor from Florida yield for a question?
Mr. GRAHAM. I will be pleased to
yield.
Mr. METZENBAUM. Mr. President,
is there not a distinction that the
Senator recognizes that when you
subsidize, for example, the highways,
and getting the money from the high-
way trust fund, and it gets its money
directly from the sale of gasoline, that
so much a gallon goes into the high-
way trust fund? In this instance, it is
not like that at all. What you are
doing is reaching out to the working
people in the State of Ohio, the State
of Washington, or the State of Penn-
sylvania, and saying to them, if you
move, we normally would have per-
mitted you to deduct your expenses up
to 35 miles, and we now change it to
55 miles. So blue collar workers of
America come along and subsidize this
railroad project.
Mr. GRAHAM. I am going to dis-
cuss the financing of this in a mo-
ment. The fact is we have already the
principle that this is an appropriate
method of financing high-speed rail.
We have fallen short of the principle
by requiring a portion of the
high-speed rail, unlike what we have
required of airports, sea ports, and
other forms of transportation.
The purpose of this amendment is
to achieve parity. But I would like to
reserve the opportunity to discuss
that when I can put it into a fuller
context. But the fact is we are going
to move people, we are going to move
goods. The question is, Are we going
to do it by what is a much greater
public cost of enormous interstate
systems and enormously expanded
commercial aviation capacity, or are
we going to provide it in a system that
virtually every other nation of the
world, which is of comparable develop-
ment to the United States, has found
to be the appropriate complement to
automobiles, other vehicles and avia-
tion?
Third, this is an appropriate policy
for America in 1992. We are facing the
prospects of hundreds of thousands of
very skilled Americans who have
spent their lives building the strength
of America militarily facing unemploy-
ment. Many of those are in the State
of the Senator from Ohio, the Senator
from Louisiana, the Senator from
Wyoming, Idaho. All of our States are
going to be affected by this.
While I am not an advocate of an
industrial policy, I am an advocate of
the United States having an intelli-
gent program to try to see how we can
continue as a nation to take advan-
tage of this great resource that we
have spent the last half century or
more developing. How do we transi-
tion the technological capability to
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conceptualize, to design, to produce
military technology of the highest
order of sophistication, how do we,
Mr. President, give those people from
Connecticut who have been engaged
in that activity some alternatives for
the use of their skills.
I am proud of the fact that Gover-
nor Clinton has seen, as one part of
that conversion process, that the
United States ought to be using this
time as a time of opportunity to begin
to develop high technology areas for
civilian application that can utilize
the skills of those individuals and
firms which have been so successful in
the military applications of technolo-
gy.
What better area for us to be doing
this in than the field of modern Amer-
ican transportation systems.
I go back to my introductory story
about the railroad industry being
asked, what business are you in?
And, answering it in a way that
virtually assured their bankruptcy.
I think the same question could be
asked today of many of our aerospace
and aviation industries. What busi-
ness are you in? Because I see the
proper answer to that question not
being we are in the production of
airplanes but, rather, we are in the
production of the highest
state-of-the-art transportation. The
people who ought to be building these
systems are the people who today are
building F-15's and F-18's and other
military aircraft. They are the people
who today are contributing to our
aerospace program.
Frankly, the people who probably
ought to be running these systems are
the airlines. Their skills in terms of
the organization of technology for
transportation, of marketing; of man-
agement, of computerization, are ex-
actly the kinds of skills that are going
to be called upon to operate these new
forms of transportation.
So I believe we have a tremendous
opportunity and challenge to use this
as one of the core areas of new tech-
nology for a new post-cold war Ameri-
ca. If this is not the kind of area in
which we want to provide new tech-
nology and opportunities for our peo-
ple, what are the areas that we want?
What imaginative ideas we are going
to come forward with if this is not the
kind of challenge we should be seeking
and accepting with enthusiasm?
Finally, Mr. President, this is a
proposal which makes eminent envi-
ronmental sense. We are concerned,
as we have demonstrated in the Clean
Air Act, with the reduction of emis-
sions which will adversely affect our
environment. We know that the
greatest single source of those emis-
sions is motor vehicles. That is why
we have had such a focus on those
areas of the country with high concen-
trations of automobiles and other
motor vehicles.
This offers a partial, not only safe
but environmentally sensitive, alter-
native to those large numbers of mo-
tor vehicles. It has proven that in
Japan, where Japan's bullet train has
for 40 years had a fatality-free record.
I do not know if there is a transporta-
tion system in the history of the world
that has ever carried so many people
over such an extended period of time
at such high rates of speed with such
a safety record. And the same is true
of the systems which have been devel-
oped in Europe.
The major environmental organiza-
tions of America are supporting this
amendment. These include the Na-
tional Wildlife Federation, the Nation-
al Audubon Society, the Natural Re-
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sources Defense Council, Friends of
the Earth, the Environmental Defense
Fund, and more. They have seen this
as not only good energy policy, good
transportation policy, good policy in
terms of conversion of military to
civilian applications, but sound envi-
ronmental policy.
If all of these reasons commend a
strong American initiative to create
the atmosphere, the environment for
the development of high-speed rail,
what are the barriers? We have dealt
with some of those barriers, Mr. Presi-
dent, in the 1991 Surface Transporta-
tion Act. We took some major initia-
tives, particularly in the area of en-
couraging the most advanced form of
high-speed rail, in magnetic levitation.
We have appropriated $750 million to
fund major research, development and
experimentation on magnetic levita-
tion which many feel will be the domi-
nant transportation system by the
midpoint of the next century, if not
earlier.
We also did some things that will
make current high-speed rail technol-
ogy more accessible such as making
interstate corridors available for
high-speed rail. So this Congress, led
by the Senate, particularly by the
Senator from New York, has taken
leadership in this area and recognized
its importance.
There continues to be another sig-
nificant barrier, and that is the lack
of parity in terms of financing the
system.
At this point I would like to return
to the comments and the questions of
the Senator from Ohio. The current
law is as follows: In the area of trans-
portation, virtually all of the tradi-
tional means of transportation are 100
percent available for tax-free financ-
ing. If you want to build an airport,
you get 100 percent tax-free financing.
If you want to build a wharf at a cur-
rent seaport, 100 percent tax-free
financing; highway systems, 100 per-
cent tax-free financing. All of those
are currently covered. High-speed rail
is covered.
You can do tax-free financing, but it
is the only category in which there is
a restriction on the amount of tax-free
financing which is available, and that
restriction is that 25 percent of the
tax-free financing has to be within the
revenue cap applicable to the State or
States in which the high-speed rail
system is constructed.
That may not seem like much of a
constraint but let me put some num-
bers behind that limitation. Let us
assume that you are in a State of 10
million people. I think that is more or
less the size of the State of Ohio. The
cap is based on the population of the
State, and it is $50 per person. So the
State of Ohio each year would have
available to it $500 million for every-
thing from housing to water and sew-
er systems to all of the ways in which
the State and local communities uti-
lize tax-free financing.
Because of the scale of these
high-speed rail systems, and the inten-
sity, the focused nature in which they
are constructed and financed, they
tend to be heavy capital demands for
short periods of time. For instance,
the high-speed rail system which has
been suggested in my State that
would run from Miami to Orlan-
do/Tampa has a cost of in the range of
$4 to $5 billion. That is a lot of mon-
ey, but that is for a system of over 300
miles. If you calculate what 300 miles
of Interstate System would cost, it is
not such a prohibitive expenditure.
But let us assume that it was $4
billion to be financed and it was going
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to be constructed over a 4-year period
at $1 billion a year. If you had to
take 25 percent of that $1 billion, or
$250 million, and apply it against your
$500-million-a-year cap, that would
mean that for 4 years the State of
Ohio, if that were the State in which
this were occurring, would have half
of the funds that would otherwise
have been available for all that other
range of activities financed by tax-free
financing. That is why this provision
has been such a barrier to States mov-
ing forward aggressively with consid-
ering high-speed rail as an alternative
to highways or airports or other more
conventional forms of transportation.
Now, to the Senator from Ohio
again, I am not terribly enthusiastic
about the specific form of financing
that we have found. I might say to
the Senator from Ohio that that exact
provision has been suggested in the
past for a variety of other items. The
fact is that money is going to flow into
the national Treasury not earmarked
to finance high-speed rail. It is just
going to add to the total aggregate of
resources in the national Treasury.
The estimate is that over a 5-year
period it will produce approximately
$190 to $200 million. That is the
estimated cost over the 5-year period
of making tax-free financing available
to ail 100 percent of high-speed rail as
opposed to the 75 percent which is
currently authorized.
I underscore that that difference is
more than just the difference between
75 and 100 percent. It is the differ-
ence between zero and 100 percent,
because unless high-speed rail has
access on a parity basis with other
forms of transportation to tax-free
financing, these systems simply are
largely not going to be built.
Therefore, we are going to go into
the 21st century with largely a 19th
century transportation system. We
are going to have missed the opportu-
nities for enormous energy efficiency
as we approach the time we are going
to be exhausting our domestic petro-
leum reserves. We are going to have
missed this window of opportunity of
using this modern, challenging tech-
nology as a means of assisting in the
transition from a military to a civilian
economy. And our environment will
have lost the benefits of the additional
benign qualities that are associated
with high-speed rail.
So, Mr. President, I believe as a
legislative body we do not get faced
with large, dramatic statements of
ultimate destination for America. We
get faced with incremental opportuni-
ties. Today we have one of those in-
cremental opportunities. I would say
with a high level of certainty that if
we adopt this proposal and it becomes
law, we will see, before this decade is
out, the commencement of a new form
of transportation in America which
over the 21st century will serve our
children and grandchildren and great
grandchildren very well.
If we turn our backs on this oppor-
tunity today, I think that we are go-
ing to be consigning those same future
generations of America to greater
energy dependence, to a less pure
environment, and to a transportation
system that will be systemically con-
strained in terms of its ability to serve
our Nation's needs and to contribute
to an economically competitive Ameri-
ca.
Mr. METZENBAUM. Will the Sena-
tor yield?
Mr. GRAHAM. Yes.
Mr. METZENBAUM. I very much
question who is going to pay for this if
the amendment of the Senator from
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Idaho would prevail. It is going to be
working people. My question to the
Senator from Florida is, no matter
how strongly he feels about these
projects, does the Senator really be-
lieve that there should not be estate
taxes, should not be a surtax on the
wealthy, a special tax on those with
incomes over $200,000 or $1 million a
year, there should not be a tax on
corporations, they should not bear a
part of the burden?
Why is it that you come before us
with this proposal to stick it to the
average Joe, the working Joe?
Mr. GRAHAM. First, Senator, what
we are doing, current law as I under-
stand it is that if you move more than
35 miles that you can deduct the cost
of that move. This amendment would
say you now have to move 55 miles in
order to take advantage of this.
Whatever you think about that as a
matter of tax policy, it is not an over-
whelming issue to say that you have
to have moved an additional 20 miles
in order to have been able to take
advantage of the ability to deduct
your moving expenses from your Fed-
eral income tax return.
Mr. METZENBAUM. It is not over-
whelming unless you happen to be the
guy who is paying it, and the working
guy who is moving a little bit further
down the road.
Mr. GRAHAM. I am concerned
about the working guy who is current-
ly working for a defense facility in
Connecticut who may have a job if
this Nation commits itself to develop-
ing modern forms of technology in-
cluding high-speed rail.
Mr. METZENBAUM. I do not have
any quarrel about the high-speed rail.
Mr. GRAHAM. I am concerned
about the position that working man
is going to be in 25 years from now
when the last of the American petro-
leum comes up out of the ground
probably at ANWR because we had
drilled that last remaining reserve of
American petroleum. I am concerned
about what that is going to mean to
the national security of that working
man and woman and every other
American.
Mr. METZENBAUM. I would say to
my colleague, first of all my friend
from Idaho is one of those who is
strongest against increasing taxes.
Every time we talk about increasing
taxes, they blame that all on Demo-
crats. This is an increase in taxes, no
argument about it. This is an in-
crease in taxes.
I think that there may be a need for
some increase in taxes on those who
are able to pay. So I say to my friend
from Florida, my friend from Idaho, if
you think this amendment is so great,
why do not you provide for a surtax
on millionaires, or a tax upon those
who have an income over a particular
amount, or on estates that are beyond
a certain amount? Why do not you do
that? Instead of that, no, the faceless,
nameless, working people in this coun-
try are being called upon to pay the
bill.
Mr. SYMMS. If the Senator will
yield.
First off, I would just say to my
colleagues that the reason we do this
is because of the 1990 Budget Act. As
far as I am concerned, I think I could
empirically prove to the Senator from
Ohio that we should not have an off-
set in it because this is going to make
money for the Federal Treasury. The
Texas project is going to have $1.9
billion in tax-exempt bonds, $3.4 bil-
lion in taxable bonds, $1.7 billion in
equity financing. They are going to
hire 12,000 people, pay them $15 an
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4824
hour, and they are all going to be
paying taxes.
We are sitting in here arguing about
some Mickey Mouse thing. I agree
with the Senator. I do not like to do
it, but I am trying to go by the rules
and the law. I think we ought to fire
ail the people that work for the
tax-writing committees that use static
financing. We ought to go back and
do this on growth-oriented models.
But that is not what we are debating
here today.
So my colleagues in the Senate, do
not let the Senator from Ohio get this
distorted from what the fact is. This
is the least painful way we can find to
make this thing fit in the budget.
I did not vote for the 1990 Budget
Act. I do not know how the Senator
from Ohio voted. That is why we are
doing it.
Mr. GRAHAM. I would like to also
point out to the Senator from Ohio
that I believe yesterday he supported
a series of amendments that the Sena-
tor from Arkansas and I introduced
which held the overhead constant in
just three Federal agencies: Com-
merce, Justice, and State. If those
provisions are sustained throughout
the appropriations process and then
carried forward in future years, those
will produce about three times more
revenue savingB than this proposal
will entail in terms of a tax loss.
So I appreciate the Senator's con-
cern for fairness in taxation, a con-
cern that I share. I wish we had a
different and more perfect world in
which to operate. But we deal with
the world as we find it. I believe that
the world as we find it will be better
served by making this minimal Feder-
al commitment toward the accom-
plishment of a very significant nation-
al goal.
The PRESIDING OFFICER (Mr.
Conrad). Under the previous order the
Senator from Louisiana is recognized.
Mr. JOHNSTON. Mr. President, as
I had stated earlier, the Finance Com-
mittee is going to meet in a little less
than 1 hour, at 5 p.m. This tax ex-
tender measure will be the measure to
be considered at that time.
Mr. President, Senators are simply
going to have to be cooperative with
us and let us get on with this bill. If
this becomes a grab bag, we are not
only going to be here all night, but we
are not going to be able to get an en-
ergy bill.
I wanted to be considerate to Sena-
tors in their ability to speak. I believe
the Senator from Pennsylvania want-
ed 2 minutes.
Mr. President, I ask unanimous
consent that the Senator from Penn-
sylvania be recognized for 2 minutes
after which I be recognized to make a
motion to table.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. SPECTER. Mr. President, I
sought the floor for a brief period to
lend my support to the pending
amendment because I believe
high-speed ground transportation is
very, very important to the develop-
ment of this country.
This is a subject that I have been
working on for the better part of a
decade, in conjunction with State
Representative Richard Geist from
Altoona, PA. There are very elaborate
plans in Pennsylvania for the develop-
ment of a high-speed train system,
with Pittsburgh as the center for the
development of maglev technologies.
It is a marvelous projection to think
of a train running from Philadelphia
to Pittsburgh in 2 hours and 7 min-
utes with intermediate stops at
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Lancaster, Harrisburg, State College,
Altoona, Johnstown, Greensburg, and
Pittsburgh. Such a system would be
very development for this country. It
is high time we move ahead with real
development of our Nation's infra-
structure on capital investments
which will yield great fruits to this
country.
I commend my colleague from Ida-
ho, and my colleague from Florida, for
advancing this proposal. I have no
illusions about this being adopted
here. I think the debate has been
very constructive. I do hope that it
will be adopted one day soon.
I thank my colleague from Louisi-
ana. I thank the Chair.
The PRESIDING OFFICER. Under
the previous order the Senator from
Louisiana is recognized.
Mr. JOHNSTON. Mr. President,
this is a very far-reaching amend-
ment. If my motion to table fails,
frankly we are here for a long time
just on this amendment.
I know the Senator from Ohio has
second-degree amendments. They will
be very long, and it is a weighty issue,
Mr. President.
In 55 minutes the Finance Commit-
tee is going to be open for business.
The Senator from Idaho, the chief
sponsor of this amendment, is a mem-
ber of that committee and he can
bring this up. If it is a good idea, let
him at least get the advice of the Fi-
nance Committee. At least give them
a bite, if they want to do it, at decid-
ing how they are going to finance it,
whether they finance it with increas-
ing the number of miles with the
move from 35 to 55, as the Senator
from Idaho as he suggested, or maybe
some kind of alternative kind of tax
that he would propose.
In any event, Mr. President, on
behalf of the distinguished Senator
from Wyoming (Mr. Wallop) and my-
self, I move to table the amendment.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is
there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The
question is on agreeing to the motion
of the Senator from Louisiana (Mr.
Johnston) to lay on the table the
amendment of the Senator from Idaho
(Mr. Symms). On this question, the
yeas and nays have been ordered, and
the clerk wul call the roll.
The assistant legislative clerk called
the roll.
Mr. FORD. I announce that the
Senator from Louisiana (Mr. Breaux),
the Senator from North Dakota (Mr.
Burdick), the Senator from California
(Mr. Cranston), and the Senator from
Tennessee (Mr. Gore) are necessarily
absent.
Mr. SIMPSON. I announce that the
Senator from North Carolina (Mr.
Helms) is absent due to illness.
I further announce that, if present
and voting, the Senator from North
Carolina (Mr. Helms) would vote
'nay.'
The PRESIDING OFFICER. Are
there any other Senators in the
Chamber who desire to vote?
The result was announced • yeas 40,
nays 55, as follows:
(ROLLCALL VOTE NO. 161 LEG.)
YEAS -40
Akaka Baueus Benton
Baden Bond Boren
Bradley Bumpers Byrd
DeConcini Dixon Dodd
Ford Glenn Gramtn
Hatfield Heflin Hollinp
Inouye Johnston Kennedy
Lautenberg Leahy Levin
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IJoberman
Lugar
McCain
Motsonbeui
Packwood
Pryor
Rockefeller
Sanford
8arbanes
Shut
Seymour
Shelby
Simpson
Smith
Wallop
WeUstone
NAYS- 66
Adams
Bingsjnen
Brown
Bryan
Burns
Chafes
Coats
Cochran
Cohen
Conrad
Craig
D'Amato
Danforih
Daschle
Dole
Domenid
Durenberger
Exon
Fowler
Garn
Gorton
Graham
Grassloy
Harkin
Hatch
Jaflbrds
Kassshaui
Kaatsn
Karray
Kerry
Kohl
Lott
Mack
MeConnaU
Mikulski
Mitchell
Moynihan
MurkowskJ
Nickles
Nunn
Pell
Praemler
Raid
Riagla
Robb
Roth
Rudman
Simon
gptHtr
Stavans
Symms
Thurmond
Warner
Wirth
WoUora
NOT VOTING - 6
Breaux
Burdick
Cranston
Gore
So the motion to lay on the table
the amendment (No. 2784) was reject-
ed.
Several Senators addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Louisiana.
Mr. JOHNSTON. Mr. President,
the motion to table was not accepted.
I think the Senate has spoken on this.
I hope the Senator from Ohio will be
willing to go ahead and let us voice
vote the amendment.
Mr. METZENBAUM. Not at this
point.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll
The bill dark proceeded to call the
roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that we tem-
porarily lay aside the instant measure
in order to consider a Pressler amend-
ment on pepeline safety.
The PRESIDING OFFICER. Is
there objection?.
Mr. METZENBAUM. Is there any
time limit?
Mr. JOHNSTON. Mr. President, we
intend to accept the amendment, real-
ly, without debate.
The PRESIDING OFFICER Is
there objection to the request of the
Senator from Louisiana?
Without objection, it is so ordered.
The Senator from South Dakota is
recognized.
AMENDMENT NO. 27*6
(Purpose: To amend the Hazardous liquid Pipe-
line Safety Act of 1979)
Mr. PRESSLER. Mr. President, I
send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The
clerk will report.
The bill clerk read as follows:
The Senator from South Dskota (Mr. Pressler)
proposes an amendment numbered 27M.
Mr. PRESSLER. Mr. President, I
ask unanimous consent that reading
of the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
At the appropriate piece, insert the following:
SBC. . AMENDMENT.
Ths Haiardoue Liquid Pipeline 8cfoty Act of
1979 (49 App, U.S.C. 2001 ot eeq.) m ■ wended ay
adding at the end thereof the following new eeo-
tion:
•8BC. 220. FIELD PERSONNEL.
'(a) In General. - To the aslant and in sush
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i as are provided in advance in appropria-
tion Ada, the Secretary of Transportation, in
fiscal year IMS, ahall employ end maintain
thereafter an additional 12 pipoline field person-
nel above the number of field personnel autho-
rised for fiaeal year 1992 for the Research and
Special Programs Administration. These person-
nel will work primarily on public water supply
protection and other environmental public health
and safety aspects of pipeline regulations. The
Secretary ahall take such action aa may be neces-
sary to assure that the activities of such addition-
al field personnel focus on -
'(1) inspecting intrastate hazardous liquid
pipeline facilities in those States that do not have
a hazardous liquid pipeline safety program that
meets the requiremente of subsection (a) or (b) of
section 206 of this title;
'(2) assisting the States identified under para-
graphs (1) and (3) in developing hazardous liquid
pipeline safety programs that meet the require-
mente of subsection (a) or (b) of section 206 of
this title;
'(3) inspecting interstate hazardous liquid
pipeline facilities constructed prior to 1971; and
'(4) providing technical assistance and training
to State pipeline inspectors and assisting in the
review and management of pipeline safety granta.
'(b) Assignment of Field Personnel. • The addi-
tional field personnel provided under subsection
(a) ahall be assigned by the Secretary to the Re-
search and Special Programs Administration
pipeline safety regional offices on the basis of the
extent to which -
'(1) hazardous liquid pipelines constructed
prior to 1971 exist in s region;
'(2) there are in e region States having intra-
state hazardous liquid pipeline facilities that do
not have a hazardous liquid pipeline safety pro-
gram meeting the requiremente of subsection (a)
or (b) of section 206 of this title; and
'(3) there are other factors, including those
baaed on public water eupply protection and oth-
er environmental public health and safety con-
cerns, which the Secretary deems relevant to
improving the extent and quality of Federal and
State hazardous liquid pipeline safety programs.
'(c) Funding. - Ths Secretary of Transportation
may use such sums as may be necessary of funds
appropriated pursuant to section 17(e) of the
Natural Gaa Pipeline Safety Act of 1968, aa
amended, and section 214(a) of the Hazardous
Liquid Pipeline Safety Act of 1979, aa amended,
to carry out this section/.
Mr. PRESSLER. Mr. President, I
introduced this amendment as a free
standing bill, S. 2375, on March 20,
1992, because I am deeply committed
to helping prevent any further envi-
ronmental disasters like the one that
recently occurred in my home State of
South Dakota.
We need pipelines throughout our
Nation to move energy resources,
including a variety of fuels and natu-
ral gas. These pipelines are vital •
both for economic and national securi-
ty reasons. However, they also repre-
sent a potential environmental haz-
ard. When they leak, the consequenc-
es can be devastating. I am offering
this amendment because this risk can
be mitigated best by increasing the
number of Federal inspectors for haz-
ardous liquid pipelines.
Now, let me share with you some of
the facts surrounding a recent inci-
dent in South Dakota. On January 13,
1992, the Williams Pipeline Co. report-
ed a fuel leak near Sioux Falls, SD, to
the Office of Pipeline Safety at the
Department of Transportation.
I was alarmed to learn of this leak,
as were many of my constituents.
Any leak is of concern, but this one
was most disconcerting. First, the
lead went undetected for nearly 6
months. Second, it occurred only
three-fourths of a mile from a major
aquifer in eastern South Dakota
which serves as the primary water
supply for our State's largest popula-
tion center. Third, the original esti-
mated size of the leak was literally
only bucketfuls. However, further
examination resulted in estimates of
some 400,000 gallons, making it the
largest lead in the history of South
Dakota. Revised estimates are now
closer to 200,000 gallons. To date,
over 160,000 gallons have been recov-
ered and pumps are still recovering
product. A leak of this magnitude
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certainly should have been detected
earlier.
So, Mr. President, to paint the pic-
ture of what happened at that major
pipeline leak; it was detected 6
months late; it was first reported as a
very small leak. Then it was realized
that it was huge - the largest leak in
a pipeline in our State's history; and,
fortunately, it did not reach the aqui-
fer but it was only a half or
three-quarters of a mile away. The
point I am making is that we had a
major leak that almost went undetect-
ed until it was too late. It was the
worst, but it was not the first. I fear
it will not be the last. My amendment
is designed to reduce the risk.
Mr. President, I feel very strongly
that everything possible must be done
to prevent such leaks from occurring
in the future. They are too costly to
the environment and to everyone
involved. Therefore, I carefully studied
what happened in this case. South
Dakota and other States that have
this type of pipeline ought to be con-
cerned over the possibility of future
leaks. However, the number of such
leaks can be reduced through a coordi-
nated effort by Federal, State, and
local government officials, and private
industry leaders.
I serve on the Commerce Subcom-
mittee on Surface Transportation.
Last year, the Senate passed, by voice
vote, S. 15S3, the Pipeline Safety Im-
provement Act of 1991. This legisla-
tion will help address the safety of
pipelines in a number of important
ways. But it is not enough.
Since this leak was reported, I have
carefully revisited this issue. First, I
was briefed in detail by Mr. George
Tenly, Associate Administrator for
Pipeline Safety, head of the Office of
Pipeline Safety. I learned many specif-
ics regarding safety and inspection
procedures on the section of pipeline
in question, as well as the pipeline
inspection program in general.
The enormous task of inspecting 1.8
million miles of pipeline in this coun-
try under Federal inspection jurisdic-
tion falls on only 24 Federal inspec-
tors. So, for our entire nation with
1.8 million miles of pipeline, we have
only 24 Federal inspectors.
Mr. Steve Cropper, president of
Williams Pipeline, met with me to
explain the industry aide of this criti-
cal issue. I was pleased to learn sever-
al new technological advances were
being applied to assist the industry in
deterring future leaks. As I continued
to study this matter, I worked closely
with officials in my home State that
deal with pipeline safety, learning the
problems they face.
Currently, hazardous gas and liq-
uids are transported via pipelines
throughout the United States. Of the
approximately 1.8 million miles of
pipeline, roughly 1.6 million miles are
natural gas pipelines and 155,000
miles of pipeline transport hazardous
liquids. The leak in South Dakota
falls in the latter category.
Mr. President, 48 States have their
own natural gas pipeline safety inspec-
tion programs. However, only 10
States have a similar program for the
inspection of hazardous liquid pipe-
lines.
The Federal Government retains
primary inspection responsibilities for
pipelines in those States without their
own programs, but the Federal office
is understaffed. States need greater
assistance from the Federal Govern-
ment in implementing their own in-
spection program.
This problem must be corrected.
My amendment would do the follow-
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ing: First it adds 12 new Federal pipe-
line safety inspectors above the num-
ber authorized for fiscal year 1992 - a
50-percent increase. Second, these
inspectors will focus specifically on
inspections in States that do not have
their own hazardous liquid pipeline
safety programs in place.
Third, inspectors would provide
technical assistance and training to
these States to help them develop
their own pipeline safety programs.
These personnel will focus primarily
on public water supply protection and
other environmental public health and
safety aspects of pipeline regulations.
They will pay particular attention
to pipelines constructed prior to 1971
which are more likely to develop prob-
lems. They will assist States in the
review and management of pipeline
safety grants. These provisions, to-
gether with others, offer a good first
step in improving overall pipeline
safety.
South Dakota Department of Envi-
ronment and Natural Resources Sec-
retary Robert Roberts fully supports
this amendment. The fact of the
matter is that States are usually in a
much better position to handle these
inspections than is the Federal Gov-
ernment. They best understand the
intricacies of their own State. In addi-
tion, the local citizens are in closer
contact with State officials than re-
gional Federal offices.
The bottom line, Mr. President, is
that local, State, and Federal govern-
ments, as well as the pipeline indus-
try, must cooperate in improving pipe-
line safety. By providing greater as-
sistance to those States that need it
most, my amendment will provide a
first step to improving overall pipeline
safety.
So, Mr. President, to conclude, let
me say I think that our entire Nation
can look to the spill that occurred
near Sioux Falls, SD, as an example of
the dangers to which the public and
the environment can be subjected if a
pipeline leaks. We certainly need
pipelines throughout our Nation to
move energy, to move gas, to move
natural gas. We certainly need to
improve the technology of pipeline
safety. But we also must have prompt
pipeline inspection and notification so
that any problems can be corrected.
My amendment would be a step
forward. It would add 12 additional
Federal pipeline inspectors. It would
improve the cooperation between Fed-
eral, State, and local governments.
I think we can learn from the near
disaster that took place near Sioux
Falls, SD. I think we can improve
pipeline safety throughout our Nation.
It is a subject to which we need to pay
attention because the transportation
of energy is so important to our citi-
zens. But that transportation must
be safe.
Mr. President, finally I would point
out that the Office of Pipeline Safety
is funded through user fees and is
authorized to increase those fees to
cover amounts needed for this type of
program. Therefore, this amendment
costs the taxpayer nothing. Indeed, it
is cost effective for the pipeline indus-
try as the cost of the expanded pro-
gram would be less than the cost asso-
ciated with the cleanup of many indi-
vidual fuel spills. I urge the adoption
of my amendment. This additional
State oversight is very desperately
needed.
Mr. JOHNSTON. Will the Senator
yield?
Mr. PRESSLER. Yes.
Mr. JOHNSTON. Mr. President, I
am advised that the Senator from
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Sooth Dakota has dmcvmti this with
the CoaanorceCVifnmtttoo, which does
ban* jurisdktaon over this matter.
Mr. PKE8SLER Mr. President, I
cannot say the Commerce Committee
hat daarad it; 1 do net know. I have
disnissirt it. 1 am a rnomhtr of tha
Commarea Committaa. Wa had hoped
for a hearing on it, hut it did not ma-
terialize. It waa not denied, either.
Mr. JOHNSTON. Mr. President, I
behove tha Senator from Wyoming;
tha distinguished ranking minority
member, and myself are willing to
take this to conference, and we will
aeek the advice of the Commerce
Committee in the meantime.
But we are willing to take this to
conference,
Mr. PRESSLER Mr. President, is
my friend saying to me if the Com-
merce Committee somehow wants
jurisdiction over this, which they
could have exercised, that it will be
taken out in conference?
I really would like to go to a vote, if
I need to have a stronger hand in
conference.
Mr. JOHNSTON. Mr. President, I
thought this would be a matter we
could accept. If the Senator wishes to
wait, we may well oppose it later. But
that is up to him.
Mr. PRESSLER Well, if the Sena-
tor will accept it - 1 will always take
an amendment if I can get it passed.
But I would not want the implication
to be that it is going to be taken out
in conference.
The Senator will give me a fair shot
in conference?
Mr. JOHNSTON. Mr. President,
what I am saying is that the Com-
merce Committee has jurisdiction over
this matter. If they are against it, I
am sure it would weigh very heavily
with me as one member of conference,
and I am sure with other
Indeed, if we want to
debate here 91* get the
Committee over to talk
matter at this time, I a
would make it difficult to
tha
it
hare,
Mr. PRESSLER If the Senator wffl
take the amendment, I wul agree to
that. I am a member of the Com-
merce Committee, and I am 99 per-
cent sure that I can persuade them
not to have any objection to it. Fa-
mous last words.
Mr. WALLOP. Mr. President, I echo
the words of the distinguished com-
mittee chairman.
There is also, I say to my friend, yet
another piece of relevant legislation
coming through to which he could add
this amendment, and that is the De-
partment of Transportation Appropri-
ations Act, upon which the Senate has
yet to act.
Mr. PRESSLER. Mr. President,
someone told me that would be legis-
lating on an appropriations bill.
Mr. WALLOP. The Senator can do
as he wishes. The Senator from Loui-
siana and I are willing to accept the
amendment, Mr. President.
Mr. PRESSLER I am glad to hear
that. I thank the Senator very much.
The PRESIDING OFFICER la
there further debate on the amend-
ment?
If not, the question is on agreeing to
the amendment.
The amendment (No. 2785) waa
agreed to.
Mr. JOHNSTON. Mr. President, I
move to reconsider the vote by which
the amendment was agreed to.
Mr. PRESSLER. I move to lay that
motion on the table.
The motion to lay on the table •
agreed to.
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Mr. DASCHLE. Mr. President, I
wish to state my support for the
amendment from my colleague from
South Dakota, Senator Pressler, relat-
ing to pipeline safety. It is a good
first step to improving pipeline safety
and it should be enacted.
In South Dakota, we have seen the
pitfalls of shoddy pipeline manage-
ment. As a result of a crack in the
product pipeline between Alexandria,
MN, and Sioux Falls, more than
200,000 gallons of gasoline spilled
beneath and onto a field near Renner,
SD. Renner is just 4 miles north of
Sioux Falls, the largest city in the
State, and the spill occurred less than
a mile away from the edge of the aqui-
fer that provides the drinking water
for Sioux Falls. After the leak was
discovered, by a farmer walking in his
field who suddenly discovered he was
ankle-deep in gasoline, we learned
that the pipeline must have been leak-
ing for weeks, and the 200,000 gallons
of lost product was never noticed to be
missing by the owner of the pipeline,
the Williams Pipe line Co.
Clearly, the current system is inade-
quate to protect the people from spills
like the one we experienced in
Renner. I still do not understand how
that much product can be lost without
anyone noticing.
Adding 12 more inspectors to the
Office of Pipeline Safety is a good first
step. But I must be frank, I do not
know if it would have made a differ-
ence in Renner if we had had even
100 more inspectors. Unless you have
better and more comprehensive moni-
toring; inspection, and reporting re-
quirements, it will be simply impossi-
ble to have enough inspectors in the
right places at the right times. Unless
we can establish better mechanisms
for States to assume partial regulato-
ry control over interstate pipelines,
those with the most direct contact
with the pipelines will have only limit-
ed input. Finally, unless we can es-
tablish comprehensive, nationwide
standards for aboveground storage
tanks, we may get the product into
the tank farms safely only to have it
leak away there. This has also been
the experience in Sioux Falls as well
as Fairfax, VA, and so many other
places.
On the last point, Senator Robb and
I have legislation, S.1761, pending
before the Senate Environment Com-
mittee that would establish compre-
hensive regulations for aboveground
storage tanks. It was our intention to
have this bill become a part of the
RCRA reauthorization this year, but
it now seems that this will have to
wait until the next Congress. With
regard to improving pipeline safety, it
is imperative that Congress pass the
long-stalled Pipeline Safety Act
reauthorization, and that improved
environmental safeguards be adopted,
as well as better mechanisms to estab-
lish State jurisdiction over interstate
pipelines.
In closing, I thank my colleague
from South Dakota for offering this
amendment, and I hope we can use
this momentum to address the larger
problem of pipeline and storage tank
safety.
The PRESIDING OFFICER. The
Senator from Virginia.
Mr. ROBB. Mr. President, I rise
today - -
The PRESIDING OFFICER. The
Chair alerts the Senator from Virginia
that the Symms-Gramm amendment
is the pending business before the
Senate.
Mr. ROBB. Thank you, Mr. Presi-
dent. I ask unanimous consent that
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the Symms-Gramm amendment be
temporarily set aside.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. ROBB. Mr. President, I rise
today in support of the pending ener-
gy legislation.
This bill represents that which is, at
the moment, politically possible.
The chairman of the Energy Com-
mittee, Senator Johnston, has done a
masterful job, of crafting a bill which
has the broad support, of environmen-
talists; support from industry; support
from the administration.
The first vote on this bill, in the
Senate was 94 to 4, and in the House,
the margin was more than 10 to 1
(3S1 to 37).
I support the measure, as far as it
goes, because it does take some impor-
tant steps to wean our Nation from
its overreliance on imported oil.
But the truth is that this bill is
missing what is the most potent tool
available, to reduce our reliance on
imported oil: shifting taxation from
income to the motor fuels pump.
By shifting, without increasing, the
existing burden of taxation, we can
encourage Americans to buy more fuel
efficient cars, to car pool, and to use
alternative forms of transportation.
Changing the point of tax collection
can save us millions of barrels of oil,
unleash investment into alternative
fuels, and reduce the risk of global
warming.
Omission of the gas tax in this ener-
gy bill has not gone unnoticed by
those outside the Halls of Congress.
When the energy bill passed the
House in late May, the New York
Times headline read: 'Congress Ap-
pears on the Verge of Creating A Na-
tional Policy That Does Not Cover
Oil.'
The piece quoted Wilfrid L. Kohl,
director of the International Energy
Program at the Johns Hopkins School
of Advanced International Studies.
'I would call (the bill) a positive first
step on the way to something we don't
ever seem to achieve, which is a com-
prehensive national energy policy,'
Kohl said.
Such a policy, he said, would re-
quire a stiff gasoline tax.
The article also quoted Eli Berg-
man, director, of Americans for Ener-
gy Independence.
'Senators and Congressmen will
whisper that the thing that would do
the most would be a $1 hike, in the
gasoline tax,' Bergman said.
He continued: 'They'll whisper it,
but they won't do anything abut it.'
In June, the Washington Post ran
an op-ed by J. Robinson West, presi-
dent of the Petroleum Finance Co.,
Ltd., declaring:
The energy bill • • • ignore*, llio fundamental
issue, surrounding energy, and represents s
refusal, to make, difficult choices.
He continued,
Congress, snd the administration know how to
reduce our reliance on oil. but they arc loo timid
to act.
He went on:
Almost every other governinoul has had the
eoursge to raise the price of gasoline, with the
result being enhanced fuel efficiency, and conser-
vation. Unfortunately, a gasoline lax is consid-
ered s grudge tax that Americans don't want to
pay, and their politicians, on either side of the
aisle, snd both ends of Pennsylvania Avenue are
not about to propose it oven if they know, it will
I did raise the gas tax issue on the
first go around with this energy bill.
Realizing that this question is a
very sensitive one, I offered a modest
amendment, expressing the sense of
the Senate that the Congressional tax
committees study the question of
whether we ought to shift some of the
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existing income tax burden to motor
fuels.
The concept is straightforward:
Reduce the income tax which on the
margins discourages people from
working and investing and place the
tax instead where it will result in 'less
pollution' and 'greater security'.
If a phased-in 40-cents-per-gallon
increase were chosen the tax credit
would amount to $215 for individuals
and $431 for married couples filing
jointly according to Joint Tax Com-
mittee estimates.
This proposal should not be all that
hard to swallow.
I personally would prefer a tougher
approach, and have long advocated
using revenues from an increase in
the gas tax, to reduce the budget defi-
cit, and/or invest in our basic infra-
structure.
And I am pleased that recent pro-
posals put forth by Paul Tsongas and
Ross Perot to reduce the deficit, by
increasing the gas tax by 50 cents,
have been received favorably by seri-
ous observers.
But I have been persuaded that if
we try to hit two birds at once • ener-
gy conservation and deficit reduction
- we are likely to end up with neither.
So for now, I am pushing a tax shift
rather than a tax increase. And will
continue to pursue deficit reduction
through other measures.
My amendment to study tax shift-
ing, which was adopted in February
and is part of the pending bill, repre-
sents a small step forward on an ex-
tremely difficult issue.
I do not plan to offer an amend-
ment to increase the gas tax, at this
time.
I realize that in an election year,
the chances of passage are virtually
nil, and that a negative vote now, on
this issue, could actually damage its
chances, in the future.
I am willing to be patient, because I
am confident that once the Finance
Committee looks at the gas tax more
closely, the rationale for reform in
this area will grow; and that building
on existing information, we will, over
time, forge an overwhelming argu-
ment, that a serious national energy
policy requires the imposition of a
conservation tax.
The case is already building.
Since the Senate adopted my
amendment in February, two indepen-
dent studies have further strength-
ened the case for imposing a conserva-
tion tax on motor fuels.
In April, the National Research
Council, the research arm of the Na-
tional Academies of Science and Engi-
neering, released a 10-month study
which found that increasing gasoline
prices, was in many ways, a more
preferable way of achieving energy
conservation, than increasing CAFE
standards.
The study, entitled 'Automotive
Fuel Economy: How Far Should We
Go?' found that while CAFE stan-
dards are at odds with market signals
- because increasing efficiency makes
driving cheaper - increasing fuel pric-
es would send an unmistakably, clear
signal, to conserve.
In June, the World Resources Insti-
tute came out with a fascinating
study, which found that the economic,
environmental, health and security
costs of driving, not covered by the
current gasoline tax, total $300 billion
a year.
To accurately reflect the true costs
of driving - highway construction and
maintenance, highway services, com-
muter parking, air pollution, global
warming, national security risks, con-
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gestion, accidents, and noise - the
study found that motor fuels taxes
should rise more than $2 per gallon
above their current levels.
Now, I realize that most politicians
think that voters will not understand
issues of externalities and social costs;
but make no mistake: The American
public knows the cost of foreign oil
dependence all too well.
They know that in the late 1970's,
our dependency cost us jobs, while in
the early 1990's, it cost us lives.
They know that more than 100 of
our Nation's cities are so polluted, in
large part by automobile emissions,
that they do not meet Federal clean
air health guidelines.
They know the gridlock they face
commuting each morning is getting
worse and worse.
Mr. President, I am determined to
move forward on this issue.
I am advised that pursuant to the
sense of the Senate amendment, the
Finance Committee has requested
that the Congressional Research Ser-
vice (CRS) study this issue.
I think this is a positive step, but it
is my hope that once this study is
complete, the Finance Committee will
hold hearings on this subject.
I know that when I testified before
the Finance Committee in
mid-February, the chairman stated
his interest in considering this propos-
al, and I look forward to working with
him, on this issue in the future.
Mr. President, I thank the Chair. I
thank the chairman of the Energy
Committee for permitting me to offer
these few words. I yield the floor.
Mr. JOHNSTON. Mr. President,
what is the pending business?
The PRESIDING OFFICER. The
pending business is the Symms Gra-
ham amendment, which recurs.
Mr. JOHNSTON. Mr. President,
Senator Metzenbaum has now re-
moved his objection, and we are ready
for the adoption of that amendment.
The PRESIDING OFFICER. If
there be no further debate, the ques-
tion is on agreeing to the amendment.
The amendment (No. 2784) was
agreed to.
Mr. GRAHAM. Mr. President, I
move to reconsider the vote.
Mr. JOHNSTON. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. JOHNSTON. Mr. President, we
are now ready for the Rockefeller
amendment which is, as I look over
this list of potential amendments,
really the last really essential amend-
ment to be considered. That is not to
say that it will be the last amendment
to be considered. So let the word go
out to Senator Rockefeller, wherever
he is, to please come in and deal with
his amendment. In the meantime, I
suggest the absence of quorum.
Mr. WALLOP. Mr. President, will
the Senator withhold?
Mr. JOHNSTON. Mr. President, I
withhold.
Mr. WALLOP. Let me add my
urgingB to those of the committee
chairman. This is an amendment
which I think will arrive without need
for considerable debate or controversy.
But if that is not the case, it really
belongs being in front of the Senate as
soon as possible so that we can dispose
of the amendment. A great deal of
work has gone into the negotiations
that brought us to this point, and the
Senate needs time to consider it care-
fully.
I do not have any idea how long it
may be debated, but should there be a
desire to have extended debate, the
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Senate is entitled to have the debate
begin aa soon aa possible.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President, we
have just asked for a hot line to go
out to ask Senators if they have addi-
tional amendments. We know there is
a Rockefeller amendment which we
are prepared to accept basically with-
out debate, unless there is some unex-
pected gUtch m the amendment. The
rest of these amendments appear to
us, Mr. President, to be the kind of
amendments that may, and we hope
will, go away when pressed to the
issue.
So we are putting out a hot line. If
we are lucky, we can finish this up in
time for everyone to get away for an
early dinner. If Senators are really
serious about some of these amend-
ments, we may be here several days.
We hope it is an early dinner, Mr.
President, because I know there are a
lot of Senators who are anxious to get
away because they told me that they
are. The hot line will go out.
Mr. WALLOP. Mr. President, I urgs
my colleagues on my side of the aisle
to consider carefully how valuable a
contribution their amendments may
be to the process of America's energy
policy. If they can find it in their
hearts to look to another time, look to
another vehicle, we would be most
grateful. At any rate, I do urge my
colleagues to make known their inten-
tions so that we can draw a circle
around this bill and at least get this
energy policy to conference where it
really belong?.
I urge a prompt response. Once
again, we urge the arrival of the
Rockefeller amendment.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER (Mr.
Raid). The clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
AMENDMENT NO. 2786
(Purpose: To extend the authorization of the
Uranium Mill Tailing* Radiation Control Act of
1978)
Mr. JOHNSTON. Mr. President, I
will send an amendment to the desk.
It is somewhat in the nature of a
technical amendment on behalf of
Senator Brown which extends the
date of the Uranium Mill Tailings Ra-
diation Control Act of 1978 from 1994
to 1998.
I say it is in the nature of a techni-
cal amendment because we think we
can probably deal with this problem
on the basis of the present legislation,
that is, S. 1220, the bill presently un-
der consideration. But it is probably
prudent to accept this amendment.
So I send that amendment to the desk
at this time.
The PRESIDING OFFICER. The
clerk will report the amendment.
The legislative clerk read as follows:
The Senator from Louisiana (Mr. Johnston),
for Mr. Brown, propose! an amendment num-
bered 2786.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that reading
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of the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
Al the appropriate place in the amendment,
inaart tha following naw aaciion:
SEC. . URANIUM MILL TAILINGS RADIATION
CONTROL ACT EXTENSION.
Section 1 12<a) of tha Uranium Mill Tailing.
Radiation Control Act of 1978 (42 U.S.C. 7922(a))
ie amended by striking '1994' and inaerting
•1998'.
Mr. BROWN. Mr. President, I am
pleased that the Senate has agreed to
include my amendment, which will
reauthorize the Uranium Mill Tailings
Radiation Control Act of 1978, as part
of the committee substitute amend-
ment to H.R. 776, the Energy Efficien-
cy Act.
In October 1991, I introduced S.
1885, which would have reauthorized
the Uranium Mill Tailings Control Act
of 1978 and extended the Uranium
Mill Tailings Remedial Act (UMTRA)
Program through September 1998.
Uranium ore was processed in large
part by private companies for use by
the Department of Defense from the
1940*8 through 1960. Once the con-
tracts between these companies and
the Federal Government were com-
pleted, the uranium mills were shut
down and large piles of uranium tail-
ings, which contain radioactive ele-
ments, were left on site. Recognizing
the threat to human health and the
environment that the tailing posed,
Congress enacted Public Law 95-604,
the Uranium Mill Tailings Radiation
Control Act of 1978.
Since the law's inception in 1978,
the Department of Energy and affect-
ed States have worked together to
make the UMTRA Program a success.
DOE, in conjunction with the States
is responsible for the cleanup of 24
inactive uranium mill tailings sites in
10 States. Under the act, DOE pro-
vides for 90 percent of the costs asso-
ciated with the UMTRA Program,
while the States contribute 10 per-
cent. To date, the cleanup of nine of
the sites has been completed.
While significant progress has been
made cleaning up these sites, we have
been told by DOE that remediation of
all 24 sites will not be completed by
the stated expiration of the act in
1994. Of the sites in Colorado -
Durango, Grand Junction, Gunnison,
Maybell, Naturita, Rifle, and Slick
Rock - only the Durango site has been
remediated.
It is critical we assure affected
States and communities that the pro-
gram will continue, so that cleanup of
all sites can be completed and the
health and environmental risks associ-
. ated with these tailings can be elimi-
nated. The extension of the act also
ensures the ability of States to budget
for their required cost-sharing contri-
butions to the program.
This amendment will ensure the
Federal Government's commitment to
the cleanup of these sites.
The PRESIDING OFFICER. The
question is on agreeing to the amend-
ment.
The amendment (No. 2786) was
agreed to.
Mr. WALLOP. I move to reconsider
the vote by which the amendment was
agreed to.
Mr. JOHNSTON. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. JOHNSTON. I suggest the
absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
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Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President, we
now have the results of our hotline
back. On our side of the aisle, the
only amendment requested is the
Rockefeller amendment.
I see Senator Rockefeller on the
floor, and we are prepared to do that
now.
I wonder if the Senator from West
Virginia (Mr. Rockefeller) would tell
me how much time he would like.
Mr. ROCKEFELLER. I say to the
managers not more than 5 minutes
for the entire amendment.
Mr. WALLOP. My suggestion is if
that is the case, why do we not take
20 minutes, equally divided, with the
intention of yielding back whatever
time out of that that is not used.
Mr. ROCKEFELLER. That is fine
by this Senator.
I say to the manager on the Demo-
cratic side, we are awaiting the arrival
of Senator Ford.
Mr. JOHNSTON. Mr. President, I
think we can go ahead and get these
amendments identified at least.
Mr. President, I ask unanimous
consent that the only amendments to
be considered on the pending legisla-
tion H.R 776 are as follows: A
Rockefeller amendment with respect
to coal miner health; a Dodd amend-
ment with respect to rollup securities.
Mr. WALLOP. Mr. President, I
suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. ROCKEFELLER. Mr. Presi-
dent, I ask unanimous consent that
the order for the quorum call be re-
scinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
There is now pending before the
Senate a unanimous-consent request
propounded by the senior Senator
from Louisiana.
Mr. JOHNSTON. Mr. President, I
withdraw that request.
AMENDMENT NO. 2787
(Purpose: Substitute for th« coal health provi-
Mr. ROCKEFELLER. Mr. Presi-
dent, I send an amendment to the
desk and ask for its immediate consid-
eration.
The PRESIDING OFFICER. The
clerk will report.
The legislative clerk read as follows:
The Senator from West Virginia
(Mr. Rockefeller) proposes an amend-
ment numbered 2787.
Mr. ROCKEFELLER. Mr. Presi-
dent, I ask unanimous consent that
reading of the amendment be dis-
pensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(Subsequently, the following oc-
curred:)
AMENDMENT NO. 2787, AS MODIFIED
Mr. ROCKEFELLER Mr. Presi-
dent, I ask unanimous consent that
my amendment be modified with the
changes that I now send to the desk.
And in case anybody is nervous, it is a
simply a collating matter. We were
advised by legislative counsel to do
this.
The PRESIDING OFFICER The
amendment is so modified.
(The text of the amendment (No.
2787), as modified is printed in today's
Record under 'Amendments Submit-
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ted.')
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that there be
a time agreement on the pending
amendment of 20 minutes, equally
divided between the Senator from
West Virginia and the Senator from
Wyoming, and that no second-degree
amendments be in order.
The PRESIDING OFFICER. Is
there objection.
Without objection, it is so ordered.
Mr. ROCKEFELLER. Mr. Presi-
dent, the Senate can be proud, the
American people can be proud, that
this legislation will see to it that the
promise of health care is kept to tens
of thousands of retired coal miners
and their families.
Everyone acknowledges that these
elderly people deserve their health
care coverage. They earned it in some
of the most dangerous and important
work in America. As former Secretary
of Labor Dole's Coal Commission said
very simply, the commitment to
health care benefits should be hon-
ored.
The history of the two financially
troubled health care trust funds can
be traced back to an historic 1946
agreement between the mine workers
and the U.S. Government. Labor and
industry leaders were called to the
White House after President Truman
seized the mines during a strike over
the deplorable state of health care in
the coalfields.
The world and the coal industry
and health care in America have
changed in many ways since then.
Skyrocketing health care costs and a
crazy quilt of court decisions on com-
pany liability have badly eroded the
financial condition of the retired
coalminer trust funds.
But certain things have not
changed. Health care is still one of
the most important things in the life
of a retired coalminer. The need re-
mains for statesmanship among indus-
try and labor leaders in ensuring that
there is good health care in the
coalfields.
During the last few weeks I have
been involved in intense and lengthy
negotiations on this legislation. We
have debated arcane points of law and
obscure data about every facet of the
coal industry.
But we must never forget that what
is important here is the people in-
volved.
Many of these retirees were born in
the early decades of this century.
Their active days in the mines were in
the 1930's and 1940's and 1950's.
They remember the days of the pick
and shovel and dynamite, when
caveins were not uncommon and
methane explosions often brought
sudden disaster.
These miners gave so much for our
country. They fueled American indus-
try to a position of world leadership
and sustained the country as a bul-
wark of freedom in hot war and cold.
What they won for themselves and
their dependents was not a favor but
what they paid for at a high price,
often with their lives.
In the deal that created this health
program in the 1940's, the miners
agreed to mechanization of the mines,
opening the way to the industry's
prosperity. The miners knew that
tens of thousands of jobs would be lost
but that they would have good health
care in their twilight years. The in-
dustry knew its labor costs would fall.
This legislation is needed to see to it
that the deal is honored. Mechaniza-
tion is creating a very different eco-
nomic future for the coal industry.
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But this legislation is needed to honor
an historic promise from the past - to
take care of the people who made
industrial history.
In the coalfields, family is every-
thing. Working together, families
created riches for the coal industry
and for the country. The modern in-
dustrial might of America rose on the
backs of these families. To tell the
story of one of many thousands of
those families, I invited a widow from
my own State of West Virginia to
testify before my subcommittee last
fall
Dixie Woolum told us how in the
late 1940's the health trust funds
transformed health care in the
coalfields. She said that her husband
told her that if anything happened to
him, she would be taken care of.
Because of financial trouble in the
funds and legal loopholes, however,
things did not go smoothly. Her
health benefits were cut off and it
took lawsuits to get them back for
people like Mrs. Woolum.
Mrs. Woolum spoke for herself and
many thousands of others when she
said:
My husband was a devoted man to
his work. He worked in bad condi-
tions, but he never missed a day. • • •
It is a blow in the face to think some
day you have health coverage and the
next you have nothing. • • • I am not
an educated person, but I do know
what is right and what is wrong. I
hope through your work, this will not
ever happen again to anyone else.
If this legislation is enacted into
law, as I believe it will be, Mrs.
Woolum's wish that others will be
spared her difficulties will be fulfilled.
Some say today that those who have
worked hard and played by the rules
have been alighted in America in re-
cent years. Here is an opportunity to
prove that isn't so. Here is an oppor-
tunity to show the world an older
America and one that we can begin to
rebuild here today. An America
where those who work hard and do
what is right for their country re-
ceived in return their country's grati-
tude.
This has been one of the most con-
tentious pieces of legislation I have
worked on in the Senate. But I have
said from the beginning that my goal
was to protect the health care of re-
tired coalminers and their families,
and that I was not wedded to the
details of how to do it. To get past
the contentiousness, I have tried to
listen to all concerned and accommo-
date as many suggestions as I could.
That will continue to be my approach
as the legislative process continues.
The legislation we consider today is
significantly different from the bill I
introduced last November. Instead of
including a broad industrywide tax,
the basic funding mechanism of this
legislation generally requires premium
payments from those for whom the
retirees worked. These are the re-
sponsible companies. Under both
bills, companies with retirees still in
the existing health funds would pay
for their own retirees. We must stop
the past practice in which existing
companies dump their responsibilities
onto the companies that have faithful-
ly kept their commitments.
The key difference between the two
bills relates to the funding of health
benefits for the orphan retirees. In
general these are the people whose
companies are out of business. Under
the earlier bill, the tax would have
funded those benefits. Here, in gener-
al, the responsible coal operators and
related companies will fiand the bene-
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fits. The two existing health trust
funds will be folded into a new, com-
bined fund, in general for current
fund orphans and nonorphans. Addi-
tionally, a new 1992 fund will be re-
quired to provide for certain other
retirees, including those who might be
orphaned by future bankruptcies or
liquidations.
The approach of the current legisla-
tion was not lightly arrived at.
Lengthy and difficult negotiations
were required because of the myriad
of conflicting interests in our nation-
wide coal industry. As the Dole Com-
mission indicated, more than one
approach might be reasonable and
fair.
The current approach is the one
sought by the administration and in
the end it appeared to be the one
most likely to command a consensus
in the legislative process. Under this
legislation, the current health benefits
will be preserved. The approach of
this legislation rests on the important
principle that responsible companies
should bear the cost of these health
benefits. It is a rational approach. It
is a fair approach. It is a good and
reasonable way for Congress to see to
it that the country keeps its word to
the retired coalminers and their fami-
lies.
That the country must keep its
word to these elderly people is the
ultimate meaning of this legislation.
Many Senators and other people have
worked hard to see to it that the
promises are kept. I express my grati-
tude for his assistance to my senior
colleague from West Virginia, Senator
Byrd. I express my gratitude to Sena-
tor Wallop for his cooperation and to
Senator Ford and many others.
As the poet, Robert Forst said, 'we
have promises to keep and miles to
go.' But we will have taken a big step
toward our goal when we pass this
legislation. The Senate can be proud
of it. The country can be round of it.
The country can be proud of itself.
Keeping this kind of promise is what
America is all about.
Mr. BYRD. Mr. President, will the
Senator yield to me briefly?
Mr. ROCKEFELLER. I am pleased
to yield.
Mr. BYRD. I thank my colleague.
Mr. President, the purpose of the
amendment offered by my colleague
from West Virginia, Mr. Rockefeller, is
a simple one: it is to assure more than
100,000 retired coal miners and de-
pendents that they will continue to
have access to adequate health care
beyond February 1, 1993.
It is to assure tens of thousands of
retired coal miners - many of whom
are in poor health, and all of whom
who risked their lives to provide our
Nation with the energy resources that
made America the great economic and
industrial power that it is today - that
promises made to them during their
working years are not now, in retire-
ment, in their 'golden years', going to
be reneged upon.
It is to assure tens of thousands of
dependents of such retirees, many of
whom who saw their fathers, broth-
ers, husbands, and sons sacrifice life
and limb thousands of feet below
ground in the dark and cramped re-
cesses of an underground mine, and
who must now watch their loved ones
suffer the ravages of black lung and
other debilitating health problems
resulting from their work in the coal
mines of America, that the health
benefits upon which they so critically
depend will not be suddenly taken
away.
This amendment is about honoring
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commitments. It says that when
promisee are made, promises will be
kept. It is that simple.
Yet, getting it to the floor has been
anything but simple. The road has
been long; filled with many twists and
turns, and always seeming to be on an
uphill climb.
My colleague, Senator Rockefeller,
however, has shown great patient and
perseverance in seeing this matter
through.
I know how hard he has worked to
bring this amendment to fruition. He
has talked with me from time to time
about it. I commend him on a job
very well done.
In addition, I wish to commend the
Senator from Kentucky (Mr. Ford)
and all of those who have worked so
hard to bring this to a successful con-
clusion.
As a result of this amendment, Mr.
President, retired coal miners and
their dependents will no longer need
to fear the loss of the health care
benefits. Through the merger of the
1950 and 1974 United Mine Workers
of America Benefit Funds, retired
mine workers will continue to receive
health care coverage through a new
combined fund. Their benefits will be
provided by those companies that are
now or formerly were signatories to a
National Bituminous Coal Agreement.
It is these companies that made the
promise of health benefits to their
workers, and it is appropriate that
these companies be collectively asked
to provide these benefits.
And this amendment accomplishes
that
Again, I want to pay my highest
compliments - and I fall short of the
appropriate words to do so - to my
distinguished colleague, Senator
Rockefeller. He has had his mind and
his heart on this amendment for
months and months, and he has spent
many, many long hours in pursuing
those efforts in support of the amend-
ment over these many, many months.
I take my hat off to him. I admire
him for his tenacity, his perseverance,
his high purpose, and his faithfulness
to duty, as he has toiled along the way
to make this amendment a reality. It
deserves the support of every Member
of the body.
I close by once again commending
my colleague, Senator Rockefeller, and
by thanking Senator Wallop and the
others who worked with Senator
Rockefeller on this matter for so long
a time.
Mr. President, I thank my colleague
for yielding, and I yield the floor.
The PRESIDING OFFICER. Who
yields time?
The Senator from Wyoming controls
10 minutes, and the Senator from
West Virginia controls 3 1/2 minutes.
The Senator from Wyoming is rec-
ognized.
Mr. WALLOP. Mr. President, I yield
myself 4 minutes.
Mr. President, let me give my
thanks back to Senator Byrd, Senator
Ford, and Senator Rockefeller. They
know, and Senator Johnston knows,
and others know I did not want this
provision on this bill. It is not energy
legislation.
It was, nonetheless, part of the
vehicle that arrived from the Finance
Committee, and it was a circumstance
with which we had to deal. It was not
a question of wishing to, wanting to,
not caring for, wishing to avoid, or not
wanting to deal with the issue of the
so-called orphans. I mean, they were
never an issue. It was a question as
to whose responsibility they were.
Negotiations were correctly de-
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scribed as difficult. But they were
always conducted with at least a rea-
sonable understanding of what was on
the other side's plate, and what was
causing difficulty.
To that end, I particularly wish to
thank the administration's folks who
came to help us: Tom Scully, Gail
Wilensky, and Barbara Selfridge.
I also wish to thank Paul Joffe,
Jonathan Wood, Kennie Gill, Ellen
Doneski; and Jim Franson, of the
legislative counsel.
Of my own staff, Micheal Hoon; and
of the Energy Committee minority
staff, Marian Marshall and Gary
Ellsworth.
I think it is fair to say these people
put in probably longer hours on the
resolution presented by this amend-
ment than the collection of the other
amendments which will come to rest
on or around this bill.
I believe that the resolution which
we have arrived at is as fair as we
could possibly make it. I thank Sena-
tor Byrd, Senator Rockefeller, and
Senator Ford for their efforts to come
to agreement, and for their under-
standing of the problems that the
original amendment presented to me.
All of us have things with which we
take some satisfaction. In this resolu-
tion, all of us wish there were some
little piece of it that we could have
left as originally drafted, or not have
included even as finally drafted.
But, having said that, I think it
shows the best traditions of the Sen-
ate that a resolution to a very sticky,
very thorny problem was arrived at in
as fair and equitable a manner. And
the best part of it is that the inno-
cents in the program, whose plight
brought us to the table, have had
their interests protected and assured.
Fundamentally, I think that was
never a question that any of us
wished to avoid. It was always my
intention, certainly, that that should
take place.
Mr. President, I would yield the
remainder of the time that I have to
Senator Specter.
But I would just like to make the
following statement: That the amend-
ment does not void the litigation
known as the Evergreen case. I want
to make clear that it is the Senator's
intention that any liability ultimately
assessed in that litigation shall apply
only to that prior to the date of enact-
ment, and not to future obligations.
It is also my understanding that
moneys that may be paid for past
liability will not be interpreted as
contributions which were actually
received after 1997 and before July 20,
1992, by the 1950 UMW benefit plan,
or the 1974 one.
Mr. President, I yield the remainder
of the time to the Senator from Penn-
sylvania (Mr. Specter).
The PRESIDING OFFICER. The
Senator from Pennsylvania is recog-
nized for 5 minutes.
Mr. SPECTER. Mr. President, I
thank the Chair, and I thank my
esteemed colleague from Wyoming for
yielding time.
Mr. President, I join in supporting
this important amendment. I con-
gratulate my colleagues for working
out a very, very difficult issue. I com-
pliment the Senator from West Vir-
ginia for tackling this complex matter,
and for shepherding it through the
stages which we have arrived at here
today.
I know from personal experience the
tremendous anguish of the retirees
from the coal industry, because we
have many of them in the Common-
wealth of Pennsylvania. This
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was brought to my attention by re-
peated visits m western Pennsylvania,
and especially southwestern Pennsyl-
vania.
Last January, I went to Washing-
ton, PA - they call it 'little
Washington'; maybe they should call
it 'Big Washington,' but they call it
little Washington' - to meet with
several hundred of the coal retirees.
During the course of that meeting; I
heard of the kinds of problems that
they were sustaining. It is especially
tragic because they had expected to
have benefits to have protected them
from the ravages of aging, and the
ravages of the need for medical care.
As this matter has worked its way
through the legislative process, there
have been a great many who have
contributed. The Senator from Ken-
tucky is on the floor. I really observed
- participated to a slight extent, but
really observed - the negotiations one
evening last week with the chairman
of the Appropriations Committee,
attended by the majority leader and
the Republican leader.
I believe this amendment takes the
issue away from a contentious debate
and a contentious vote and works it
out, I think, on terms which are high-
ly acceptable.
Again, I thank my colleague from
Wyoming for yielding me time, and I
yield the floor.
Mr. FORD. Will my distinguished
friend from West 'Virginia yield me
sometime?
Mr. ROCKEFELLER. How much
time remains?
The PRESIDING OFFICER. The
Senator has 3 1/2 minutes remaining.
Mr. ROCKEFELLER. Mr. Presi-
dent, I ask unanimous consent for
about 2 minutes after that.
But I yield the remainder of the
time to the Senator from Kentucky.
The PRESIDING OFFICER. The
Senator from West Virginia is recog-
nized.
I am sorry, the Senator from Ken-
tucky is recognized.
Mr. FORD. We have been giving so
many accolades to the distinguished
Senator from West Virginia we think
we are all from West Virginia. I have
been called a third Senator from West
Virginia, and I do not mind that at
all.
Mr. President, let me first say to my
colleagues and good friends - Senator
Jay Rockefeller, you just could not ask
anyone to work any harder and be
more dedicated than he has been on
this issue; and Senator Byrd, with his
expertise and ability to work out the
funding formula; and Senator
Malcolm Wallop with his good, hard
negotiation • that their leadership and
untiring effort, in my opinion, has
produced this compromise.
It was not always clear that we
could accomplish our goal of protect-
ing the health benefits of retirees and
their families in the coal fields, includ-
ing over 16,000 retirees in Kentucky.
But after days, hours, and weeks of
negotiations, we have achieved that
end.
Throughout this process, I have had
two goals: first, to ensure that the
beneficiaries of the UMWA Benefit
Funds did not lose their much needed
health care benefits, nor have them
interrupted; and second, that the
funding mechanism for paying for
these benefits not include a new tax
on coal companies that were never a
part of this problem.
This bipartisan compromise accom-
plishes both of these goals and I am
pleased to support this agreement.
My mam interest in this process has
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always been to protect the retirees
who were promised lifetime benefits,
without imposing a burden on Ken-
tucky coal that would be devastating
to our ability to remain competitive.
I can remember standing in the hot
burning Sun on a Saturday afternoon
in July at the courthouse in Harlan
County, KY. The Junior Chamber of
Commerce, the Jaycees at that time,
had raised funds for a memorial for
all those who had lost their lives, in
Harlan County alone, working in the
coal mines.
Close to 1,400 names were on that
memorial. They were the names of
hard working individuals that literally
gave their lives to produce the energy
that the rest of us in this Nation need
to live our lives. Theirs was truly the
ultimate sacrifice, in one of the most
dangerous jobs I know.
And when I remember that hot July
afternoon, I remember the wives, and
the children, and the families that
were there that day to honor their
loved ones. It is for these families,
and the promise given to their loved
ones that if anything happened to
them, their families would have life-
time health care benefits, that I re-
main committed to seeing this reason-
able, and fair, legislation signed into
law.
This bipartisan compromise ensures
a permanent and stable funding base
for the health benefits of existing
retirees. It also puts in place a proce-
dure whereby the United Mine Work-
ers and the Bituminous Coal Opera-
tors will negotiate a new fund to en-
sure that the health benefits of a
limited number of future orphans will
be protected.
Many of the changes I sought to
have incorporated into the original
proposal have been adopted, and I am
most grateful to my colleague, Senator
Rockefeller, and his most capable
staff, for accommodating me. There is
no new tax on nonsignatory coal in
this agreement. We have closed the
new orphan fund so to limit the prob-
lem and ensure a long-term solution.
We have attempted to allocate costs
according to the principle that those
most responsible should bear the
greatest portion of costs. And we
have ensured that our retirees, and
their families, will not have to bear
the cost of future problems.
Of course, this is a negotiated set-
tlement. And as with any compro-
mise, no one Member, or party, got
everything they wanted. But I believe
that we can truly say that all of us,
and the Nation as a whole, got some-
thing. And that is a stable coal indus-
try that will not face the heartache
and trauma of a nationwide coal
strike next February. Coal can be the
key to our energy independence, and
this agreement we are adopting today
will ensure the long-term stability,
and competitiveness, of this industry.
I commend my colleague, Senator
Rockefeller, for his tireless efforts to
resolve this problem. I also want to
commend Senator Byrd and Senator
Wallop for their crucial participation
in bringing together this compromise,
and recognize the considerable contri-
butions of the White House in putting
this bipartisan compromise together.
The retirees owe Senator
Rockefeller a great debt of gratitude
for ensuring that a promise made to
them can be kept. This Nation owes
the same gratitude for achieving a
solution that is fair, and ensures that
the coal industry, as a whole, can
continue to prosper.
Mr. President, not many times do
you have an individual that works on
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your staff that Is as dedicated as one
Kennie Gill on mine. She has worked
diligently. She has never given up.
She has stood her ground on occasions
when it was necessary. I am very
pleased that she is an individual that
represented me in this negotiation.
And I want to pay a compliment to
her, to Paul Joffe, to Gary Ellsworth,
to Ellen and Doneski, others that
worked so hard as staff to be sure
that this piece of legislation was put
together.
I yield the floor.
The PRESIDING OFFICER. The
Senator's time has expired.
Mr. JOHNSTON. Will the Senator
yield me 30 seconds?
The PRESIDING OFFICER. The
Senator has no time to yield.
Mr. WALLOP. Mr. President, I yield
the remainder of my time, first, to
Senator Johnston and the remainder
to Senator Rockefeller.
Mr. JOHNSTON. I thank my col-
league.
I simply wanted to state my admira-
tion for the distinguished junior Sena-
tor from West Virginia, Mr.
Rockefeller; to Senator Ford, from
Kentucky; to Senator Wallop; to the
senior Senator from West Virginia,
Senator Byrd; and the other Senators
who have been involved in this mat-
ter.
Frankly, I thought they would nev-
er do it. I thought this amendment
was a dagger pointed at the heart of
energy legislation and that we would
be dragged down into the mire of the
impossible dream of getting this legis-
lation passed. But the distinguished
Senator from West Virginia, with his
stick-to-itivenees, with his good hu-
mor, but with his absolute devotion to
this idea, came and brought the par-
ties together in an impossible dream.
It really is impossible the way he
brought us to the brink of disaster
and, at the last minute, scooped the
baby off the tracks and in the process
saved the coal miners of West Virgin-
ia. I hope they will always be grateful
to him and to the Senator from Ken-
tucky and the Senator from Wyoming,
because they have accomplished the
impossible.
The PRESIDING OFFICER. The
Senator from West Virginia is recog-
nized for 2 minutes.
Mr. ROCKEFELLER. I yield one of
those minutes to the Senator from
Pennsylvania (Mr. Wofford).
Mr. WOFFORD. Mr. President, as a
cosponsor of this amendment and as a
supporter of the energy bill, at this
creative, constructive and historic
moment for coal miners and their
families, I want to salute Senator
Rockefeller for his dedicated, out-
standing leadership. Indeed, I salute
the two Senators from West Virginia,
Senator Rockefeller and Senator Byrd
our President pro tempore, as well as
Senator Ford and my other colleagues
who made this important solution
possible. I see it as a promise fulfilled,
a commitment honored.
America's retired coal miners have
worked in dangerous, dirty and often
unhealthy conditions and they were
promised health care benefits. Coal
remains the single largest source of
energy in the United States and it is
the miners who deserve the benefits
promised them.
like other Americans, coal miners
went to work each day under the
assumption that their health benefits
would be there when they retired.
This amendment helps ensure that
promise is kept.
Today, that promise is being broken
for thousands of retired coal miners
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and their families. Not because they
didn't work hard enough. Not be-
cause they didn't plan ahead. But
because of economic forces over which
they have no control.
Through no fault of their own, min-
ers have become orphans in their
retirement years. Their former em-
ployers have gone out of business or
simply no longer make contributions
to the existing health benefit trust
funds. Now our miners have no place
else to turn except here, to their Gov-
ernment. They played the game by
one set of rules all their lives, and
now somebody's changed the rules on
them.
In large parts of Pennsylvania gen-
erations of miners have worked for
over a century to bring coal out of the
ground and provide the fuel that pow-
ered America's industrial might. In
communities built by immigrants who
came to this country looking for a
better life for themselves and their
children. Generation after generation,
they were more than willing to work
hard to fulfill the dream. Of a secure
retirement if you work hard; of help-
ing your children go to college if they
study hard; of owning your own home
if you save; and of having a doctor if
you need one.
They did not expect anything hand-
ed to them on a silver platter. But
they also did not expect to have the
rug pulled out from under their feet
when they retired.
For the miners and their families
losing what they thought were guar-
anteed health benefits, the safety net
is broken. Congress can fix it and this
amendment on which the Senator
from West Virginia has worked so
hard over the last year will do it.
In 1990, a commission appointed by
then Labor Secretary Dole, and
chaired by former Secretary William
Usery, addressed the problems facing
retired miners. It reached a conclu-
sion that ought to be a matter of com-
mon sense and basic fairness: that
retired miners are entitled to the
health care benefits they were prom-
ised and such commitment must be
honored today. The basic recommen-
dations of the Dole commission are
contained in this amendment.
It is time for us to enact them into
law. It is time to commit our will and
our wallet to taking care of our own
people and our own problems.
The health benefits provided to coal
miners under this amendment are
nothing more than what they are due.
They worked hard for their retire-
ment years. They have earned some
peace of mind and a decent, healthy
quality of life. This is not a handout.
This is not a giveaway.
This amendment represents a prom-
ise kept, a commitment honored.
The PRESIDING OFFICER. The
Senator from West Virginia.
Mr. ROCKEFELLER. I thank the
Senator from Pennsylvania, the Sena-
tor from Kentucky, the Senator from
Louisiana, and the Senator from Wyo-
ming.
I also want to thank Kennie Gill,
with Senator Ford; John Wood, with
Senator Byrd; Gary Ellsworth and
Mike Hoon, with Senator Wallop - all
of them have been overwhelming; Jim
Francis, one of the Senate legislative
counsel, who has not been mentioned.
The degree of work the people like
that put in, the public has absolutely
no idea how deep that is.
I am very grateful to Tom Scully,
Gail Wilensky, and Barbara Selfridge,
of the White House, all of whom, once
they came into the process, were deal-
ing in very good faith and very con-
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structure.
I want to Bay, however, that the
individual who aits beside me as I now
speak, Paul Joffe, stands out to me in
heroic terms on this. For 3 years,
without stopping; he has made this
his cause. Last week, a colleague
measured the amount of time that he
spent on this particular project during
the course of the week, and it was 120
hours. That was a typical week for
him.
People out there do not know that
people in the Senate work as hard as
they do, that the staff works as hard
as they do. To me, Paul Joffe, who
sits at my side, my legislative counsel
on these things and my counsel on
many things, stands as a model of
public service.
I think it is an inspiration. There
are tens of thousands of coal miners
out there who owe their health bene-
fits to him and they do not know that
but I so state them to him at this
point.
I also want to thank Ellen Doneski
who helped Paul and myself for this.
Mr. President, I conclude simply by
saying that all of these things are
terribly important because the work
of the Senate is done by a combina-
tion of the willingness of Senators to
dig in and take a position and then
reach consensus. But all of the most
difficult of all of that work is done by
the staff of the Senate. That point
constantly needs to be made.
I thank the Chair and I conclude by
thanking Senator Johnston for his
extraordinary patience in this whole
process. There were times when he
was not actually in such a good mood.
That simply reflected his desire to get
on with the matter. I am very grate-
ful to the Senator from Louisiana.
Mr. UEBERMAN. Mr. President,
Senators Rockefeller, Ford, Byrd, and
Wallop have worked long and hard to
craft a compromise provision on coal
industry retiree health benefits which
balances the needs of the United Mine
Workers of America (UMWA) retirees
and the interests of domestic and
foreign coal mining companies. The
task has been a difficult one because
of the divergent interests among all
the parties involved - union and non-
union coal companies, western and
eastern coal companies, those who
signed the 1988 BCOA-UMWA agree-
ment and those who have separate
agreements with the UMWA.
I am particularly concerned about
those companies that previously were
signatories to a BCOA-UMWA agree-
ment and now have separate labor
agreements with the UMWA. In the
case of the Pittston Co., which is
headquartered in my State, they are
being required to pay for retirees in
the new Government fund created by
this provision despite the fact that
they had negotiated this issue as part
of a separate UMWA collective bar-
gaining agreement. I am concerned
that Congress should not be in the
business of abrogating collective bar-
gaining agreements, except in the
rarest circumstances. Congressional
interference in the collective bargain-
ing process could have troubling
long-term repercussions. We should
not be changing contract terms retro-
actively by congressional action.
I am also concerned about Congress
interfering in pending court cases. In
this instance, the evergreen case has
been brought to determine Pittston's
liability under its prior UMWA agree-
ments. It would appear that the most
appropriate way to resolve this issue
is to allow this case to proceed to final
judgment.
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The Pittston-UMWA contract re-
sulted from a painful, 14-month-long
strike and is an elaborate agreement
with contingencies to cover the possi-
ble outcomes of the evergreen lawsuit
and an agreement not to support
legislation which would impose a
reachback obligation on the company.
I am concerned by the fact that the
action we take today abrogates a col-
lective bargaining agreement which I
believe was negotiated in good faith.
I am also troubled because this
provision poses serious economic diffi-
culties for those companies which
export a substantial portion of their
coal. Companies like Pittston cannot
pass these costs through on the inter-
national export market, while those
coal companies who sell to domestic
utility companies have contracts
which allow them to pass through
Government mandated costs. Last
year Pittston exported approximately
70 percent of the coal it mined. These
exports are important to the economic
strength of the United States. Partic-
ularly given the current state of our
economy, we should be strengthening
not undermining companies' ability to
compete abroad.
I hope those who have drafted this
provision will consider in conference
establishing an export credit for those
payments mandated by the provision.
The credit would be based on the
amount of coal mined in the United
States and exported and should enable
exporting companies to continue to
compete on the international market.
We cannot expect coal exporters to
compete in the international market if
their product is burdened by excessive
Government fees or taxes. If these
companies cannot continue to export
coal, it is their employees in this coun-
try who will suffer. I appreciate all
the hard work my colleagues have
done thus far on this provision and I
look forward to working with them as
the bill goes to conference.
Mr. SIMON. Mr. President, I am
proud to cosponsor legislation intro-
duced to ensure the provision of
health care benefits to retirees of the
coal industry. I want to thank my
good friend and colleague, Senator
Rockefeller for his hard work in draft-
ing the provisions of that bill and
working out this amendment. I also
want to express my appreciation to all
the other Senators who have also
worked hard on this legislation.
Coal industry workers have contrib-
uted significantly to providing energy
consumed in the United States and
abroad. It is vital to every worker as
well as the American economy that we
maintain a stable and strong coal
industry. The provision of lifelong
health benefits is crucial to ensuring
the continued well-being and security
of coal industry employees, retirees,
and their dependents many of whom
work and reside in Illinois.
This bill provides a vehicle for in-
suring all coal industry employees and
retirees, particularly those retirees
who have been orphaned by bankrupt
companies and coal companies which
no longer are in business. As our
Nation grapples with proposals for
providing insured health care to all
individuals, let this proposed legisla-
tion stand as an example of how in-
dustry producers and consumers
should view their responsibilities to
American workers. Once again, I am
proud to cosponsor this legislation
which directly responds to the over-
due health care needs of a dedicated
and well-deserving group of Ameri-
cans.
The PRESIDING OFFICER. All
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time has expired on the amendment.
If there be no further debate, the
question is on agreeing to the amend-
ment.
The amendment (No. 2787), as mod-
ified, was agreed to.
Mr. JOHNSTON. Mr. President, I
move to reconsider the vote.
Mr. FORD. I move to lay that mo-
tion on the table.
The motion to lay on the table was
agreed to.
Mr. WELLSTONE. Mr. President, I
will just take 30 seconds. I wanted to
as a matter of official record thank
Senator Rockefeller from West Virgin-
ia for his fine work, and tell him I am
very pleased to see the extension of
benefits to the coal miners.
Mr. President, that is all I wanted
to do. So I suggest the absence of a
quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The assistant legislative clerk pro-
ceeded to call the roll.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr.
Wellstone). Without objection, it is so
ordered.
Mr. WALLOP. Mr. President, we
are right to the point where with a
little understanding and cooperation
from Members we could put together
an agreement that would limit further
amendments, describe those which
remain, and there are not many re-
maining.
It is my hope that those who would
once again seek to use this bill for
other than energy policy purposes
would resist. It is only postponing the
time when we might get together a
comprehensive energy policy. The
Senate's privilege of nongermaneness
ought once in a while be viewed with
some discretion, and in this instance,
it would be my hope Senator
Johnston, after working for 18 years
on energy policy, and Senator Wallop,
after working 16 years on energy poli-
cy, might be indulged and that the
Senate, which has already spoken 94
to 4 on its energy policy, might be
permitted to work its will on matters
relevant to that topic.
So I urge those Senators who are
dabbling in the occult, if you will,
trying to figure ways to further or
impede political careers in a political
season might resist that and allow us
to go ahead. The remaining amend-
ments that deal with energy can be
disposed of with relative dispatch.
Those that do not deal with energy
will impede our progress more than
through the night, probably through
tomorrow, and into Friday.
Mr. President, I hope that calm and
cool will prevail and we can be permit-
ted to get on with this bill.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
AMENDMENT NO. 278S
Mr. JOHNSTON. Mr. President, I
will send shortly an amendment to
the desk which broadens a study pro-
vided in the bill to provide for a sur-
vey of practices and policies under
which electric cooperatives prepare
least-cost plans, submit such plans to
the REA, and the extent to which
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such least-cost planning is reflected in
rates charged to customers.
In other words, it is a slight broad-
ening of the subject matter of the
study. It is submitted on behalf of
Senator Simpson, and I now send that
amendment to the desk.
The PRESIDING OFFICER. The
clerk will report the amendment.
The bill clerk read as follows:
The Senator from Louisiana (Mr. Johnston),
for Mr. Simpson, proposes an amendment num-
bered 2788
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that reading
of the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
On page 274, after line 21, redesignate para-
graphs (2) through (4) as paragraphs (S) through
(6), respectively and insert a new paragraph (2)
as follows:
'(2) a survey of practices and policies under
which electric cooperatives prepare least-cost
plans, submit such plans to the Rural Electrifica-
tion Administration, and the extent to which
such least cost planning is reflected in rates
charged to customers:'
Mr. WALLOP. Mr. President, the
amendment has been cleared on both
sides.
Mr. SIMPSON. Mr. President, I rise
to offer an amendment which would
require the Secretary of Energy to
conduct a survey in order to examine
the practices and policies under which
electric cooperatives prepare least-cost
energy plans, submit such plans to the
Rural Electrification Administration,
and the extent to which such
least-cost planning is reflected in rates
charged to customers. I strongly be-
lieve that this important analysis by
the Secretary of Energy will be a first
step toward ensuring that rural elec-
tric cooperative energy goals are
in-line with the goals of the entire
electric supply and distribution indus-
try.
After a close investigation of
demand-side management (DSM)
theory, which is supported by the
regulated electric industry, and the
movement toward integrated resource
planning in the Nation's electricity
industry, I became curious as to
whether or not electric cooperatives
are submitting least-cost plans which
are comparable to those presently
required by Federal and State law to
be submitted by privately owned utili-
ties.
Demand side management is a
method of improving a utility's finan-
cial performance, and philosophically
guards against needless capital outlays
for construction and operating expens-
es. It is my strongly held opinion that
if the United States is to efficiently
meet its energy needs into the 21st
century, all providers must be a part
of the equation. This amendment
moves toward making the rural elec-
tric cooperatives part of that strategy
and active participants in the process.
I thank the floor managers for ac-
cepting this amendment. My fine
colleague from Wyoming, Senator
Malcolm Wallop, has worked doggedly
and passionately on this most impor-
tant bill. His dedication and devotion
to formulating legislation that will
enhance our domestic energy industry
should be commended. I do so deeply
thank Senator Bennett Johnston for
his unstinting cooperation in helping
to craft this important bipartisan
amendment. His assistance is most
appreciated.
The PRESIDING OFFICER. Is
there further debate?
If there is no further debate, the
question is on agreeing to the amend-
ment.
The amendment (No. 2788) was
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agreed to.
Mr. WALLOP. Mr. President, I
move to reconsider the vote.
Mr. JOHNSTON. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President, I
wonder if my distinguished colleague
from Wyoming can tell us what the
plans are on his side of the aisle for
additional amendments.
The PRESIDING OFFICER. The
Senator from Wyoming is recognized.
Mr. WALLOP. Mr. President, that
we know of after the hotline, we have
a Grassley ethanol amendment, a Dole
ethanol amendment, a Dole solid
waste disposal act, Senator
Murkowski offers a pair of amend-
ments in the form of studies, Senator
D'Amato has an antidumping amend-
ment, Senator Stevens has a tax cred-
it amendment, which I understand
the Finance Committee is working on
now and will accept; Senator
Simpson's we have just adopted; Sena-
tor Burns has a tax credit for oil pro-
duction tar sands; Senator Jeffords
for alternative fuels; Senator Cochran
for windfall profit tax, for school dis-
tricts in Mississippi. The Senator from
Wyoming has one that is called rele-
vant, which is defense mechanism, in
case the bill should run out from un-
der us in one way or another.
That is all that we know of.
Mr. JOHNSTON. Mr. President, I
wonder if the Senator from Texas
would be willing to let us get a unani-
mous consent embodying these
amendment along with a Dodd rollup
amendment under any formulation.
Mr. GRAMM. If the distinguished
chairman will yield, if that amend-
ment were asked for and were put on
the list, I would oppose that amend-
ment, and I would request that the
Social Security earnings cap repeal,
the capital gains tax rate reduction,
since this is a tax bill, and the crime
bill, also be included on the amend-
ment list.
So I would be willing to enter into a
unanimous-consent request embodying
these amendments, the rollup amend-
ment, and those three amendments.
Mr. JOHNSTON. Mr. President, I
do not know how long Senators want
to expect to be protected. But if noth-
ing is happening here, and no one
wants to put in an amendment, I will
say we will very soon go to third read-
ing. I might say it is time the Sena-
tors did say yea or nay as to whether
they wish to push an amendment.
Mr. WALLOP. Mr. President, will
my colleague yield?
Mr. JOHNSTON. Certainly.
Mr. WALLOP. While we spoke, we
disposed of an amendment. Senator
Cochran will not offer his amendment
on windfall profits tax.
Mr. JOHNSTON. Please convey our
warmest thanks to Senator Cochran.
He has risen from the heights to even
higher heights in the esteem of the
Senator from Louisiana.
Mr. WALLOP. Mr. President, I
suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. WALLOP. Mr. President, all
the people on our side who .have
amendments have been notified that
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the bill is open for amendment, that
the progress, which has been good all
day, is now stalled. I think it is unfair
to other Senators. We approach the
hour of half past 6, the time is going
by, and no amendments are offered.
I would join with my colleague from
Louisiana in believing that after a
short period of time Senators may not
be serious in their intent to offer
these amendments, and that we ought
to go to third reading.
I share with my colleague from
Louisiana a desire to wrap up this bill
and would hope that if any Senator is
serious about offering an amendment
they would show up and do it; other-
wise I will join the Senator in the
move to third reading.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. WELLSTONE. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
AMENDMENT NO. 2789
(Purpose: To amend the Securities Exchange Act
of 1984 with respect to limited partnership
roUups)
Mr. WELLSTONE. Mr. President, I
send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The
clerk will report.
The assistant legislative clerk read
as follows:
The Senator from Minnesota (Mr. Wellstone)
proposal an amendment numbered 2789.
Mr. WELLSTONE. Mr. President, I
ask unanimous consent that reading
of the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
At the appropriate place in the Committee
amendment, insert the following new title:
TITLE XX - LIMITED PARTNERSHIP
ROLLUP REFORM
SEC. XX01. SHORT TITLE.
This title may be cited as the 'Limited Partner-
ship RoUup Reform Act of 1992*.
SEC. XX02. REVISION OF PROXY SOLICI-
TATION RULES WITH RESPECT TO LIMITED
PARTNERSHIP ROLLUP TRANSACTIONS.
(a) Amendment - Section 14 of the Securities
and Exchange Act of 1934 (16 U.S.C. 78n) b
amended by adding at the and the following new
subsection:
'(h) Proxy Solicitations and Tender Offers in
Connection With Limited Partnership RoUup
'(1) Proxy rules to contain special provisions. •
It shall be unlawful for any person to solicit any
proxy, consent, or Authorization concerning a
limited partnership rollup transaction, or to
make any tender offer in furtherance of a limited
partnership rollup transaction, unless such
transaction b conducted in accordance with rules
prescribed by the Commission under sections
14(a) and 14(d) as required by thb subsection.
Such rules shall -
'(A) permit any holder of a security that b the
subject of the proposed limited partnership rollup
transaction to engage in preliminary communica-
tions for the purposes of determining whether to
solicit proxies, consents, or authorizations in
opposition to the proposed transaction, without
regard to whether any euch communication
would otherwise be considered a solicitation of
proxies, and without being required to file solicit-
ing material with the Commission prior to mak-
ing that determination, except that nothing in
thb subparagraph shall be construed to limit the
application of any provision of thb title prohibit-
ing, or reasonably designed to prevent, fraud-
ulent, deceptive, or manipulative acta or practices
under thb title;
'(B) require the issuer to provide to holders of
the securities that are the subject of the transec-
tion such list of the holders of the issuer's secu-
rities as the Commission may determine in such
form and subject to such terms and conditions as
the Commission may specify;
'(C) prohibit compensating any person soliciting
proxies, consents, or authorisations directly from
security holders concerning such a transaction •
'(Don the basis of whether the solicited proxies,
consents, or authorizations either approve or
dieapprove the proposed transaction; or
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'(ii) contingent on the transaction's Approval,
disapproval, or coaptation;
'(D) aat forth disclosure requirements for solic-
iting material distributed in connection with a
limited partnership rollup transaction, including
requirements for dear, concise, and comprehensi-
ble disclosure, with respect to -
'(0 sny changes in the business plan, voting
rights, form of ownership interest or the general
partner's compensation in the proposed limited
partnership rollup transaction from each of the
original limited partnerships;
'GD the conflicts of interest, if sny, of ths gen-
eral partner;
'(iii) whether it is expected that there will be a
significant difference between the exchange val-
ues of ths limited partnerahipa and ths trading
pries of ths securities to be issued in the limited
partnership rollup transaction;
'(■v) the valuation of the limited partnerahipa
and the method used to determine the value of
limited partners' interests to be exchanged for
the securities in ths limited partnership rollup
'(v) ths differing risks and effects of the trans-
action for investors in different limited partner-
ships proposed to be included, and the risks and
effects of completing the transaction with less
than all limited partnerahipa;
'(vi) s statement by the general partner ea to
whether the proposed limited partnership rollup
transaction is fair or unfair to investors in each
limited partnership, a discussion of the basis for
that conclusion, and ths general partner's evalu-
ation, and a description, of alternatives to the
limited partnership rollup transaction, such as
liquidation;
'(vii) any opinion (other than an opinion of
counsel), appraisal, or report received by the
general partner or sponsor that is prepared by an
outside party and that is materially related to the
limited partnership rollup transaction and the
identity and qualifications of the party who pre-
pared the opinion, appraisal, or report, the meth-
od of selection of such party, material past, exist-
ing, or contemplated relationships between the
party, or any of its affiliates and ths general
partner, sponsor, successor, or sny other affiliate,
compensation arrangements, and ths basis for
rendering and methods used in developing the
opinion, appraisal, or report; and
'(viii) such ether matters deemed necessary or
appropriate by the Commission;
'(E) provide that any solicitation or offering
period with respect to sny proxy solicitation,
tender offer, or information statement in a limit-
ed partnership rollup transaction shall be for not
less than ths lesser of 60 calendar days or the
msximum number of days permitted under appli-
cable State law; and
'(F) contain ouch other provision* as the Com-
mission determines to be necessary or appropri-
ate for the protection of investors in limited part-
nership rollup transactions. The disclosure re-
quirements under subparagraph (D) shall also
require that the soliciting material include a
dear and concise summary of the limited part-
nership rollup transaction (including a summary
of ths matters referred to in clauses (i) through
(vii) of that subparagraph) with the risks of ths
limited partnership rollup transaction sst forth
prominently in ths forepart thereof.
'(2) Exemptions. • The Commission msy, consis-
tent with the public interest, the protection of
investors, and the purposes of this Act, exempt by
rule or order sny security or class of securities,
sny transaction or dass of transactions, or any
person or dsss of porsons, in whole or in part,
conditionally or unconditionally, from the re-
quirements imposed pursuant to paragraph (1)
or, from the definition contained in paragraph
(4).
'(3) Effect on commission authority. • Nothing
in this subsection limits the authority of the
Commission under subsection (s) or (d) or sny
other provision of this titls or precludes the Com-
mission from imposing, under subsection (s) or
(d) or sny other provision of this titls, s remedy
or procedure required to be imposed under this
subsection.
'(4) Definition. • As used in this subsection the
term 'limited partnership rollup transaction1
means s transaction involving •
'(A) ths combination or reorganization of limit-
ed partnerships, directly or indirectly, in which
some or all investors in the limited partnerships
receive new securities or securities in another
entity, other than s transaction •
'(i) in which -
'(I) ths investors' limited partnership securities
sre reported under a transaction reporting plan
declared effective before January 1, 1991, by the
Commission under section 1 1A; and
'(ID the investors receive new securities or
securities in another entity that are reported
under a transaction reporting plan declared effec-
tive before January 1, 1991, by the Commission
under section 11 A;
'(ii) involving only issuers that are not required
to register or report under section 12 both before
and after the transaction;
'(iii) in which the securities to be issued or
exchanged are not required to be and are not
registered under the Securities Act of 1933;
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'(iv) which will result in no significant adverse
change to investors in any of the limited partner-
ships with respect to voting rights, the term of
existence of the entity, management compensa-
tion, or investment objectives; or
'(v) where each investor is provided an option to
receive or retain a security under substantially
the same terms and conditions ss the original
issue; or
'(B) the reorganisation of a single limited part-
nership in which some or all investors in the
limited partnership receive new securities or
securities in another entity, and -
'(i) transactions in the security issued are re-
ported under a transaction reporting plan de-
clared effective before January 1, 1991, by the
Commission under section 1 IA;
*(ii) the investors' limited partnership securities
sre not reported under a transaction reporting
plan declared effective before January 1, 1991, by
the Commission under section 1 IA;
'(iii) the issuer is required to register or report
under section 12, both before and slier the trans-
action, or the securities to be issued or exchanged
are required to be or are registered under the
Securities Act of 1933;
'(iv) there sre significant adverse changes to
security holders in voting rights, the term of
existence of the entity, management compensa-
tion, or investment objectives; and
'(v) investors are not provided an option to
receive or retain a security under substantially
the same terms and conditions ss the original
issue.
'(6) Exclusion. • For purposes of this subsection,
a limited partnership rollup transaction does not
include s transaction that involves only s limited
partnership or partnerships having an operating
policy or practice of retaining cash available for
distribution and reinvesting proceeds from the
sale, financing, or refinancing of assets in accor-
dance with such criteria ss the Commission de-
termines sppropriste.'.
(b) Schedule for Regulations. - The Securities
and Exchange Commission shall, not later than
12 montha alter the date of enactment of this
Act, conduct rulemaking proceedings and pre-
scribe final regulations under the Securities Act
of 1933 and the Securities Exchange Act of 1934
to implement the requirements of section 14(h) of
the Securities Exchange Act of 1934, as amended
by subsection (a).
SEC. XX03. RULES OF FAIR PRACTICE IN
ROLLUP TRANSACTIONS.
(a) Registered Securities Association Rule. -
Section 16A(b) of the Securities Exchange Act of
1934 (16 UJS.C. 78o-3(b)) is amended by adding
at the end the following new paragraph:
'(12) The rules of the association to promote
just and equitable principles of trade, as required
by paragraph (6), include rules to prevent mem-
bers of the association from participating in any
limited partnership rollup transaction (as such
term is defined in section 14(h)(4)) unless such
transaction waa conducted in accordance with
procedures designed to protect the rights of limit-
ed partners, including •
'(A) the right of dissenting limited partners to
an appraisal and compensation or other rights
designed to protect dissenting limited partners;
'(B) the right not to have their voting power
unfairly reduced or abridged;
'(C) the right not to bear an unfair portion of
the costs of s proposed rollup transaction that b
rejected; and
'(D) restrictions on the conversion of contingent
interests or fees into non-coutingent interests or
fees end restrictions on the receipt of s
non-contingent equity interest in exchange for
fees for services which have not yet been provid-
ed. As used in this paragraph, the term
'dissenting limited partner' means a holder of a
beneficial interest in a limited partnership that ia
the subject of a limited partnership rollup trans-
action who casts s vote against the transaction
and complies with procedures established by the
association, except thst for purposes of an ex-
change or tender offer, such term means any
person who files an objection in writing under
the rules of ths sssocistion during ths period in
which the offer is outstanding and complies with
such othsr procedures established by the sssoda-
tion.\
(b) Listing Standards of National Securities
Exchanges. • Section 6(b) of the Securities Ex-
change Act of 1934 ( 16 U.S.C. 780b)) ia amended
by adding at the end the following:
'(9) The rules of the exchange prohibit the list-
ing of any security issued in a limited partner-
ship rollup transaction (as such term is defined
in section 14(h)(4)), unless such transaction was
conducted in accordance with procedures de-
signed to protect the rights of limited partners,
including -
'(A) the right of dissenting limited partners to
an appraisal and compensation or other rights
designed to protect dissenting limited partners;
'(B) the right not to have their voting power
unfairly reduced or abridged;
'(C) the right not to bear an unfair portion of
the costs of s proposed rollup transaction that is
rejected; and
'(D) restrictions on the conversion of contingent
interests or fees into non-contingent interests or
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fern snd restrictions on the receipt of *
non-contingent equity interact in exchange for
feea for eervicee which have not yet been provid-
ed. Ac ueed in thie paragraph, the term
'dieeenting limited partner' meane a holder of a
beneficial intereet in a limited partnership that is
the eubject of a limited partnership transaction
who easts a vote against the transaction and com-
plies with procedures established by the ex-
change, except that for purposes of an exchange
or tender offer, euch term meane any person who
files en objection in writing under the rules of
the exchange during the period in which the offer
it outstanding/.
(c) Standards for Automated Quotation Sjys-
tems. • Section 16A(b) of the Securities Exchange
Act of 1994 (16 UJS.C. 76o-3(b)) ie amended by
adding at the end the following new paragraph:
'(19) The rules of the association prohibit the
authorisation for quotation on an automated
interdeeJer quotation system sponsored by the
association of any security designated by the
Commission as a national market system security
resulting from a limited partnership rollup trans-
action (tm such term is defined in section
14(h)(4)), unless such transaction was conducted
in accordance with procedures designed to protect
the rights of limited partners, including -
'(A) the right of dissenting limited partners to
an appraisal and compensation or other rights
designed to protect dissenting limited partners;
'(B) the right not to have their voting power
unfairly reduced or abridged;
'(C) the right not to bear an unfair portion of
the costs of s proposed rollup transaction that is
rejected; and
'(D) restrictions on the conversion of contingent
interests or fees into non-contingent interests or
fees and restrictions on the receipt of s
non-contingent equity interest in exchange for
fees for services which have not yet been provid-
ed. As used in this paragraph, the term
'dieeenting limited partner' means a holder of a
beneficial interest in s limited partnership that is
the eubject of s limited partnership transaction
who easts s vote against the transaction and com-
plies with procedures established by the associa-
tion, except that for purposes of an exchange or
tender offer such term meane any person who
files an objection in writing under the rules of
the association during the period during which
the offer b outstanding.'.
(d) Effect on Existing Authority. • The amend-
ments made by this section ehall not limit the
authority of the Securities and Exchange Com-
mission, s registered securities association, or s
national securities exchange under any provision
of the Securities Exchange Act of 1994, or pre-
clude the Commission or such association or
exchange from imposing, under sny other euch
provision, s remedy or procedure required to be
imposed under euch amendments.
(e) Effective Dste. • The amendments made by
thie eection ehall become effective 17 months
after the date of enactment of thia Act.
AMENDMENT NO. 2790 TO AMENDMENT
NO. 2769
Mr. DODD. Mr. President, I send a
substitute to the desk and ask for its
immediate consideration.
The PRESIDING OFFICER. The
clerk will report.
The assistant legislative clerk read
as follows:
The Senator from Connecticut (Mr. Dodd)
proposes sn amendment numbered 2790 to
amendment No. 2789.
Mr. DODD. Mr. President, I ask
unanimous consent that reading of
the amendment be dispensed with.
Mr. GRAMM. Mr. President, I ob-
ject.
The PRESIDING OFFICER (Mr.
Wellstone). Objection is heard. The
clerk will read the amendment.
The assistant legislative clerk pro-
ceeded to read the amendment.
The text of the amendment is as
follows:
In lieu of the matter proposed to be inserted,
insert the following:
TITLE XX - LIMITED PARTNERSHIP ROLLUP
REFORM
SEC. XX01. SHORT TITLE.
This title may be cited ss the 'Limited Psrtner-
ehip Rollup Reform Act of 1992*.
SEC. XX02. REVISION OF PROXY SOLICI-
TATION RULES WITH RESPECT TO LIMITED
PARTNERSHIP ROLLUP TRANSACTIONS.
(a) Amendment. - Section 14 of the Securities
and Exchange Act of 1934 (15 US.C. 78n) is
amended by adding at the end the following new
'(h) Proxy Solicitations and Tender Offers in
Connection With Limited partnership Rollup
Transactions. •
'(1) Proxy rules to contain special provisions. -
It shall be unlawful for any person to solicit sny
proxy, consent, or suthorizstion concerning s
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limited partnership rollup transaction, or to
make any tender offer in furtherance of a limited
partnership rollup transaction, unless such
transaction is conducted in accordance with rules
prescribed by the Commission under sections
14(a) and 14(d) as required by this subsection.
Such rules shall -
'(A) permit any holder of a security that is the
subject of the proposed limited partnership rollup
transaction to engage in preliminary communica-
tions for the purposes of determining whether to
solicit proxies, consents, or authorizations in
opposition to the proposed transaction, without
regard to whether any such communication
would otherwise be considered a solicitation of
proxies, and without being required to file solicit-
ing material with the Commission prior to mak-
ing that determination, except that nothing in
this subparagraph ahall be construed to limit the
application of any provision of this title prohibit-
ing, or reasonably designed to prevent, fraudu-
lent, deceptive, or manipulative acts or practices
under this title;
'(B) require the issuer to provide to holders of
the securities that are the subject of the transac-
tion such list of the holders of the issuer's secu-
rities as the Commission may determine in auch
form and subject to auch terms and conditions ss
the Commission may specify;
'(C) prohibit compensating any person soliciting
proxies, consents, or authorisations directly from
security holders concerning such s transaction -
'(i) on the basis of whether the solicited proxies,
consents, or authorizations either approve or
disapprove the proposed transaction; or
'(ii) contingent on the transaction's approval,
disapproval, or completion;
•(D) set forth disclosure requirements for solic-
iting material distributed in connection with s
limited partnership foUup transaction, including
requirements for clear, concise, and comprehensi-
ble disclosure, with respect to •
*(i) any changes in the business plan, voting
rights, form of ownership interest or the general
partner's compensation in the proposed limited
partnership rollup transaction from each of the
original limited partnerships;
*(ii) the conflicts of interest, if sny, of the gen-
eral partner;
'(Hi) whether it is expected that there will be s
significant difference between the exchange val-
ues of the limited partnerships and the trading
price of the securities to be issued in the limited
partnership rollup transaction;
'(iv) the valuation of the limited partnerships
and the method used to determine the value of
limited partners' interests to be exchanged for
the securities in the limited partnership rollup
'(v) the differing risks and effects of the trans-
action for investors in different limited partner-
ships proposed to be included, and the risks and
effects of completing the transaction with less
than all limited partnerships;
'(vi) s statement by the general partner as to
whether the proposed limited partnership rollup
transaction is fair or unfair to investors in each
limited partnership, a discussion of the basis for
that conclusion, and ths general partner's evalu-
ation, and a description, of alternatives to the
limited partnership rollup transaction, such as
liquidation;
'(vii) any opinion (other than an opinion of
counsel), appraisal, or report received by the
general partner or sponsor that is prepared by an
outside party and that is materialry related to the
limited partnership rollup transaction and the
identity and qualifications of the party who pre-
pared the opinion, appraisal, or report, the meth-
od of selection of such party, material past, exist-
ing, or contemplated relationships between the
party, or any of its affiliates and the general
partner, sponsor, successor, or any other affiliate,
compensation arrangements, and the basis for
rendering and methods used in developing the
opinion, sppraiaal, or report; and
*(viii) auch other matters deemed necessary or
appropriate by the Commission;
'(E) provide that any solicitation or offering
period with respect to any proxy solicitation,
tender offer, or information statement in s limit-
ed partnership rollup tranaaction ahall be for not
leas than the leaser of 60 calendar days or the
maximum number of days permitted under appli-
cable State law; and
'(F) contain auch other provisions as the Com-
mission determines to be necessary or appropri-
ate for the protection of investors in limited part-
nership rollup tranaactiona. The disclosure re-
quirements under subparagraph (D) ahall also
require that the soliciting material include a
clear and concise summary of the limited part-
nership rollup tranaaction (including a aummary
of the matters referred to in clauses (i) through
(vii) of that subparagraph) with ths risks of the
limited partnership rollup tranaaction set forth
prominently in the forepart thereof.
'(2) Exemptions. - The Commission may, consis-
tent with ths public interest, ths protection of
investors, and the purposes of this Act, exempt by
rule or order any security or dees of securities,
any tranaaction or class of transactions, or sny
person or class of persons, in whole or in part,
Utionalry,
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i imposed pursuant to paragraph (1)
or, from tha definition eontainad in paragraph
(4).
'(3) Effect on eommiaaion authority. - Nothing
in this subsection limits tha authority of tha
Cirmmiseiirn under auhaaetion (a) or (d) or any
other provision of this title or precludes the Com-
mission from imposing, under subsection (a) or
(d) or any other provision of this title, a remedy
or procedure required to be imposed under this
'(4) Definition. - As used in this subsection the
term 'limited partnership rollup transaction'
means a transaction involving -
'(A) the combination or reorganisation of limit-
ed partnerships, directly or indirectly, in which
some or all investors in the limited partnerships
receive new securities or securities in another
entity, other than a transaction -
'(i) in which -
'(I) tha investors' limited partnership securities
are reported under a transaction reporting plan
declared effective before January 1, 1991, by the
Commission under section 11A; and
'(ID the investors receive new securities or
securities in another entity that are reported
under a transaction reporting plan declared effec-
tive before January 1, 1991, by the Commission
under section 11A;
'(ii) involving onjy issuers that are not required
to register or report under section 12 both before
and after the transaction;
*(iii) in which the securities to be issued or
exchanged are not required to be and are not
registered under the Securities Act of 1933;
'(iv) which will result in no significant adverse
change to investors in any of the limited partner-
ships with respect to voting rights, the term of
existence of the entity, management compensa-
tion, or investment objectives; or
'(v) where each investor is provided an option to
receive or retain a security under eubetantially
the same terms and conditions as the original
'(B) tha reorganisation of a single limited part-
nership in which some or all investors in ths
limited partnership receive new securities or
securities in another entity, and •
'© transactions in ths security issued are re-
ported under a transaction reporting plan de-
clared effective before January 1, 1991, by ths
Commission under section 1 1A;
'(ii) the investors' limited partnership securities
are not reported under s transaction reporting
plan declared effective before January 1, 1991, by
tha Commission under section 11A;
'(iii) the issuer is required to register or report
under section 12, both before and after the trans-
action, or the securities to be issued or exchanged
are required to be or ere registered under the
Securities Act of 1933;
'(iv) there are significant adverse changes to
security holders in voting rights, ths term of
existence of ths entity, management compensa-
tion, or investment objectives; and
'(v) investors are not provided an option to
receive or retain a security under substantially
the same terms and conditions ss ths original
issue.
'(6) Exclusion. • For purposes of this subsection,
s limited partnership rollup transaction does not
include s transaction that involves only s limited
partnership or partnerships having an operating
policy or practice of retaining cash evailable for
distribution and reinvesting proceeds from ths
sale, financing, or refinancing of assets in accor-
dance with ouch criteria ss the Commission de-
termines eppropriste.'.
(b) Schedule for Regulstions. - Ths Securities
and Exchange Commission shall, not later than
12 months after the date of enactment of this
Act, conduct rulemaking proceedings and pre-
scribe final regulations under the Securities Act
of 1933 and the Securities Exchange Act of 1934
to implement the requirements of section 14(h) of
the Securities Exchange Act of 1934, ss smended
by subsection (s).
SEC. - 03. RULES OF FAIR PRACTICE IN
ROLLUP TRANSACTIONS.
(a) Registered Securities Association Rule. -
Section 16A(b) of the Securities Exchange Act of
1934 (16 U.S.C. 78o-3(b)) is smended by sdding
st the end the following new paragraph:
'(12) Ths rules of ths association to promote
just and equitable principles of trade, ss required
by paragraph (6), include rules to prevent mem-
bers of the association from participating in any
limited partnership rollup transaction (ss such
term is defined in section 14(h)(4)) unless such
transaction wss conducted in accordance with
procedures designed to protect the rights of limit-
ed partners, including -
'(A) the right of dissenting limited partners to
an appraisal and compensation or other righte
designed to protect dissenting limited partners;
'(B) the right not to have their voting power
unfairly reduced or abridged;
'(C) the right not to bear an unfair portion of
ths costs of s proposed rollup transaction that is
rejected; and
'(D) restrictions on ths conversion of contingent
interests or fees into non-contingent interests or
lass and restrictions on the receipt of a
non-contingent equity interest in exchange for
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4358
fees for services which have not yet been provid-
ed. As used in this paragraph, the term
'dissenting limited partner' means a holder of a
beneficial interest in a limited partnership that is
the subject of a limited partnership rollup trans-
action who casts a vote against the transaction
and complies with procedures established by the
sssociation, except that for purposes of an ex-
change or tender offer, such term means any
person who files an objection in writing under
the rules of the association during the period in
which the offer is outstanding and complies with
such other procedures established by the associa-
tion.'.
(b) Listing Standards of National Securities
Exchanges. - Section 6(b) of the Securities Ex-
change Act of 1034 ( 16 UJS.C. 78f0»» is amended
by adding at the end the following:
'(0) The rules of the exchange prohibit the list-
ing of any security issued in a limited partner-
ship rollup transact ion (as such term is defined
in section 14(h)(4)), unless such transaction was
conducted in accordance with procedures de-
signed to protect the rights of limited partners,
including -
'(A) the right of dissenting limited partners to
an appraisal and compensation or other rights
designed to protect dissenting limited partners;
'(B) the right not to have their voting power
unfairly reduced or abridged;
'(C) the right not to bear an unfair portion of
the costs of s proposed rollup transaction that is
'(D) restrictions on the conversion of contingent
interests or fees into non-contingent interests or
fess and restrictions on the receipt of a
non-contingent equity interest in exchange for
fess for services which have not yet been provid-
ed. As used in this paragraph, the term
'dissenting limited partner' means a holder of a
beneficial interest in s limited partnership that is
the aubject of a limited partnership transaction
who easts a vote against the transaction and com-
plies with procedures established by the ex-
change, except that for purposes of an exchange
or tender offer, such term means any person who
files an olfaction in writing under the rules of
the exchange during the period in which the offer
b outstanding.'.
(c) Standards for Automated Quotation Sys-
tems. - Section 16A(b) of the Securities Exchange
Act of 1034 (16 UAC. 78o-3(b)) is amended by
adding at the end the following new paragraph:
'(13) The rules of the association prohibit the
authorisation for quotation on an automated
intsrdealer quotation system sponsored by the
association of any security designated by the
Commission as a national market system security
resulting from a limited partnership rollup trans-
action (as such term is defined in section
14(h)(4)), unless such transaction was conducted
in accordance with procedures designed to protect
the rights of limited partners, including -
'(A) the right of dissenting limited partners to
an appraisal and compensation or otlier rights
designed to protect dissenting limited partners;
'(B) the right not to have their voting power
unfairly reduced or abridged;
'(C) the right not to bear an unfair portion of
the costs of a proposed rollup transaction that b
rejected; and
'(D) restrictions on the conversion of contingent
interests or fees into non-contingent interests or
fees and restrictions on the receipt of s
non-contingent equity interest in exchange for
fees for services which hsve not yet bean provid-
ed. As used in thb paragraph, the term
'dissenting limited partner' means a holder of a
beneficial interest in a limited partnership tliat b
the subject of s limited partnership transaction
who casts a vote against the transaction and com-
plies with procedures established by the associa-
tion, except that for purposes of an exchange or
tender offer auch term means any person who
files an objection in writing under the rules of
the association during the period during which
the offer b outstanding.'.
(d) Effect on Exbting Authority. • The amend-
ments msde by thb section shall not limit the
authority of the Securities and Exchange Com-
mission, s regbtered securities association, or a
national securities exchange under any provision
of the Securities Exchange Act of 1034, or pre-
clude the Commission or such association or
exchange from imposing, under any other such
provision, a remedy or procedure required to be
imposed under such amendments.
(s) Effective Date. - The amendments made by
thb section shall become effective 18 monthe
after the date of enactment of thb Act.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the read-
ing of the amendment be temporarily
suspended.
The PRESIDING OFFICER (Mr.
Ford). Without objection it is so or-
dered.
The Senator from Louisiana.
Mr. JOHNSTON. Mr. President,
the distinguished Senator from Texas
has just advised that some conversa-
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4359
tions with the Senator from Connecti-
cut might prove fruitful on this mat-
ter and he advises that maybe we
should set the whole amendment and
second-degree amendment aside while
those conversations proceed in order
that we can maybe perhaps dispose of
the remainder of the bill, hopefully.
If the Senator from Connecticut is
agreeable to that.
Mr. DODD. To ask unanimous con-
sent, temporarily lay it aside, and it
would be the pending matter with no
other legislative mater in between, I
have no objection to that.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the
Wellstone amendment, with the
second-degree amendment by Senator
Dodd, be temporarily laid aside.
The PRESIDING OFFICER. Is
there objection? Without objection, it
is so ordered.
Mr. JOHNSTON. Mr. President, we
are now ready to do any other busi-
ness, if any there is.
I suggest the absence of a quorum.
Mr. WALLOP. Will the Senator
withhold?
Mr. JOHNSTON. Yes.
The PRESIDING OFFICER. The
Senator from Wyoming.
Mr. WALLOP. Mr. President, we
are down to the point where this bill
could be finished with some dispatch.
The amendment of the Senator
from Minnesota, as amended by the
Senator from Connecticut, is not ener-
gy policy. It is political policy, and I
understand that. Everybody here
does.
But it is genuinely important, Mr.
President, This Senate has spoken on
the energy strategy, 94 to 4. We are
now down to just one or two amend-
ments which have to do with energy
policy. It is my hope that the Senator
from Texas and the Senator from
Connecticut can come to some resolu-
tion of it.
In the meantime, I insist again that
our colleagues who have amendments
do us the courtesy of coming here to
the floor and offering them. It is an
abuse of the privileges of the Senate
to allow two people to sit here with
every intent to managing a bill and
disposing of amendments with as
much credibility and dispatch as we
can.
I would ask my colleagues - it is my
understanding that we are the only
ones on this side who have amend-
ments remaining, absent that to be
settled by the conversations that are
temporarily set aside - so I would ask
my leader, Senator Dole, or Senator
Grassley, or Senator Murkowski, Sen-
ator Stevens, or Senator Jeffords, to
come to the floor and offer their
amendments and do us the courtesy of
dealing with the bill with dispatch.
We are here and ready to accept those
amendments.
And I would say to my friend from
Louisiana, that should it be that we
arrive at some resolution that can
dispose of the amendment now tempo-
rarily laid aside, I will join my col-
league in calling for third reading on
this bill. There is no reason why the
Senate should not dispose of this bill
or the amendments that are there to
be offered. There is no reason for
delay.
It is my hope that the two Senators
now conversing can come up with a
resolution of that which divides them
and will permit us to get on to this
bill. In the meantime, it is temporari-
ly laid aside.
And I say again to those Senators, if
they wish to appear on the Nightly
News or whatever, it is a good time.
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Not much else is happening in Ameri-
ca. Otherwise, we will go to third
reading.
Mr. JOHNSTON addressed the
Chair.
The PRESIDING OFFICER (Mr.
Weilstone). The Senator from Louisi-
ana.
Mr. JOHNSTON. Mr. President, I
would repeat what the Senator says
about senatorial courtesy. There are
a number of Senators, this one includ-
ed, who have highly important mat-
ters tonight involving, frankly, my
wife, in my own case, and wives of
others. And I do not mind at all miss-
ing my event tonight, as others do
not, if there is business to do.
But, Mr. President, it is not right
and it is not fair for Senators to keep
us here waiting, not knowing whether
Senators are going to put in an
amendment or not. It is just not lair.
So I appeal to Senators, in the spirit
of Senatorial courtesy, for which this
body is supposed to be greatly re-
nowned, to summon up all of their
Senatorial courtesy and do what they
wish to do, either say yea or nay on
their amendments, and come to it.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President, I
am advised by the Senator from Texas
(Mr. Gramm) that we believe we are
very close to having the so-called
rollup amendment by Senator Dodd
worked out; that their stalls will be
working. So that we do not expect
that amendment will be a matter to
prohibit us from going to third read-
ing.
So again I invite Senators who
might have business to come before
the Senate on this bill to please come
because you are now on the critical
path. The Dodd rollup amendment,
in all probability, is not an impedi-
ment to final passage on this bill, in
all probability. So we would again
invite Senators to come and do their
amendments.
The PRESIDING OFFICER. The
Senator from Wyoming is recognized.
Mr. WALLOP. Mr. President, I echo
once again the plea of my colleague.
We would very much like to complete
work on this bill. I believe that is
within our reach if we could only
reach out and touch that which re-
mains to be done. It is perfectly ridic-
ulous that we sit here with nothing to
do, our patience and the tolerance of
the Senate being abused by colleagues
who have amendments, and presum-
ably they or their stalls can hear this
plea.
So I urge, again, our colleagues
bring these down because should it be
that we arrive at the conclusion of the
arrangements between the Senator
from Texas and the Senator from
Connecticut, it will be my intention
not withstanding that my leader has
one of the amendments left, and other
colleagues too, to go to third reading.
I have no patience for staying here all
night waiting for them to indulge us,
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER (Mr.
Wofford). The clerk will call the roll.
The legislative clerk preceded to call
the roll.
Mr. MURKOWSKI. Mr. President,
I ask unanimous consent that the
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order for the quorum call be rescind-
ed.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
AMENDMENT NO. 2791
(Purpose: To require the Council on Economic
Advisers to complete and submit a jobs aurvay
report on significant public end/dr private sector
construction, dovolopmontol or manufacturing
pr ejects scheduled or to be proposed)
Mr. MURKOWSKL Mr. President,
I send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The
clerk will report the amendment.
The legislative clerk read as follows:
The Senator from Alaska (Mr. Murkowaki)
proposes an amendment numbered 2791.
Mr. FORD. Mr. President, I ask
unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
At tbe appropriate place, insert the following
Sec . (a) Jobs Survey Report. - Within avail-
able funds, tbe Secretary of Labor and tbe Secre-
tary of Commerce in consultation with the Coun-
cil of Economic Advisers and working with other
appropriate Federal officiate, shell within ninety
(90) days of the date of enactment of this Act,
submit a Jobs Survey Report to tbe Congress on
significant public and/or private sector construc-
tion, development or manufacturing projects
under consideration by Congress, scheduled, or
proposed to be undertaken or initiated prior to
June SO, 1998. For purposes of this section, the
term 'significant projects' means any new con-
struction, developments] or manufacturing pro-
ject which will, at its peek, provide new job and
employment opportunities to 2,600 or more peo-
ple within the United States.
(b) In developing the Jobs Survey Report re-
quired by subsection (a), tbe Secretariee shall
provide the Congress with the following informa-
tion on the significant public and private sector
pr ejects defined in subsection (a):
(1) the location of Urn project;
(2) the private or public sector sponsor of the
(4) the scheduled period for construction and
(6) the number of jobs associated with the pro-
ject (by category):
(A) construction;
<B) fabrication;
(C) manufacturing;
(D) indirect; and,
(E) operation and maintenance.
(6) tbe physical location of the jobs, by state
and region, associated with the project;
(7) the impact of the project, when completed,
on improving national economic well-being and
other aapecta of the national interest;
(8) the estent to which the project, if undertak-
en on a timely basis, would reduce unemploy-
ment on a national, regional and state basis;
(9) tbe potential impact of tbe project on pro-
moting tbe export of VS. goods and aervicee and
in reducing the balance of trade deficit;
(10) any authorization, regulatory, financing or
other impedimenta which threaten or many
threaten to delay initiation of tbe project in ac-
cordance with the sponsor's project schedule;
and,
(11) any appropriate legislation action recom-
mended to the Congress to expedite initiation of
the project eehedule and the creation of new jobs
for unemployed American working men and
(c) In preparing the Jobs Survey Report, the
Secretariee shall devote one section of the Report
to a review and analysis of trends underway in
tbe nation 'a domestic petroleum industry which
are eauaing the export of VS. capital and jobs.
Tbs Council shall analyse the csusee of these
trends and shall identify the contributing role, if
any, of tbe following factors and make appropri-
ate recommendstions to the Congress:
(1) world oil prices;
(2) any decline in technological leadership;
(3) lack of leasing opportunities in prospective
areas, including tbs public lends;
(4) shortages of capital for domestic petroleum
(3) The total capital coat of tbs project;
(6) tax policy, environmental and other regula-
tory restrictions which make development end
operations more attractive in foreign countries;
(6) significant changes in domestic demand for
petroleum products; and,
(7) any reduction in the degree of risk sssodst-
ed with reliance on foreign sources of oil for 60
percent or more of domestic demand.
Mr. FORD. Parliamentary inquiry,
Mr. President. Do we need to set aside
the Wellstone-Dodd amendments in
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order to accommodate the Senator
from Alaska?
The PRESIDING OFFICER. Not at
this time. That consent was previous-
ly granted.
Mr. FORD. But that is in perpetu-
ity?
The PRESIDING OFFICER. The
latter two amendments will recur
upon disposition of this amendment.
Mr. FORD. I thank the Chair.
The PRESIDING OFFICER. The
Senator from Alaska is recognized.
Mr. MURKOWSKI. I thank the
Chair.
Mr. President, we have just con-
ferred at some length on the amend-
ment offered by the junior Senator
from Alaska which would basically
cover a jobs survey report directing
the Secretary of Labor and the Secre-
tary of Commerce, in consultation
with the Council of Economic Advis-
ers, and working with other appropri-
ate Federal agencies, to submit within
90 days of date of enactment a jobs
survey report to the Congress on sig-
nificant public or private sector con-
struction, development, or manufac-
turing projects under consideration by
Congress scheduled or proposed or
initiated prior to June 30, 1993.
Inserted therein is the notation
'with available funds.'
The purpose of the amendment
specifically requires that the Secretar-
ies provide the Congress with informa-
tion on the significant public- and
private-sector projects identified in
various subsections, specifically: Con-
struction - fabrication, manufactured,
indirect; operation maintenance; loca-
tion of jobs; impact of projects; the
extent to which the projects are un-
dertaken on a timely basis are made
known; potential impact for projects
in promoting the export of U.S. goods;
any authorization, regulatory financ-
ing, and so forth.
Covered in the report is detailed
information relative to outflow of jobs
in the United States as a consequence
of investment overseas and increased
dependence on imports.
It is my understanding that the
amendment has been cleared on this
side by the minority, and I believe the
majority has accepted the amendment
as well.
Mr. FORD. Mr. President, we have
no objection on this side to the
amendment as it has been corrected:
'with available funds.'
Mr. MURKOWSKI. I thank my
friend from Kentucky. I urge immedi-
ate adoption.
The PRESIDING OFFICER. Is
there further debate on the amend-
ment? If not, the question is on agree-
ing to the amendment of the Senator
from Alaska.
The amendment (No. 2791) was
agreed to.
Mr. FORD. Mr. President, I move to
reconsider the vote by which the
amendment was agreed to.
Mr. MURKOWSKI. I move to lay
that motion on the table.
The motion to lay on the table was
agreed to.
Mr. MURKOWSKI. I thank my
friend from Kentucky, and I thank
the staff.
Mr. FORD. Mr. President, I suggest
the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. GORTON. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
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Mr. GORTON. Mr. President, I ask
unanimous consent to proceed as in
morning business.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(The remarks of Mr. Gorton and
Mr. Akaka pertaining to the introduc-
tion of S. 3097 are located in today's
Record under 'Statements on Intro-
duced Bills and Joint Resolutions.')
CHANGE OF VOTE
Mr. ROTH. Mr. President, my re-
quest has been approved by both the
majority and Republican leaders. I
ask unanimous consent that I be per-
mitted to change my vote on rollcall
vote No. 157 from yea to nay. This
will not change the outcome of the
vote.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. AKAKA. Mr. President, I sug-
gest the absence of a quorum.
The PRESIDING OFFICER. The
absence of a quorum having been
suggested, the clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
NUCLEAR REACTOR LICENSING
Mr. SIMPSON. Mr. President, I
wish to speak on the reform of the
licensing process for nuclear energy
plants which has been approved by
both the Senate and the House.
The provisions in the House and the
Senate bills are identical and expand
upon the Nuclear Regulatory
Commission's (NRC) part 52 rule for
a combined construction and operat-
ing license. A Federal appeals court
decided unanimously last week to
uphold the NRC's part 52 rule in its
entirety.
This provision clarifies that public
concerns should be addressed before a
spade of soil is turned - not after com-
pletion of a plant.
At the Shoreham plantwe are wit-
nessing the failure ofthe~ existing
licensing process, where a completed
plant - which never generated a single
commercial kilowatt of electricity - is
being torn down and dismantled. A
true tragedy of fiscal and energy folly.
Under the new proposal once the
construction of a plant is approved by
the Nuclear Regulatory Commission
(NRC), a utility may proceed with
construction without the specter of
indefinite delays.
The NRC may halt construction at
any time if new information arises
which the Commission decides is sig-
nificant with respect to safety.
In any event, any NRC licensing
decision may be appealed in Federal
court.
ADVANCED REACTOR DESIGNS
The Senate bill requires the Secre-
tary of Energy to submit a 5-year
program for the commercialization of
advanced reactor technologies to Con-
gress, targeting 1995 for the design
completion for advanced light water
reactors.
These designs take advantage of
natural forces of nature such as gravi-
ty and natural circulation of the cool-
ant in order to prevent potential acci-
dents. In the event of an emergency,
the reactor is designed to shut itself
down and cool without the need for
operator intervention.
I am truly pleased with this provi-
sion which will encourage safer, more
reliable nuclear plant designs and will
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encourage NRC certification of these
standardized designs on a timely
schedule designed to meet this
country's growing need for new elec-
tricity generating capacity.
URANIUM ENRICHMENT RE-
STRUCTURING
This legislation seeks to take a step
toward privatizing the Federal Pro-
gram of Uranium Enrichment by
creating a Government Enrichment
Corporation. The Senate has passed
this provision many times and we are
very familiar with it and now the
House has also approved it.
This legislation would provide mech-
anisms for partial reimbursement of
the costs of reclamation and
remediation at uranium mill tailings
sites.
I am also very pleased to see lan-
guage which allows for cleanup reim-
bursements at sites, which produced
uranium for the U.S. defense pro-
gram.
NUCLEAR DECOMMSSIONING FUND
I would like to thank my former
colleague on the Nuclear Regulation
Subcommittee, Senator Breaux, for all
of his fine work to include a provision
that he had introduced and I have
cosponsored, dealing with the repeal
of investment restrictions applicable
to nuclear decommissioning funds.
The removal of restrictions of in-
vestments, which are currently limit-
ed to tax-exempt bonds or Govern-
ment securities, will open up a wider
range of investment options for utili-
ties to consider in managing these
funds and will thereby greatly benefit
utility ratepayers.
DEPLETION ALLOWANCE FOR URANIUM
I would also like to thank the Fi-
nance Committee, and particularly
Senators Bentsen, Packwood, and
Hatch for rejecting the repeal of the
depletion allowance for uranium and
other minerals which the House in-
cluded as an offset for tax credits for
electricity generated using renewable
resources.
The depletion allowance provision
has been in place in the U.S. Tax
Code since 1913.
Over the years, Congress has reex-
amined whether to reduce or repeal
the depletion allowance and each and
every time has decided not to tinker
with it.
And for good reason - it is an incen-
tive to encourage exploration and
capital investment in the high-risk
mining industry. I believe this provi-
sion is still necessary to preserve our
domestic mineral industry during
cyclical market downturns and to
enhance our international competi-
tiveness.
I trust that the Senate language
will prevail in conference so that the
tax credit for renewable sources of
electricity is not offset by the repeal of
the depletion allowance.
ENERGY INDEPENDENCE
Mr. JEFFORDS. Mr. President, I
rise again to address the issue of ener-
gy independence and our continuing
failure to reach that goal. Over the
years, particularly most recently, my
office has received lots of mail about
how the domestic energy industry,
particularly our oil industry, is head-
ing overseas and firing American
workers. Let me cite some recent
figures. Amoco announced recently
8,500 job cuts, Unocal another 1,100.
Mobil, the industry that fought so
hard against my last effort to save the
domestic energy jobs, is laying off
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2,000 workers.
British Petroleum is cutting 600 to
700 jobs. Exxon cutting 1,000 domes-
tic jobs. Arthur Anderson predicts
40,000 to 50,000 more job losses in our
oil industry. We had 4,500 rigs work-
ing in the early 1980*8, now we have
645 rip. Phillips Petroleum cuts
1,350 jobs; Chevron slashes 2,500 jobs;
Sun Oil projects firing 1,000 workers,
and Shell may fire up to 4,650 Ameri-
Even API, the American Petroleum
Institute, may trim their staff 10 to
15 percent, according to a June 15,
1992, article in the Legal Times. Few-
er lobbyists to oppose energy indepen-
According to the Oil and Gas Jour-
nal, America will end up losing
411,000 jobs, that's almost the entire
population of my State or several
other States, such as Wyoming. Be-
tween 1981 and 1989, 154 refineries
closed in this country, 9 of which were
in Wyoming. Refineries closed in Lusk,
Osage, Glenrock, Cody, La Barge,
Cowley, and Casper. Amoco recently
announced that it was closing a refin-
ery in Wyoming as well to bring the
number to 10. We have got to stop
this loss of jobs.
Some may blame this loss on envi-
ronmentalism, but that is not the
reason. Oil companies are going over-
seas because they make more money,
not because anyone is forcing them to
leave this country. There is plenty of
oil right here in America without ever
touching ANWR or the coastal areas.
Greater use of enhanced oil recovery
techniques could bring billions of
American gallons to market and pro-
vide American jobs.
Why are these techniques not being
used? Because oil recovery using these
techniques is more expensive than
conventional oil recovery. It's about
economics, not environmentalism.
Some oil companies say they have to
leave because they cannot afford to
comply with our environmental regu-
lations. Well, if this is true, what does
this mean? It means they are going to
places that let them pollute. They say
they have a choice to stay here in
America and protect the environment,
or go overseas and make more money.
What do they choose? They choose to
make more money and pollute. That,
Mr. President, is the wrong choice and
we should not reward those who make
that choice.
So where does this leave us? Soon,
foreign governments will control the
supply of oil, the shipping of oil, the
refining of oil, and the marketing of
oil. They are doing just what the oil
executives of yesteryear in this coun-
try realized they had to do to prosper.
First, oil companies just refined oil
and left the production to others con-
sidering it too speculative. Then, they
realized they needed to control the
shipping. Soon afterward, oil compa-
nies got into production, and finally,
in I believe, in the 1920's they opened
up service or filling stations. They
controlled oil from below the ground
all the way to the customer, and they
prospered.
Now, OPEC and our foreign com-
petitors are doing the same, just as
the Abdullah Tariki, the Red Sheikh
realized they must do some years ago.
They already control the bulk of the
world's oil. They are building the
refineries. In fact, how many of my
colleagues realized that 85 percent of
the MTBE for reformulated gasoline
we required under the Clean Air Act
is not going to be made in America.
Did you know that the oil companies
plan to import the MTBE and not use
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American workers? When you voted
for the Clean Air Act, as I did, were
you voting for foreign jobs? I was not
and I am sure you were not. More
and more of the finished components
and product are being made some-
where other than America. We have
lost over 150 refineries in this coun-
try, who do you think is making up
for this lost production. It is not our
workers.
So OPEC controls the supply, is
taking over the production, we ail
know the ships are not registered in
this country, and the service stations
are next. OPEC country's already
own a significant interest in some of
our convenience store chains and
service stations.
Little by little we are becoming
more dependent on foreign energy
sources. I believe this is wrong. I
believe many of my colleagues also
believe this is wrong. I doubt any
member of this body will say that
domestic energy production is not
important. My colleagues from Wyo-
ming; for example, are trying to help
their uranium industry when cheaper
nuclear fuel is available from the for-
mer Soviet Union. My colleagues also
worked to change stripper well royal-
ties so as to help domestic oil produc-
tion. Are these free market activities?
My colleagues from the oil States
have tried various measures to protect
domestic production from floor prices
to import fees to raising the oil pro-
duction limit for meeting the defini-
tion of a stripper well in order to re-
ceive favorable tax treatment. These
are not free market options.
Why do my colleagues undertake
these actions? Because they believe in
domestic jobs, and they realize that
there is no fee market for energy.
Opposing efforts to increase domestic
protection on the basis of maintaining
a free market is thus highly question-
able.
Energy is the lif eblood of our econo-
my. And I do not wish to be melodra-
matic, but frankly, our energy policy
has AIDS. Little by little our economy
is being attacked by increasing depen-
dency on foreign sources. Instead of
curing the disease we are working all
around the problem.
This bill does make some significant
advances in such areas as energy con-
servation. But, there is one area it
does not attack, and that is the de-
pendency of our transportation sector
on foreign energy sources. My col-
leagues will point to the fleet provi-
sions of this bill combined with the
Clean Air Act as significant efforts
toward diversification of fuels. True,
but we have not diversified the source
of these fuels. With the exception of
natural gas, the overwhelming per-
centage of these new fuels will come
from offshore. Again, 85 percent of
the MTBE will not be made in Ameri-
ca. We have merely traded one depen-
dency for another.
So how do we cure the energy de-
pendency disease? I realize that there
is no silver bullet. There are many
conflicting goals that we must bal-
ance. Do we encourage further do-
mestic oil production now, thereby
depleting our reserves for future con-
tingencies? Suppose we had never had
a mandatory oil import quota pro-
gram that the oil companies wanted
and got We would have more
low-cost domestic oil available today.
So those interested in husbanding our
resources should oppose oil import
quotas. The same argument can be
made about protectionist import fees.
But, on the other hand, if we do not
require some domestic production, we
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lose thousands of jobs. OPEC can
underprice us any day of the week
and totally shut down our domestic
industry. Little by little, that is what
they are doing. Once we lose the
capacity to produce our own energy,
we will be defenseless as a nation.
Two world wars were won because we
had greater access to energy and could
outproduce our enemies. I note with
some irony, Mr. President, that when
it comes to making weapons, we insist
that the weapons be made here, even
though they could be made cheaper
elsewhere. But, when it comes to the
fuels that actually make the weapons
work, we adopt some laissez-faire
attitude that it does not matter where
the fuels come from. This is absurd,
we cannot afford to lose our ability to
produce energy. Nor can we afford to
drain our oil reserves dry until we
have developed alternatives to oil.
So again, what is the answer?
Handouts are not the answer, interna-
tional oil companies do not need tax
handouts. Oil companies are going to
keep going overseas because OPEC oil
is cheaper than our oil. But OPEC is
smart; they will not kill us off too
fast, 8,000 jobs here, 4,000 jobs there.
A little at a time so we, the American
people, do not get just mad enough to
say enough is enough. But over time,
we are talking about 400,000 jobs lost.
We have to accept the fact that we
need domestic energy production and
we need to protect domestic jobs and
capabilities. But how do we do this
and still meet the goal of conserving
our resources?
There is only one answer to this
problem and that is to protect a cer-
tain percentage of domestic produc-
tion, but the key is the domestic pro-
duction of what type of energy? We do
not have $2 a barrel oil, we will never
be able to compete with OPEC on
pricing or in a truly free market.
This free market nonsense is just that
- nonsense. OPEC is not a free mar-
ket organization, its an organization
designed to control prices for their
benefit and our deteriment. Conven-
tional oil is thus not the answer.
Instead of the status quo of lost
American jobs, I believe we should be
requiring a certain percentage of do-
mestic production of two types of
energy. First, let us make use of
those sources of energy that we either
use or lose. Like stripper well oil.
For the most part, once a stripper
well shuts down, it is shut down forev-
er. The oil associated with that well
is lost. The pressures and subsurface
characteristics and needed to continue
oil production disappear. Why let this
energy source go to waste, to be lost
forever. That is wrong. For virtually
pennies a gallon, we can keep the
thousands of stripper wells going.
This would decrease our trade balance
and increase the income to thousands
of Americans across this country.
Nearly three-quarters of the wells in
this country are stripper wells. Let us
not lose the production from these
wells.
What is the second type of energy
we should be mandating domestic
production of? Those resources which
are plentiful, like renewable resources.
Our farmers can outproduce anyone
in the world. They helped make our
country great and they can continue
to make America great. Let us put
the family farmer back to work.
The Senate has already consider
this proposal and voted to table it, so
I am not going to offer it again. But,
I urge my colleagues on the committee
to improve this bill so that it will
decrease our energy dependence.
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Americansoverwhelminglythinkwe
are on the wrong track. In terms of
our dependence on imported motor
fuels, this bill does not put us on a
new track. The only way to guaran-
tee American jobs is in the motor fuels
industry is to protect them. Mr. Pres-
ident, I believe energy policy, in par-
ticular oil policy, is one area that
America has consistently failed to
adopt an effective long-range strategy.
The debate has volleyed back and
forth between two diverse views.
Some say we should not limit imports
at all; that we need a totally free mar-
ket. Buy the oil wherever its cheapest
and husband our reserves. The other
view is that we should become more
reliant on our won resources, our own
people. I believe American money
should go to invest in American work-
ers. I support domestic production.
I will not accept the terms of the
big oil companies. They lobby for
easing the environmental regulations
that have made us one of the cleanest
countries in the world. They lobby for
opening up sensitive ecosystems to
their drilling. And for what long-term
again? The oil companies keep missing
one of the fundamental reason for
opposition to drilling in ANWR. What
does any American have to gain in the
long-term from drilling in ANWR?
The oil companies will drain it dry
and then be right back where they are
today: firing American workers and
begging for more help from Congress.
They want Americans to put a fragile
ecosystem at risk for no long-term
benefit, just a quick fix. If they would
only think about a long-term strategy
for America they might find a more
receptive Congress. What is going to
happen to the American worker when
they have sucked the oil our of
NAWR? They have never answered
that question.
I do not intend to reoffer my
amendment to this bill. I believe I
would be defeated again, so I will
make time for more productive uses.
We certainly need to start making
productive use of our time. I will
continue to fight for greater energy
independence and for American work-
ers.
In the meantime, I hope the energy
workers across this country will join
the fray. Fight for your jobs and for
greater use of American resources.
Your jobs can be secure for a few pen-
nies per gallon, a few pennies I believe
Americans would be more than willing
to pay to support their fellow Ameri-
cans. Someday, I hope my children
can fuel their car with American re-
sources. When that day comes, we
will once again be a strong America.
Thank you, Mr. President.
Mr. EXON. Mr. President, I had
prepared an amendment to the energy
bill relating to a coal rate study re-
quired under this legislation. I will
not be offering that amendment be-
cause it is not my intention to delay
the energy bill further. However, I
would like to engage the manager of
the bill in a colloquy regarding section
14113 of S. 2166. This provision calk
for the establishment of a data base
containing transportation rate infor-
mation for shipments of coal over a
10-year period and a study of the
impact of Federal policies on such
rates.
On September 4, 1991, Senator
Hasten and I wrote a letter on behalf
of the Subcommittee on Surface
Transportation indicating our displea-
sure with this provision. That letter
raised both jurisdictional and substan-
tive concerns with the provision. Cer-
tain recent studies by the Interstate
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Commerce Commission (ICC) appear
to indicate a downward trend in rail-
road coal rates have fallen 19.3 per-
cent since 1980.
This data suggest there may well be
a need to rethink section 14113. I
would like to inquire of the chairman
if he would be willing to reexamine
this section.
Mr. JOHNSTON. I thank my col-
league from Nebraska. As he knows, I
have had a longstanding concern re-
garding the relatively high costs of
coal transportation by rail. However,
he has raised some points that ap-
proximately should be considered as
we head into conference on this legis-
lation.
Mr. EXON. I thank the Senator
from Louisiana and ask that the letter
of September 4, 1991, be printed in
the Record.
There being no objection, the letter
was ordered to be printed in the Re-
cord, as follows:
Committee on Commerce, Science,
end Transportation,
Washington, DC, September 4, 1991.
Hon. Bennett Johnston, Chairman,
Committee on Energy and National Resources,
US. Senate,
Washington, DC.
Dear Bennett: Aa the Chairman and ranking
Republican member of the Senate Surface Trans-
portation Subcommittee, we ere writing to es>
i concern over section 14113 of S. 1220, the
f bill, which was reported to the full
Specifically, Section 14113 would require the
Department of Energy (DOE) to review increases
in coal transportation rates resulting from last
year's Clean Air Act amendments and other Fed-
eral policies. It would direct DOE to establish a
data base for all rates for domestic coal ship-
ments moving by rail, pipeline, truck, conveyor
belt, barge, and other modes of transportation
over a 10-year period. Interestingly, it would
require DOE to examine revenue to variable cost
ratios of railroad coal rates, but not similar ratios
for other transportation modes. It also csdudes
from scrutiny modes transporting noncoal energy
sources, 9M well 9M rates charged by energy pro-
ducers.
We urge that Section 14 1 13 be deleted from S.
1220. The Surface Transportation Subcommittee
of the Commerce Committee has jurisdiction over
coal transportation rates. As recently ss the
100th Congress, the Subcommittee held a series
of hearings involving railroad coal rates. It also
considered legislation on the Interstate Com-
merce Commission's (ICC) implementation of the
Staggers Rail Act, which allows shippers to file
complaints on railroad rates deemed unreason-
ably high and allows the ICC to order a rate
reduction and award reparations. The full Sen-
ate Commerce Committee specifically voted
against reporting legislation on the subject at
that time.
A decade of experience under the Staggers Rail
Act shows it is accomplishing largely what Con-
gress intended. In fact, a May, 1991, ICC study
showed that average, inflation-adjusted transpor-
tation rates for coal fell by 14.2 percent between
1980 and 1989. The Subcommittee will continue
its oversight role on the implementation of the
Staggers Rail Act by the ICC.
In summary, we object to Section 14 1 13 of S.
1330 and urge that it be deleted from the bill.
Robert W. Kaaten, Jr.,
Ranking Republican, Surface Trans-
portation Subcommittee.
J. James Exon,
Chairman, Surface Transportation
Subcommittee.
BIODIESEL
Mr. BOND. Thank you, Mr. Presi-
dent. Is it the understanding of the
Senator from Louisiana that biodiesel
would be considered covered under
the definitions of alternative fuel and
replacement fuel in S. 2166?
Mr. JOHNSTON. Yes, it is my un-
derstanding that biodiesel would in-
deed be considered covered under the
alternative fuel and replacement fuel
definitions in the bill because biodiesel
is derived from nonpetroleum feed
stocks such as soybeans, vegetable oils,
and animal byproducts.
Mr. BOND. So biodiesel made from
soybeans would also be included under
these definitions?
Mr. JOHNSTON. That is correct.
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Mr. BOND. Is it also the Senator's
intention that programs to promote
the development and commercializa-
tion of alternative fuels could include
biodiesel, including biodiesel made
from soybeans and animal byproducts,
if the Secretary deems appropriate?
Mr. JOHNSTON. Yes, that is my
intention.
Mr. BOND. I thank the Senator.
UNANIMOUS-CONSENT AGREEMENT
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the only
first-degree amendments remaining in
order to H.R. 776, other than the
pending committee substitute, and the
pending Wellstone and Dodd amend-
ments, numbers 2789 and 2790, be the
following:
Senator Grassley's ethanol amend-
ment; Senator Dole's amendment
regarding ethanol; Senator Dole's
solid waste disposal/phosphorus acid
process amendment; Senator
Murkowski's amendment regarding a
study of the future of oil and gas po-
tential in ANWR, with a possible mod-
ification by Senator Murkowski and
Senator Wellstone of that amend-
ment; Senator Stevens' tax credit
regarding an oil pollution amendment;
Senator D'Amato's amendment re-
garding antidumping; that
second-degree amendments be in or-
der, provided they are relevant to the
first-degree amendment and under
the same time limitation, if one is in
effect on the first degree; that no
motions to recommit be in order; pro-
vided further that if a subsequent
unanimous-consent agreement is
reached between Senators Dodd and
Gramm on the Dodd-Wellstone
amendments, then it be in order for
Senator Dodd to modify or withdraw
his amendment in order to conform to
the accord; then the terms of the
amendment limitations of this agree-
ment remain in effect.
Further, that if unanimous consent
is not reached relative to the
Dodd-Wellstone amendments, then
any agreement regarding limitation on
amendments to this bill is vitiated;
that upon disposition of these
above-listed amendments and the
committee substitute, the Senate,
without any intervening action or
debate, proceed to third reading and
final passage of the bill.
The PRESIDING OFFICER. Is
there objection?
Mr. WALLOP. Mr. President, the
minority has dealt with this and be-
lieves it to be a good reflection of the
best course to follow.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The text of the agreement is as
follows:
Ordered, That at 10 a.m. on Thursday, July 30,
1992, the Senate resume consideration of H.R.
776, the Comprehensive National Energy Policy
Act, and the only first degree amendments re-
maining in order, other than the pending com-
mittee substitute and the pending Wellstone and
Dodd amendments, Nos. 2789 and 2790. be the
following:
D'Amato: Anti-dumping.
Dole: Regarding Ethanol.
Dole: Solid waste diepoeel/phoephorue add
Graesley: Ethanol.
Stevens: Tax credit re: oil pollution.
Ordered further, That second degree amend-
ments be in order provided they ere relevant to
the first degree amendment, and under the same
time limitation if one b in effect on the ftni
Ordered further, Thet no motions to recommit
be in order.
Ordered further, Thet if a subsequent unani-
mous consent agreement is reached between
Senators Dodd and Gramm on the
Dodd-Wellstone amendments, then it be in order
for Senator Dodd to modify or withdraw his
amendment In order to conform to the accord;
then the terms of the amendment limitations of
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this agreement remain in effect; end if unani-
moue consent b not reecbed relative to the
Dodd-Wolletone emendment, tben any agreement
regarding a limitation on amendments to this bill
be vitiated.
Ordered further, That upon disposition of
these above listed amendments, and the commit-
tee substitute, the Senate, without any interven-
ing action or debate, proceed to third reading and
final passage of the bill.
Mr. JOHNSTON. Mr. President, I
think Senators who just heard the
reading of the unanimous-consent re-
quest, which was agreed to, will un-
derstand that it is all contingent upon
reaching agreement on the
Dodd-Wellstone amendments, and if
they do not reach any agreement,
then the whole matter is vitiated, and
we are still in open season on our bill,
which we trust will not happen.
Mr. WALLOP. Mr. President, if the
Senator will yield, it is my passionate
desire that they reach such an agree-
ment; that the long awaited, long
struggled over energy policy not be
held hostage to this extraneous argu-
ment • not that it is not an important
argument; it is that it is an extrane-
ous argument. It has nothing to do
with energy policy.
So I urge the two Senators to find
some resolution to that, and I can on-
ly say that it is my hope, along with
Senator Johnston's, that they do, and
it is my hope that along about 2
o'clock tomorrow afternoon, we are
engaged in the vote on Anal passage of
this legislation.
It is beyond time, Mr. President, for
it to go to conference. I think both of
us would agree that the remaining
amendments are well within the reach
of resolution, either through vote or
through negotiation. They are not
that difficult, and the subjects which
they contain are not that mysterious
to Senators that we should not be able
to arrange some kind of agreement,
and the vote on them will be clear to
all Senators.
So, really, the only thing that con-
founds final passage is the confronta-
tion between the Senator from Con-
necticut and the Senator from Texas.
Mr. JOHNSTON. Mr. President, if
the Senator will yield, we protected
these four Senators on their amend-
ments for about 3 hours now, while
we have sat around waiting. I hope
we do not plan to have another 3 or 4
hours' protection tomorrow while we
wait around. It would be easier just
to come in at 1 or 2 o'clock and get
started.
Mr. WALLOP. I would say to my
friend, Mr. President, that the agree-
ment does not guarantee that they be
brought up, only that they be in or-
der. So should it be that all other
matters are settled I would join my
friend in calling for third reading and
moving to final passage.
Mr. JOHNSTON. I thank my
friend.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. WALLOP addressed the Chair.
The PRESIDING OFFICER. The
Chair informs the distinguished Sena-
tor from Wyoming we need a request
to set aside the pending amendment.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the pending
business be set aside in order to con-
sider an amendment that was part of
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the unanimous-consent agreement.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
AMENDMENT NO. 2792
(Purpose: To require ibe Secretary of Energy to
conduct a study of the status and future of the
domestic oil and gas industry and the potential
impacts of development of the Coastal Plain of
the Arctic National Wildlife Refuge on the oil and
gas industry, the economy, and national security)
Mr. WALLOP. Mr. President, on
behalf of Senator Murkowski, I send
an amendment to the desk and ask
that it be stated.
The PRESIDING OFFICER. The
clerk will report the amendment.
The legislative clerk read as follows:
The Senator from Wyoming (Mr. Wallop), for
Mr. Murkowski, proposes an amendment num-
bered 2792.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
At the end of the bill insert the following new
title:
TITLE - STUDY OP THE FUTURE OIL AND
GAS POTENTIAL AND ECONOMIC
IMPACT
Sec. . The Secretary of Energy, in consultation
with the Secretaries of Labor, Commerce, State,
the Interior, and Defense, shall prepare and com-
plete within 6 months from the date of enact-
ment of this Act and submit to the United States
House of Representatives and the Committee on
Energy and Natural Resources of the United
States Senate a comprehensive study of the
following:
(1) the current and projected status of the
domestic oil and gas industry, including:
(A) the quantity and types of jobs lost in the
industry during the 10 year period ending on the
date of enactment of this Act; and
<B) the potential for job creation and loss
during the 10 year period beginning on the date
of enactment of this Act together with the basis
for any alternative projection;
CD the historic and projected future trends in
oil and gas industry investment in foreign coun-
tries and the related reductions in investment in
the United States;
(5) the current and projected status of the rate
of imports of foreign oil in absolute terms and as
a percentage of consumption;
(4) the current and projected impacts of in-
creasing reliance on imported oil on:
(A) the economy of the United States;
(B) the balance of trade deficit of the United
States; and
(O national security interests of the United
States, including related military and other costs;
(6) the current and projected status of decline
in production of oil from Alaska's North Slops
transported through the Trans-Alaska Pipeline
System (TAPS) end effects of this decline on:
(A) regional and national employment in the
United States;
(B) the nations! security of the United States;
and
(C) energy prices in the United States;
(6)(A) the sstimstsd date for the required re-
moval of the TAPS in the event there is no oil
production from the coastal plain of the Arctic
National Wildlife Refuge (ANWR); and
(B) ths effect of the shutdown and removal of
the TAPS on the production of Alaska North
Slope heavy oil ressrvss and othsrwiss economi-
cally marginal fields for which production tech-
nologies are in ths process of development;
(7) the impact of potential ANWR coastal plain
oil production on:
(A) the longevity of ths TAPS and on oil pro-
duction and consumption in ths United States;
and
(B) the potential loss of othsrwiss producible
domestic available ressrvss;
(7) ths potential quantity and typee of jobs that
would be created, both directly and indirectly, by
the esplorstion and development of the coastal
plain of ANWR and the loss of such jobs if asplo-
ration and development doss not occur;
(8) ths domestic industrial production capabili-
ties which would be created by the esplorstion
and development of the coastal plain of ANWR
and the potential loss of such capability of esplo-
rstion and development does not occur, including
the sbility to explore and develop other domestic
oil and gss prospects;
(9) the potential impact of esplorstion and
development of the coastal plain of ANWR on:
(A) the economy of the United States;
(B) the economies of the regions of the United
(Q the balance of trade deficit of the United
(10) the projected potential revenues, both
direct and indirect, to the United States Treeaury
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snd the SUU of Atoka that would be gsneretod
by exploration and development of oil reaervea
within the ooaatal plain of ANWR;
(11) the technologies available for reducing the
environmental impact of exploration and produc-
tion of oil from the coastal plain of ANWR; and
(12) the development and application of Arctic
oil production technologies on Alaska's North
Slope including:
(A) a comparison of the technology used at the
Prudhoe Bay and Endicott oil fields; and
(B) a comparison of technologies used and the
environmental impact of Alaska North Slope
development to conventional oil field exploration
and development in the contiguous United
States.
AMENDMENT NO. 2792, AS MODIFIED
Mr. WALLOP. I now send a modifi-
cation by Senator Murkowski on be-
half of himself and Mr. Wellstone to
the desk and ask that it be stated.
The PRESIDING OFFICER. The
amendment is so modified.
The amendment, as modified, is as
follows:
Strike all after the word 'TITLE' and insert
the following:
■ STUDY OF THE FUTURE OIL AND GAS
POTENTIAL AND ECONOMIC IMPACT
Sec. . The Secretary of Energy, in consultation
with the Secretaries of Labor, Commerce, State,
the Interior, and Defense, shall prepare and com-
plete within 6 months from the date of enact-
ment of this Act and submit to the United States
House of Representatives and the Committee on
Energy and Natural Resources of the United
States Senate a comprehensive study of the fol-
lowing:
(1) the current and projected status of the
domestic oil and gas industry and other energy
industries, including:
(A) the quantity and types of jobs created and
lost in the industry during the 10 year period
ending on the date of enactment of this Act; and
(B) the potential for job creation and loss dur-
ing the 10 year period beginning on the date of
enactment of this Act together with the basis for
any alternative projection;
(2) the historic and projected future trends in
oil end gas industry and other energy industry
investment in the United States and foreign
countries and the related change in investment
in the United States;
(3) the current and projected status of the rate
of imports of foreign oil in absolute terms and as
a percentage of consumption;
(4) the current and projected impacts of in-
creasing reliance on imported oil on:
(A) the economy of the United States;
(B) the balance of trade deficit of the United
(Q national security interests of the United
States, including related military and other costs;
(6) the current and projected status of decline
in production of oil from Alaska's North Slope
transported through the Trans-Alaska Pipeline
System (TAPS) end effects of this decline on:
(A) regional and national employment in the
United Steles;
(B) the national security of the United States;
and
(O energy prices in the United States;
(6) (A) the estimated date for the required
removal of the TAPS in the event there is no oil
production from the coastal plain of the Arctic
National Wildlife Refuge (ANWR); and
(B) the effect of the shutdown and removal of
the TAPS on the production of Alaska North
Slope heavy oil reserves snd otherwise economi-
cally marginal field* for which production tech-
nologies are in the process of development;
(7) the impact of potential ANWR coastal plain
oil production on:
(A) the longevity of the TAPS and on oil pro-
duction and consumption in the United States;
snd
(B) the potential loss of otherwise producible
domestic available reserves;
(7) the potential quantity and types of jobs that
would be created, both directly and indirectly, by
the exploration and development of the coastal
plain of ANWR and the loss of such jobs if explo-
ration and development does not occur;
(S) the domestic industrial production capabili-
ties which would be created by the exploration
and development of the coastal plain of ANWR
and the potential loss of such capability if explo-
ration and development does not occur, including
the ability to explore and develop other domestic
oil snd gas prospects;
(9) the potential impact of exploration and
development of the coastal plain of ANWR on:
(A) the economy of the United States;
(B) the economies of the regions of the United
State; and
(C) the balance of trade deficit of the United
States;
XD) production from wells producing 16 barrels
of oil per day or loss.
(10) the projected potential revenues and costs,
both direct and indirect, to the United States
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Treasury and the State of Alaska that would ba
generated or incurred by exploration and develop-
ment of oil reserves within tbe coastal plain of
ANWR;
( 1 1) the technologies available for reducing the
environmental impact of esploration and produc-
tion of oil from the coastal plain of ANWR; end
(12) the development and application of Arctic
oil production technologies on Alaska's North
Slope including:
(A) a comparison of the technology used at the
Prudhoe Bay and Endieott oil fields; and
(B) a comparison of technologies available for
Alaska North Slope development with conven-
tional oil field esploration and development in
the contiguous United States.
(IS) all possible alternative energy supplies
(including energy conservation) currently avail-
able in the United States, and which might be
available in the foreseeable future, that would
provide the same amount or greater amounts of
energy than are estimated by the Department of
the Interior to be available from the coastal plain.
(14) the known and estimated reserves of oil
and gas on the North Slope of Alaska (including
State and federal offshore lands) outside of the
Arctic National Wildlife Refuge.
Mr. WALLOP. Mr. President, on
behalf of the minority and my under-
standing of the majority, I say the
differences between the Senator from
Minnesota and the Senator from Alas-
ka have been worked out, and it is
acceptable to both aides. I call for the
question on the amendment.
The PRESIDING OFFICER Is
there further debate on the amend-
ment, as modified? If not, question is
on agreeing to the amendment, as
modified.
The amendment (No. 2792), as mod-
ified, was agreed to.
Mr. WALLOP. Mr. President, I
move to recensider the vote.
Mr. JOHNSTON. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. WALLOP. Mr. President, I sug-
gest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
AMENDMENTS SUBMITTED
SPECTER AMENDMENT NO. 2783
Mr. SPECTER proposed an amendment to
the bill H.R. 776, supra, as follows:
At the end of the Amendment, add the follow-
ing:
TITLE I - TAX INCENTIVE FOR HEALTH
CARE ACCESS
SEC. 101. DEDUCTIBILITY FOR
SELF-EMPLOYED INDIVIDUALS.
(s) In General. • Paragraph (1) of section 1620)
of the Internal Revenue Code of 1986 (relating to
special rules for health insurance costs of
self-employed individuals) is amended by striking
'26 percent of.
(b) Deduction Msds Permanent. - Section 1620)
of the Internal Revenue Code of 1986 is amended
by striking paragraph (6).
(c) Conforming Amendment. -Subparagraph (B)
of section 1620X3) of the Internal Revenue Code
of 1986 (relating to coordination with medical
deduction, etc.) is amended •
(1) by striking 'health insurance credit' and
inserting 'health expenses credit and employer
health insurance credit',
(2) by striking 'section 82' and inserting
'section 34A with respect to such insurance and
section 38, respectively', and
(3) by striking 'credit* in the heading thereof
and inserting 'credits'.
(d) Effective Dete. • The amendments made by
thia section ehall apply to taxable years beginning
after December 31, 1991.
TITLE II - HEALTH CARE REFORM PROVI-
SIONS
SUBTITLE A - MODEL HEALTH CARE IN-
SURANCE BENEFITS PLAN
SEC. 201. MODEL HEALTH CARE INSUR-
ANCE BENEFITS PLAN.
(a) In General. • The Secretary ehall request
that the NAIC -
(1) develop a model health care insurance
benefits plan that ehall contain standards that
entities offering health care insurance policies
should meet with respect to the benefits and
coverage provided under such policies, and
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(2) report to Iho Secretary on such standard*,
not later than 1 year alter tho date of enactment
of thia Act. If tho NAIC develop* such a plan by
aucfa date and the Secretary finda that such plan
implement* the requirements of aubeection (c),
such plan shall be the model health care insur-
ance benefits plan under thia Act.
(b) Role of the Secretary in Absence of NAIC
Plan. - If the NAIC fails to develop and report a
model health care insurance benefits plan by the
date specified in subsection (a) or the Secretary
finda that such plan doss not implement the
requirements of subsection (c), the Secretary
shall develop and publish such a plan, by not
lator than eighteen months after the date of
enactment of thia Act. Such plan shall then be
the plan under thia Act.
(c) Contents. - Ths standards under the model
benefits plan should require -
( 1) that coverage be provided under health cars
insurance policies for basic hospital, medical and
surgical services, including preventative care
services determined appropriate by the Secretary;
(2) reasonable cost sharing by the beneficiaries
under such policies; and
(S) appropriate copaymenta and deductibles.
SBC. 202. DEFINITIONS.
As used in this title:
(1) Health care insurance. - The term 'health
care insurance' means sny hospital or medical
expense incurred policy or certificate, hospital or
medical service plan contract, health mainte-
nance subscriber contract, multiple employer
welfare arrangement, other employee welfare
plan (aa defined in the Employee Retirement
Income Security Act of 1974), or sny other health
insurance arrangement, and includes an
employment-related reinsurance plan, but does
not include •
(A) a self-insured health care insurance plan; or
(B) any of the following offered by an insurer -
(i) accident only, dental only, or disability
income only insurance,
(ii) coverage issued aa s supplement to liability
insurance,
(iii) worker's compensation or similar insur-
(iv) automobile medical-payment insurance.
(2) Managed cars plan. • The term 'managed
care plan' means s health cars insurance plan in
which ths insurer offering such plan utilises ths
standards recommended under section 21 1 con-
cerning the benefits and coverage under such
plan.
(3) Model benefits plan. • The term 'model
benefits plan' meane the model health care
insurance benefits plan developed under section
201(a).
(4) NAIC. - Ths term 'NAIC means the Nstion-
sl Association of Insurance Commissioners.
(6) Secretary, • The term 'Secretary' means the
Secretary of Health and Human Services.
(6) Small employer. •
(A) In general. • The term 'small employer'
means any employer which, on an average busi-
ness day during the preceding taxable year, had
more than 2 but less than 100 employees.
(B) Employee. • The term 'employee' ahull not
include •
(i) s self-employed individual aa defined in
section 401(c)(1) of ths Internet Revenue Code of
1086, or
(ii) an employee who works less than 20 hours
per week.
SUBTITLE B - MANAGED CARE
SEC. 211. DEVELOPMENT OP STANDARDS
FOR MANAGED CARE PLANS.
(s) In General. • Not later than 1 year after the
date of enactment of thia Act, the Secretary,
taking into account recommendation* of the
Managed Care Advisory Committee, shall develop
recommended standards that insurers offering
managed care plana should meet with respect to
the benefits, coverage, and delivery systems
provided under such plana. Such standards shall
encompass ths standards by which managed care
entities operate.
(b) Managed Care Advisory Committee. •
(1) Establishment. • There shall bo estsblishsd
a Managed Care Advisory Committee (hereinafter
referred to am ths 'Committee').
(2) Membership. • The Committee shall be
composed of 6 members appointed by the Secre-
tary, each member representing 1 of tho follow-
ing areas:
(A) Health care professions In.
(B) Managed care industry.
(C) Academia (with specific expertise in man-
aged care plana).
(D) Business management
(E) Organised labor.
(5) Compensation. -
(A) In general. • Members of the Committee
shall serve without compensation.
(B) Expenses, etc., reimbursed. - While away
from their homes or regular places of business on
ths business of the Committee, the members may
be allowed travel expenses, including per diem in
lieu of subsistence, am authorized by section 5703
of title 6, United States Code, for persons em-
ployed intermittently in Government service.
(C) Application of act. - The provisions of the
Federal Advisory Committee Act (5 U.S.C. App.)
shall not spply with respect to the Committee.
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(D) Support. • The Secretary shall supply such
necessary office facilities, office supplies, support
services, and related expenses as necessary to
carry out the functions of the Committee.
SEC. 212. PREEMPTION OF PROVISIONS
RELATING TO MANAGED CARE.
In the case of a managed care plan mseting the
recommended standards under section 211 that
b offered by an insurer, the following provisions
of State law are preempted and may not be
enforced against the managed care plan with
respect to an insurer offering such plan:
(1) Restrictions on reimbursement rates or
selective contracting. - Any law that restricts the
ability of the insurer to negotiate reimbursement
rates with health care providers or to contract
selectively with one provider or a limited number
of providers.
(2) Restrictions on differential financial incen-
tives. - Any law that limits the financial incen-
tives that the managed care plan may require a
beneficiary to pay* when a non-plan provider is
used on a non-emergency basis.
(3) Restrictions on utilization review methods.
(A) In general. - Any law that •
(i) prohibits utilization review of any or all
treatment* and conditions;
(ii) requires that such review be made by a
resident of the State in which the treatment is to
be offered or by an individual liceused in such
State, or by a physician in any particular special-
ty or with any board certified specialty of the
same medical specialty as the provider whose
services are being rendered;
(iii) requires the use of specified standards of
health care practice in such review or requires
the disclosure of the specific criteria used in such
review;
(iv) requires payments to providers for the
expenses of responding to utilization review
requests; or
(v) imposes liability for delays in performing
such review.
(B) Construction. - Nothing in subparagraph
(A)(ii) shall be construed as prohibiting a State
from requiring that utilization review be conduct-
ed by a liceused health care professional, or
requiring that any appeal from such a review be
made by a licensed physician or by a licensed
physician in any particular specialty or with any
board certified specialty of the same medical
specialty as the provider whose services are being
rendered.
(4) Restrictions on benefits. • Any law that
mandates benefits under the managed care plan
that are greater that the benefits recommended
under the standards developed under section 211.
SUBTITLE C • SMALL EMPLOYER PUR-
CHASING GROUPS
SEC. 221. QUALIFIED SMALL EMPLOYER
PURCHASING GROUPS.
(a) Defined. • For purposes of this title, an
entity is a qualified small employer purchasing
group if •
(1) the entity submits an application lo the
Secretary at such time, in such form and contain-
ing such information as the Secretary may
require; and
(2) on the basis of information contained in the
application and any other information the Secre-
tary may require, the Secretary determines that
(A) the entity is administered solely undor the
authority and control of its member employers;
(B) the membership of the entity coiisiuts solely
of small employers (except that an employer
member of the group may retain its moinborship
in the group if, after the Secretary determines
that the entity meets the requirements of this
subsection, the number of employees of the
employer member increases to more than 100);
(C) with respect to each State in which its
members are located, the entity consists of not
fewer than 100 employers;
(D) at the time the entity submits its applica-
tion, the health care insurance plans with respect
to the employer members of tlie entity are in
compliance with applicable State laws and the
model benefits plan relating to such plans;
(E) the health care insurance plans of the entity
and the employer members of the entity are not
self-insured plans;
(F) each enrollee in the program of tho entity
may enroll with any participating carrier that
offers health care insurance coverage in the
geographic area in which the enrollee resides;
and
(G) such entity will be a nonprofit entity; and
(3) such entity has a board of directors as
described in subsection (b) with authority to act
as described in subsection (c).
(b) Operations. • A small employer purchasing
group shall be administered by a board of direc-
tors. The members of such board shsll bo elected
by the employers that are members of the group,
and such board members shall servo st the
pleasure of the majority of such employers.
(c) Duties of Board. •
(1) In general. • The board shsll hevc the
authority to •
(A) enter into contracts with carriers to provide
health care insurance coverage to eligible employ-
ees and their dependents;
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(B) enter into other contracta as art nnresairy
or proper to cany out the proviaiona of thia
subtitle;
(O employ neceaaary staff;
(D) appoint oommitteea aa neceaaary to provide
technical aaaiatance in the operation of the
entity's program;
(E) aaaeaa participating employers a reaaonable
fee for neceaaary coste in connection with the
(F) undertake activitiea neceaaary to adminiater
the program including marketing and publicising
the program and assuring carrier, employer, and
enrollee compliance with program requirements;
(G) issue rules and regulatione neceaaary to
carry out the purpose of this subtitle; end
(H) accept and expend funds received through
fees, grante, appropriations, or other appropriate
and lawful mesne.
(2) Program management. -
(A) Geographic areas of coverage. - Ths board
•hall eetsblieh geographic areas within which
participating carriers may offer health care
ineuranca coverage to eligible employees and
dependenta. The board ahall contract with
sufficient numbers and typee of carriers in an
area to assure that employeea have a choice from
among s reaaonable number and type of compet-
ing health care inauranos carriers.
(B) Contract requirementa. -
G) In general. - The board ahall enter into
eontracta with qualified carriers for the purpose
of providing health cars insurance coverage to
eligible employeea and dependenta, and ahall pay
qualified carriers on st least s monthly basis st
ths contracted ratea.
(ii) General qualifieationa of carriers. - Partici-
pating carriers shall be qualified if such carriers
have -
(I) adequate adminiatrative management,
QD financial solvency, and
Gil) the ability to assume the risk of providing
and paying for covered services. A participating
carrier may utilise reinsurance, provider risk
sharing, and other appropriate mechaniama to
•here a portion of the riek described in subclause
(in). The board may establish risk adjuettnent
mofhsnisms that can be utilised to addreee
drcumstaneas where a participating carrier has
s significantly disproportionate •here of high riek
or low riek enroUeea based upon valid data
provided by carrier. Any such risk adjuatment
mechanism may bs developed and applied oiuy
after consultation with the participating carriers.
(O Program atandarda. • The board ahall re-
quire that participating carriera that contract
with or employ health care providers shall have
mechaniama to aceompliah st least the following,
satisfactory to the program:
(i) Review the quality of care covered.
(ii) Review the appropriateness of care covered.
(iii) Provide accessible health services.
(D) Uniformity of benefita. • The board ahall
aaaure that participating carriera -
(i) ahall offer substantially similar benefita to
enroUees in the program, except that enrollesa
cost sharing required by participating carriera
may vary according to the basic method of opera-
tion of the carrier, and
(ii) ahall not vary ratea to email employers or
enroUeea in the program on account of claim
experience, health status or duration from issue.
(E) Payment mechanism. • The board ahall
establiah a mechanism to collect premiums from
email employers, including remittance of the
enrollee's share of the premium.
(3) Notification of program benefita. • The board
ahall uae appropriate and efficient means to
notify employers of ths availability of sponsored
health care insurance coverage from the program.
The board ahall make available marketing materi-
als which accurately summarize the carriera'
ineuranca plana and ratea which are offered
through the program. A participating carrier
may contract with an agent or broker to provide
marketing, advertising, or presentation proposals
or otherwise disseminate information regarding
coverage or services or rates offered in connec-
tion with the program.
(4) Conditions of participation. -
(A) In general. - The board ahall eatabliah
conditiona of participation for email employers
and enroUees that -
(i) aesure that the entity ia a valid email em-
ployer purchasing group and is not formed for
the purpose of securing health care ineuranca
coverage;
(ii) eesure that individuate in the group are not
added for the purpose of securing such coverage;
(iii) require that a specified percentage of
employees and dependenta obtain health care
ineuranca coverage;
(iv) require minimum employer contributions;
and
(v) require prepayment of premiume or other
mechanisms to sssure that payment wUl be made
for coverage.
(B) Minimum participation. • The board may
require participating employers to agree to
participate in the program for a specified mini-
mum period of time and may include in any
participation agreements with employers s re-
quirement for s financial depoait or provision for
a financial penalty, which would be invoked in
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ths event ths employer violetee the participation
(d) Grants. -
(1) Authority. • The Secretary may award
grants to qualified email employer purchasing
groups to assist such groups in paying the expen-
ditures associated with the formation and initial
operations of such groups.
(2) Application. - To be eligible to receive a
grant under this subsection, s qualified small
employer purchasing group shall request such a
grant as part of the application submitted by
such group under subsection (a)(1).
(8) Authorisation of appropriations. - There are
authorised to award grants under this subsec-
tion, such sums as may be necessary.
(a) Freedom of Contract. - Nothing in this
subtitle shall be construed to prohibit a partici-
pating carrier from offering health care insur-
ance coverage to email employers that are not
participating in the program of a small employer
purchasing group.
SEC. 222. PREEMPTION FROM INSURANCE
MANDATES FOR SMALL EMPLOYER PUR-
CHASING GROUPS.
(a) Finding. - Congress finds that qualified
email employer purchasing groups organised for
the purpose of obtaining health insurance for the
employer members of such groups affect inter-
(b) Preemption of State Mandates. • In the case
of s qualified email employer purchasing group,
no provision of State law shall apply that re-
quires the offering, as part of the health care
insurance plan with respect to an employer
member of such a group, of any services, category
of care, or services of any class or type of provid-
er that is in excess of that recommended under
the model benefit plan.
SUBTITLE D - INSURANCE MARKET RE-
FORM
SEC. 281. FAILURE TO SATISFY CERTAIN
STANDARDS FOR HEALTH CARE INSUR-
ANCE PROVIDED TO SMALL EMPLOYERS.
(a) In General. • Subchapter L of chapter 1 of
the Internal Revenue Code of 1986 (relating to
insurance companies) is amended by adding at
the end thereof the following new part:
TART IV - HEALTH CARE INSURANCE
PROVIDED TO SMALL EMPLOYERS
'Sec 860. Failure to satisfy standards for health
care Insurance of small employers.
'Sec 860A. General issuance requirements.
'Sec 860B. Specific contractual requirements.
'Sec 660C. State compliance agreements.
'Sec 860D. Definitions and other rules.
'SBC. 860. FAILURE TO SATISFY CERTAIN
STANDARDS FOR HEALTH CARE INSUR-
ANCE OF SMALL EMPLOYERS.
'(a) General Rule. - No health insurance con-
tract issued to an eligible small employer shall be
treated as a contract for purposes of section 807
or 882 if the issuer of such s contract fails to
meet at any time during any taxable year •
'(1) the general issuance requirements of sec-
tion 860A, or
'(2) the specific contractual requirements of
166OB.
'(b)
'(1) Section not to apply where failure not
discovered exercising reasonable diligence. •
Subsection (a) shall not apply with respect to any
failure for which it ie established to the aatiefae-
tion of the Secretary that the person deecribed in
such eubsection did not know, or exercising
reasonable diligence would not hsve known, that
ouch failure existed.
'(2) Section not to apply where failures correct-
ed within 80 days. - 8ubsection (a) shall not
apply with respect to sny failure if •
'(A) such failure was dus to reasonable cause
and not to willful neglect, end
'(B) such failure b corrected during the 80-dsy
period beginning on the 1st dote sny of ths
persons described in such eubsection knew, or
exercising reasonable diligence would hsve
known, that such failure existed.
'(8) Waiver by secretary. - In the case of s
failure which Is dus to reasonable cause and not
to willful neglect, the Secretary may waive the
application of subsection (s).
'SEC. 860A. GENERAL ISSUANCE REQUIRE-
MENTS.
'(s) General Rule. • The requirements of this
section are met If s person meets •
'(1) ths mandatory policy requirements of
subsection (b),
'(2) the guaranteed issue requirements of
subsection (c), and
'(8) ths mandatory registration and disclosure
requirements of subsection (d).
'(b) Mandatory Policy Requirements. •
'(1) In general. - The requirements of thie
eubsection are met if any person issuing s health
care insurance contract to any eligible small
employer makes available to such employer a
health care insurance contract which •
'(A) provides benefits and coverage consistent
with ths model health care insurance benefits
plan developed under section 201 of the Health
Equity and Access Improvement Act of 1991, and
•(B) ie for a term of not less than 12 months.
'(2) Pricing and marketing requirements. • The
requirements of paragraph (1) are not met unless
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'(A) the pries at which the eond2set described
in paragraph (1) is mad* available b not greater
than tha pries for aueh contract determined on
the eame beak aa prices for other health care
contracts within the same clsss of
nsde available by the person to sligibls
ssjsII employers, and
•(B) such contract is made available to eligible
small employers using at least ths marketing
methods and other sales practices which are used
in selling such other contracts.
'(c) Guaranteed Issue. -
'(1) In general. - The requirements of this
■ubsection sre met if the person offering health
care insurance contracts to eligible small employ-
ers issues such a contract to any eligible small
employer silking to enter into such a contract.
'(2) Financial capacity exception. - Paragraph
(1) shall not require any person to issue a health
care insurance contract to the extent that the
issuance of such contract would result in such
person violating the financial solvency standards
(if any) established by ths State in which such
contract is to be issued.
'(8) Delivery capacity exception. - Paragraph ( 1)
shall not require any person to issue a health
care insurance contract to the extent thet the
issuance of such contract would result, upon
demonstration to the Secretary, in such person
exceeding its administrative capacity to serve
previously enrolled groups and individuals (and
additional individuals who will be expected to
enroll boeauss of affiliation with such previously
enrolled groups)
'(4) Exception for certain employers. - Para-
graph (1) shall not apply to a failure to issue e
health care insurance contract to an
employer if -
'(A) such employer is unable to pay the premi-
um for such contract, or
'(B) in tha case of an eligible small employer
with fewer than 16 employees, such employer
mils to enroll a minimum percentage of the
employer's eligible employees for coverage under
such contract, so long as such percentage is
enforced uniformly for all eligible small employ-
ers of comparable size.
'(6) Exception for alternative state programs. -
'(A) In general. - Paragraph (1) shall not apply
if the State in which the health care insurance
contract is issued -
*(i) hss a program which -
'(D assures ths availability of health care insur-
ance contracts to eligible small employers
through ths equitable distribution of high risk
groups among all persons offering such contracts
to such employers, and
'(II) is consistent with a model program devel-
oped by the NAIC;
'(ii) hss a qualified State-run reinsurance
program, or
'(iii) hss a program which ths Secretary of
Health and Human Services hss determined
sssures all sligibls small employers in the State
an opportunity to purchass a health care insur-
ance contract without regard to any risk charac-
teristic.
'(B) Reinsurance program. -
*(i) Program requirements. • For purposes of
subparagraph (A)(ii), a State-run reinsurance
program is qualified if such program is one of the
NAIC reinsurance program models developed
under clause (ii) or is s variation of one of such
models, ss approved by the Secretary of Hoalth
and Human Services.
'(ii) Models. - Not later than ths 120 day. after
the date of the enactment of the Health Equity
and Acorns Improvement Act of 1991, the NAIC
shall develop esvsral models for e reinsurance
program, including options for program funding.
'(d) Mandatory Registration and Disclosure
Requirements. - The requirements of this subsec-
tion sre met if the person offering heslth care
insurance contracta to eligible small employers in
any State •
'(1) registers with the State commissioner or
superintendent of insurance or other State
authority responsible for regulation of health
'(2) fully discloses the rating practices for small
employer health care insurance contracts st the
time such person offers s health care insurance
contract to an eligible small employer, and
'(8) fulry discloess ths terms for renewal of the
contract at the time of the offering of such
contract and at least 90 days before the expira-
tion of such contract.
'SEC. 860B. SPECIFIC CONTRACTUAL RE-
QUIREMENTS.
'(a) General Rule. • The requirements of this
section sre met if the following requirements are
met:
'(1) The coverage requirements of subsection
(b).
'(2) The rating requirements of subsection (c).
'(b) Coverage Requirements. •
'(1) In general. • The requirements of this
subsection sre met with respect to sny hoalth
care insurance contract if, under the terms snd
operation of the contract, ths following require-
ments sre met:
'(A) Guaranteed eligibility. • No eligible employ-
es (snd ths spouse or any dependent child of the
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employee eligible for coverage) may be excluded
from coverage under the contract.
'(B) Limitationa on coverage of preexisting
conditions. • Any limitation under the contract
on any preexisting condition -
'(i) may not extend beyond the 6-month period
beginning with the date an insured is first cov-
ered by the contract, and
*(ii) may only apply to preexisting conditions
which manifested themselves, or for which
medical care or advice waa sought or recommend-
ed, during the 3-month period preceding the date
an insured is first covered by the contract.
HO Guaranteed renewability. -
'(i) In general. - The contract must be renewed
at the election of the eligible email employer
unices the contract is terminated for cause.
'(ii) Cause. - For purposes of this subparagraph,
the term 'cause* means •
'(D nonpayment of the required premiums;
'(ID fraud or misrepresentation of the employer
or, with respect to coverage of individual
insureds, the insureds or their representatives;
'(IID noncompUanee with the contract's mini-
mum participation requirements;
'(IV) noncompliance with the contract's employ-
er contribution requirements; or
'(V) repeated misuse of s provider network
provision in the contract.
'(2) Waiting periods. - Paragraph UXA) shall
not •PPtf to any period an employee is excluded
from coverage under the contract eolery by reason
of a requirement applicable to all employees that
a minimum period of service with the employer is
required before the employee is eligible for such
'(8) Determination of periods for rulee relating
to preexisting conditions. - For purposes of
paragraph (1KB), the date on which an insured is
first covered by s contract shall bs the earlier of
'(A) the date on which coverage under such
contract begins, or
'(B) the first day of any continuous period •
'(0 during which the insured waa covered under
1 or more other health insurance arrangements,
and
'(ii) which does not end more than 120 days
before the date employment with the employer
'(4) Cessation of small employer health insur-
ance contract.
'(B) Notice requirement. • Subparagraph (A)
shall apply onry if the person gives notice of the
decision to terminate at least 90 days before the
expiration of the contract.
'(G) 6-year moratorium. • If, within 6 years of
the year in which a parson terminates a class of
business under subparagraph (A), such person
establishes a new class of business, the issuance
of such contracts in that year shall be treated as
s failure to which this section applies.
'(D) Transfers. - If, upon a failure to renew e
contract to which subparagraph (A) applies, a
person offers to transfer such contract to another
class of business, such transfer must be made
without regard to risk characteristics.
'(c) Rating Requirement. •
'(1) In general. - The requirementa of this
subsection are met if •
'(A) the requirements of paragraphs (2) and (3)
are met, and
'(B) any incresss in any premium rate under
the renewal contract over the corresponding rate
under the health care insurance contract being
renewed does not exceed the applicable annual
'(A) In general. - Except as otherwiee provided
in this paragraph, a person shall not be treated
as failing to meet the requirementa of paragraph
(1HO if such person terminates the class of
business which includes the health care insur-
'(2) Limit on variation of premiums between
classes of business. -
'(A) In general. - The requirementa of this
paragraph are met if the index rate for a rating
period for any class of business of the ineurer
does not exceed the index rate for any other class
of business by more than 20 percent.
'(B) Exceptions. • Subparagraph (A) •hall not
apply to a class of business if -
'({) the class is one for which the insurer does
not reject, and never has rejected, eligible small
employers included within the class of business
or otherwiee eligible employees and dependents
who enroll on s timely basis, based upon risk
characteristics,
'(ii) the insurer does not transfer, and never
has transferred, s health care insurance contract
involuntarily into or out of the class of business,
and
'(iii) the class of business is currently available
for purchase.
'(3) Limit on variation in premium rates within
s class of business - The requirements of this
paragraph are mot if the premium rates charged
during a rating period to eligible small employers
with similar case characteristics (other than risk
characteristics) for the same er similar coverage,
or the rates which could be charged to such
employers under the rating aystem for that class
of business, do not vary from the index rate by
more than 20 percent of the index rate.
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'(4) Applicable annual adjusted increase. - For
purpoaaa of paragraph (1KB) -
'(A) In ganaral. - The applicable annual adjusted
incraaaa is an amount equal to the aum of -
'(i) the applicable percentage of the premium
rate under the health care insurance contract
being renewed, plue
'(ii) any increase in the rate under the renewal
contract due to any change in coverage or to any
change of case characteristics (othsr than risk
characteristics),, plus
'(iii) 6 percentage points.
'(B) Applicable percentage. •
'(i) In general. - For purposes of subparagraph
(A), the applicable percentage ie the percentage
(if sny) by which-
'(D the premium rate for newly issued contracts
for substantially similar coverage for an employer
with similar case characteristics (othsr than risk
characteristics) as the employer under the health
care ineurance contract (determined on the let
day of the rating period applicable to audi con-
tracts), esceeds
'(ID such rate on the 1st day of the rating
period applicable to the contract being renewed.
'(ii) Cases where no new business. - If no new
contracts srs being issued for s class of business
during sny rating period, the applicable percent-
age shall be the percentage (if any) by which the
bass premium rate determined under paragraph
(6MB) with respect to the renewal contract ex-
ceeds such rate for the contract to be renewed.
'(6) Definitions. - For purposes of this subsec-
tion -
'(A) Index rate. - The term 'index rate' means,
with respect toe class of business, the arithmetic
average of the applicable bass premium rate and
the corresponding highest premium rate for that
'(B) Base premium rate. - The term 'base premi-
um rate' mesne, for each class of business for
each rating period, the lowest premium rate
which could have been charged under a rating
system for that class of business by the insurer to
eligible email employers with similar casecharac-
terietice (other than risk characteristics* for
health care insurance contracts with the same or
■nailer coverage.
•SBC. SMC. STATE COMPLIANCE AGREE-
MENTS.
'(a) Agreements. - The Secretary of Health and
Human Services may enter into an agreement
with any State -
'(1) to appry the standards set by the NAIC for
health care insurance contracts in lieu of the
requirements of this subchapter, and*
'(2) to provide for the State to make the initial
determination as to whether a person ie in
compliance with such standards for purposes of
applying the sanctions under section 850.
'(b) Standards. • An agreement may be entered
into under subsection (a)(1) only if •
'(1) the chief executive officer of tho State
requests such agreement be entered into,
*(Z> the Secretary of Health and Human Servic-
es determines thst the NAIC standards to be
applied under the agreement will carry out the
purposes of this subchapter, and
'(3) the Secretary determines that the NAIC
standards to be applied under the agreement will
appjy to substantially all health care ineurance
contracts issued in such State to eligible smell
employers.
'(c) Termination. • The Secretary of Health and
Human Services shall terminate any agreement
if the Secretary determines that the application
of NAIC standards by the State ceases to carry
out the purposes of this subchapter.
'(d) NAIC Standards. - Not later than the 270
days after ths date of the enectment of the
Health Equity and Access Improvement Act of
1991, the NAIC shall develop standards which
provide for requirements substantially similar to
the requirements of this subchapter.
'SEC. MOD. DEFINITIONS AND OTHER
RULES.
For purposes of this part •
'(1) Health cere ineurance. • The term 'health
care insurance' means sny hospital or medics!
expense incurred policy or certificate, hospital or
medical service plan contract, hsslth mainte-
nance subscriber contract, multiple employer
welfare arrangement, other employee welfare
plan (as defined in the Employee Retirement
Income Security Act of 1974), or any other health
insurance arrangement, and includes an
employment-related reinsurance plan, but does
not include •
'(A) s self-insured health care insurance plan;
or
'(B) any of the following offered by en insurer
'(i) accident only, dental only, or disability
income only insurance,
'(ii) coverage issued as s supplement to liability
insurance,
'(iii) worker's compensation or similar insur-
ance, or
'(iv) automobile medical-payment insurance.
'(2) Class of business. -
'(A) In general. - Except as provided in subpara-
graph (B), the term 'class of business' mesne,
with respect to health care insurance provided to
eligible small employers, all health care Insurance
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provided to such employee*.
'(B) Establishment of groupings. -
'(i) In general. - An ieeuer may establish sepe-
rmle cleeeei of business with reepect to health
care inauranee provided to eligible email employ-
en but on|y if aueh cleeeei are baaed on 1 or
more of the following:
'(D Bueineea marketed and eold through per-
aona not participating in the marketing and eaie
of such insurance to other eligible small employ-
ers.
'AD Business acquired from other insurers as a
distinct grouping.
'(Ill) Business provided through an association
of not ices than 20 eligible small employers which
was established for purposes other than obtaining
insurance.
'(IV) Business related to managed care plane (as
defined in section 202(2) of the Health Equity
and Access Improvement Act of 1991.
'(V) Any other bueinees which the Secretary of
Health and Human Services determines neede to
be separately grouped to prevent a substantial
threat to the solvency of the insurer.
'(ii) Exception allowed. - Except as provided in
subparagraph (C), an insurer may not establish
more than one distinct group of eligible small
employers for each category specified in clause
G>.
'(Q Special rule. - An insurer may establish up
to 2 groups under each category in subparagraph
(A) or (B) to account for differences in character-
istics (other than differences in plan benefits) of
health insurance plane that are expected to
produce substantial variation in health care
'(2) Characteristics. -
'(A) In general. - The term 'characteristics'
mesns, with respect to any insurance rating
system, ths factors used in determining rates.
'(B) Risk characteristics. - The term 'risk
characteristics' means factors related to the
health risks of individuals, including health
status, prior claims experience, the duration
sines ths data of issue of s health insurance plan
or arrangement, industry, and occupation.
'(O Geographic factors. •
'(i) In general. • In applying geographic location
as s characteristic, an insurer may not use for
purposes of this subchapter areas smaller than
3-digit postal tip code areas.
'(ii) Study and report. -Not later than 120 days
after the date of the enactment of the Health
Equity and Access Improvement Act of 1991, the
Comptroller General of the United States shall
study end report to ths Congress concerning -
'(D insurance industry practices in determining
the geographic boundaries of communities used
for setting rates,
'(ID ths feasibility and desirability of establish-
ing standardised geographic communities for
setting rates, and
'(III) the effect such standardised geographic
communities would have on rates charged small
employers.
'(8) Eligible email employer. •
'(A) In general. - The term 'eligible small
employer' mesns any person which, on an aver-
age business day during the preceding taxable
year, had more than 2 but less than 60 employ-
ees.
'(B) Aggregation rules. • All members of the
ssms controlled group of corporations (within the
meaning of section 62(a)) and all persons under
common control (within the meaning of section
62(b)) shall be treated as 1 person.
'(O Employes. • The term 'smployss' shall not
'(i) s self-employed individual as defined in
lection 401(c)(1), or
'(ii) an employee who works ices than 20 hours
'(4) Nsic - The term 'NAIC means the Nation-
al Association of Insurance Commissioners.'
(b) Conforming Amendment. - Subchapter L of
chapter 1 of ths Internal Revenue Code of 1986
is amended by adding at the end thereof the
following new item: 'Part IV. Health care insur-
ance provided to small employers.'
(c) Effective Dates. -
(1) In general. • The amendments made by this
section shall apply to eontracte issued, or re-
newed, after the date of the enactment of this
Act.
(2) Guaranteed issue. - The provisions of sec-
tion 860A(c) of ths Internal Revenue Code of
1986, as sdded by this section, shall apply to
eontracte which are issued, or renewed, after the
date which is 18 months after the date of the
enactment of this Act.
(8) Premium range. • In the case of any contract
in effect on the date of ths enactment of this Act,
the provisions of section 660B<cX 1XA) of such
Code, ss sdded by this section, shall not apply to
the premiums under such contract or any renew-
al contract for benefits provided during the
period beginning on such data and ending on the
last day of the 2nd plan year beginning after
TITLE m - ACCESS TO PRIMARY AND PRE-
VENTIVE CARE
SEC. 801. REAUTHORIZATION OF CERTAIN
PROGRAMS PROVIDING PRIMARY AND PRE-
VENTIVE CARE.
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(a)
SlTgXDCA) of the Public Health Service Act (42
UAC 147MiKlXA)) is i
(Dbyi
eeg.fa
O) by striking sot 'each of the teal years 1992
1 1906' and inserting in lieu thereof 'fiscal
• 1902; $390,000,000 for fiscal year 1998, and
as may be nscssssry for each of the
fecal years 1994 through 1996*.
Ch) Tnkirmluiie Prevention Grants. - Section
tVtqtCO of the Pubtie Health Service Act (42
UAC 247V0K2)) is eminihd ■
CO by strike**; out 'and snchsiuns' and insert-
ins; in lieu thereof 'such stuns*; and
ttbystriknegout 'each of the fiscal jeers 1992
rhrnngh 1998' and inserting in lien thereof 'fiscal
year 1992, $90,000,000 for fiscal year 1998, and
sneh sums as may he nseaasaiy for each of the
Ascel years 1994 through 1996*.
(e) Lead Poisoning Prevention. - Section 817AQ
of the Public Health Service Act (42 U.S.C.
*t7b-l<p) ie amended by striking out 'and
$24,000,000 for fiseal year 1991' and inserting in
Ken thereof '$24,000,000 for fiscal year 1991,
$60,000,000 for fiscal year 1998, and such sums
as maybe necessary for each of the fiseal years
1994 through 1996.'.
Id) Sexually Transmitted Diseases. - Section
aUKdXl) of the Public Health Service Act (42
UAC. 247e(dXl)> is amended -
(1) by striking out 'and such sums' and insert-
ins; in lieu thereof 'such sums'; and
(2) by inserting before the first period the
following: '$126,000,000 for fiscal year 1998, and
such sums as may be necessary for each of the
Ami years 1994 through 1996'.
Co) Migrant Health Centers. • Section
329(hMlXA) of the Public Health Service Act (42
U-S.C. 264Wh)<lXA)) ie amended by striking out
'and 1991, and such sums as may be necessary
for each of the fiscal years 1992 through 1994'
and inserting in lieu thereof 'through 1992,
$80,000,000 for fiscal year 1998, and such sums
as may be necessary for each of the fiscal years
1994 through 1996'.
(f) Community Health Centers. - Section
390(gMlXA) of the Public Health Service Act (42
UAC. 264e(gMl>(A» ie amended by striking out
'and 1991, and such sums as may be necessary
for each of the fiscal yeara 1992 through 1994'
and inserting in lieu thereof 'through 1992,
$700,000,000 for fiseal year 1998, and such •urns
as may be necessary for each of the fiseal years
1994 through 1996'.
(g> Health Care Services for the Homeiees. -
i S40(qH 1) of the Public Health Service Act
(42 UAC. 266(qHl)) is amended by striking out
'and such sums* and all that follows through the
period and inserting in lieu thereof '$90,000,000
for fiscal year 1998, and such sums as may be
necessary for each of the fiscal years 1994
through 1996.'.
(h) Substance Abuse Prevention Programs. -
Section 608<dXl) of the Public Health Service Act
(42 VSJC. 290aa-6(d)(l)) ie amended -
(1) by striking out 'and such sums' and insert-
ing in lieu thereof 'such sums'; and
(2) by inserting before the period the following:
'$860,000,000 for fiscal year 1998, and such cume
as msy be necessary for each of the fiscal years
1994 through 1996'.
(i) Family Planning Project Grants. • Section
1001(d) of the Public Health Service Act (42
U.S.C. 800(d)) ie smsndsd •
(1) by striking out 'and $158,400,000' and
inserting in lieu thereof '$168,400,000'; and
(2) by inserting before the period the following:
', $200,000,000 for fiseal year 1998, and such
sums as may be necessary for each of Uie fiscal
years 1994 through 1996'.
(p Breast and Cervical Cancer Prevention. -
Section 1609(a) of the Public Health Service Act
(42 U AC. 800n-6(a)) ie amended •
(1) by striking out 'and such sums' and insert-
ing in lieu thereof 'such sums'; end
(2) by striking out 'for each of the fiscsl years
1992 and 1998' and inserting in lieu thereof 'for
fiscal year 1992, $100,000,000 for fiscal year
1998, and such sums as may be necessary for
each of the fiseal years 1994 through 1996'.
(k) Preventive Health and Health Services
Block Grant - Section 1901(a) of the Public
Health Service Act (42 U.S.C. 800w(e)) is amend-
ed by striking out 'and such sums' snd all that
follows through the end thereof and inserting the
following: '$286,000,000 for fiscal year 1993. and
such sums as msy be necessary for each of the
fiscal years 1994 through 1996.'.
(1) HIV Early Intervention. • Section 2666 of the
Public Health Service Act (42 U.S.C. SOOiT-66) b
amended •
(1) by striking out 'and such sums' and insert-
ing in lieu thereof 'such sums'; and
(2) by striking out 'each of the fiscal years 1992
through 1996' and inserting in lieu thereof 'fiscal
year 1992, $810,000,000 for fiscal year 1998, and
such sums as may be necessary for each of the
fiscal years 1994 through 1996'.
(m) Maternal snd Child Health Services Block
Grant. • Section 601(a) of the Social Security Act
(42 U.S.C. 701(a)) is amended by striking out
'$686,000,000 for fiseal year 1990 and each fiscal
year thereafter* and inserting iu lieu thereof
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'1600,000.000 for feed year 1993, and such sum*
ss may be neceeaary in each of the fecal years
1994 through 1997*.
TITLE IV - COST CONTAINMENT
SEC. 401. NEW DRUG CLINICAL TRIALS
PROGRAM.
Part B of title IV of the Public Health Service
Act (42 U.S.C. 2S4 et aeq.) is amended by adding
at the end thereof the following new section:
'SEC. 409. NEW DRUG CLINICAL TRIALS
PROGRAM.
'(a) In General. • The Director of the National
Institutes of Health is authorized to establish
and implement a program for the conduct of
clinical trials with respect to new drugs and
disease treatments determined to be promising by
the Director. In determining which drugs and
disease treatments that are to be the subject of
such clinical trials, ths Director shall give priori*
ty to those drugs and disease treatments targeted
towards ths diseases determined •
'(1) to be the most costly to treat;
'(2) to have the highest mortality; or
'(3) to affect the greatest number of individuals.
'(b) Authorisation of Appropriations. - There
are authorised to be appropriated to carry out
this section, $120,000,000 for fecal year 1993,
and such sums ss may be necessary in each of
the fecal years 1994 through 1997.'.
SEC. 402. MEDICAL TREATMENT EFFEC-
TIVENESS.
(a) Drug Abuse Demonstration Projects. •
Section 609G(c)(l) of the Public Health Service
Act (42 U.S.C. 290aa- 14(c)(1)) b amended •
(1) by striking out 'and such sums' and insert-
ing in lieu thereof 'such sums'; and
(2) by striking out 'each of the fecal years 1990
through 1991' and inserting in lieu thereof 'fees!
year 1991, $200,000,000 for fecal year 1993, and
such sums ss msy bs necessary for each of the
fecal years 1994 through 1996*.
(b) Agency for Health Care Policy and Research.
• Section 926 of the Public Health Service Act (42
U.S.C. 299c-6) b amended -
(1) in subsection (a), by striking out 'and
$70,000,000 for fecal year 1992' and inserting in
lieu thereof '$70,000,000 for fecal year 1992,
$ 100,000,000 for fecal year 1993, and audi sums
ss msy be necessary for each of the fecal years
1994 through 1996'; and
(2) by adding at ths end thereof the following
'(c) Use of Additional Appropriations. • Within
amounts appropriated under subsection (a) for
each of the fecal years 1993 through 1996 that
are in excess of the amounts appropriated under
such subsection for fecal year 1992, the Secre-
tary shall givs priority to expanding research
conducted to determine the most cost effective
methods of health care and for developing and
disseminating new practice guidelines related to
such methods. In utilising such amounts, the
Secretary shall give priority to diseases and
disorders thst ths Secretary determine* are the
most costly to the United Ststee end evidence s
wids variation in current medicsl practice.'.
SEC. 403. HEALTH CARE COST CONTROL -
EXPENDITURE TARGETS.
(s) In General. • Not later than I year a/tor the
date of enactment of thb Act, the Secretary of
Health and Human Services, after considering
the recommendations of the Health Care Cost
Control Advisory Committee esteblbhed under
subsection (b), shall prepare and aubmit to the
appropriate committees of the Congress s report
concerning the establishment of national spend-
ing targets for health care and health care servic-
es. Such report shall contain the recommenda-
tions of the Secretary concerning the feasibility
(1) for controlling the cost of health care,
reducing cost shifting and maintaining the
quality of care;
(2) of establbhing national targota for health
expenditures;
(3) of establbhing national reimbursement
targets for hospital services;
(4) establbhing national reimbursement tsrgets
for physicians services; and
(6) of establbhing national reimbursement
targets for prescription drug services.
(b) Health Care Cost Control Advisory Commit-
tee. •
(1) Establishment. • There shall be ostsblbhed
s Health Care Cost Control Advisory Committee
(hereinafter referred to in thb subsection ss the
'Committee').
(2) Membership. • The Committee shall be
composed of 6 individuab appointed by the
Secretary, representing -
(A) physicians;
(B) hoapitab;
(C) pharmacies;
(D) private insurers;
(E) State and local governments;
(F) employers;
(G) organized labor, and
(H) academb with expertise ss s health econo-
mist.
(3) Compensation. •
(A) In general. • Members of the Committee
shall serve without compensation.
(B) Expenses, reimbursed. • While swsy from
their homes or regular places of business on the
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business of the Committee, the members of the
Committee mey be allowed travel expenaee,
including per diem in lieu of eubeietenee, aa
authorised by section 6703 of title 6. United
Slates Code, for persons employed intermittently
in Government service.
(Q Application of the act. • The provisions of
the Foderal Advisory Committee Act (6 U.S.C.
App.) shall not apply with respect to the Commit-
tee.
(D) Support • The Secretary of Health and
Human Services shall supply such necessary
office facilities, office supplies, support services,
and related expenaee aa necessary to carry out
the functions of the Committee.
TITLE V - REVENUE OFFSETS
SUBTITLE A - GENERAL PROVISIONS
SEC. 601. ELIMINATION OF THE STATUTE
OF LIMITATIONS ON COLLECTION OF
GUARANTEED STUDENT LOANS.
Section 3(c) of the Higher Education Technical
Amendments of 1991 (Public Law 102-26) ia
amended by striking out 'that are brought before
November 16, 1992*.
SEC. 602. INCREASED BASE TAX RATE ON
OZONE-DEPLETING CHEMICALS AND EX-
PANSION OF LIST OF TAXED CHEMICALS.
(a) In General. - Paragraph (1) of section
4661(b) (relating to amount of tax) is amended to
reed aa follows:
'(B) Baae tax amount. • The base tax amount for
purposes of subparagraph (A) with respect to any
sale or use during e calendar year before 1996
with respect to any ozone-depleting chemical ie
the amount determined under the following table
for audi calendar year:
Calender Year Baae tax amount
1992 $1.66
1993 $2.76
1994 $3.66
1996 $4.66/
(b) Conforming Amendment*. •
(1) Ratee retained for chemical ueed in rigid
foam insulation. • The table in subparagraph (B)
of section 4662(g)(2) (relsting to chemicals used
in rigid foam insulation) ia amended •
(A) by striking ' 16' and inserting ' 13.6', end
(B) by striking ' 10' and inserting '9.6'.
(2) Floor stock taxes. •
(A) Subparagraph (C) of eection 4662(h)(2)
(relating to other tax-increase dates) is emended
by striking ' 1993, and 1994' and inserting ' 1993.
1994, end 1996. and July 1, 1992'.
(B) Paragraph (3) of section 4662(h) (relating to
due date) ia amended -
(i) by inserting 'or July 1' after 'January 1',
(ii) by inserting 'or December 31, respectively,'
after 'June 30'.
(c) Effective Date. • The amendment* made "by
this section shsll spply to taxable chemical* sold
or used on or after July 1, 1992.
SEC. 603. MARK TO MARKET INVENTORY
METHOD FOR SECURITIES DEALERS.
(a) General Rule. • Subpart D of part II of
subchapter E of chapter 1 (relating to invento-
ries) ie emended by sdding st the end thereof the
following new section:
•SEC. 476. MARK TO MARKET INVENTORY
METHOD FOR DEALERS IN SECURITIES.
'(e) General Rule. - Notwithstanding any other
provision of this subpart, the following rules
shsll spply to securities held by a dealer in
securities:
'(1) Any security which is inventory in the
hands of the desler shsll be included in inventory
st fair market value.
'(2) In the caee of any security which is not
inventory in the hsnds of the dealer and which is
held st the close of sny taxable year •
'(A) the dealer shall recognize gain or loss a* if
such security were sold for it* fair market value
on the laat business dsy of such laxablo year, and
'(B) any gain or loss shall be taken into account
for auch taxable year. Proper adjustment shall be
made in the amount of any gain or loss subse-
quently realized for gain or loss taken into
account under the preceding sentence. The
Secretary may provide by regulations for the
application of this paragraph at times other than
the timee provided in this paragraph.
'(b) Exceptions. •
'(1) In general. • Subsection (a) shall not apply
to -
'(A) any security held for investment,
'(B) any security described in subsection
(c)(2)(C) which ia originated or acquired by the
taxpayer in the ordinary course of a trade or
business of the taxpayer and which is not hold
for sale, and
'(C) any hedge with respect to •
'(i) a security to which subsection (a) does not
apply, or
'(ii) a position or a liability which is not a
security in the hands of the taxpayer. Subpara-
graph (C) ahall not apply to any security held by
a person in its capacity as a dealer in securities.
'(2) Identification required. • Any security shall
not be treated as described in subparagraph (A),
(B), or (C) of paragraph (1), as the esse may be,
unless such security b clearly identified in the
dealer's records ss being described in such sub-
paragraph before the close of the day on which it
was acquired, originated, or entered into (or such
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other tine as the Secretary may by regulations
'(3) Securities subsequently not exempt. • If a
security ceases to be described in paragraph ( 1) at
any time aAer it was identified as such under
paragraph (2), this section shall apply to such
security as of the time such cessation occurs.
'(4) Special rule for property held for invest-
ment. - To the extent provided in regulations,
subparagraph (A) of paragraph (1) shall not apply
to any security described in subparagraph (D) or
(E) of subsection (c)(2) which is held by a dealer
in such securities.
'(c) Definitions. • For purposes of this section -
'(1) Dealer in securities defined. • The term
'dealer in securities' means a taxpayer who -
'(A) regularly purchase! securities from or sells
securities to customers in the ordinary course of
a trade or business; or
'(B) regularly offers to enter into, sssume,
offset, assign or otherwise terminate positions in
securities with customers in the ordinary course
of s trade or business.
'(2) Security defined. • The term 'security'
means any -
'(A) share of stock in a corporation;
'(B) partnership or beneficial ownership interest
in a widely held or publicly traded partnership or
trust;
'(C) note, bond, debenture, or other evidence of
indebtedness;
'(D) any interest rate, currency, or equity
notional principal contract;
'(E) evidence of an interest in, or s derivative
financial instrument in, sny security described in
subparagraph (A), (B), (C), or (D), or any curren-
cy, including any option, forward contract, abort
position, and any similar financial instrument in
such s security (but not including any contract to
which section 1266(a) applies); and
•(F) position which -
'(i) is not a security described in subparagraph
(A). (B), (Q. (D), or (E),
'(ii) is a hedge with respect to such s security,
and
'(iii) is clearly identified in the dealer's records
ss being described in this subparagraph before
the dose of the day on which it was acquired or
entered into (or such other time ss the Secretary
may by regulations prescribe).
'(8) Hedge. • The term 'hedge' includes any
position which reduces the dealer's risk of inter-
est rate or price changes or currency fluctua-
tions.
'(d) Special Rules. • For purposes of this section
'(1) Certain rules not to apply. - The rules of
sections 263(g) and 263A shall not apply to
securities to which subsection (a) applies.
'(2) Improper identification. - If a taxpayer •
'(A) identifies sny security or position under
subsection (b)(2) ss being described in such
subsection and such security or position is not so
described, or
'(B) fails under subsection (c)(2)(F)(iii) to identi-
fy a security or position which is described in
such subsection at the time such identification is
required, the provisions of subsection (s) shall
apply to such security or position, except that
any loos under this section prior to the disposi-
tion of the security shall be recognized only to
the extent of gain previously rocognized under
this section with respect to such security.
'(e) Regulatory Authority. • The Secretary shall
prescribe such regulations ss may be necessary or
appropriate to carry out the purposes of this
section, including rules •
'(1) to prevent the use of year-end transfers,
related parties, or other arrangements to avoid
the provisions of this section, and
'(2) to provide for the application of this section
to hedges which do not hedge s specific security,
position, or liability/
(b) Conforming Amendments. •
(1) Paragraph (1) of section 986(d) is emended
(A) by striking 'section 1256' end inserting
'section 476 or 1266', and
(B) by striking ' 1002 and 1266' and inserting
'476, 1092, and 1266'.
(2) The table of sections for subpart D of part II
of subchapter E of chapter I is amonded by
adding at the end thereof Uie following now item:
'Sec 476. Mark to market inventory method for
dealers in securities.'
(c) Effective Date. •
(1) In general. • The amendments made by this
section shail apply to all taxable years ending on
or sAer December 31, 1993.
(2) Change in method of accounting. - In the
cess of any taxpayer required by this section to
change its method of accounting for any taxable
year -
(A) such change ahall be treated as initiated by
the taxpayer,
(B) such change ahall be treated as msde with
the consent of the Secretary, and
(Q the net amount of the adjustments required
to be taken into account by the taxpayer under
section 481 of the Internal Revenue Code of 1986
shall be taken into account ratably over the
10- taxable year period beginning with Uie first
taxable year ending on or after December 31,
1993.
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SBC. 604. DISALLOWANCE OF INTEREST ON
CERTAIN OVERPAYMENTS OF TAX.
(a) General Rum. - Subsection (a) of section
6611 k ■■■Willi tomdw follow.:
'<•) Dsmllowanee of Intaraol on Certain
Overpaymente. -
•<1) Refunds within 46 dayssfter return is filed.
• If any payment of tax imposed by this title is
refunded within 46 days after the last day pre*
scribed for filing the return of such tax (deter-
mined without regard to any extension of time
for filing the return) or, in the cess of a return
filed after such last date, b refunded within 46
days after the date the return is filed, no interest
shall be allowed under subsection (a) on such
overpayment.
'(2) Refunds after claim for credit or refund. -
If-
'(A) the taxpayer files a claim for a credit or
refund for any overpayment of tax imposed by
this title, and
'(B) such overpayment is refunded within 45
days after such claim is filed, no interest shall be
allowed on such overpayment from the date the
claim is filed until the day the refund ia made.
'(8) IRS initiated adjustments. • Notwithstand-
ing any other provision, if an adjustment, initiat-
ed by or on behalf of the Secretary, results in a
refund or credit of an overpayment, interest on
such overpayment shall be computed by subtract-
ing 46 days from the number of days interest
would otherwise be allowed with respect to such
overpayment.'
(b) Effective Dates. -
(1) Paragraph (1) of section 6611(e) of the
Internal Revenue Code of 1966 (as amended by
subsection (a)) shall apply in the case of returns
ths due date for which (determined without
regard to extensions) is on or after July 1, 1992.
(2) Paragraph (2) of section 6611(e) of such
Code (as so emended) shsll spply in the case of
claims for credit or refund of sny overpayment
filed on or after Jujy 1, 1992 regardless of the
taxable period to which such refund relstes.
(3) Paragraph (3) of section 6611(e) of such
Code (as so amended) shall apply in the case of
any refund paid on or after July 1, 1992 regard-
less of ths taxable period to which such refund
SUBTITLE B - ELECTROMAGNETIC SPEC-
TRUM FUNCTION
SBC 611. SHORT TITLE.
This subtitle may be cited as the 'Emerging
Telecommunications Technologies Act of 1992*.
SEC. 612. FINDINGS.
The Congress finds thst •
(1) spectrum is s valuable natural resource;
(2) it b in the national interest thst thb re-
source be used more efficiently;
(8) the spectrum below 6 gigahertz (GHz) b
becoming increasingly congested, and, ss a result
entitiee thst develop innovative new
spectrum-based services are finding it difficult to
bring these services to the marketplace;
(4) scarcity of assignable frequencies can and
will -
(A) impede the development and commercializa-
tion of new spectrum -based products and servic-
«•;
(B) reduce the capacity and efficiency of the
United Ststes telecommunications system; and
(Q adversely affect the productive capacity and
international competitiveness of the United
Ststes economy;
(5) the United Ststes Government presently
lacks explicit authority to use excess
radiocommunications capacity to satisfy
non-United Ststes Government requirements;
(6) more efficient use of the spectrum can
provide the resources for increased economic
returns;
(7) msny commercial users derive significant
economic benefits from their spectrum licenses,
both through the income they earn from their
use of the spectrum and the returns they realize
upon transfer of their licenses to third parties;
but under current procedures, the United Ststes
public does not sufficiently share in their bene-
fits;
(6) msny United Ststes Government functions
and responsibilities depend heavily on the use of
the radio spectrum, involve unique applications,
end are performed in the broad national and
public interest;
(9) competitive bidding for spectrum can yield
significant benefits for the United Ststes econo-
my by increasing the efficiency of spectrum
allocations, assignment, and use; and for United
Ststes taxpayers by producing substantial reve-
nues for the United Ststes Treasury; and
(10) the Secretary, the President, and the
Commission should be directed to take appropri-
ate steps to foster the more efficient use of this
valuable national resource, including the reallo-
cation of a target amount of 200 megahertz
(MHz) of spectrum from United States Govern-
ment use under section 305 of the Communica-
tions Act to non-United States Government use
pursuant to other provisions of the Communica-
tions Act and the implementation of competitive
bidding procedures by the Commission for some
new assignments of the spectrum.
SEC.613.NATIONALSPECTRUM PIJWNING.
(a) Planning Activities. • The Secretary and the
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Chairman of the Commiaaion shall, at least twice
each year, conduct joint spectrum planning
meetings with respect to the following issues -
(1) future spectrum needs;
(2) the spectrum allocation actions necessary to
accommodate those needs, including consider-
ation of innovation and marketplace develop-
ments that may affect the relative efficiencies of
different portions of the spectrum; and
(3) sctions necessary to promote the efficient
use of the spectrum, including proven spectrum
management techniques to promote increased
shared use of the spectrum as a moans of in-
creasing non-United States Government access;
and innovation in spectrum utilisation including
means of providing incentives for spectrum users
to develop innovstive services and technologies.
(b) Reports. • The Secretary and the Chairman
of the Commission shall submit a joint annus!
report to the President on the joint spectrum
planning meetings, conducted under subsection
(a) and any recommendations for action devel-
oped in such meetings..
(c) Open Process. - The Secretary and the
Commission will conduct an open process under
this section to ensure the full consideration and
exchange of views among any interested entities,
including all private, public, commercial, and
governmental interests.
SEC. 614. IDENTIFICATION OF REALLO-
CABLE FREQUENCIES.
(a) Identification Required. • The Secretary
shall prepare and submit to the President the
reports required by subsection (d) to identify
bands of frequencies that •
(1) are allocated on a primary basis for United
States Government use and eligible for licensing
pursuant to section 305(a) of the Communica-
tions Act;
(2) sre not required for the present or identifi-
able future needs of the United States Govern-
(3) can feasibly be made available during the
next 15 years after enactment of this title for use
under the provisions of the Communications Act
for non-United States Government users;
(4) will not result in costs to the Federal Gov-
ernment that are excessive in relation to the
benefite that may be obtained from the potential
non-United States Government uses; and
(6) are likely to have significant value for
non-United States Government uses under the
Communications Act.
(b) Amount of Spectrum Recommended. -
( I) In general. • The Secretary shall recommend
ss a goal for reallocation, for use by non-United
States Government stations, bands of frequencies
constituting a target amount of 200 MHz, that
are located below 6 GHz, and that meet the
criteria specified in paregraplia ( 1) through (5) of
subsection (a). If the Secretary identifies (ss
meeting such criteria) bands of frequencies
totalling more than 200 MHz, the Secretary ahall
identify and recommend for reallocation those
bands (totalling not less than 200 MHz) that are
likely to have the greatest potential for
non-United States Government uses under the
Communications Act.
(2) Mixed uses permitted to be counted. • Bands
of frequencies which the Secretary recommends
be partially retained for use by United States
Government ststions, but which sre also recom-
mended to be reallocated and made available
under the Communications Act for use by
non-United States Government ststions, msy be
counted toward the target 200 MHz of spectrum
required by paragraph (I) of this subsection,
except that •
(A) the bends of frequencies counted under this
paragraph may not count toward inoro than
one-half of the amount targeted by paragraph ( I)
of this subsection;
(B) s band of frequencies may not bo counted
under thia paragraph unless tho assignments of
the band to United States Government stations
under section 305 of the Communications Act sre
limited by geographic area, by time, or by other
means so ss to guarantee that the potential use
to be made by which United Ststes Government
stations b substantially loss (as tnoasured by
geographic area, time, or othorwise) then the
potential United States Government uee to be
made; and
(C) the operational sharing ponnittod undor
this paragraph ahall be subject to procedures
which the Commission and the Department of
Commerce shall establieh and implement to
ensure against harmful interference.
(c) Criteria for Identification. -
(1) Needs of the united states government. - In
determining whether a band of frequencies meets
the criteria specified in subsection (a)(2), the
Secretary ahall •
(A) consider whether the band of frequencies is
used to provide s communications service that is
or could be available from a commercial provider;
(B) seek to promote •
(i) the msximum practicable reliance on com-
mercially available substitutes;
(ii) the sharing of frequencies (ss permitted
under subsection (b)(2));
(iii) the development end use of new communi-
cations technologies; and
(iv) the use of nonradiating communications
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systems what* practicable;
(Q seek to avoid •
(i) serious degradation of United SUtea Govern-
■lent aarvicea and operations;
(ii) excessive coota to the United States Govern-
ment and civilian users of audi Government
Secretary shall consider -
(A) the extent to which equipment is commer-
cially available that ia capable of utilizing the
(iii) identification of any bands for reallocation
that are likely to be subject to substitution for
the reasons specified in section 406(b)(2)(A)
through (O; and
(D) exempt power marketing adminiatrationa
and the Tennessee Valley Authority from any
reallocation procedures.
(2) Feasibility of use. • In determining whether
a frequency band meets the criteria specified in
subsection (aXS). the Secretary shall -
(A) assume such frequencies will be assigned by
the Commisaion under section 303 of the Com-
munications Act over the course of fifteen years
after the enactment of thb title;
(B) assume reasonable ratea of scientific prog-
ress and growth of demand for telecommunica-
tions services;
(C) determine the extent to which the realloca-
tion or reassignment will relieve actual or poten-
tial scarcity of frequencies available for
non-United States Government use;
(D) seek to include frequencies which can be
used to stimulate the development of new tech-
(E) consider the cost to reestablish United
States Government aarvicea displaced by the
reallocation of spectrum during the fifteen year
(3) Costs to the united states government. • In
determining whether a frequency band masts the
criteria apecified in subsection (a)(4), the Secre-
tary shall consider •
(A) the costs to the United States Government
of reaccommodating ita services in order to make
spectrum available for non-United States Govern-
ment use, including the increments! costs direct-
ly attributable to the loss of the use of the fre-
quency band; and
(B) the benefits that could be obtained from
reallocating such spectrum to non-United States
Government users, including the value of auch
spectrum in promoting -
(i) the delivery of improved service to the
public;
(ii) the introduction of new services; and
(iii) the development of new communications
technologies.
(4) Non-united states government use. • In
determining whether a band of frequenciee meeta
the criteria apecified in subsection (e)(6), the
(B) the proximity of frequencies that are already
assignod for non-United States Government use.
(d) Procedure for Identification of Keallocable
Bends of Frequencies. •
(1) Submission of reports to tlio president to
identify an initial 60 mhz to be made available
immediately for reallocation, and to provide
preliminary and final reports on additional
frequencies to be reallocated. -
(A) Within 3 months sfter the date of the
enactment of thb title, the Secretary aim 1 1 pre-
pare and submit to tho President s report which
specificelly identifies sn initial 50 MHz of spec-
trum thst ere located below 3 GHz. to be made
available for reallocation to the Federal Commu-
nications Commission upon issuuncc of this
report, snd to be distributed by the Commission
pursuant to competitive bidding procedure*.
(B) The Department of Commerce shall make
available to the Federal Communications Com-
mission 60 MHz ss identified in subparagraph
(A) of electromagnetic spectrum for allocation of
land-mobile or land-mobilc-satellitc services.
Notwithstanding section 553 of the Administra-
tive Procedure Act and title 111 of the Communi-
cations Act, the Fedoral Communications Coin-
miasion shall allocate such spectrum and conduct
competitive bidding procedures to complete the
assignment of such spectrum in a manner which
ensures thst the proceeds from such bidding are
received by the Federal Government no later
than September 30, 1992. From such proceeds.
Federal sgenciee d is pi seed by this transfer of the
electromagnetic spectrum to the Federal Commu-
nications Commission shall be reimbursed for
reasonsble costs directly attributable to audi
displacement. The Department of Commerce
shall determine the amount of, and arrange for,
auch reimbursement. Amounts to agencies shall
be available subject to appropriation Acts.
(C) Within 12 months after the dutv of the
enactment of this title, the Sccrclury shall pre-
pare and submit to the President a preliminary
report to identify reallocable bands of frequencies
meeting the criteria established by this section.
(D) Within 24 months sfter the dale of enact-
ment of thb title, the Secretary shall prepare and
submit to the President s final report which
identifies the target 200 MHz for reallocation
(which shall encompass the initial 60 MHz
previously designated under subparagraph (A)).
(E) The President shall publish tho reports
required by this section in the Federal Register.
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(2) Convening of private Motor advisory eom-
mitteo. - Not later than 12 month* after tho
onactmant of thia title, the 8acratarjr ahall eon-
vana a private eeetor adviaorjr committee to -
(A) review the bands of frequencies identified in
the preliminary report required by paragraph
(1HO;
(B) adviee the Secretary with reapect to -
0) the bends of frequencies which should be
included in the final report required by para-
graph (1KD); and
Oi) the effective datee which should be eeteb-
liehed under subssetion (e) with respect to ouch
frequendee;
(C) receive* public comment on the Secretary's
preliminary and final report* under this subsse-
tion; and
(D) prepare and submit the report required by
paragraph (4). The private eeetor edvieory com-
mittee ehall meet at leoet quarterly until each of
the actions required by section 406(a) have taken
(8) Composition of committee; chairman. - The
private eeetor edvieor committee ehall include •
(A) the Chairman of the Commission, and the
Secretary, or their deeignetsd representative*,
and two other representative* from two different
United States Government egendee that are
epectrum users, other then the Department of
Commerce, es such agencies mey be designated
by the Secretary; and
(B) Person* who are representative of •
(i) manufacturers of spectrum-dependent tele-
(ii) commercial users;
(iii) other users of the electromagnetic epec-
trum; and
(iv) other interested members of the public who
are knowledgeable about the usee of the electro-
magnetic epectrum to be chosen by the Secretary.
A majority of the members of the committee ehall
be members described in eubparagraph (B), and
one of such members shall be designated ee
chairman by the Secretary.
(4) Reeommendatione on spectrum allocation
procedure*. - The private eeetor edvieory commit-
tee ehall, not later than 12 monthe after it*
formation, submit to the Secretary, the Commis-
sion, the Committee on Energy and Commerce of
the Houee of Repreeentetivee, and the Committee
on Commerce, Science and Traneportation of the
Senate, euch reeommendatione es the committee
oonsidsrs appropriate for the reform of the
prnnses of allocating the electromagnetic epec-
trum between United States Government users
and non-United Slates Government users, and
any dissenting views thereon.
(e) Timetable for Reallocation and Limitation. •
The Secretary ehall, es part of the final report
required by eubeection (dMIXD), include* timeta-
ble for the effective datee by which the President
shall, within 16 years after enactment of this
title, withdraw or limit sssignmente on frequen-
cies specified in the report. The recommended
effective datee ehall •
(1) permit the earliest possible reallocation of
the frequency bands, taking into account the
requirements of eection 406(e);
(2) be baaed on the ueeful remaining life of
equipment that hae been purchased or contracted
for to operate on identified frequencies;
(8) be based on the need to coordinate frequency
uee with other notion*; end
(4) ovoid the imposition of incremental costs on
the United Statee Government directly attribut-
able to the lose of the uee of frequendee or the
changing to different frequendee that are exess-
sivs in relation to the benefita that may be ob-
tained from non-United Statee Government usee
of the reassignsd frequendee.
SEC. 616. WITHDRAWAL OF ASSIGNMENT
TO UNITED STATES GOVERNMENT STA-
TIONS.
(a) In General. • The President shall •
(1) within 3 months after receipt of the
Secretary's report under eection 404(dXIMA),
withdraw or limit the easignment to a United
Stetee Government etation of any frequency on
the initial 60 MHx which that report recom-
mends for immediste reallocation;
(2) with respect to other frequendee recom-
mended for reallocation by the Secretary's report
in eection 404(d)(1)(D). by the effective datee
recommended pursuant to eection 404(e) (exeent
as provided in subssetion (b)(4) of this eection),
withdraw or limit the easignment to s United
Statee Government etation of any frequency
which that report recommends be reallocated or
available for mixed uee on euch effective dates;
(8) assign or reassign other frequendee to
United Stetee Government etation* as necessary
to adjust to such withdrawal or limitation of
(4) publish in the Federal Register a notice end
description of the action* taken under this
subsection.
(b) Exceptions. •
(1) Authority to eubetitute. - If the President
dcterminee that a circumstance described in
section 406(b)(2) exhrta, the President -
(A) mey, within 1 month after receipt of the
Secretary* report under eection 404(dM IMA), and
within 6 monthe after receipt of the Secretary*
report under eection 404(dKlKD). eubetitute en
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alternative frequency or band of fraquanciai for
the frequency or band that ia subject to auch
extermination and withdraw (or limit) the eesign-
t of that alternative frequency or band in the
r required by subsection (a); and
ubliah in the Federal Regiater a
etatement of the reaaona for taking the action
deeeribed in subparagraph (A).
(2) Grounda for substitution. - For purposes of
paragraph (1), the following circumstances are
deeeribed in this paragraph:
(A) the reassignment would seriously jeopardise
the national security interests of the United
loss of the use of the frequency pursuant to this
section. The estimates of these costs shall be
prepared by the affected agency, in consultation
with the Department of Commerce.
(d) There are authorised to be appropriated to
the affected licensee agencies such sums as may
be necessary to carry out the purposes of this
(B) the frequency proposed for reassignment ia
uniquery suited to meeting important United
States Governmental needs;
(O the reassignment would seriously jeopardise
public health or safety; or
(D) the reassignment will result in incremental
costs to the United States Government that are
excessive in relation to the benefits that may be
obtained from non-United States Government
uses of the reassigned frequency.
(3) Criteria for substituted frequencies. - For
purposes of paragraph (1), a frequency may not
be substituted for a frequency identified by the
final report of the Secretary under section
404(d)<l)(D) unless the substituted frequency
also meets each of the criteria specified by section
404(a).
(4) Delays in implementation. - If the President
determines that any action cannot be completed
by the effective dates recommended by the Secre-
tary pursuant to section 404(e), or that auch an
action by auch date would result in a frequency
being unused as a consequence of the
Ouniniasion's plan under section 406, the Presi-
dent may -
(A) withdraw or limit the assignment to United
Steles Government stations on a later data that
is consistent with auch plan, by providing notice
to that effect in the Federal Register, including
the reason that withdrawal at a later date ia
required; or
(B) substitute alternative frequencies pursuant
to the proviaions of this subsection.
(c) Costs of Withdrawing Frequencies Assigned
to the United States Government; Appropriations
Authorised. - Any United States Government
licenses, or non-United States Government entity
operating on behalf of a United States Govern-
ment licensee, that is displaced from a frequency
pursuant to this section may be reimbursed not
more than the incremental costs it incurs, in
such amounts as provided in advance in appro-
priation Acta, that are directly attributable to the
SBC. 616. DISTRIBUTION OF FREQUENCIES
BY THE COMMISSION.
(a) Plana Submitted. •
(1) With respect to the initial 60 MHz to be
reallocated from United States Government to
non-United States Government use under section
404(d)(1)(A), not later than 6 months after
enactment of this title, the Commission shall
complete a public notice and comment proceeding
regarding the allocation of this spectrum and
shall form a plan to assign such spectrum pursu-
ant to competitive bidding procedures, pursuant
to section 408, during fiscal years 1994 through
1996.
(2) With respect to the remaining spectrum to
be reallocated from United States Government to
non-United States Government use under section
404(e), not later than 2 years after issuance of
the report required by section 404(d)(1)(D), the
Commission shall complete a public notice and
comment proceeding; and the Commission shall,
after consultation with the Secretary, prepare
and submit to the President a plan for the distri-
bution under the Communications Act of the
frequency bends reallocated pursuant to the
requirements of this title. Such plan shall -
(A) not propose the immediate distribution of all
such frequencies, but, taking into account the
timetable recommended by the Secretary pursu-
ant to section 404(e), shall propose -
(i) gradually to distribute the frequencies re-
maining, after making the reservation required
by subparagraph (ii), over the course of a 10-year
period beginning on the date of submission of
such plan; and
(ii) to reserve a significant portion of such
frequencies for distribution beginning after the
end of such 10-year period;
(B) contain appropriate provisions to ensure -
(i) the availability of frequencies for new tech-
nologies end services in accordance with the
policies of section 7 of the Communications Act
(47 U5.C. 167); and
(ii) the availability of frequencies to stimulate
the development of such technologies; and
(O not prevent the Commission from allocating
bends of frequencies for specific usee in future
rulemaking proceedings.
(b) Amendment to the Communications Act. •
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Section 303 of the Communications Act is
amended by adding at the end thereof the follow-
ing new subsection:
'(u) Have authority to assign the frequencies
reallocated from United States Government use
to non-United States Government use pursuant
to the Emerging Telecommunications Technolo-
gies Act of 199 1, except that any such assignment
shall expressly be made subject to the right of the
President to reclaim such frequencies under the
provisions of section 407 of the Emerging Tele-
communications Technologies Act of 1991.'.
SEC. 617. AUTHORITY TO RECLAIM REAS-
SIGNED FREQUENCIES.
(a) Authority of President. - The President msy
reclaim reallocated frequencies for reassignment
to United States Government stations in accor-
dance with this section.
(b) Procedure for Reclaiming Frequencies. -
(1) Unassigned frequencies. - If the frequencies
to bo reclaimed have not been assigned by the
Commission, the President may reclaim them
based on the grounds described in section
406(b)(2).
(2) Assigned frequencies. • If the frequencies to
be reclaimed have been assigned by the Commis-
sion, the President msy reclaim them based on
the grounds described in section 406(b)(2), except
that the notification required by section 406(b)(1)
shall include •
(A) a timetable to accommodate an orderly
transition for license— to obtain new frequencies
and equipment necessary for their utilisation;
(B) an estimate of the cost of displacing the
(c) Costs of Reclaiming Frequencies. - Any
non-United States Government licensee that is
displaced from s frequency pursuant to this
section shall be reimbursed the incremental costs
it incurs that are directly attributable to the loss
of the use of the frequency pursuant to this
(d) Effect on Other Lew. - Nothing in this
section shall be construed to limit or otherwiee
afreet the authority of the President under
section 706 of the Communications Act (47
U.S.C. 606).
SEC. 616. COMPETITIVE BIDDING.
(a) Competitive Bidding Authorised. • Section
309 of the Communications Act is amended by
adding the following new subsection:
'(p(lHA) The Commission shall use competitive
bidding for awarding all initial licensee or new
construction permits, including licensee and
permits for spectrum reallocated for non-United
States Government use pursuant to the Emerg-
ing Telecommunications Technologies Act of
1991, subject to the exclusions I is tod in para-
graph (2).
'(B) The Commission shsll require potential
bidders to file s first-stage application indicating
an intent to participate in the competitive bid-
ding process and containing such other informa-
tion ss the Commission finds necessary. AAer
conducting the bidding, the Commission shsll
require the winning bidder to submit s
second-stage application. Upon determining that
such application is acceptable for filing and that
the applicant ia qualified pursuant to subpara-
graph (C), the Commission shall grant a permit
'(C) No construction permit or license shsll bs
granted to en applicant selected pursuant to
subparagraph (B) unless the Commission deter-
mines that such applicant is qualified pursuant
to section 306(b) and subsection (s) of this sec-
tion, on the basis of the information contained in
the first- and second-slags applications submitted
under subparagraph (B).
'(D) Each participant in the competitive bidding
process is subject to the schedule of changes
contained in section 6 of this Act.
'(E) The Commission shall have the authority
in awarding construction pormite or licenses
under competitive bidding procedures to (i) define
the geographic and frequency limitations and
technical requirements, if any, of such permits or
licenses; (ii) establish minimum acceptable com-
petitive bide; and (iii) estsblish other appropriate
conditions on such permits snd licensee that will
eerve the public interest.
*(F) The Commission, in designing the competi-
tive bidding procedures under this subjection,
shall study snd include procedures •
'(i) to ensure bidding access for smsll snd rural
'(ii) if appropriate, to extend the holding period
for winning bidden awarded permits or licenses,
snd
'(iii) to expand review and enforcement require-
ments to ensure that winning bidders continue to
meet their obligations under this Act.
'(G) The Commission shall, within 6 months
after enactment of the Emerging Telecommunica-
tions Technologies Act of 1991, following public
notice snd comment proceedings, adopt rules
sstablishing competitive bidding procedures
under this subsection, including the method of
bidding snd the basis for payment (such as fiat
fees, fixed or variable royalties, combinations of
flat foss snd royaltiee, or other reasonable forme
of payment); snd s plan for applying such com-
petitive bidding procedures to the initial 60 MHs
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reallocated from United States Government to
non-United States Government uaa under section
404(d)(1)(A) of the Emerging Telecommunica-
tions Technologies Act of 109 lv to be distributed
during the fiscal jeers 1094 through 1996.
'(2) Competitive bidding shall not apply to -
'(A) license renewals;
•(B) the United States Government and State or
local government entities;
'(C) amateur operator ssrvices, over-the-air
terrestrial radio and television broadcast services,
public safety services, and radio astronomy
'(D) private radio end-ussr licenses, such as
Spsrisliisd Mobile Radio Service (SIIRS), mari-
time, and aeronautical end-ussr licenses;
'(E) any license grant to a non-United States
Government licensee being moved from its cur-
rent frequency assignment to a different one by
the Commission in order to implement the goals
and objectives underlying the Emerging Telecom-
munications Teehnologiss Act of 1991;
'(F) sny other service, class of services, or
assignments that the Commission determines,
after conducting public comment and notice
proceedings, should be exempt from competitive
bidding because of public interest factors war-
ranting an exemption; and
'(G) small businesses, ss defined in section
3(a)(1) of the Small Business Act.
'(3) In implementing this subsection, the Com-
mission shall ensure that current and future
rural telecommunications needs are met and that
existing rural licensees and thsir subscribers are
not adversely affected.
'(4) Monica received from competitive bidding
pursuant to this subsection shall be deposited in
the gensral fund of the United States Treasury.'.
(b) Random Selection not to Apply When Com-
petitive Bidding Required. - Section 309(i)(l) of
the Communications Act is amended by striking
the period after the word 'selection' and inserting
', except in instances where competitive bidding
procedures are required under subsection (p.1.
(c) Spectrum Allocation Decisions. • Section 303
of the Communications Act is amended by adding
the following new subsection:
'(v) In making spectrum allocation decisions
among ssrvices thst are subject to competitive
bidding, the Commission is suthorixed to consid-
er ss one factor among others taken into account
in making its determination, the relative econom-
ic values and other public interest benefits of the
proposed uses as reflected in the potential reve-
nues that would be collected under its competi-
tive bidding procedures/.
SBC. 619. DEFINITIONS.
As used in this subtitle:
(1) The term 'allocation' means an entry in the
National Table of Frequency Allocations of s
given frequency band for the purpose of its use
by one or more radiocommunications services.
(2) The term 'assignment* means an authorisa-
tion given by the Commission or the United
States Government for a radio station to use a
radio frequency or radio frequency channel.
(3) The term 'Commission' means the Federal
Communications Commission.
(4) The term 'Communications Act' meana the
Communications Act of 1934 (47 U.S.C. 161 et
esq.).
(6) The term 'Secretary' means the Secretary of
Commerce.
SUBTITLE C - OTHER PROVISIONS
SEC. 621. EXTENSION OF CURRENT LAW
REGARDING LUMP-SUM WITHDRAWAL OF
RETIREMENT CONTRIBUTIONS FOR CIVIL
SERVICE RETIREES.
(a) Civil Service Retirement System. • Section
S343e(0(3) of title 6, United States Code, is
amended by striking out 'October 1, 1996' end
inserting in lieu thereof 'October 1, 1996'.
(b) Federal Employees Retirement System. •
Section 6420a(0(3) of title 6, United States Code,
is emended by striking out 'October 1, 1996' end
inserting in lieu thereof 'October 6, 1996'.
SEC. 622. EXTENSION OF THE PATENT AND
TRADEMARK OFFICE USER FEE SUR-
CHARGE THROUGH 1996.
Section 10101 of the Omnibus Budget Reconcili-
ation Act of 1990 (36 U.S.C. 41 note) is emended
(1) in subsection (s) by striking '1996' snd
inserting ' 1996';
(2) in subsection (b)(2) by striking '1996' snd
inserting '1996'; and
(3) in subsection (c) •
(A) by striking ' 1996' the first piece it appears
snd inserting ' 1996'; snd
(B) by sdding at the end the following new
paragraph:
'(6) $107,000,000 in fiscal year 1996.'
SEC. 623. ONE- YEAR EXTENSION OF CUS-
TOMS USER FEES.
Paragraph (3) of section 1303 l(j) of the Consoli-
dated Omnibus Budget Reconciliation Act of 19S6
(19 U.S.C. 68c<j)(3)) is emended by striking out
' 1996' and inserting ' 1996'.
SEC. 624. DISCLOSURES OF INFORMATION
FOR VETERANS BENEFITS.
(s) In General. - Section 6103(I)(7)(D) (relating
to programs to which nils sppliee) is amended by
striking 'September 30, 1992' in the last sentence
and inserting 'September 30, 1996*.
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(b) Conforming Amendment. - Section 6317(g)
of title 38, United States Code, b emended by
striking 'September 30, 1092' and inserting
'September 30, 199*'.
(c) Effective Date. • The amendments made by
this section shall take effect on September 30,
1992.
SEC. 626. REVISION OF PROCEDURE RE-
LATING TO CERTAIN LOAN DEFAULTS.
(a) Revision. - Section 3732(c)(l)(0(ii) of title
33, United States Code, is amended by striking
out 'resale,' and inserting in lieu thereof 'resale
(including losses sustained on the resale of the
property),'.
(b) Effective Date. - The amendment made by
subsection (a) shall take effect on October 1,
1991.
SEC. 626. APPLICATION OF MEDICARE PART
B LIMITS TO FEHBP ENROLLEE AGE 66 OR
OLDER.
(a) Federal Employees Health Benefits Program.
- Subsection 8904(b) of title 6, United States
Code, is amended:
(1) by amending paragraph (1) to road as fol-
lows:
'(b)(1)(A) A plan, other than a prepayment plan
described in section 8903(4) of this title, may not
provide benefits under this chapter, in the case of
any individual enrolled in the plan who is not mn
employee and who is age 66 or older, to the
extent that -
'(i) a benefit claim involves a charge by a health
care provider for a type of service or medical item
which is covered for purposes of benefit payments
under beth this chapter and title XVIII of the
Social Security Act (42 UJS.C. 1396-1396ccc)
relating to medicare hospital and supplementary
medical insurance, and
4(ii) benefits otherwise payable under such
provisions of law in the case of such individual
would exceed applicable limitations on hospital
and physician charges established for medicare
purposes under sections 1886 and 1848 of the
Social Security Act (42 UJS.C. 1396ww and
1396w-4), respectively.
*(B)(i) For purposes of this subsection, hospi-
tals, physicians, and other suppliers of medical
and health services who have in force participa-
tion agreements with the Secretary of Health and
Human Services consistent with sections 1842(h)
and 1886 of the Social Security Act (42 US.C.
1396u(h) and 1396cc), whereby the participating
provider accepts medicare benefits in full pay-
ment of charges for covered items and services
slier applicable patient copayments under sec-
tions 1813, 1833 and 1866(a)(2) of the Social
Security Act (42 UJS.C. 1396s. 13961, and
1396cc(a)(2)) have been sstiefied, shall
equivalent benefit payments and enroll©*
copayments under this chapter as full payment
for any item or service described undor subpara-
graph (A) which is furnished to sn individual
who is enrolled under this chapter and is not
covered for purposes of benefit payments applica-
ble to such item or service under provision* of
title XVIII of the Social Security Act.
'(H) Physicians and other health care suppliers
who are non participating physicians, as defined
by section 1842(i)(2) of the Social Security Act
(42 U3.C. 1396u(i)(2)) for purposes of services
furnished to medicare beneficiaries, may not bill
in excess of the limiting charge prescribed under
section 1848(g) of the Social Security Act (42
VS.C. 1396w-4(g)) when providing services
described under subparagraph (A) to an individu-
al who is enrolled under this chapter and is not
covered for purposes of benefit payment* applica-
ble to those services under provisions of title
XVIII of the Social Security Act.
'(iii) The Office of Personnel Management elial!
notify the Secretary of Health and Human Ser-
vices if a hospital, physician, or other supplier of
medical services is found to knowingly and
willfully violate this subsection and the Secretary
shall invoke appropriate sanctions in accordance
with subsections 1128A(a)(2), 1848(g)(8). and
1866(b)(2) of the Social Security Act (42 U.S.C.
1320a-7a(a)(2), 1396w-4(g)(8), and 1396cc(b)(2))
and applicable regulations.'; and
(2) by amending paragraph (3)(B) to read as
follows:
'(B) For purposes of this paragraph, the term
'medicare program information' includes •
'(i) the limitations on hospital charges estab-
lished for medicare purposes under section 1886
of the Social Security Act (42 US.C. I396ww)
and the identity of hospitals which have in force
agreements with the Secretary of Health and
Human Services consistent with section 1866 of
the Social Security Act (42 VS.C. 1396cc); and
'(ii) the annual fee schedule amounts for servic-
es of participating physicians and 'limiting
charge' information for nonpartidpating physi-
cians established for medicare purposes undor
section 1848 of the Social Security Act (42 UAC.
1396w-4) and the identity of physicians and
suppliers who hsve in force participation agree
ments with the Secretary consistent with subsec-
tion 1842(h) of the Social Security Act (42 U.S.C.
1396u(h).'.
(b) Medicare Agreements With Institutional
Providers. - Section 1866UM1) of the Social
Security Act (42 US.C. I396cc(a)(l)) is t
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(1) by striking out 'and' at the end of subpara-
graph (P);
C2) by atrikiBg out the period at ths and of
subparagraph (Q) and inserting ', and', and
(9) by inserting after subparagraph (Q) the
following new paragraph:
'QQ to accept as payaient in full the amounts
that would be payable under this part (including
the amounts of any coinsurance and deductibles
required of individuals entitled to have payment
made on their behalf) for an item or service
which the provider normally furnishes to pa-
tients (or others furnish under arrangement with
the provider) and which ie furnished to an indi-
vidual who has attained age 65, ie ineligible to
receive benefits under this part, and ie enrolled,
other than as an employee, under a health bene-
fits plan described in paragraphs (1) through (3)
of section 6903 and section 8903e of title 6,
United States Code, if such item or service is of
a type that ie covered under both this title and
chapter 60 of title 6, United States Code.'.
(c) Medicare Participating Physicians and
Suppliers. - Section 1642(h)(1) of the Social
Security Act (42 U.S.C. 1306u(h)(l)) ie amended,
after the second sentence, by inserting the follow-
ing new sentence: 'Such agreement shall provide,
for any year beginning with 1993, that the physi-
cian or supplier will accept as payment in full the
amounts that would be payable under this part
(plus the amounts of any coinsurance or deduct-
ibles required of individuals on whose behalf
payments are made under thia title) for an item
or service furnished during such year to an
individual who has attained age 66, is ineligible
to receive benefits under this part, and is en-
rolled, other than as sn employee, under a health
benefits plan described in paragraphs ( 1) through
(3) of section 6903 and section 6903e of title 6,
United States Code, if such item or service ie of
e type that ie covered under both this part and
ehapter 69 of title 6, United States Code.'.
(d) Medicare Actual Charge Limitation for
Nonpartidpating Physicians. • Section 1648(g) of
the Social Security Act (42 U.S.C. 1369w-4(g)) is
•mended by sdding at the end thereof the follow-
ing paragraph:
'(8) Limitation of actual charges for enrolleee of
the federal employees health benefits program. •
(A) A nonpartidpating physician shall not impose
an actual charge in excess of ths limiting charge
defined in paragraph (2) for items and services
furnished after 1992 in any case involving -
'(i) an individual who has attained age 66, is
ineligible to receive benefits under this part, and
is enrolled, other than as an employee, under a
health benefits plan described in paragraphs (1)
through (3) or section 8903 or section 8903a of
title 6, United States Code; and
4(ii) an item or service of a type that ia covered
for benefita under both thia part and chapter 89
of title 6, United States Code.
f(B) If a person knowingly and willfully bills for
physicians' services in violation of subparagraph
(A), the Secretary shall apply sanctions against
the person in accordance with section 1842(j)(2).'.
(e) Effective Dates. •
(1) Except ss provided in paragraph (2), the
amendments made by this section shall be effec-
tive with respect to health care provider charges
for items and services furnished to individuals
enrolled in plans under chapter 89 of title 6,
United Ststes Code, in contract years beginning
after December 31, 1992.
(2) The amendment made by subsection (b)
applies to agreements for periods sfler 1991.
ROCKEFELLER (AND OTHERS) AMEND-
MENT NO. 2787
Mr. ROCKEFELLER (for himself. Mr. Byrd,
Mr. Ford, Mr. Adams, Mr. Aksks, Mr. Dixon, Mr.
Inouye, Mr. Riegle, Mr. Simon, Mr. Specter, end
Mr. Woflbrd) proposed sn amendment to the bill
H.R. 776, supra, ss follows:
On page 646, strike subtitle C of title XX end
insert:
SUBTITLE C - HEALTH CARE OF COAL
MINERS
SEC. 1941. SHORT TITLE.
This subtitle may be cited ss the *Cosl Industry
Retiree Health Benefit Act of 1992'.
SEC. 1942. FINDINGS AND DECLARATION OF
POLICY.
(a) Findings. - The Congress finds that -
(1) the production, transportation, and use of
coal substantially affects interstate and foreign
commerce and the national public interest; snd
(2) in order to secure the stability of interstate
commerce, it is necessary to modify the current
private health care benefit plan structure for
retirees in the coal industry to identify persons
most responsible for plan liabilities in order to
stabilise plan funding and allow for the provision
of health care benefits to such retirees.
(b) Statement of Policy. - It is the policy of this
subtitle -
(1) to remedy problems with the provision and
funding of health care benefita with respect to
the beneficiaries of multiemployer benefit plans
that provide health care benefita to retirees in
the coal industry;
(2) to allow for sufficient operating assets for
such plans; and
(3) to provide for the continuation of a privately
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financed self-sufficient program for the delivery
of health care benefits to the beneficiaries of such
SBC. 1948. COAL INDUSTRY HEALTH BENE-
FITS PROGRAM.
(a) In General. - The Internal Revenue Code of
1986 is amended by adding st the end the follow-
ing new subtitle:
'SUBTITLE J - COAL INDUSTRY HEALTH
BENEFITS
'Chapter 99. Coal industry health benefits.
'CHAPTER 99 - COAL INDUSTRY HEALTH
BENEFITS
'Subchapter A - Definitions of general applicabili-
ty
'Subchapter B - Combined benefit fund.
'Subchapter C - Health benefits of certain min-
ers.
'Subchapter D • Other provisions.
'SUBCHAPTER A • DEFINITIONS OF GEN-
ERAL APPLICABILITY
'Sec. 9701. Definitions of general applicability.
'SEC. 9701. DEFINITIONS OF GENERAL
APPLICABILITY.
'(a) Plans and Funds. - For purposes of this
chapter -
'(1) UMWA benefit plan. -
'(A) In general. - The term 'UMWA Benefit
Plan' means a plan •
'(i) which is described in section 404(c), or a
continuation thereof; and
*(ii) which provides health benefits to retirees
and beneficiaries of the industry which main-
tained the 1960 UMWA Pension Plan.
'(B) 1960 umwa benefit plan. • The term ' 1960
UMWA Benefit Plan' means a UMWA Benefit
Plan, participation in which is substantially
limited to individuals who retired before 1976.
'(C) 1974 umwa benefit plan. - The term ' 1974
UMWA Benefit Plan1 means a UMWA Benefit
Plan, participation in which is substantially
limited to individuals who retired on or after
January 1, 1976.
'(2) 1960 umwa pension plan. - The term ' 1960
UMWA Pension Plan' means a pension plan
described in section 404(c) (or a continuation
thereof), participation in which is substantially
limited to individuals who retired before 1976.
'(8) 1974 umwa pension plan. • The term ' 1974
UMWA Pension Plan' means a pension plan
described in section 404(c) (or a continuation
thereof), participation in which is substantially
limited to individuals who retired in 1976 and
thereafter.
'(4) 1992 umwa benefit plan. - The term ' 1992
UMWA Benefit Plan' means the plan referred to
in section 97 ISA.
'(6) Combined fund. - The term 'Combined
Fund' means the United Mine Workers of Ameri-
ca Combined Benefit Fund established under
section 9702.
'(b) Agreements. • For purposes of this section
'(1) Coal wage agreement. • The term 'coal wage
'(A) the National Bituminous Coal Wage Agree-
ment, or
'(B) any other agreement entered into between
sn employer in the coal industry and the United
Mine Workers of America that required or re-
quires one or both of the following:
'(i) the provision of health benefits to retirees of
such employer, eligibility for which is based on
years of service credited under s plsn established
by the settlors and described in section 404(c) or
a continuation of auch plan; or
'(ii) contributions to the 1960 UMWA Benefit
Plan or the 1974 UMWA Benefit Plan, or any
predecessor thereof.
'(2) Settlors. - The term 'settlors' moans the
United Mine Workers of America snd the Bitumi-
nous Coal Operators' Association, Inc. (referred
to in this chapter as the 'BCOA').
'(8) National bituminous coal wage agreement.
• The term 'National Bituminous Coal Wage
Agreement' means a collective bargaining agree-
ment negotiated by the BCOA and the United
Mine Workers of America.
'(c) Terms Relating to Operators. • For purposes
of this section -
'(1) Signatory operator. • The term 'signatory
operator' means a person which is or wee a
signatory to a coal wsge agreement.
'(2) Related persons. -
'(A) In general. • A person shall be considered
to be a related person to a signatory operator if
that person is •
'(i) a member of the controlled group of corpora-
tions (within the meaning of section 62(e)) which
includes such signatory operator;
'(ii) a trade or business which is under common
control (ss determined under section 62(b)) with
such signatory operator; or
*(iii) any other person who is identified as
hsving a partnership interest or joint venture
with a signatory operator in a business within
the coal industry, but only if such business
employed eligible beneficiaries, except that this
clause shall not apply to a person whose only
interest is as a limited partner. A related person
shall also include a successor in interest of any
person described in clause (i), (ii), or (iii).
'(B) Time for determination. - The relationships
I in clauses (i), (ii), snd (iii) of subpara-
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graph (A) shall be determined as of July 20,
1992, except that if, on July 20, 1992, a signatory
operator is no longer in business, the relation-
ships shall be determined as of the time immedi-
ately before such operator ceased to be in busi-
'(3) 1986 agreement operator. - The term ' 1988
agreement operator' mesne -
'(A) a signatory operator which was a signatory
to the 1988 National Bituminous Coal Wage
Agreement,
'(B) an employer in the coal industry which wss
a signatory to an agreement containing pension
and health care contribution and benefit provi-
sions which are the same as those contained in
the 1988 National Bituminous Coal Wage Agree-
ment, or
'(C) an employer from which contributions were
actually received after 1987 and before July 20,
1992, by the I960 UMWA Benefit Plan or the
1974 UMWA Benefit Plan in connection with
employment in the coal industry during the
period covered by the 1988 National Bituminous
Coal Wage Agreement.
'(4) Last signatory operator. • The term 'last
signatory operator' means, with respect to a coal
industry retiree, a signatory operator which was
the most recent coal industry employer of such
retiree.
'(6) Assigned operator. - The term 'assigned
operator' means, with respect to an eligible
beneficiary defined in section 9703(0, the signa-
tory operator to which liability under subchapter
B with respect to the beneficiary is assigned
under section 9706.
'(6) Operators of dependent beneficiaries. - For
purposes of this chapter, the signatory operator,
last signatory operator, or assigned operator of
any eligible beneficiary under this chapter who is
s coal industry retiree shall be considered to be
the signatory operator, last signatory operator, or
assigned operator with respect to any other
individual who is an eligible beneficiary under
this chapter by reason of a relationship to the
retiree.
'(7) Business. - For purposes of this chapter, a
person shall be considered to be in business if
auch person conducts or derives revenue from
any business activity, whether or not in the coal
industry.
'(d) Enactment Date. - For purposes of this
chapter, the term 'enactment date' means the
date of the enactment of this chapter.
'SUBCHAPTER B - COMBINED BENEFIT
FUND
'Part I • Establishment and Benefits
'Part II - Financing
'Part III - Enforcement
'Part IV - Other Provisions
•PART I - ESTABLISHMENT AND BENEFITS
'Sec. 9702. Establishment of the United Mine
Workers of America Combined Benefit Fund.
'Sec. 9703. Plan benefits.
'SEC. 9702. ESTABLISHMENT OF THE UNIT-
ED MINE WORKERS OF AMERICA COM-
BINED BENEFIT FUND.
'(a) Establishment. -
'(1) In general. • As soon ss practicable (but not
later than 60 days) after the enactment date, the
persons described in subsection (b) shall desig-
nate the individuals to servo ss trustees. Such
trustees shall create a now private plan to be
known as the United Mine Workers of America
Combined Benefit Fund.
'(2) Merger of retiree benefit plans. - As of
February 1, 1993, the settlors of the 1950 UMWA
Benefit Plan and the 1974 UMWA Benefit Plan
shall cause such plans to be merged into the
Combined Fund, and such merger shall not be
treated as an employer wilhdruwul for purposes
of any 1988 coal wage agreement.
'(3) Treatment of plan. • The Combined Fund
shall be -
'(A) a plan described in section 302(c)(5) of the
Labor Management Relations Act. 1947 (29
U.S.C. 186(c)(5)).
'(B) en employee wolfare benefit plan within the
meaning of section 3(1) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C.
1002(D). and
'(C) a multiemployer plan within the meaning
of section 3(37) of such Act (29 U.S.C. 1002(37)).
'(4) Tax treatment. - For purposes of this title,
the Combined Fund and any related trust shall
be treated as an organization exempt from tax
under section 601(a).
'(b) Board of Trustees. -
'(1) In general. - For purposes of subsection (a),
the board of trustees for the Combined Fund
shall be appointed as follows:
'(A) one individual who represents employers in
the coal mining industry shall be designated by
the BCOA;
'(B) one individual shall bo designated by the
three employers, other than 1988 agreement
operators, who have been assigned the greatest
number of eligible beneficiaries under section
9706;
'(C) two individuals designated by the United
Mine Workers of America; and
'(D) three persons selected by the persons
appointed under subparagraphs (A), (B), and (C).
'(2) Successor trustees. • Any successor trustee
shall be appointed in the same manner as the
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tnmlM Beengesjrrniii. TW pli
llm (lessened Pom deemfl scoriae far the row or el
i payments required to
'(AlBGOA. -If theBCX>Aceeseetoexiet.sny
trustee or iMtuwar under paragraph ( IMA) she*
U disignetid hjrtlwl eoasloyerc who «m
»ofts»BCOAonthsonerto™etdeleond
imherof
i9706.
'(B) Fo.
l < 1KB) she* be iwfiuUJ by U»
3 employers i. other than 1963 agreement opara-
tors. which Um records of the I960 UMWA
Benefit Plan and 1074 UMWA Benefit Plan
indicate have tha greatest number of <
beneficiaries aa of tha enactment «
trustee and any
November 1. 1998.
'(c) Plan Yaar. - Tha first plan yaar of tha
Combined Fund shall begin February 1. 1993,
and and September 30, 1993. Each succeeding
plan yaar shall begin on October I of each calen-
dar yaar.
'SEC. 9703. PLAN BENEFITS.
'(a) In General. • Each eligible beneficiary of the
Combined Fund shall receive -
'(1) health benefits described in subsection (b),
and
'(2) in tha case of an eligible beneficiary de-
scribed in subsection (IX 1), death benefits cover-
age described in subsection (c).
'(b) Health Benefits. -
'(1) In general. • The trustees of the Combined
Fund shall provide health care benefits to each
eligible beneficiary by enrolling the beneficiary in
a health care services plan which undertakes to
provide such benefits on a prepaid risk basis.
The trustees shall utilise all available plan
resources to ensure that, consistent with para-
graph (2), coverage under the managed care
system shall to the maximum extent feasible be
substantially the same as (and subject to the
same limitations of) coverage provided under the
1960 UMWA Benefit Plan and the 1974 UMWA
Benefit Plan aa of January I. 1992.
'(2) Plan payment rates. •
'(A) In general. • The trust ass of the Combined
Fund shall negotiate payment rates with the
health care services plana described in paragraph
(1) for each plan yaar which are in amounts
which -
*(i) vary as necessary to ensure that beneficia-
ries in different geographic areas have irraaa to
a uniform level of health benefits; and
*(ii) result in aggregate payments for such plan
year from the Combined Fund which do not
a tetal pre
be seed la Ike Ceaaainsd Fund under i
97044a) far the seen year, aajuatod aa provided in
eenpsragrssbs (B) ami (O.
'(B) Reductions - The amount deesrmsned
under subparagraph (AMii) far any plan year
*(ii) by the amount reserved far plan i
tration usjder euhsartion (d).
•(C) In tresses - TVs aseounl
subparagraph (AMii) shall be i
'(*) by any reduction in
payments required to be paid under paction
9704(a) by reason of transfers described in sec-
tion 9706,
*(ii) by any carryover to the plan year from any
preceding plan yaar which •
*(D is derived from amounta described in section
9704<eM3MBMi>, and
'(II) the trustees elect to use to pay benefits far
the current plan year, and
•(iii) any interest earned by the Combined Fund
which the trustees elect to use to pey benefits far
the current plan year.
'(3) Qualified providers. • The trustees of the
Combined Fund shall not enter into sn agree-
ment under paragraph ( 1) with any provider of
esrvicaa which is of a type which ia required to be
certified by the Secretary of Health and Human
Services when providing services under title
XVIII of the Social Security Act unless the pro-
vider is so certified.
'(4) Effective date. • Benefits shall be provided
under paragraph (1) on and after February I.
1993.
'(c) Death Benefits Coverage. -
'(1) In general. • The trustees of the Combined
Fund shall provide death benefits coverage In
each eligible beneficiary described in subsection
<0( 1) which is identical to the benefits provided
under the 1960 UMWA Pension PUn or 1974
UMWA Pension Plan, whichever ia applicable, on
July 20, 1992. Such coverage shall be provided on
and after February 1. 1993.
'(2) Termination of coverage. • The 1960
UMWA Pension PUn and the 1974 UMWA
Pension Plan shall each bo amended to provide
that death benefits coverage slisll not be provided
to eligible beneficiariee on and after February I,
1993. This paragraph shall not prohibit such
plana from subsequently providing desth benefits
not described in paragraph (I).
'(d) Reserves for Administration. • Tlie trustees
of the Combined Fund may reserve for each plan
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year, for use in payment of the Administrative
costs of the Combined Fund, an amount not to
exceed 6 percent of the premiums to be paid to
the Combined Fund under section 9704(a) during
the plan year.
*<e) Limitation on Enrollment. - The Combined
Fund shall not enroll any individual who is not
receiving benefits under the I960 UMWA Benefit
Plan or the 1974 UMWA Benefit Plan as of July
20. 1992.
'(0 Eligible Beneficiary. - For purposes of this
subchapter, the term 'eligible beneficiary' means
an individual who •
'(1) is a coal industry retiree who, on July 20,
1992, was eligible to receive, and receiving,
benefits from the 1960 UMWA Benefit Plan or
the 1974 UMWA Benefit Plan, or
'(2) on such date was eligible to receive, and
receiving, benefit* in either such plan by reason
of a relationship to such retiree.
TART II - FINANCING
'Sec. 9704. Liability of assigned operators.
4Sec. 9705. Transfers.
'Sec. 9706. Assignment of eligible beneficiaries.
'SEC. 9704. LIABILITY OF ASSIGNED OPERA-
TORS.
'(a) Annual Premiums. - Each assigned operator
shall pay to the Combined Fund for each plan
year beginning on or after February 1, 1993, an
annual premium equal to the sum of the follow-
ing three premiums -
'(1) the health benefit premium determined
under subsection (b) for such plan year, plus
'(2) the deeth benefit premium determined
under subsection (c) for such plan year, plus
'(3) the unassigned beneficiaries premium
determined under subsection (d) for such plan
year. Any related person with respect to an
assigned operator shall be jointly and severally
liable for any premium required to be paid by
•uch operator.
'(b) Health Benefit Premium. - For purposes of
this chapter •
'(1) In general. • The health benefit premium
for any plan year for any assigned operator shall
be an amount equal to the product of the per
beneficiary premium for the plan year multiplied
by the number of eligible beneficiaries assigned to
such operator under section 9706.
'(2) Per beneficiary premium. - The Secretary of
Health and Human Services shall calculate a per
beneficiary premium for each plan year beginning
on or after February 1, 1993, which is equal to
the sum of -
'(A) the amount determined by dividing -
'(i) the aggregate amount of payments from the
1960 UMWA Benefit Plan and the 1974 UMWA
Benefit Plan for health benefits (loss reimburse-
ments but including administrative costs) for the
plan year beginning July I, 1991, for all individu-
als covered under such plans for such plan year,
'(ii) the number of such individuals, plus
'(B) the amount determined under subpara-
graph (A) multiplied by the percentage (if any) by
which the medical component of the Consumer
Price Index for the calendar year in which the
plan year begins exceeds such component for
1992.
'(3) Adjustments for medicare reduction*. - If,
by reason of a reduction in bunofiU under title
XVIII of the Social Security Act, the level of
health benefits under the Combined Fund would
be reduced, the trustees of the Combined Fund
shall increase the per beneficiary premium for
the plan year in which the reduction occurs and
each subsequent plan year by tho amount neces-
sary to maintain the level of health benefit*
which would have been provided without such
reduction.
'(c) Death Benefit Premium. • The death benefit
premium for any plan year for any assigned
operator shall be equal to tho applicable percent-
age of the amount, actuarially dolortninod, which
the Combined Fund will be required to pay
during the plan year for death benefits coverage
described in section 9703(c).
'(d) Unassigned Beneficiaries Premium. • The
unassigned beneficiaries premium for any plan
year for any assigned operator shall be equal to
the applicable percentage of the product of the
per beneficiary premium for the plan year multi-
plied by the number of eligible beneficiaries who
are not assigned under section 9706 to any
person for such plan year.
'(e) Premium Accounts; Adjustments. -
'(1) Accounts. - The trustees of the Combined
Fund shall establish snd maintain 3 separate
accounts for each of the premiums described in
subsections (b), (c), snd (d). Such accounts shall
be credited with the premiums received and
debited with expenditures allocable to such
premiums.
'(2) Allocations. •
'(A) Administrative expenses. • Administrative
costs for any plan year shall be allocated to
premium accounts under paragraph (1) on the
basis of expenditures (other then administrative
costs) from such accounts during the preceding
plan year.
'(B) Interest. - Interest shall be allocated to the
account established for health benefit premiums.
'(3) Shortfalls and surpluses. •
'(A) In general. - Except as provided in subpara-
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graph CB), if, for any plan year, there is a abort-
fall or surplus in any premium account, the
premium for the following plan year for each
assigned operator shall be proportionately re-
duced or increased, whichever is applicable, by
the amount of such shortfall or surplus.
'(B) Exception. • Subparagraph (A) shall not
apply to any surplus in the health benefit premi-
um account or the unsssigned beneficiaries
premium account which is attributable to -
'(i) the excess of the premiums credited to such
account for a plan year over the benefits (and
administrative costs) debited to such account for
the plan year, but such excess shall only be
available for purposes of the carryover described
in section 9703(b)(2)(C)(ii) (relating to carryovers
of premiums not used to provide benefits), or
'(ii) interest credited under paragraph (2)(B) for
the plan year or any preceding plan year.
'(C) No authority for increased payments. -
Nothing in this paragraph shall be construed to
allow expenditures for health care benefits for
any plan year in excess of the limit under section
9703(b)(2).
'(0 Applicable Percentage. - For purposes of this
'(1) In general. - The term
percentage1 means, with respect to any assigned
operator, the percentage determined by dividing
the number of eligible beneficiaries assigned
under section 0706 to such operator by the total
number of eligible beneficiaries assigned under
section 9706 to all such operators (determined on
the basis of assignments as of October 1, 1998).
'(2) Annual adjustments. • In the case of any
plan year beginning on or after October 1, 1994,
the applicable percentage for any assigned opera-
tor shell be redetermined under paragraph ( 1) by
making the following changes to the assignments
as of October 1, 1998:
'(A) Such assignment* shell be modified to
reflect any changes during the period beginning
October 1, 1993, end ending on the lest day of
the preceding plan year pursuant to the appeele
process under section 9706(0.
'(B) The total number of assigned eligible
beneficieriee shall bo reduced by the eligible
beneficiaries of assigned operators which (and all
related persons with respect to which) had ceased
business (within the meaning of section
9701(cH6)) during the period described in sub-
paragraph (A).
'(g) Payment of Premiums. •
'(1) In general. • The annual premium under
subsection (a) for any plan year shall be payable
in 12 equal monthly installments, due on the
twenty-fifth day of each calendar month iu the
plan year. In the esse of the plan year beginning
February 1, 1993, the annual premium under
subsection (a) shall be edded to such premium for
the plan year beginning October 1, 1993.
'(2) Deductibility. - Any premium required by
this section shell be deductible without regard to
any limitation on deductibility based on the
prefunding of health benefits.
'(h) Information. • The trustees of the Com-
bined Fund shell, not later then 60 days after the
enactment date, furnish to the Secretary of
Health and Human Services information as to
the benefits end covered beneficiaries under the
fund, and such other information as the Secre-
tary may require to compute any premium under
'(i) Transition Rules. •
'(1) 1968 agreement operators. •
'(A) 1st year coots. • During the plan year of the
Combined Fund beginning February I. 1993, the
1988 agreement operators shall make contribu-
tions to the Combined Fund in amounts iiecos-
eary to pay benefits and administrative costs of
the Combined Fund incurred during such yeer,
reduced by the amount transferred to the Com-
bined Fund under section 9706(a) on February I.
1998.
'(B) Deficits from merged plane. - During the
period beginning February 1, 1998, and ending
September 30, 1994, the 1988 agreement opera-
tore shell make contributions to the Combined
Fund ae are necessary to pay off tho expenses
accrued (and remaining unpaid) by Uie 1960
UMWA Benefit Plen and the 1974 UMWA Bene-
fit Plan as of February 1. 1993. reduced by the
onsets of such plane es of such date.
'(C) Failure. - If any 1988 agreement operator
fails to meet any obligation under this paragraph,
any contributions of such operator to the Com-
bined Fund or any other plan deecribod in section
404(c) shell not bo deductible under this title
until such time es tho failure is corrected.
*(D) Premium reductions. •
'(i) 1st year payments. • In the esse of e 1968
agreement operator making contributione under
s»di paragraph (A), ths premium of such operator
under subsection (s) ehell be reduced by the
amount paid under subparagraph (A) by such
operator for the plen yev beginning February I.
1998.
'(ii) Deficit payments. - In ths case a 1968
agreement operator making contributions under
wdmoisgisph (B), the premium of such operator
under subsection (s) shall be reduced by the
amounts which are paid to the Combined Fund
by reason of claims arming in connection with
Iks 1960 UMWA Benefit Plen and the 1974
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UMWA Benefit Plan as of February 1, 199S,
including claims based on the 'evergreen clause'
found in the language of the 1960 UMWA Bene-
fit Plan and the 1974 UMWA Benefit Plan, and
which are allocated to such operator under
subparagraph (ED.
*(iii) Limitation. - Clause (ii) shall not apply to
the extent the amounts paid exceed the contribu-
'(iv) Plan years. - Premiums under subsection
(a) shall be reduced for the first plan year for
which amounts described in clause (i) or (ii) are
available and for any succeeding plan year until
such amounts are exhausted.
'(E) Allocations of contributions and refunds. -
Contributions under subparagraphs (A) and (B),
and premium reductions under subparagraph
(D)(ii), shall be msde ratably on the basts of
aggregate contributions msde by such operators
under the applicable 1966 coal wage agreements
as of January 31, 1999.
*(2) 1st plan year. • In the case of the plan year
of the Combined Fund beginning February 1,
1993-
'(A) the premiums under subsections (a)(1) and
(a)(3) shall be 67 percent of such premiums
without regard to this paragraph, and
'(B) the premiums under subsection (a) shall be
paid as provided in subsection (g).
'(3) Startup costs. • The 1950 UMWA Benefit
Plan and the 1974 UMWA Benefit Plan shsll psy
the costs of the Combined Fund incurred before
February 1, 1993. For purposes of this section,
shall be treated as administrative
incurred for the plan year beginning
February 1, 1993.
'SBC. 9706. TRANSFERS.
'(a) Transfer of Assets From 1960 UMWA
Pension Plan. •
'(1) In general. - From the funda reserved under
paragraph (2), the board of trustees of the 1960
UMWA Pension Plsn shall transfer to the Com-
bined Fund •
'(A) $70,000,000 on Februsry 1, 1993,
'(B) $70,000,000 on October 1, 1993, and
'(C) $70,000,000 on October 1, 1994.
'(2) Reservation. • Immediately upon the enact-
ment date, the board of trustees of the 1960
UMWA Pension Plan shall segregate
$210,000,000 from the general assets of the plan.
Such funda shall bs held in the plan until dis-
bursed pursusnt to paragraph (1). Any interest
on such funds shall be deposited into the general
sssets of the 1960 UMWA Pension Plan.
'(3) Use of funds. • Amounts transferred to the
Combined Fund under paragraph ( 1) shall •
'(A) in the case of the transfer on February 1,
1993, be used to proportionately reduce the
premium of each assigned operator under section
9704(a) for the plan year of the Fund beginning
February 1, 1993. and
'(B) in the case of sny other such transfer, be
used to proportionately reduce the unassigned
beneficiary premium under section 9704(a)(3) and
the death benefit premium under section
9704(a)(2) of each assigned operator for the plan
year in which transferred and for any subsequent
plsn year in which audi funds remain available.
Such funds may not be used to pay any amounts
required to be paid by the 1988 agreement opera-
tors under section 9704(i)(l)(B).
'(4) Tsx treatment; validity of transfer. -
'(A) No deduction. • No deduction shall be
allowed under this titlo with respect to any
transfer pursuant to paragraph (1), but such
transfer shall not adversely afioct the deductibili-
ty (under applicable provisions of this title) of
contributions previously made by employers, or
amounts hereafter contributed by employer*, lo
the 1960 UMWA Pension Plan, the I960 UMWA
Benefit Plan, the 1974 UMWA Pension Plan, the
1974 UMWA Benefit Plan, the 1992 UMWA
Benefit Plan, or the Combined Fund.
'(B) Other tax provisions. • Any transfer pursu-
ant to paragraph (1) -
'(i) shall not be treated as an out pi oyer rever-
sion from a qualified plan for purposes of section
4980, and
'(ii) shall not be includible in the gross income
of any employer maintaining the I960 UMWA
Penaion Plan.
'(6) Treatment of transfer. • Any transfer
pursuant to paragraph ( I) shall not be deemed to
violate, or to be prohibited by, any provision of
law, or to cause the settlors, joint board of trust-
ees, employers or any related person to incur or
be subject to liability, taxes, fines, or penalties of
sny kind whatsoever.
'(b) Transfers From Abandoned Mine Reclama-
tion Fund. -
'(I) In general. • The Combined Fund shall
include any amount transferred to the Fund
under section 402(h) of the Surface Mining
Control snd Reclamation Act of 1977 (30 UiJ.C.
1232(h)).
'(2) Use of funds. • Any amount transferred
under paragraph (1) for any fiscal year shall be
used to proportionately reduce the unassigned
beneficiary premium under section 9704(a)(3) of
each assigned operator for the plan year in which
transferred.
'SEC. 9706. ASSIGNMENT OF ELIGIBLE
BENEFICIARIES.
*(s) In General. « For purposes of this chapter.
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the Secretary of Health end Human Service*
•hall, before October 1. IMS, assign eech coal
industry retiree who is en eligible beneficiary to
a signatory operator which (or any related person
with respect to which) remains in business in the
following order:
'( 1) First, to the signatory operator which -
'(A) was a signatory to the 1978 coal wage
agreement or any subsequent coal wage agree-
ment, and
'(B) was the most recent signatory operator to
employ the coal industry retiree in the coal
industry for at least 2 years.
'(2) Second, if the retiree ie not assigned under
paragraph (1), to the signatory operator which •
'(A) was a signatory to the 1978 coal wage
agreement or any eubsequent coal wage agree-
ment, and
'(B) was the most recent signatory operator to
employ the coal industry retiree in the coel
industry.
'(S) Third, if the retiree is not assigned under
paragraph (1) or (2), to the signatory operator
which employed the coal industry retiree in the
coal industry for s longer period of time than any
other signatory operator prior to the effective
date of the 1978 coal wage agreement.
'(b) Rules Relating to Employment and Reas-
signment Upon Purchase. • For purposes of
subsection (a) •
'(I) Aggregation rules. -
'(A) Related person. - Any employment of a coal
industry retiree in the coal industry by a signato-
ry operator shall be treated as employment by
any related persons to such operator.
'(B) Certain employment disregarded. • Employ-
ment with •
'(i) a person which is (and all related persons
with respect to which are) no longer in business,
or
'(ii) a person during a period during which such
person was not a signatory to a coal wage agree-
ment, shall not be taken into account.
'(2) Reassignment upon purchase. • If a person
becomes a successor of sn assigned operator after
the enactment date, the assigned operator may
transfer the assignment of an eligible beneficiary
under subsection (a) to such successor, and such
successor shall be treated ss the assigned opera-
tor with respect to such eligible beneficiary for
purposes of this chapter. Notwithstanding the
preceding sentence, the assigned operator trans-
ferring such assignment (and any related person)
shall remain the guarantor of the benefits provid-
ed to the eligible beneficiary under this chapter.
An assigned operator shall notify the trustees of
the Combined Fund of any transfer described in
this paragraph.
f(c) Identification of Eligible Beneficiaries. - The
1960 UMWA Benefit Plsn and the 1974 UMWA
Benefit Plan shall, by the later of October I.
1992, or the twentieth day after the enactment
date, provide to the Secretary of Health and
Human Services s list of the names and social
security account numbers of each eligible benefi-
ciary, including each deceased eligible beneficiary
if any other individual is an eligible beneficiary
by reason of s relationship to such deceased
eligible beneficiary. In addition, the plans shall
provide, where ascertainable from plan records,
the nsmes of sll persons doecribed in subsection
(s) with respect to any eligible beneficiary or
deceased eligible beneficiary.
'(d) Cooperation by Other Agencies and Per-
sons. •
'(1) Cooperation. • The head of any department,
agency, or instrumentality of the United Slates
shall cooperate fully and promptly with the
Secretary of Health and Human Services in
providing information which will enable the
Secretary to carry out his responsibilities under
this section.
'(2) Providing of information •
'(A) In general. • Notwithstanding any other
provision oflsw, including section 610.'). the head
of any other agency, department, or instrumen-
tality shall, upon receiving a written request
from the Secretary of Health and Human Servic-
es in connection with this section, cause a search
to be msde of the files and records maintained by
such agency, department, or instrumentality with
a view to determining whether the information
requested is contained in such files or records.
The Secretary shall be advised whether the
search disclosed the information requested, and.
if so, such information shall be promptly trans-
mitted to the Secretary, except that if the disclo-
sure of sny requested information would contra-
vene nstionsl policy or security interests of the
United States, or the confidentiality of census
data, the in forms lion shall not be transmitted
and the Secretary shall be so advised.
'(B) Limitation. • Any information provided
under subparagraph (A) shall be limited to infor-
mation necessary for the Secretary to carry out
hie duties under this section.
'(3) Trustees. • The trustees of the Combined
Fund, the 1950 UMWA Benefit Plan, the 1974
UMWA Benefit Plan, the I960 UMWA Pension
Plsn. and the 1974 UMWA Pension Man shall
fully and promptly cooperate with the Secretary
in furnishing, or assisting the Secretsry to
obtain, any information the Secretary needs to
carry out the Secretary's responsibilities under
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this section.
•<•) Notice by Secretary. -
'(1) Notice to fund. - The Secretary of Health
and Human Services •hall advise the trustees of
the Combined Fund of the name of each person
identified under this section as an assigned
operator, and the names and social security
account numbers of eligible beneficiaries with
respect to whom he is identified.
•(2) Other notice. -The Secretary of Health and
Human Services shall notify each assigned
operator of the names and social security account
numbers of eligible beneficiaries who have been
■esigned to such person under this section and a
brief summary of the facta related to the basis for
'(1) Reconsideration by Secretary. -
'(1) In general. - Any assigned operator receiv-
ing a notice under subsection (e)(2) with respect
to an eligible beneficiary may, within SO days of
receipt of such notice, request from the Secretary
of Health and Human Servioes detailed informa-
tion ae to the work history of the beneficiary and
the basis of the assignment.
'(2) Review. • An assigned operator may, within
SO days of receipt of the information under
paragraph (1), request review of the assignment.
The Secretary of Health and Human Servioes
shall conduct such review if the Secretary finds
the operator provided evidence with the request
constituting a prima facie case of error.
'(S) Results of review. •
'(A) Error. - If the Secretary of Health and
Human Services determines under a review
under paragraph (2) that an assignment was in
*(i) the Secretary ehall notify the assigned
operator and the trustees of the Combined Fund
and the trustees ehall reduce the premiums of
the operator under section 9704 by (or if there
are no auch premiums, repay) all premiums paid
under section 9704 with respect to the eligible
beneficiary, and
'(ii) the Secretary shall review the beneficiary 'e
record for reassignment under subsection (s).
'(B) No error. - If the Secretary of Health and
Human Services determines under s review
conducted under paragraph (2) that no error
occurred, the Secretary ehall notify the assigned
operator.
'(4) Determinations. • Any determination by the
Secretary of Health and Human Servioes under
paragraph (2) or (S) ehall bo final.
'(6) Peyment pending review. • An assigned
operator ehall pay the premiums under section
9704 pending review by the Secretary of Health
and Human Services or by s court under this
'(6) Private actions. • Nothing in this section
ehall preclude the right of any person to bring a
separate civil action against another person for
responsibility for assigned premiums, notwith-
standing any prior decision by ths Secretary.
'(g) Confidentiality of Information. • Any person
to which information is provided by the Secretary
of Health and Human Services under this section
shall not discloss such information except in any
proceedings related to this section. Any civil or
criminal penalty which is applicable to an unau-
thorised disclosure under section 610S shall
apply to any unauthorized disclosure under this
TART III - ENFORCEMENT
'See 9707. Failure to pay premium.
'SEC. 9707. FAILURE TO PAY PREMIUM.
'(a) General Rule. • There ie hereby imposed a
penalty on the failure of any assigned operator to
pay any premium required to be paid under
section 9704 with respect to sny eligible benefi-
ciary.
'(b) Amount of Penalty. • The amount of the
penalty imposed by eubeection (s) on any failure
with respect to sny eligible beneficisry ehall be
$100 per day in the noncompliance period with
respect to sny such failure.
'(c) Noncompliance Period. - For purposes of
this section, the term 'noncompliance period'
means, with respect to any failure to pay any
premium or installment thereof, the period •
'(1) beginning on the due date for euch premi-
um or installment, and
'(2) ending on the date of payment of euch
premium or installment.
'(d) Limitations on Amount of Penalty. •
'(1) In general. • No penalty shall be imposed by
eubeection (a) on any failure during any period
for which it ie established to the satisfaction of
the Secretary of the Treasury thst none of the
persons responsible for euch failure knew, or
exercising reasonable diligence, would have
known, that auch failure exiatod.
'(2) Corrections. - No penalty ehall be imposed
by subsection (s) on any failure if •
'(A) auch failure was due to reasonable cause
and not to willful neglect, and
'(B) auch failure ie corrected during the 30-day
period beginning on the 1st date that any of the
persons responsible for euch failure knew, or
exercising reasonable diligence would have
known, thst such failure existed.
'(S) Waiver. - In the case of s failure that is due
to reasonable cause end not to willful neglect, the
Secretary of the Treasury msy waive all or part
of the penalty imposed by subsection (a) for
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failures to the extent that the Secretary deter-
mines, in his sole discretion, that the payment of
such penalty would be excessive relative to the
failure involved.
'(e) Liability for Penalty. - The person failing to
meet the requirements of section 9704 shall be
liable for the penalty imposed by subsection (a).
'(0 Treatment. - For purposes of this title, the
penalty imposed by this section shall be treated
in the came manner as the tax imposed by sec-
tion 4980B.
TART IV - OTHER PROVISIONS
'Sec 0708. Effect on pending claims or obliga-
tions.
'SEC. 9708. EFFECT ON PENDING CLAIMS
OR OBLIGATIONS.
'All liability for contributions to the Combined
Fund that arises on and after February 1, 1998,
shall be determined exclusively under this chap-
ter, including ail liability for contributions to the
I960 UMWA Benefit Plan and the 1974 UMWA
Benefit Plan for coal production on and after
February 1, 1998. However, nothing in this
chapter is intended to have any effect on any
claims or obligations arising in connection with
the 1960 UMWA Benefit Plan and the 1974
UMWA Benefit Plan as of February 1, 1998,
including claims or obligations based on the
'evergreen' clause found in the language of the
1960 UMWA Benefit Plan and the 1974 UMWA
Benefit Plan. Thk chapter shall not be construed
to affect any rights of subrogation of any 1988
agreement operator with respect to contributions
due to the 1960 UMWA Benefit Plsn or the 1974
UMWA Benefit Plan as of Februsry 1, 1998.
'SUBCHAPTER C - HEALTH BENEFITS OF
CERTAIN MINERS
'Part I - Individual employer plane
'Part II - 1992 UMWA benefit plan
'PART I - INDIVIDUAL EMPLOYER PLANS
'Sec 9711. Continued obligations of individual
'SEC. 9711. CONTINUED OBLIGATIONS OF
INDIVIDUAL EMPLOYER PLANS.
'(a) Coverage of Current Recipients. - The last
signatory operator of any individual who, as of
February 1, 1993, is receiving retiree health
benefite from an individual employer plan main-
tained pursuant to a 1978 or subsequent coal
wage agreement ehail continue to provide health
benefite coverage to such individual and the
individual's eligible beneficiaries which is sub-
stantially the same as (and subject to all the
limitations of) the coverage providod by euch plan
as of January 1, 1992. Such coverage shall con-
tinue to be provided for as long as the last signs*
tory operator (and any related person) remains in
business.
'(b) Coverage of Eligible Recipients. -
'(1) In general. • The last signatory operator of
any individual who, as of Februsry 1, 1998, is not
receiving retiree health benefite undor the indi-
vidual employer plan maintained by the last
signatory operator pursuant to a 1978 or subse-
quent coal wags agreement, but lies met the egs
and service requirements for eligibility to receive
benefite under euch plan aa of such dote, shall, at
such time as such individual becomes eligible to
receive benefite under euch plsn, provide health
benefits coverage to such individual and the
individual 'a eligible beneficiaries which is de-
scribed in paragraph (2). This paragraph shall
not apply to any individual who retired from the
coal industry after September 80, 1994, or any
eligible beneficiary of audi individual.
'(2) Coverage. • Subject to the provisions of
subsection (d), health benefite coverage ia de-
scribed in this paragraph if it ia substantially the
same es (and subject to ell ths limitations of) the
coverage provided by the individual employer
plan aa of January 1, 1992. Such coverage shall
continue for es long as ths Isst signatory opera-
tor (and any related person) remains in business.
'(c) Joint and 8everal Liability of Related Per-
eone. - Each related person of s Isst signatory
operator to which subsection (s) or (b) applies
shall be jointly and severally liable with the last
signatory operator for the provision of health
care coverage described in subsection (a) or (b).
'(d) Managed Care and Coat Containment. • The
lest signatory operator shall not be treated as
failing to most ths requirements of subsection (s)
or (b) if benefits are provided to eligible beneficia-
ries under msnsgsd care and cost containment
rules and procedures described in section 9712(e)
or agreed to by the lest signatory operator and
the United Mine Workers of Amsries.
'(s) Treatment of Noncovered Employees. • The
distance, level, end duration of benefite provided
to former employees of s Isst signatory operator
(and their eligible beneficiariee) who are not
otherwiee covered by this chapter snd who are
(or were) covered by a coal wage agreement shell
only be determined by, end shall be subject to,
collective bargaining, lawful unilateral action, or
other applicable law.
'(0 Eligible Beneficiary. • For purposes of this
section, ths term 'eligible beneficiary' mesne any
individual who ia eligible for health benefite
under s plan described in subsection (s) or (b) by
reason of the individual's relationship with ths
retiree described in such subsection (or to an
individual who, based on service snd employment
hietory at ths time of death, would heve been so
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described but for such faith).
•(g) Rules Applicable to This Part and Part II.
- For purpose* of this part and part II -
'(1) Successor. - The term 'last signatory
operator* shall include a successor in interest of
such operator.
*(2) Reassignment upon purchase. - If a person
becomes a ■urreesnr of a last signatory operator
after the enactment date, the last signatory
operator may transfer any liability of such opera-
tor under this chapter with respect to an eligible
beneficiary to such successor, and such successor
shall be treated as the last signatory operator
with respect to such eligible beneficiary for
purposes of this chapter. Notwithstanding the
preceding sentence, the last signatory operator
transferring such assignment (and any related
person) shall remain the guarantor of the bene-
fits provided to the eligible beneficiary under this
chapter. A last signatory operator shall notify
the trustees of the 1992 UMWA Benefit Plen of
any transfer described in this paragraph.
TART H - 1992 UMWA BENEFIT PLAN
•Sec 9712. Establishment and coverage of 1992
UMWA Benefit Plan.
•SEC. 9712. ESTABLISHMENT AND COVER-
AGE OF 1992 UMWA BENEFIT PLAN.
•(a) Creation of Plan. -
*( 1) In general. - As soon as practicable after the
enactment dete, the settlors shall create a sepa-
rate private plan which shall bo known as the
United Mine Workers of America 1992 Benefit
Plan. For purposes of this title, the 1992 UMWA
Benefit Plan shall bo treated as an organization
exempt from taxation under section 601(a). The
settlors shall be responsible for designing the
structure, Administration and terms of the 1992
UMWA Benefit Plan, and for appointment and
removal of the members of the board of trustees.
The board of trustees shall initially consist of five
members end shall thereafter be the number set
by the settlors.
'(2) Treetment of plen. - The 1992 UMWA
Benefit Plen shall be -
'(A) s plan described in section 302(c)(6) of the
Labor Management Relations Act, 1947 (29
U.S.C. 166(c)(6)),
'(B) an employee welfare benefit plan within the
meaning of section 3(1) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C.
1002(1)), and
'(C) a multiemployer plan within the meaning
of section 3(37) of such Act (29 U.S.C. 1002(37)).
•(b) Coverage Requirement. •
'(1) In general. - The 1992 UMWA Benefit Plan
ehall only provide health benefits coverage to any
eligible beneficiary who is not eligible for benefits
r the Combined Fund and shsll not provide
ouch coverage to any other individual.
•(2) Eligible beneficiary. • For purposes of this
section, the term 'eligible beneficiary ' means an
individual who •
•(A) but for the enactment of this chapter,
would be eligible to receive benefits from the
1960 UMWA Benefit Plan or the 1974 UMWA
Benefit Plan, based upon sge and service earned
as of February 1, 1993; or
•(B) with respect to whom coverage is required
to be provided under section 971 1, but who does
not receive ouch coverage from the applicable laat
signatory operator or any related person, and any
individual who ia eligible for benefits by reason of
a relationship to an individual described in
subparagraph (A) or (B). In no event shall the
1992 UMWA Benefit Plan provide health benefit*
coverage to any eligible beneficiary who is a coal
industry retiree who retired from the coal indus-
try after September 30, 1994, or any beneficiary
of such individual.
•(c) Health Benefit*. -
•(1) In general. - The 1992 UMWA Benefit Plan
shsll provide heslth care benefits coverage to
each eligible beneficiary which ia substantially
the ssme as (and subject to ell the limitations of)
coverage provided under the I960 UMWA Benefit
Plan and the 1974 UMWA Benefit Plan as of
January 1, 1992.
'(2) Managed care. • The 1992 UMWA Benefit
Plan shall develop managed care and coat con-
tainment rules which shall be applicable to the
payment of benefits under this subsection.
Application of such rules shall not cause the plan
to be treated as fsiling to meet the requirements
of this subsection. Such rules shall preserve
freedom of choice while reinforcing managed care
network use by allowing a point of service deci-
sion ss to whether s network medical provider
will be used. Major elements of such rules may
include, but are not limited to, elementa de-
scribed in paragraph (3).
•(3) Major elementa of rules. • Elements de-
scribed in this paragraph are •
'(A) implementing formulary for drugs and
subjecting the prescription program to a rigorous
review of appropriate use,
'(B) obtaining a unit price discount in exchange
for patient volume and preferred provider status
with the amount of the potential discount vary-
ing by geographic region,
'(C) limiting benefit payments to physicisns to
the allowable charge under title XVIII of the
Social Security Act, while protecting beneficiaries
from balance billing by providers,
•(D) utilising, in the claims payment function
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'appropriateness of service' protocols under title
XVIII of the Social Security Ad if mora stringent,
'(E) creating mandatory utilisation review (UR)
procedural, but placing the responsibility to
follow such procedures on the physician or
hospital, not the beneficiaries,
'(F) selecting the most efficient physicians and
state-of-the-art utilisation management tech-
niques, includingambulatory care techniques, for
medical services delivered by the managed care
network, and
'(G) utilising a managed care network provider
system, as practiced in the health care industry,
at the time medical services are needed
(point-of service) in order to receive maximum
benefits available under this subsection.
'(4) Last signatory operators. - The board of
trustees of the 1992 UMWA Benefit Plan shall
permit any last signatory operator required to
maintain an individual employer plan under
section 971 1 to utilise the managed care and coat
containment rules and programs developed under
this subsection if the operator electa to do so.
'(6) Standards of quality. - Any managed care
system or cost containment adopted by the board
of trustees of the 1992 UMWA Benefit Plan or by
a last signatory operator may not be implemented
unless it is approved by, and meets the standards
of quality adopted by, a medical peer review
panel, which has been established •
'(A) by the settlors, or
'(B) by the United Mine Workers of America
and a last signatory operator or group of opera-
tors. Standards of quality shall include accessibil-
ity to medical care, taking into account that
accessibility requirements may differ depending
on the nature of the medical need.
'(d) Guarantee of Benefits. -
'(1) In general. -All 1988 last signatory opera-
tors shall be responsible for financing the bene-
fits described in subsection (c), in accordance
with contribution requirements established in the
1992 UMWA Benefit Plan. Such contribution
requirements, which shall bs applied uniformly
to each 1988 last signatory operator, on the basis
of the number of eligibis and potentially eligible
beneficiaries attributable to each operator, shall
include:
'(A) the payment of an annual prefunding
premium for all eligible and potentially eligibis
beneficiaries attributable to a 1988 last signatory
operator,
'(B) the payment of s monthly per beneficiary
premium by each 1988 last signatory operator for
each eligibis beneficiary of such operator who is
described in subsection (b)(2) end who is receiv-
ing benefits under the 1992 UMWA Benefit Plan,
'(C) the provision of sscurity (in the for
bond, letter of credit or cash escrow)
amount equal to a portion of the projected
cost to the 1992 UMWA Benefit Plan of |
ing health benefits for eligible and pots
eligible beneficiaries attributable to the 19
signatory operator. If a 1988 last sig
operator is unable to provide the sscur
quired, the 1992 UMWA Benefit Plan
require the operator to pay an annual prefi
premium that » greater than the pr
otherwise applicable.
'(2) Adjustments. - Ths 1992 UMWA 1
Plan shall provide for •
'(A) annual adjustments of ths psr bout
premium to cover changes in the cost of |
ing benefits to eligible beneficiaries, and
'(B) adjustments ss necessary to the i
prefunding premium to reflect changes
cost of providing benefits to eligible benefi
for whom per beneficiary premiums are nc
'(3) Additional liability. • Any last sig
operator who is not s 1988 last signatory
tor shall pay the monthly per beneficiary
um under paragraph (1MB) for each i
beneficiary described in such paragraph at
able to that operator.
'(4) Joint and several liability. • A 191
signatory operator or laat signatory of
described in paragraph (3), and any i
parson to any such operator, shall bo Joint
severally lisbls with such operator flc
amount required to bs paid by such of
under this section.
'(6) Deductibility. • Any premium roqui
this section shall bs deductible without rej
any limitation on deductibility based <
prefunding of health benefits.
'(6) 1988 last signatory operator. • For pu
of this section, the term '1988 last sig
operator' meane a last signatory operator
is s 1988 agreement operator.
'SUBCHAPTER D - OTHER PROV1SK
'Sec 9721. Civil enforcement.
'Sec. 9722. Sham transactions
'SEC. 9721. CIVIL ENFORCEMENT.
'The provisions of section 430 1 of the Esj
Retirement Income Security Act of 1974
apply to sny claim arising out of sn oblige
pay any amount required to be paid I
chapter in the asms man nor mm sny claim i
out of an obligation to pay withdrawal li
under subtitle E of title IV of such Ac
purposes of ths preceding sentence, a sig
operator and related persons shall be tree
the same manner ss <
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•SBC. 0722. SHAM TRANSACTIONS.
'If a principal purpose of any tranaaction is to
evade or avoid liability under thia chapter, thia
chapter ahall be applied (and audi liability shell
be imposed) without regard to such tranaaction.'
(b) Amendments to Surface Mining Act. -
(1) Extension of fee program. - Section 402(b) of
the Surface Mining Control and Reclamation Act
of 1977 (30 UJS.C. 1282(b)) b amended by etrik-
ing 'September 30, 1996* and inserting
'September 30, 2004*.
(2) Transfer to fund. • Section 402 of such Act
(30 UJS.C. 1232) is amended by edding at the end
the following new subsection:
'(h) Transfer of Funds to Combined Fund. - (1)
In the case of any fiscal year beginning on or
after October 1, 1996, with respect to which fees
are required to be paid under thia section, the
Secretary shall, as of the beginning of such fiscal
year and before any allocation under subsection
(g), make the transfer provided in paragraph (2).
'(2) The Secretary shall transfer from the fund
to the United Mine Workers of America Com-
bined Benefit Fund established undsr section
9702 of the Internal Revenue Code of 1986 for
any fiscal year an amount equal to the sum of -
'(A) the amount of the interest which the Secre-
tary sstimatse will be earned and paid to the
Fund during the fiscal year, plus
'(B) the amount by which the amount described
in subparagraph (A) is less than $70,000,000.
'(S)(A) The aggregate amount which may be
transferred under paragraph (2) for any fiscal
year shall not exceed the amount of expenditure
which the trustees of the Combined Fund esti-
mate will be debited against the unassignsd
beneficiaries premium sccount under section
9704(e) of the Internal Revenue Code of 19S6 for
the fiscsl year of the Combined Fund in which
the transfer is mads.
'(B) The aggregate amount which may be trans-
ferred under paragraph (2MB) for all fiscal years
shall not exceed an amount equivalent to ell
interest earned and paid to the fund after Sep-
tember 30, 1992, and before October 1, 1996.
'(4) If, for any fiscsl year, the amount trans-
ferred is mors or less than the amount required
to be transferred, the Secretary ehall appropriate-
ly adjust the amount transferred for the next
fiscsl year.'
(3) Conforming amendments. • (A) Section
401(c) of such Act (30 U.S.C. 1231(c)) ie emended
by striking 'snd' st the end of paragraph ( 1 1), by
redesignating paragraph (12) as paragraph (13),
and by adding after paragraph (1 1) the following
new paragraph:
'(12) for the purpose described in section
402(h); snd*.
(B) Section 402(g)(1) of euch Act (30 U.S.C.
1232(g)) is amended by striking 'Moneys' snd
inserting 'Except es provided in subsection (h),
ORDER FOR TOMORROW
Mr. JOHNSTON. Mr. President, on
behalf of the majority leader, I ask
unanimous consent that when the
Senate completes its business today, it
stand in recess until 9:30 a.m., Thurs-
day, July 30; that following the
prayer, the Journal of Proceedings be
deemed approved to date; that the
time for the two leaders be reserved
for their use later in the day; that
there be a period for morning business
not to extend beyond 10 a.m., with
Senators permitted to speak therein
for up to 5 minutes each; that Sena-
tors Leahy and Lott be recognized for
up to 15 minutes each; and that at 10
a.m. the Senate resume consideration
of H.R. 776, the energy bill.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
CONGRESSIONAL RECORD
(SENATE)
July 30, 1992
Pegs S 10*67
COMPREHENSIVE NATIONAL ENERGY
POLICY ACT
The PRESIDING OFFICER. Under
the previous order, the Senate will
now resume consideration of H.R. 776,
which the clerk will report.
The bill clerk read as follows:
A bill (H.R. 776) to provide for improved* ener-
gy efficiency.
The Senate resumed consideration
of the bill.
Pending:
(1) Wsllstone amendment No. 2789, to amend
the Securities Exchange Act of 1934 with respect
to limited partnership rollups.
(2) Dodd amendment No. 2790 (to amendment
No. 27S9), in the neture of s substitute.
Mr. JOHNSTON. Mr. President, we
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reason, of course, for this dilemma is
that we do not have the intestinal
fortitude, the guts, to make tough
decisions.
This bill has almost nothing in it to
stimulate the domestic production of
oil and gas. Why? This is the energy
bill. It seems we would rather ram
through the easy stuff and go home
claiming victory. After the elections,
well, maybe that is when we will talk
about ANWR, that is when people will
again talk about CARE standards. It
is no wonder the American people are
anxious, concerned, and discouraged.
Mr. President, let me tell you what
I hear people saying. They are saying
they want jobs. They want American
jobs. They want an expansion of the
economy. They are also saying no
blood for oil. We went through that
effort in the Persian Gulf. Make no
mistake about why we were over
there. We were over there to keep the
flow of oil available to the Western
world.
The American people are saying no
more billion-dollar trade deficits.
They are saying let us import less; let
us produce more domestically. They
are saying no more exporting of Amer-
ican jobs. Why are we sending our jobs
overseas with our investment when
we could be developing our own do-
mestic energy resources in this coun-
try? What is Congress saying, Mr.
President? Congress is saying we are
not even going to have at this time an
up/down vote on ANWR.
It is unfortunate we are not going
to have this debate of the one issue
which means 735,000 new jobs
throughout America, the largest single
jobs issue identified in the Nation at
this time. This body iB not even going
to debate the merits. My colleagues
on the other side of the aisle who
have indicatd a support for ANWR say
we simply cannot address the issue at
this time because of the political reali-
ties.
Mr. President, the political realities
are very simple. The Democratic
Presidential team does not support
the opening of ANWR and the leasing
thereof. The Vice Presidential candi-
date on the other side, my colleague
and good friend, Senator Goife, not
only opposes ANWR, but he proposes
putting ANWR in a wilderness in
perpetuity, which would foreclose this
Nation from developing what has been
identified as North America's largest
potential oil reserve.
It is, indeed, unfortunate we are not
going to discuss the fact that in May
alone this Nation spent $4.1 billion on
imported oil. We are not going to dis-
cuss the three-quarters of a million
troops we sent to fight in the Persian
Gulf to protect oil supplies when we
could be producing oil here at home.
It simply does not make sense.
The unfortunate part is that we
cannot seem to overcome the environ-
mental opposition. Where is Ameri-
can ingenuity? Where is American
technology that has been able to meet
the challenges ahead? Can we not
encourage America's environmental
community to come aboard, help us
make ANWR development safer? Re-
duce the footprint? Reduce the impact
on the environment by using new
technology? Of course, we can. But
for reasons unknown to me in exact
terms, the environmental community
has yet to come aboard and say 1st us
make a contribution to America's
energy independence by reducing de-
pendence on imported oil and gas by
developing ANWR. And let us do it
better, let us do it with U.S. jobs, with
UJ5L ingenuity, with sound science as
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were accepted.
The first amendment was an
amendment requiring an analysis of
the economic benefits associated with
opening the Arctic National Wildlife
Reserve to oil development.
The second was an amendment that
would require an analysis of all pro-
jects nationwide that could aid the
economy and produce jobs.
And, as a consequence of that com-
parison, Mr. President, at about the
end of the first quarter of next year
this body is going to have a base of
information. It is going to be a base
of information that I think will clearly
show the tremendous impact on the
economy that opening ANWR could
provide to this Nation, not only in
jobs but also as a significant contribu-
tion to offsetting the balance of pay-
ments deficit. One only has to look at
the balance-of-payments deficit to
recognize that two-thirds of our deficit
in the balance of payments is the cost
of importing oil.
The necessity of that continuing is,
of course, dependent upon actions by
this body and the House of Represen-
tatives relative to the authorization to
initiate the authority for lease sales in
domestic areas of identified petroleum
resource ANWR certainly fits into
that category.
So what we have done is set up a
criterion that, as a consequence of the
analysis, will show a comparison be-
tween identified economic activities
associated with new jobs emerging
from projects that are planned
throughout the country, that identify
over 2,500 new jobs, and a comparison
on what development might mean
with regard to the Arctic National
Wildlife Refuge.
The stage is set, Mr. President, and
my accompanying remarks are in
support of a national energy strategy,
which this Nation sorely needs. It is
really time we wake up and smell the
aroma of the coffee which surrounds
us. The American people are scream-
ing, and we are not hearing the mes-
sage. You can hear it in the Congress.
You can hear it in the headlines. You
can watch it on the evening news.
The American poeple are questioning
the attainability of the American
dream. They are concerned. They
are scared. They are frightened.
They are anxious.
They are concerned that our econo-
my is sinking, that they will wake up
without jobs, that our children will
lack the opportunity to have challeng-
es, to own their own homes; the recog-
nition that many of our jobs are going
overseas and that our politicians do
not seem to care. They are concerned
the Japanese and the Europeans are
taking our jobs, buying our property,
taking over our technology,
outcompeting us in every industry
that really matters, industries that
were basically the center of American
ingenuity.
The people are telling us, but we do
not hear the message. Somehow we
are not listening - listen or get out.
That is the message. We hear it time
and time again. Some suggest any-
thing is better than what we have.
We have all heard the anti-incumben-
cy concerns expressed by the media.
This bill before us, this so-called
comprehensive energy plan and the
debate we are having, is exactly what
many Americans are concerned about.
Any they are concerned that we do
not get the point. We have before us
a scaled-down bill. It is a worthwhile
bill. But the bill itself avoids the ma-
jor questions of reducing dependence
on foreign sources for our oil. The
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raw ion, of count, for this dflwnmi m
that wo do not have the intestinal
fortitude, the pits, to make tough
have indkatd a support tor ANWR amy
wo simply cannot addroai the issue at
this tune because of the political reeb-
This bill has almost nothing in it to
stimulate the domestic production of
oil and gas. Why? This is the energy
bill. It seems we would rather ram
through the easy stuff and go home
claiming victory. After the elections,
well, maybe that is when we will talk
about ANWR, that is when people will
again talk about CARE standards. It
is no wonder the American people are
anxious, concerned, and discouraged.
Mr. President, let me tell you what
I hear people saying. They are saying
they want jobs. They want American
jobs. They want an expansion of the
economy. They are also saying no
blood for oil. We went through that
effort in the Persian Gulf. Make no
mistake about why we were over
there. We were over there to keep the
flow of oil available to the Western
world.
The American people are saying no
more billion-dollar trade deficits.
They are saying let us import less; let
us produce more domestically. They
are saying no more exporting of Amer-
ican jobs. Why are we sending our jobs
overseas with our investment when
we could be developing our own do-
mestic energy resources in this coun-
try? What is Congress saying, Mr.
President? Congress is saying we are
not even going to have at this time an
up/down vote on ANWR.
It is unfortunate we are not going
to have this debate of the one issue
which means 735,000 new jobs
throughout America, the largest single
jobs issue identified in the Nation at
this time. This body is not even going
to debate the merits. My colleagues
on the other side of the aisle who
Mr. President, the political realities
are very simple. The Democratic
Presidential team does not support
the opening of ANWR and the leasing
thereof. The Vice Presidential candi-
date on the other side, my colleague
and good friend, Senator Gor>, not
only opposes ANWR, but he proposes
putting ANWR in a wilderness in
perpetuity, which would foreclose this
Nation from developing what has been
identified as North America's largest
potential oil reserve.
It is, indeed, unfortunate wo are not
going to discuss the fact that in May
alone this Nation spent $4. 1 billion on
imported oil. We are not going to dis-
cuss the three-quarters of a million
troops we sent to fight in the Persian
Gulf to protect oil supplies when we
could be producing oil here at home.
It simply does not make sense.
The unfortunate part is that we
cannot seem to overcome the environ-
mental opposition. Where is Ameri-
can ingenuity? Where is American
technology that has been able to meet
the challenges ahead? Can we not
encourage America's environmental
community to come aboard, help us
make ANWR development safer? Re-
duce the footprint? Reduce the impact
on the environment by using new
technology? Of course, we can. But
for reasons unknown to me in exact
terms, the environmental community
has yet to come aboard and say let us
make a contribution to America's
energy independence by reducing de-
pendence on imported oil and gas by
developing ANWR. And let us do it
better, let us do it with U.S. jobs, with
U.S. ingenuity, with sound science as
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4411
opposed to emotion that so often car-
ries the day in this body. More often
than not, individuals who make the
most eloquent argument prevail on an
emotional basis. Decisions are made
that have no sound scientific basis.
Mr. President, the question of
ANWR is not about Caribou, it is not
about footprints in the wilderness, it
is not about a 200-day supply of oil. It
is about jobs. It is about creating jobs
and keeping jobs in America. It is
about stimulating the economy. It is
about supplying ourselves with energy
that we need so we do not have to
fight wars against despots abroad. It
is about wiping out half of our trade
deficit.
Mr. President, Congress is going to
pass this bill. I am going to support
this bill. We are going to go home and
declare some kind of a victory to our
constituents, but what a hollow victo-
ry cry that will be.
Let me explain a little bit further
on why this is going to be a hollow
victory. While this body avoids mean-
ingful legislation to encourage domes-
tic oil exploration and development,
let us look around the world and see
what is happening. Oil imports are at
their highest levels since 1978. We
currently import nearly 7.5 million
barrels of crude oil a day. It is the
highest level of imports since the win-
ter of 1978. Domestic production is
decreasing steadily and has fallen to a
low of 7.2 million barrels a day. That
is what the level was in 1968. My
State of Alaska provides 25 percent of
America's domestic oil production, but
it, too, is beginning to decline at near-
ly 10 percent a year.
What are we going to do in 5 years?
What are we going to do in 9 years?
We are going to be importing more oil.
Make no mistake about it, Mr. Pres-
ident, we must and can and are doing
a better job of conservation, but there
is an expansion of our economy and as
a consequence, there is a tremendous
demand and will be for the foreseeable
future for crude oil. Alternatives will
be developed, but they must be eco-
nomically competitive and currently
they are not and will not be for the
foreseeable future.
So, Mr. President, imports are,
again, over 50 percent. The number
of active oil and gas rigs hit the lowest
level ever recorded. Last month the
rig count was 596. Imagine that, 596
compared with 1981 when there were
4,531 rigs drilling in the United
States, rigs using American labor,
providing jobs, providing for the eco-
nomic vitality of the industry as well
as the communities where those in-
dustries were located.
Offshore drilling in the United
States fell by 41 percent this year
alone. Refinery employment is on a
major decline. The feeling in the in-
dustry is that the domestic oil indus-
try is struggling to survive. America
is over regulated and the most promis-
ing areas for new domestic production
are closed - they are closed to explora-
tion, Mr. President - by the Congress
of the United States.
There is little hope expressed for
recovery within the industry and that
is unfortunate, Mr. President, because
the American oil industry is moving
overseas before the very eyes of this
body. American jobs are being filled in
other countries and this body's inabili-
ty to make tough decisions is allowing
this to happen. When I mention this
body, I am obviously including the
House of Representatives as well.
Last year, investment in America by
30 large oil and gas companies fell by
4 percent, while overseas investment
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increased by 27 percent. Total capital
expenditures was 50 percent higher
overseas than in America. In the past
5 years, U.S. oil companies have spent
$30 billion more developing foreign
resources than they have in develop-
ing domestic oil fields in this country.
Mr. President, the gap is increasing.
The industry is going to other promis-
ing areas in countries eager to develop
their resources: Russia, South Ameri-
ca, Southeast Asia, Africa, to name a
few. More than 60 Western oil com-
panies are negotiating now joint ven-
tures with the former Soviet Repub-
lics. That is happening right now:
Chevron is in Kazakhstan, Marathon
in Sakhalin, Unocal in Thailand, BP
in Columbia, and Apache is in Burma.
Other countries encourage oil explo-
ration and development. The United
States simply shuts its door on the
most promising areas. Endless layers
of Federal regulatory hurdles inhibit
exploration and development both
onshore and offshore.
Mr. President, no new refiners have
been built in America in recent years,
and the prospects for new ones have
been killed by the cost of compliance
with the Clean Air Act. But new refin-
eries are being constructed in other
countries. Where is the balance? Can-
not America come together with re-
sponsible environmental oversight and
challenge America's technological
capability with engineering techniques
that can induce this country to build
new efficient refineries that can com-
pete with refineries overseas? If not,
Mr. President, the handwriting is on
the wall. We are simply going to im-
port not only crude but we will in-
crease our import dependence on re-
fined products.
Mr. President, a lot of people seem
to say, oh, well, that is all right How
does that oil come in, how does that
refined product come? It comes in in
foreign tankers, owned by foreign
nationals, foreign crewmen who do
not have the same oversight that U.S.
tankers have. Where is our own
self-interest, Mr. President? I find it
baffling and I think the American
people find it unacceptable.
The United States is the only coun-
try in the world with drilling morato-
riums on its coastal waters, including
some of the most promising areas off
the coasts of California, North Caroli-
na, and Florida. We recognize there
can be a risk in drilling and have
excluded drilling from the most sensi-
tive areas, like Bristol Bay, as we
should, because clearly the value of
the renewable red salmon resource far
surpasses the potential value of the
oil.
But there are many other areas
where we do not have that resource
risk; in the Chukchi and Beaufort
Seas in Alaska I support OCS drilling.
So the question is balance. We
cannot eliminate all areas. We have
to measure the environmental impact,
use discretion and use technology to
reduce the element of risk. I will
speak more on this later.
Mr. President, how does the decline
of the domestic oil industry affect
America? We talked a little bit about
jobs, but the petroleum industry in
the United States has lost 350,000
jobs in the last 10 years. The number
of industry jobs has been cut in half
over the last 10 years. These, Mr.
President, are more jobs lost in the
petroleum industry than in the auto-
mobile industry, the steel industry,
the textile industry, the chemical
industry or the electronics industry.
We have lost more jobs in America's
petroleum industry than in the other
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areas I mentioned.
These are real jobs. AMOCO laid
off 8,500, 15 percent of the company;
Mobil, 2,000 jobs; Unocal, 1,000; 1,500
jobs are going to be lost in my State of
Alaska. Nationwide over 50,000 jobs
are going to be lost in the petroleum
industry this year. Job layoffs spin
out in the economy, real estate values
drop, stores close, banks fail, and
more people lose their jobs.
Let us look at the balance of trade,
Mr. President. In the past 10 years,
America has spent $500 billion on
imported oil. Imagine what we could
do in this Nation with $500 billion in
our economy? That is a challenge to
the responsibility of this body.
In 1991, our Nation spent $43 bil-
lion on imported oil. Our total trade
deficit in 1991 was $66 billion. This
means, Mr. President, two-thirds of
our total trade deficit is for imported
oil.
We talk about offsetting a trade
deficit. We talk about our trade with
other countries. Let us focus on
where the priority is. It is the cost of
importing oil. We are doing it at the
expense of our domestic industry by
driving them out. And when you
drive them out, Mr. President, what
you set up is an increased dependence
on imports because American capital
goes overseas and the petroleum in-
dustry develops oil fields for American
consumers. It comes back in the form
of crude oil for refining in the United
States, or it is going to come back
more and more in the refined product,
in foreign ships, with foreign crews, to
be consumed by Americans.
Why not cut out the middleman?
Can we not conceivably address the
incentives within our own industry?
Can we not meet with America' envi-
ronmental community in a responsible
manner to reduce this dependence?
Certainly we can if we have the will to
do it, and the will to do it is within
the legislative body.
Make no mistake about it, Mr. Pres-
ident The President of the United
States, George Bush, supports domes-
tic energy production expansion. The
President has gone on record nine
times supporting the opening of
ANWR.
On the other hand, as I have noted,
the Democratic Presidential candidate
not only opposes ANWR, he wants to
put it into wilderness in perpetuity.
Mr. President, in May of this year
we spent $4.1 billion on imported
petroleum products; $3.2 billion of
that was for importing crude oil, and
that is in 1 month. That is greater
than our May trade deficit with Ja-
pan. Think of that: May, $4.1 billion
on imported petroleum products, and
$3.2 billion of that was for importing
crude oil.
(Mr. SIMON assumed the chair.)
Mr. MURKOWSKI. Mr. President,
as we debate the status of the energy
bill, we are faced with the reality that
we have before us a bill which does
not include the most promising area
in North America, namely ANWR, nor
does it open any new areas for oil
exploration in the United States. This
body has failed, and failed miserably,
to make the tough decisions to benefit
the hard-working men and women of
America. Development of ANWR
would encourage America's oil produc-
tion, independence, preserve American
dollars, and create 735,000 American
jobs in 50 States. This would be the
largest single jobs project ever placed
before the Congress, and the Congress
has the authority, it has the power, to
open it for competitive leasing.
These would be jobs, as I have stat-
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ed, spread to every State in the Na-
tion: 80,000 in California, 60,000 in
Texas, 34,000 in Florida, 22,000 in
New Jersey, 10,000 in Colorado, 2,000
even in the small State of Delaware.
These are real jobs, for men and wom-
en of America. For unemployed work-
ers, these are sound jobs. They are
not handouts: jobs for engineers, weld-
ers, truckers, manufacturers, con-
struction workers of all types. Be-
cause to open that area for production
is going to require pipe, valves, insula-
tion, and on, and on.
ANWR is a chance for this body to
do something to actually create do-
mestic jobs, to spur economic develop-
ment. We talk about jump-starting
the economy. What have we done?
ANWR development alone would boost
the U.S. gross national product by
$50.4 billion. ANWR development
would provide billions of dollars in
taxes and royalties to the Federal and
State governments each year. These
are real dollars.
The proof of that, Mr. President?
Well, let us go back and take a look at
reality. Prudhoe Bay oil is consumed
solely in the United States as required
by law, because when this body passed
the authorization for the pipeline to
be built, the 800-mile pipeline from
Prudhoe Bay to Valdez, it mandated
that the oil flowing through the pipe-
line must be consumed in the United
States. None of that oil goes to Japan
or overseas.
Mr. President, the State of Alaska
produces about 23 to 25 percent of the
total crude oil produced in this Na-
tion.
If we look at Prudhoe Bay since
1977, Alaska's North Slope oil compa-
nies have made direct purchases of
supplies and services from every State
in the Nation, totaling in excess of
$47 billion. The total contribution to
the U.S. economy to date from exist-
ing Prudhoe Bay oil development is
$300 billion.
ANWR development could well be of
a similar magnitude, it is potentially
that big and large a project.
The huge boost to the economy
resulting from ANWR development
can be realized without, Mr. Presi-
dent, costing the U.S. Government
one penny. We do not have to subsi-
dize it. We do not have to make spe-
cial provisions. All we have to do is
authorize it for leasing and let the
private sector go in there, put in their
bids, and initiate exploration. If the
reserves that are hoped to be there
are there, by develop the field we will
have a huge resource of domestic oil
which will produce jobs and spur the
economy. The huge boost to the econ-
omy resulting from ANWR develop-
ment can be realized without costing
the Government one penny. The lease
sales, the bonus bids, the royalties will
raise billions of dollars for the Federal
Treasury.
Mr. President, where is the base of
support? I am pleased to say a large
number of my colleagues have contin-
ued to support the opening of ANWR.
They say it is perhaps not the right
time; we have to wait until we get
over the political gridlock that we are
in; that we cannot embarrass the
Democratic candidate for Vice Presi-
dent. The labor community says that
they are supporting candidates-elect
Clinton and Gore; that they cannot
move on it until the political process
is over. We are in gridlock.
So what is new, Mr. President? We
are in gridlock. We cannot move on
it. Well, the amendments that were
passed last night keep the momentum
alive. I have said earlier the first
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requires an analysis of the economic
benefits of opening ANWR to oil devel-
opment, and that is solely an ANWR
comparison. The second one considers
all projects associated with creating
more than 2,500 new jobs in any area
of the United States. When we look at
the two together, ANWR is going to
make such an outstanding comparison
that the focus will be on opening
ANWR and the realization that we
can do it safely.
Mr. President, as I have stated, if
ANWR was developed, $250 billion
would not be sent overseas. It could
cut the trade deficit in half.
So why are we not moving, Mr.
President? We know we are in an
economic crisis. We are going to have
to address the reality of reaping what
we have sown. For far too long we
have seen the elitist defeatists have
the ear of the majority of this Con-
gress. Their pessimism and fear have
sown the seeds of weeds, so to speak.
They do not believe in the American
spirit of ingenuity or the ability of the
U.S. industry to safely develop re-
sources that make our country strong.
They say we cannot do it. We should
lock up things.
Mr. President, we sent a man to the
Moon. We can open up ANWR safely.
The comparison that we have made in
technology has been in evidence.
Extension of the Prudhoe Bay field
into the development of the Endicott
field is an outstanding standing exam-
ple. The Endicott field came in last
February. It came in as the 10th larg-
est producing field in the United
States. Today, it is the sixth largest,
at 120,000 barrels a day. But it is
only 55 acres; that is the physical size
of the area.
People might say, we do not like oil
fields. That is fine if you do not like
oil fields, but we are dependent on oil.
The Prudhoe Bay field is the best field
in the world. We can be proud of it.
Endicott and the technology used
there is so far advanced and points to
the technology that it can be used to
open up ANWR safely.
What are we talking about? We are
talking about a huge area. There are
18 million acres in the ANWR area.
Half has been set aside in wilderness
in perpetuity. That is fine. Out of
the remaining 8 1/2 million acres, we
are proposing to lease 1 1/2 million
acres. They say if development takes
place in that 1 1/2 million acres, the
actual footprint, the concentration of
development will be about 12,500
acres. That is an area the size rough-
ly of Dulles International Airport.
So it is a persuasive argument. We
have to overcome this 'can't do' phi-
losophy that has succeeded in driving
our industries out of the country. We
have to do it now.
Mr. President, some of the areas
that I think we have to reflect on are
proof of the advancements that have
been made. We had a terrible acci-
dent in Prince William Sound with
the Exxon Valdez grounding - never
should have occurred. But it did.
But what has happened since then?
Well, let us look at facts. We have
had record salmon returns in the
Prince William Sound. They swamped
the market last year. This could be
another record year because of the
successful hatchery program. We had
to dump 2 1/2 million salmon at sea
simply because there was no way to
harvest those salmon in the short
length of time available, and they
were clogging the mouth of the
streams. They simply had to be dis-
posed of. There was no other alterna-
tive. The potential impact of pollu-
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tion would have been too great.
We nee the argument of the caribou
in northwestern Alaska. Twenty years
ago we had 64,000 in one area. Now
we have over half a million. There
are too many to count.
Mr. President, advances in drilling
and production technology will further
minimize the footprint of develop-
ment, many of which have been pio-
neered from my State of Alaska.
These include directional drilling,
remjection of drill muds and cuttingB,
reductions in well spacing, consolida-
tion of support facilities, and drill pad
size reduction. As I have indicated,
Endicott field is proof - only 55 acres
- and we can expect the advance of
that technology.
Alaska's West Sak oil field contains
somewhere in the area of 15 to 25
billion barrels of oil. But it is too
heavy and too cold to produce under
current technology.- It is locked in the
sand. But we are researching recov-
ery technology at the University of
Alaska in Fairbanks. It is going to
take a few more years to bring this on
line. Would it not be a shame if we
lost the pipeline because we did not
keep it open with oil from a new
source after Prudhoe Bay declines?
And Prudhoe Bay is declining at 10
percent a year.
Eventually we are going to have to
remove that pipeline, Mr. President, if
it is not operated at a level that is
economically feasible.
How long will this body refuse to
consider opening the coastal plain of
ANWR? How high must the price of
gas go up? How dependent do we have
to become on the Mideast countries?.
Are we going to have gas lines again
or another war in the Mideast? The
battle over ANWR is not about the
loss of a mystical wilderness value or
manipulated rumors of environmental
destruction. It is about real people,
working people, real jobs, people who
are out of work, people who are con-
cerned for their future, people who
are concerned for their children. It is
about having gas in our cars, turning
on our lights in the schools, putting
our food on the table.
Mr. President, I am convinced, just
as the people of my State are con-
vinced, that ANWR is essential to our
Nation's economy and that ANWR
can be developed safely.
This body and the House of Repre-
sentatives must put the defeatist atti-
tude aside, make the tough decisions
for the benefit of American men and
women, use the new technology to
overcome old procedures, use our
engineering capability, our planning
capability, and our environmental
capability.
If we can put a man on the Moon,
Mr. President, we can open up the
coastal plain of ANWR to oil and gas
development in an environmentally
safe manner.
Mr. President, it is an affront to my
State that we have reached this stale-
mate and this gridlock, and I know to
many of my fellow Members of this
body.
Mr. President, we have seen the
advancement of this legislation. We
have seen it through the Energy Com-
mittee. We have seen it structured as
a partisan issue. We have seen it in
the Presidential political arena that
we are in.
Specifically, Mr. President, we have
seen a situation where we are in a
gridlock, and are going to have to
await a new Congress to address the
issue of ANWR with some finality.
That is indeed unfortunate, Mr.
President. But nevertheless, that is
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the position that we are in.
Mr. President, I have gone on for
some time. I see the floor manager
who has been most patient, and I
want to compliment him. I have fur-
ther remarks, but I am going to ask
unanimous consent that those re-
marks be entered into the Record as if
read.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. MURKOWSKI. I thank the
Chair. I wish my colleagues a good
day.
Mr. JOHNSTON. Mr. President, I
thought we had an amendment
cleared by Mr. Stevens, but I under-
stand Mr. Stevens wants to do the
amendment himself and have some
words to say. If the Senator from
Alaska would like to resume his com-
ments, he is free to do so until his
colleague comes.
Mr. MURKOWSKI. Mr. President,
I would be happy to. I thank my
friend from Louisiana. I will continue
not at length but there are a couple
more points that I feel should be
made.
I would like the record to reflect the
action of the Energy Committee on
the issue of ANWR. In May of 1991,
there was a motion to strike ANWR
leasing from the energy bill. I was a
member of that committee. The mo-
tion to strike ANWR leasing from the
energy bill failed by a vote of 8 to 11.
I am pleased to say that all mem-
bers of our side of the aisle voted
against striking ANWR, and we had
two members of the other side with
us, and as a consequence, we were
able to prevail on an 8-to-ll vote. On
May 23, passage of the energy bill
including ANWR - 1 think it is impor-
tant to note that the bill at that time
did include ANWR - the vote in favor
of passage in the committee was 17 to
3.
So in May 1991, the Energy Com-
mittee voted out ANWR as part of the
energy bill. We had 9 Republicans
and 8 Democrats for which I am eter-
nally grateful. Of course, we had the
chairman of the Energy Committee as
well.
Then we went to the floor in No-
vember 1991, with a cloture vote on
the motion to proceed to the consider-
ation of the entire energy bill. Sixty
votes were required to invoke cloture.
The Senate failed to invoke cloture.
We got 50 votes and 44 against.
Again, it is interesting to note the
partisanship on the vote; 32 Republi-
cans and 18 Democrats voted for clo-
ture; 9 Republicans and 35 Democrats
against cloture. That was the end of
ANWR in the bill. We could not pre-
vail. We needed 60 votes.
On February 4, 1992, we had a
second cloture vote on the motion to
proceed to the energy bill without
ANWR or CAFE. Well, that was not a
vote of any consequence because clear-
ly ANWR had been stricken under the
motion to proceed.
However, in February 1992, a
unanimous consent agreement pro-
posed by the junior Senator from Alas-
ka before this body to allow an
up-or-down vote on ANWR was taken
both to the Republican and Democrat-
ic caucuses. It was a unanimous con-
sent agreement that could be stopped
by only one person's objection. The
Republican leader announced on the
floor that there was no objection on
the Republican side; hence, prospects
for an up-or-down vote were depen-
dent on the other side.
Later that afternoon, on February
4, 1992, a Member of the other side
objected on behalf of six Senate Demo-
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crats, opposing the unanimous con-
sent agreement to grant an up or
down vote on the ANWR amendment.
Well, that is the reality, Mr. Presi-
dent. We are in a gridlock, political
gridlock, with the elections, and
ANWR has moved up not just to be an
energy issue, but it is going to be an
issue in the Presidential debate, be-
cause it divides the two sides. I think
that is indeed unfortunate, because I
think it sells America short on its
technology and its ingenuity. I think
America should recognize that the
environmental community is not anx-
ious to get aboard on ensuring how
ANWR can be opened safely. They see
this as an issue thousands of miles
away from their membership - an
idealistic issue.
I took members up there, both of
the environmental community and
Members of this body. One member
got off the plane and looked around
and said, 'Where is the wilderness?'
This is the wilderness, Mr. President.
The point is that some of the irre-
sponsible environmental groups look
upon this as an issue to keep their
membership growing, to bring in fund-
ing, not as an issue to try and come
aboard and address the concerns and
the reality that is in the interest of
America's energy security, to reduce
our dependence on imported oil, to
reduce the export of American jobs,
and to address the stimulation of this
economy by the most identifiable
means available. This is a challenge
to industry and a challenge to the
environmental community; but the
environmental community is hard and
fast against it, because they can con-
tinue to raise money. Nobody can
afford to go up to ANWR and look at
it, except a few environmental elitists.
It would cost a $5,000 bill to go up
there.
So it is tied up in Presidential poli-
tics, as I have indicated. Presidential
candidate Clinton opposes ANWR
development, and on February 37,
1992, he stated:
I support legislation expanding wilderness
designation in the ANWR area to include the 1 .6
million acre coastal plain.
Well, Mr. President, that speaks for
itself. Vice Presidential nominee Gore
is a cosponsor of Senate bill 39, a bill
to designate ANWR coastal plain as a
wilderness. Those are the facts, Mr.
President.
Mr. President, there is an area of
this bill that I am sensitive to. It is
an important provision missing from
the language that we are considering
today, providing for cancellation of
certain oil leases in the Bristol Bay
area. I am pleased that the other
body included them in their version of
the bill. This is going to come up in
the conference.
I know the leadership is discourag-
ing amendments and, after consider-
ing the issue carefully, I have conclud-
ed that focusing on this matter when
the bill reaches conference is a strate-
gy that will succeed. So I am not
going to pursue the Bristol Bay lease
buyback at that time. But the reality
is that I have addressed it with my
colleagues. The priority is on the wild
salmon resource, which is renewable.
I, along with virtually all Alaskans,
feel that this area should be bought
back.
Mr. President, it is important to
remind my colleagues that one very
important provision is missing from
the language we are considering to-
day. That is language providing for
the cancellation of certain oil leases in
Alaska's Bristol Bay.
I am pleased to note, however, that
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such a provision is in the energy bill
passed by the other body, and the
cancellation of these leases will come
up in the conference on this bill.
During that conference, Mr. Presi-
dent, I will extend every effort to en-
sure that my colleagues agree to it.
Candidly, Mr. President, I would
have preferred to have language deal-
ing with this sale in the Senate's sub-
stitute as well as in the bill sent over
by the other body, but circumstances
have simply not permitted. Initially,
there were questions about the Ener-
gy Committee's jurisdiction over OCS
issues. Later, when we debated the
Senate energy bill on this floor, there
was concern that including it would
jeopardize other, legitimate leasing
plans. Today, the leadership is dis-
couraging amendments, and after
considering this issue carefully, I have
concluded that focusing on this mat-
ter when the bill reaches conference is
the strategy most likely to succeed.
Mr. President, Bristol Bay is the
foremost producer of wild salmon in
the entire world, and a major reason
why Alaska contributes a full
one-third to the world supply of salm-
on. Its dominant fish, the famous
Alaska red salmon, or sockeye, is con-
sidered one of the world's finest. For
Alaskans it represents a major eco-
nomic factor, as thousands of fisher-
men, processing workers, and others
depend on it for a major share of their
livelihood. The Bristol Bay fishery is
often called the 'billion-dollar fishery,'
and there is a great deal of truth in
that name.
Despite what some preservationist
groups would like the American peo-
ple to believe, Alaskans have an excel-
lent record of carefully husbanding
the resources of our State. We believe
deeply in conservation - the wise use
of our resource wealth.
\ The Bristol Bay question is an ex-
ample of exactly this approach. The
area's tremendous natural potential is
an eloquent argument for the cancel-
lation of these leases.
Some years ago, when the Bristol
Bay lease sale was initially proposed,
the suggested sale area was vastly
larger than the area actually leased.
It was through the efforts of con-
cerned Alaskans that approximately
80 percent of the original area was
eliminated. Mr. President, I was proud
to play a substantial role in achieving
that reduction.
Now, it is time we take the final
step, and I intend to press for conclu-
sive action on this sale with all my
strength in conference.
I thank the Chair, and I feel quite
certain that the action taken by my
colleagues on the amendments which
they approved last evening will show
ANWR in its true light, and in the
national security interests of our Na-
tion.
I thank the Chair and yield the
floor.
AMENDMENT NO. 2793
(Purpose: To provide Tor equitable treatment of
taxpayers entitled to credit* on account of pay-
ments into the Trans-Alaska Pipeline Liability
Fund)
Mr. WALLOP. Mr. President, I send
an amendment to the desk on behalf
of Senator Stevens, the Senator from
Alaska, and ask for its immediate con-
sideration.
The PRESIDING OFFICER. The
clerk will report.
The legislative clerk read as follows:
The Senator from Wyoming (Mr. Wallop), for
Mr. Stevens, proposes an amendment numbered
2703.
Mr. WALLOP. Mr. President, I ask
unanimous consent that reading of
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the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
At the appropriate place in the bill, add the
following new section:
SBC. . TRANS-ALASKA PIPELINE LIABILITY
FUND INCOME TAX OFFSET.
Subsection (d) of 26 U.S.C. 46 12 is amended by
inserting the following new sentence before the
last sentence of such subsection (d):
'If a taxpayer who has paid into such
Trans-Alaska Pipeline Liability Fund can not use
such credit on account of the operation of any
provision of section 46 1 1(0, then such credit may
be taken to offset taxes otherwise due under
section 11, in each year to the extent which
would have been permissible hsd the Oil Spill
Liability Trust Fund financing rate imposed by
section 4611 not lapsed pursuant to 4611(0(2) or
expired pursuant to section 4611(0(1), provided
that no such credit taken under thb sentence
may be carried back to previous tax years.'.
Mr. WALLOP. Mr. President, this
amendment by Senator Stevens has
been approved by both sides of the
Finance Committee, and by the Sena-
tor from Louisiana and myself. It is
an amendment whose purpose is to
provide for equitable treatment of tax-
payers entitled to credits on accounts
of payments into the trans-Alaska
pipeline liability fund and has been
cleared on both sides by both commit-
I ask unanimous consent that an
explanation of the amendment by
Senator Stevens be printed in the Re-
cord.
There being no objection, the mate-
rial was ordered to be printed in the
Record, as follows:
EXPLANATION OF TRANS-ALASKA PIPE-
LINE LIABILITY FUND AMENDMENT
Under current lew (26 U.S.C. 46 11), an excise
tax is imposed on crude oil received at a United
States refinery, and on petroleum products enter-
ing the United SUtee for consumption, use, or
warehousing. A portion of this tax, 6 cents per
barrel, is dedicated to the Oil Spill Liability Trust
Fund (the 'Oil Spill Fund*).
Section 4612(d) allows a credit against a
taxpayer's liability for the Oil Spill Fund tax
equal to the amounts paid by the taxpayer before
January 1, 1967, into the Trans- Alaska Pipeline
Liability Fund (TAPLF), because those funds are
to be transferred into the Oil Spill Fund. (The
TAPLF is s privately owned entity created by
Federal statute.) However, the credit only kicks
in when the TAPLF funds are actually trans-
ferred, and this transfer will occur only whsn ail
outstanding claims against the TAPLF are paid.
Issue: Ths TAPLF transfsr will not take place
until late 1993 at the earliest, so the credit will
not be available until late 1993. However, the
6-cent tax against which the credit b spplied is
now expected to be automatically suspended in
early 1993 when the Oil Spill Fund reaches $1
billion. Therefore, under current law, the oil
companies will receive no TAPLF credit when the
TAPLF funds ere transferred into the oil spill
fund, because the tax against which the credit ap-
plies, will hsvs lapsed. Taxpayer companies be-
lieve thb b unfair, because contributors to other
Funds • the Deepwster Port Liability Trust Fund
and the Offshore Oil Pollution Com penes lion
Fund • have received credits when those Funds
were rolled into the Oil Spill Fund, but contribu-
tors to ths TAPLF • which b s privets fund • will
not receive similar credits.
Ths amendment would allow tax payor compa-
nies to take s credit against corporate income
taxes following ths TAPLF transfer, notwith-
standing suspension of ths 6-cent tsx dus to the
billion dollar cap and continuing beyond expira-
tion of the 6-cent tax as if thst tax had remained
in effect. Thb provision does not permit any
carryback application of the credit and would not
apply the credit against the Alternative Minimum
Tax.
PROPOSED AMENDMENT
At the appropriate place in the bill, add the
following new section:
SEC. . TRANS-ALASKA PIPELINE LIABILITY
FUND INCOME TAX OFFSET.
Subsection (d) of 26 VS. C. 4612 b amended
by inserting the following new sentence before
the last sentence of such subsection (d):
'If s taxpayer who has paid into such
Trans-Alaska Pipeline Liability Fund can not use
such credit on account of the operation of any
provision of section 461 1(0, then such credit may
be taken to offset taxes otherwise due under
section II, in each year to the extent which
would have been permissible hsd the Oil Spill
Liability Trust Fund financing rate imposed by
section 4611 not lapsed pursuant to 46 11(0(21 or
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t to Motion 4611(1X1), I
that no Midi cradit tikira undsr this ssntoncs
may bs carriad back to previous tax yean.'
The PRESroiNG OFFICER. If
there is no further debate, the ques-
tion is on agreeing to the amendment.
The amendment (No. 2793) was
agreed to.
Mr. JOHNSTON. Mr. President, I
move to reconsider the vote.
Mr. WALLOP. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. WALLOP. Mr. President, we
are down to a very narrow selection of
amendments that remain. My under-
standing; after conversations with the
Republican leader, is that most all of
ours will have been worked out, or
will be ripe for offering in the next
little while, which will leave us, the
Senate, confronted with a
nongermane, irrelevant argument be-
tween folks on the Banking Commit-
tee, as standing between the Senate
and its long-awaited energy policy bill
going to conference.
It is my hope - and I am certain it is
the hope of the Senator from Louisi-
ana - that it is resolved. Whatever its
merits, it has no business on the ener-
gy bill. Whatever its merits, it has no
business tying us up with other things
with equally little merit, and that is
certain to be the case.
So it is my hope that the parties
involved in that will find a way to set-
tle their argument. The Senator from
Louisiana has worked on this for IS
years, and I for 16, along with many
others, for most of their Senate ca-
reers as wefl. We have come too far
to be distracted by irrelevant and
nongermane amendments to energy
strategy.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll, and the following Sena-
tors entered the Chamber and an-
swered to their names:
(QUORUM NO. 8)
Dixon Johnston Mitchell
Simon
The PRESIDING OFFICER (Mr.
Simon). A quorum is not present.
The clerk will call names of the absent
Senators.
The legislative clerk resumed the
call of the roll.
The PRESIDING OFFICER. The
majority leader.
Mr. MITCHELL. Mr. President, I
move that the Sergeant at Arms be
instructed to request the presence of
absent Senators, and I ask for the
yeas and nays.
The PRESIDING OFFICER. Is
there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The
question is on agreeing to the motion
of the Senator from Maine. The yeas
and nays have been ordered, and the
clerk will call the roll.
The legislative clerk called the roll.
Mr. FORD. I announce that the
Senator from North Dakota (Mr.
Burdick), the Senator from California
(Mr. Cranston), and the Senator from
Tennessee (Mr. Gore), are necessarily
absent.
Mr. SIMPSON. I announce that the
Senator from Vermont (Mr. Jeffords)
and the Senator from Idaho (Mr.
Symmt) are necessarily absent.
I further announce that the Senator
from North Carolina (Mr. Helms) is
absent due to illness.
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The PRESIDING OFFICER. (Mr.
Lieberman). Are there any other Sen-
ators in the Chamber who desire to
vote?
The result was announced, yeas 84,
nays 10, as follows:
(ROLLCALL VOTE NO. 162 LEG.)
YEAS- 84
Adams
Akaka
Baucus
BmiImd
Bidan
Bingaman
Bond
Boran
Bradley
Brown
Bryan
Bumpers
Burns
Byrd
Chafee
Costs
Cochran
Cohan
Conrad
Craig
D'Amato
Dsnforth
Dsschb
DeConcini
Dixon
Dodd
Dole
Domenid
Duranbargar
• Eion
Ford
Glann
Gorton
Graham
Grassley
Harkin
Hatch
Hatfield
Heflin
Holling*
Inouya
Johnston
Kssssbsum
Kennedy
Kerrey
Ksrry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Lugar
Mack
MeUenbaum
Mikulaki
Mitchell
Moynihan
Nieklss
Nunn
Packwood
PaU
Praaslar
Pryor
Raid
RiagU
Robb
RockafaUar
Roth
Rudman
Sanford
Sarbsnas
Saaser
Seymour
Shelby
Simon
Simpson
Specter
Stevens
Thurmond
Wallop
Warner
Wdlstona
Wirth
Wofford
NAYS- 10
Braaus
Fowler
Garn
Gramm
Kastan
Lott
McCain
McConnaU
MurkowekJ
Smith
NOTVOTING-6
Burdick
Cranston
Gore
Halma
Jeffbrd*
Sjymme
So the motion was
agreed to.
The PRESIDING OFFICER. With
the addition of Senators voting who
did not answer the
quorum call, a
quorum is now present.
The Chair recognizes the Senate
majority leader.
Mr. MITCHELL. Mr. President, I
commend the Senators from Louisi-
ana and Wyoming for their efforts to
move this bill forward, through a
great deal of adversity and a lot of
unanticipated obstacles.
In order to enable the Senate to
complete action on the many impor-
tant measures that face us, it is im-
perative that we proceed promptly
with this and other bills we must take
up.
I ask those Senators who have an
interest in this bill to remain in the
Senate Chamber so that we can work
out those interests.
The problem that the managers
have encountered - -
Mr. WALLOP. Mr. President, can
we have order?
The PRESIDING OFFICER. The
Senator from Wyoming is correct.
The Senate is not in order. Will
Senators please clear the aisles, please
take their conversations out of the
Chamber?
The majority leader has the floor.
Mr. MITCHELL. Mr. President, the
problem that the managers have en-
countered, and the reason for this
rare procedural vote, was to get Sena-
tors to come to the Senate floor so
that they could then conduct and
complete whatever negotiations are
necessary to permit the managers to
proceed with the bill.
There is an old saying that the only
thingB certain in life are death and
taxes. But their is a third thing that
is certain in the Senate, and that is at
about 8 o'clock this evening, 10, 12,
20, or 25 Senators will come up to me
and ask why it is we must do business
between 8 p.m. and 10 p.m.? The rea-
son is, of course, we did not do any
business between 10 a.m. and noon.
Mr. JOHNSTON. And between 6
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p jbl and 10 p jn. last night.
Mr. MITCHELL. So we simply have
to proceed, and the managers have
exhibited great patience and persever-
ance over a very long course over the
consideration of this bill, which
stretches back now on calendar time
over several months.
So I encourage all of those Senators
who have an interest. We have only a
few matters remaining. They are
important. But they are few in num-
ber, and it is my hope that we can
complete action later today and in
time to enable us to proceed to other
business.
Mr. JOHNSTON. Mr. President, I
am very pleased to say that we now
have one of the biggest stumbling
blocks worked out. Senator Bentsen
has said that he has no objection to
the D'Amato amendment. So we are
now prepared to take the D'Amato
amendment.
Mr. D'AMATO addressed the Chair.
The PRESIDING OFFICER. The
Senator from New York is recognized.
Mr. D'AMATO. Mr. President, on
behalf of myself and Senator
Moynihan, I send an amendment to
the desk.
The PRESIDING OFFICER. Is
there objection to laying aside the
pending amendment? Without objec-
tion, it is so ordered.
AMENDMENT NO. 2704
(Purpose: To amend the Tariff Act of 1930 to
prevent circumvention of antidumping end coun-
tervailing duty orders)
Mr. D'AMATO. Mr. President, I
send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The
clerk wOl report.
The bill clerk read as follows:
The Senator from New York (Mr. D'Amato),
for himself and Mr. Moynihan, proposes an
amendment numbered 2704.
Mr. D'AMATO. Mr. President, I ask
unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
At the appropriate place insert:
SEC. . AMENDMENT TO SECTION
781(A)(1)B) OF THE TARIFF ACT OF i930 (19
U.S.C. 1677J(AM1MB)).
In section 781(a)(1)(B), the phrase 'produced in
the foreign country with respect to which such
order or finding applies' is deleted and the fol-
lowing new text is inserted in lieu thereof:
'supplied by an exporter or producer in the for-
eign country with respect to which the order or
finding spplies, from parts or component* from
suppliers that have historically supplied the parts
or components to that exporter or producer, or
from parts or components supplied by any party
in any foreign country on behalf of such an ex-
porter or producer'.
SEC. . AMENDMENT TO SECTION
781(A)(2)(B) OF THE TARIFF ACT OF 1930 (19
U.S.C. 1677J(A)(2)(B)).
In section 781(a)(2)(B), the phrase 'produced in
the foreign country with respect to which such
order or finding described in paragraph (1)
applies' is deleted and the phrase 'described in
subparagraph (1MB)' is inserted in lieu thereof.
SEC. . AMENDMENT TO SECTION
781(A)(2)(C) OF THE TARIFF ACT OF 1930 ( 19
U.S.C. 1677J(AM2)(0).
In section 781(a)(2)(C), the phrase 'produced in
the foreign country' is deleted and the phrase
'described in subparagraph (1KB)' is inserted in
lieu thereof.
SEC. . AMENDMENT TO SECTION
781(A)(1)(B) OF THE TARIFF ACT OF 1930 (19
U.S.C. 1677J(A)(1)(B)).
The following phrase is inserted after the lan-
guage of section 781(b)(l)(B)(ii): 'or (iii) is sup-
plied by the exporter or producer in any foreign
country with respect to which such order or
finding spplies, or from suppliers that have his-
torically supplied the parts or components to that
exporter or producer,'.
Mr. D'AMATO. Mr. President, I am
pleased to propose an amendment
that deserves the immediate attention
of this body. It is necessary in order
to give the 875 workers in Cortland,
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NY, and other American workers, a
second chance at a level playing field.
I want to thank the managers of
the bill who recognize the urgency of
the situation.
Without action on this amendment
and without a strong commitment to
our U.S. fair trade laws, companies
and workers from all across this Na-
tion will end like Smith Corona - out
on the street. I am joined by my col-
league Senator Moynihan.
The necessity and urgency of our
amendment is highlighted by a true
tragedy in our attempt to be not only
globally, but domestically, competitive.
It is without question, an amendment
that will strengthen all U.S. compa-
nies ability to compete in a fair mar-
ketplace. The tragedy is that of the
Smith Corona Corp. and the last
American factory of the last American
manufacturer of consumer typewrit-
ers. It is also a story, not so uncom-
mon, about how we fail to provide a
competitive environment right here in
our own backyard. It is not about
investment in capital or research. It is
about U.S. fair trade laws and the
exploitation of those laws by foreign
countries and foreign companies.
It is also about fairness. While I
support free trade goals and believe
they are admirable, they must be
balanced with the realities of the over-
all trade environment. Smith Corona
has attempted for more than a decade
to utilize U.S. fair trade laws to pro-
tect themselves from foreign compa-
nies who import to the United States
and sell well below product cost, a
practice known as dumping. We ail
know that in a free market, compa-
nies cannot sell below cost and survive
over the long run. Smith Corona,
operating in the realities of a
free-market economy, has been forced
to bring numerous antidumping <
before the U.S. Government. They
won with an affirmative decision eight
different times. Their main Japanese
competitor, Brother, Inc. was found to
be selling well below product cost. For
example in I960, the Commerce De-
partment found that Brother was
selling portables below cost and called
for duties of 48.7 percent. Last Au-
gust, Commerce again found that
Brother was guilty of dumping and
imposed duties of close to 60 percent.
Those are not insignificant violations
intended by our U.S. fair trade laws.
They are obscene and outrageous.
But, foreign importers have found a
way to avoid paying them.
The 1983 trade bill created a new
anticircumvention law to prohibit
foreign manufacturers from avoiding
duties by setting up U.S. plants. But,
foreign countries found a loophole
that restricted duties only to the origi-
nal country of import, not to third
party countries from which parts can
be imported.
By setting up an assembly operation
in the United States and importing
from a third-part country, they can
totally avoid paying the antidumping
duties. Importers can then afford to
continue pricing their products below
fair market value and drive competi-
tive American manufacturers from
our own, free, market. In the end, we
have traded manufacturing jobs for
often temporary assembly jobs. Thus,
we weaken our economic base further.
This amendment is a much narrow-
er version of the legislation that I
introduced last Friday and is intended
to deal with the problem facing Smith
Corona. More specifically, this amend-
ment is needed to close a loophole in
the 8ourcing of third country parts
from historical suppliers that permit
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foreign manufacturers to evade
antidumping duty orders. Under
existing law, the value of these
third-country parts is counted against
circumvention because the parts do
not originate from the original export-
ing country subject to the order, not-
withstanding the fact that such party
may have always been supplied by
third-party countries.
This has led to the anomalous re-
sult that merchandise is taken outside
the scope of an antidumping order
through the transplant of a simple
assembly operation even though there
has been absolutely no change in the
mix or sourcing of the covered
merchandise's component parts. This
amendment will provide the Depart-
ment of Commerce with the statutory
authority to reach circumvention
patterns of this nature which current
law does not address.
While we work every day to level
the playing field and open markets
abroad, loopholes in our own U.S.
trade laws undercut our competitive
position right here in our own back-
yard. It may not be too late to help
Smith Corona's 875 employees. It is
also not too late to help the thousands
of other U.S. companies who are
prayed upon by foreign competition.
We must not delay this action to
look out for the best interest of U.S.
industry and U.S. jobs. Our U.S.
industries should be investing in re-
search, development and capital, not
in court battles. We must strengthen
the law in order to ensure that our
companies do not continue to be un-
dercut by unfair trade practices.
Mr. President, I ask for the urgent
support of all my colleagues. Nothing
is more important today than an
American job.
Mr. President, let me thank the
chairman of the Finance Committee,
Senator Bentsen the Republican lead-
er and the managers of this bill. Be-
cause what we are attempting to do
here, by way of this legislation, is to
deal with the inequity and the manip-
ulation of the trade rules that unfair-
ly, illegally impacts American workers.
In this particular case it involves
the workers at a plant located in New
York. But it is just as apt to be a
plant located in any place in America.
Smith Corona is the last American
typewriter manufacturer left. What is
taking place is that a foreign competi-
tor is unfairly using predatory pricing
tactics, cutting its costs below what it
cost to produce, and violating the law
time after time after time. And yet,
through a subterfuge, it continues to
do that. This amendment attempts to
deal with that very serious loophole.
I am pleased to offer this amend-
ment on behalf of Senator Moynihan
and myself. It is my hope that we
would and will have the ability to
close this loophole, and possibly even
save these jobs. I ask unanimous con-
sent that a statement by the president
of Smith Corona on July 23, 1992 be
included in the Record.
Mr. President, I thank the chair-
man and the Republican leader for his
help.
There being no objection, the state-
ment was ordered to be printed in the
Record, as follows:
STATEMENT OF G. LEE THOMPSON, CHAIR-
MAN, SMITH CORONA CORP. BEFORE THE
SENATE COMMITTEE ON BANKING, HOUS-
ING, AND URBAN AFFAIRS, JULY 23, 1992
Mr. Chairman, members or the committee, my
name is G. Lee Thompson. I am chairman or
Smith Corona Corp. Thank you for the opportu-
nity to testify before you today on VS. competi-
tiveness.
U.S. businesses can compete with anyone. Our
companies are competitive in the production of
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i a broad spectrum of
idsavors.
What b competitiveness? The President's Com-
mission on Industrial Competitiveness put for-
ward a useful definition in 1966:
'Competitiveness for a nation b the degree to
which it can, under fires and fair market condi-
tions, produce goods and services that meet the
test of international markets while simultaneous-
ly maintaining or expanding the real incomes of
its dtixens.'
'Competitiveness is the basis for a nation's
standard of living.'
Note the important qualifier: 'Under free and
fair market conditions.' This is where I want to
put the emphasis of my statement today. And it
is where I have the most direct experience.
Today Smith Corona stands as the Nation's
last remaining manufacturer of portable electric
typewriters and word processors.
In the coming months, however, Smith Corona
will join the ranks of so many of our Nation's
former domestic manufacturing concerns • head-
quartered in the United States, but forced to
move manufacturing operations offshore to com-
pete against foreign competitors who compete on
terms inconsistent with fair trade.
The prospect of losing VS. manufacturing in
the typewriter industry to low wage foreign
seem a small footnote to
• where borders are coming down
and the production engine is fueled by the lowest
costs, most efficient inputs, end open competi-
tion. While this ides seams to represent whet is
best shout the hope end opportunity inherent in
the United States, it also represents a naive,
simplistic and destructive approach to real-world
public policy making.
Domestic manufacturing is the driving force
behind much of the growth and expansion in our
economy. Based on quantitative information, the
chamber of commerce figured the importance of
domestic manufacturing and its contributions to
a community's economy to bs an additional 64
non-manufacturing jobs for every 100 manufac-
turingjobs. These jobs rangs from wholesale and
retail trade, to transportation, finance business
services, and so forth. Aggregate personal income
associated with additional manufacturing jobs
was sufficient to spawn seven new retail estab-
lishments. Maintaining domestic manufacturing
is dearly a key to global competitiveness end our
continued economic success.
While pursuing s fuxxy notion of global free
trade, our Government has missed its real effects
on American manufacturing. I fear, Mr. Chair-
man, that our current trade and competition
policy will lead to the eventual demies of US.
manufacturing, competitiveness end opportunity,
and destroy all that led companies like Smith
Corona to become world leaders.
Smith Corona b a valid illustration of both the
success of US. competitiveness and the failure of
our Government to r,Mt #*ir a competitive mar-
For mors than 100 years. Smith Corona has
been the world leader in the manufacturing of
portable typewriters; first manual, then electric,
then electronic, leading us to word prnnessing
The typewriter industry has long been driven by
design ingenuity, features, consumer needs, and
market dynamics such ss pricing. In the
mid-1970's our foreign competitors took s new
approach - unfair pricing. Thb divergence from
fair competition sent the industry on a race to
the bottom.
Just 2 days ago we announced the eventual
relocation of our manufacturing operations to
Mexico, costing 776 of our employees their jobs.
Intense predatory pricing recharacterised the
whole nature of our business. Were thb pricing
based on features, quality, performance or most
importantly • efficiencies • the market would
have been enhanced for both consumer and pro-
ducer. However, our foreign competition did not
have better costs of production, efficiencies or
other mesne to reduce prices.
Rather, a protected home market permitted
them to est upon the VS. market, knowing that
barriers to price competition protected them at
To wit, the managing director of our Jepsnsss
competitors recently admitted in the June 22
'Financial Times' article • article attached • that
hb company. Brother Industries, has tolerated
losses in its U-S. operations to secure market
share. Put another way, they circumvented VS.
lsws and continued dumping their products to
increase sales at the expense of US. manufactur-
ers. As each of you must know, VS. mmpsnies
cannot survive by selling below cost over time.
To our Government, I say, wake up - thb b
the real world of competition. If companies can-
not turn to their Government to provide condi-
tions of fair competition, predatory pricing will
force VS. companies out of business or offshore.
In an effort to end the dumping, Smith Corona
initiated actions to obtain relief through the fur
trade regime mandated by Congress. Since 1979,
we have prevailed in 6 separate antidumping
Despite thb string of i
have never been forced to comply with the dump-
ing orders. Instead, the targets of our action
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have persistentry, cleverly and with the support
of our Government, circumvented VS.
antidumping trade lews.
In 1986 Congress responded by cresting sn
snticareumventaon lew. It was intended to bo
black snd white, with just enough gray to give
the administrators st the Commerce Department
the flexibility to address new typos of avoidance.
Yet, Mr. Chairman, as we have experienced time
and again, discretion divorced from a focus on
the statutory purpose too often results in bad
decisions and last Jobs.
For example, after passage of the 198$ Trade
Bill, foreign manufacturers found that shifting
the base of s company's assembly operations
would allow them to evade dumping duties. By
establishing s phantom factory, where virtually
no value is added other than mere assembly, a
dumper can claim that the U.S.-assembled type-
writer is no longer the object of a dumping order
- even when the final product is the same identi-
cal product subject to an order.
Does this make sense? It does if your intention
is to circumvent U.S. trade lews. Is it good pub-
lic policy? Only if we wish to displace VS. man-
ufacturing with assembly line work.
Assembly operations do not generate the high
wages, high tech jobs crested by real manufactur-
ing. The level of related activity in other sectors
I mentioned earlier does not occur. Even recog-
nizing the positive spin-ofT from a few assembly
positions in a transplant operation, the
sssembly-only operation obviously requires far
fewer workers per unit of production.
For more than a doxen years Smith Corona has
fought at the front lines, using every legal and
political weapon in the arsenal available to VS.
manufacturers. Yet, we have consistently come
up empty. The lews do not move fsst enough to
keep up with new techniques designed to attack
manufacturers; Government officials charged
with enforcing our lsws have unfortunately too
often exercised discretion to let the dumping
continue. The natural interest of shareholders in
maximizing return on investment says you play
Don Quixote only so long.
Mr. Chairman, from ths front lines of US.
manufacturing, I have witnessed the ravages of
unfair trade snd noted the inability of adminis-
trative diecretion to support the advancement of
VS. industry. As vice president of Sylvania
Television, and then as president of Singer Sew-
ing Machine, industry's calls for fair trade were
dismissed ss protectionist. There is no longer s
VS. sewing machine or T.V. industry, with the
exception of Zenith.
In their wake, we clearly see thst s failure to
act leads to the wholesale devastation of entire
industries snd s further erosion of the VS. com-
mercial base. My experiences have revealed to
me certain basic shortcomings in American com-
petitiveness.
First, Americans fail to understand or appreci-
ate the substantial importance of manufacturing.
To many, investment in America is investment,
without regard to its source or character. The
continuing thirst for capital investment hss led
many of our communities snd their political
leaders to race to the bottom, willing to displace
manufacturing with assembly jobs, so long ss ths
job lands in their community. We ignore nation-
al interests in our pursuit of the parochial.
Second, I am concerned about the failure of
Government to respond in s timely fashion . By
ths time relief comes to industry, or even the
prospect of relief, it may be too little too late,
such as with Smith Corona.
In pursuing relief, we frequently heard the
claim that adequate diecretion existed to remedy
our problem. But, how useful is discration if it is
in ths hands of those who for whatever reason
choose not to set?
Politics! leaders need to reflect on why it mat-
ters if a manufacturing job ia displaced with as-
sembly. Where does the manufacturing go?
Where will the skilled labor reside? Where is the
vslue snd whst are the wsges? Does foreign own-
ership matter? Of course, who will make the
decisions of where we manufacture, do our engi-
neering and design, high technology, and, where
will the profits go?
Do these phantom factories represent the fu-
ture of American manufacturing? To claim them
as manufacturing is sn exaggeration, to encour-
age their growth is a national resignation to low
wages and decline.
In closing, let me underscore that Smith Coro-
na hss pursued every available means to ensure
fsir trade and secure s competitive marketplace
for UfS. manufactured goods. Ths successive
failure of our Government to respond in a timely
and effective manner hss denied us the opportu-
nities for competitiveness snd forced us to join
other VS. manufacturers offshore.
Thank you very much for your time.
[From Finacial Times, June 22, 1992
BROTHER SUMS DOWN BLOATED PROD-
UCT RANGE
In the foyer of the Brother Industries building,
s smiling photograph of Mr. Juan Antonio
Samaranch, president of the International Olym-
pic Committee, congratulates the Jspaneee com-
pany on sitting st the top table of Olympic corpo-
rate sponsors along with Coca-Cola, SM, Philips
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and a few others.
Having already paid for ita high profile. Broth-
er should be able to bask in Olympic year publici-
ty. Instead, the year of Barcelona has become an
important test of strength for the maker of infor-
mation equipment, sewing machines and other
household electric appliances.
With profits under pressure. Brother has just
announced a restructuring plan that could be-
come commonplace among Japanese manufactur-
ers, many of which are burdened by too broad a
product range and struggling in overcrowded
consumer and business equipment markets.
Another problem not unique to Brother is the
side-efTect of having achieved the admirable aim
of producing high-quality goods at reasonable
cost • the company has consistently reported poor
operating profits and has been dependent on
non-operating items, such as profits on stock
sales, to boost its earnings.
The weakness of Japanese stock prices has not
only increased the cost of capital for manufactur-
ers such as Brother, which lifted it long-term
institutional borrowing from sero to Y3bn
($23.8m) last year, but it has also denied the
traditional easy profits on marketable securities.
For Brother, these circumstances were behind
a mediocre operating profit of Y486m last year,
down from Y2.36bn. The company would have
reported a loss were it not for a change in pen-
sion plan accounting that produced an operating
gainofY669m.
Sales for the year were down from Y166bn to
Y165.2bn. Net profit rose slightly from YS.2bn to
Y3.6bn, thanks mainly to a Yl.lbn increase in
gains on property and equipment sales, and an
extra Y699m in gains on stocks sold.
In response. Brother plans to cut its product
range by about 30 per cent to 700 items, transfer
10 per cent of ita 6,300 Japaness workers to new
ventures, increase the percentage of parts pro-
duced in -house, and make research and develop-
ment operations more market sensitive.
Mr. Tamotsu Shimisu, the company's manag-
ing director, said a slowing economy had forced
the restructuring. Office automation equipment
and industrial machinery markets, already over-
flowing with competitors, were made all the more
difficult by capital spending cuts. Meanwhile,
sales of its old mainline product, home sewing
machines, rose by 16 per cent.
He reckons that reducing the product line by
30 per cent will reduce sales by only 10 per cent,
ss the items to be discarded are clearly not
Brother's best sellers.
At the same tame, the company is hoping that
a focus on successful products will eventually
lead to an increase in sales and most importantly,
stronger profits.
'If it's not contributing to profits, we will no
longer make it. Sometimes you continue to pro-
duce a loss-making item because it is something
that your customers want and you have to keep
their loyalty,' Mr. Shimisu said. Items to be
pruned, he says, will include white goods and
older-style sewing machines.
Asked whether the company had tolerated
losses in order to secure market share, tilted his
head beck, closed his eyes and said: 'Yes, that's
true.' He explained, for example, that US dis-
count stores wanted high-volume, low-cost deals
that sometimes force a company to take lossss.
Mr. Shimisu pointed to a curious contradiction
that Brother was trying to resolve. Its interna-
tional sales division is wholly owned and tends to
produce good-quality market research material
for product developers, while market trends are
loss well-tracked at home, where sales are han-
dled by an affiliate of the company.
'Within Japan, we have been product-driven
and we have got to become more market orient-
ed,' Mr. Shimisu said. Again, Brother is one of
many Japanese manufacturers reaching this
conclusion, ss ths boom years of ths lets 1980s •
when GNP expanded at 6 per cent and 7 per cent
and the stock market soared geve
over-confident producers the impression that
virtually anything would sell.
During this period, companies rapidly intro-
duced slight variations on existing producers and
also attempted to squeeze into new markets. The
steel companies elbowed their wsy into electron-
ics, the camera makers attempted to re-establish
themselves ss office equipment companies, and
the consumer electronics makers launched hun-
dreds of now items each year.
Times have changed. Japaness car makers are
at least talking about slowing ths flow of their
new releases, while Hitachi, ths consumer and
commercial electronics company, wants to length-
en the life-cycle of its products to reduce expendi-
ture on research and development.
But, in spite of weak earnings and murmurings
about reform, most companies are yet to bite the
bullet, and there are doubts ss to whether
Brother's changes go far enough.
For example, the planned shift in parts
soureing only aims to increase in-houee compo-
nents from 12 per cent to 13 per cent of all parte.
The company also wants to maintain Japanese
production at 80 per cent of the total, though it
hints that south-east Asian and Chinees factories
will probably take s larger share if profits contin-
ue to falter.
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Mr. Shimiiu is con/Went that the sueesas of
mw ventures will allow the company to ooak up
■inn— labour, making redundancies unneoataaiy.
Om of those now ventures is a karaoke (singing
machine) systems company, Joysound, of which
he m a director.
Brother plans to provide karaoke hardware and
software in Japan, and would eventually like to
go international. However, the company could
find the h*rf»fr* room as crowded as the white
goods market and, in two years the company may
bs reckoning as to whether the start-up funds
could have been better spent shoring up its posi-
tion in information equipment, which accounts
for about 40 per cent of sales.
The company is genuinely reassessing the cost
of being an Olympic star, and contemplating
whether to he a corporate front-runner again at
the 1996 games in Atlanta.
'They want a lot more money for Atlanta,'
explained Mr. Shimixu, aware that Brother's
presence in the main stadium is less important
than its survival in the market.
Mr. JOHNSTON. Mr. President, we
are prepared to accept the amend-
ment.
Mr. MOYNIHAN. Mr. President, I
am pleased to join with my colleague
Senator D'Amato in offering an
amendment to the U.S. trade laws
that will make it harder for foreign
producers to evade U.S. antidumping
and countervailing penalty tariffs.
And, hopefully, the enactment of this
change will cause the management of
Smith Corona to reverse their decision
to shut down all manufacturing oper-
ations in Cortland, NY.
We need to hear from the adminis-
tration that the President will support
such a change in the law. And we
need to hear from Smith Corona that
it will keep the plant open.
At a minimum, the change in the
law offered by Senator D'Amato and
me today will, we hope, provide some
relief for other U.S. manufacturers
who win dumping cases against for-
eign imports, only to see the foreign
companies find new ways to circum-
vent the penalty tariffs that they
must pay.
This is one more step in a long line
of efforts that I have made to assist
Smith Corona to get the relief it has
been entitled to. I had to change the
law in the 1983 Trade Act to get the
administration to stop dumped type-
writers from Japan, and today I am
trying to do it again.
We thank the chairman and rank-
ing member of the Finance Committee
for their assistance on this measure.
Mr. ROCKEFELLER. Mr. Presi-
dent, I support this amendment • it is
identical to a provision in S. 3046,
which I introduced earlier this month
- and action on it is long overdue.
This amendment deals with circum-
vention - deliberate efforts by import-
ers or foreign producers to avoid the
consequences of unfair trade practice
penalties by shifting the location of
their production or the composition of
their product.
There are a growing number of
examples of circumvention, and the
Senator from New York has described
one of the most blatant - and tragic -
situations involving Smith Corona. I
would like to provide another example
- in my judgment, an even clearer case
of circumvention - that might help
explain this complex matter to Sena-
tors.
In brief, there is presently outstand-
ing an antidumping duty order
against silicon metal, a substance used
in making aluminum, among other
things. Silicon metal is generally
defined as containing more than 96
percent silicon, and the antidumping
duty order contains that specification.
To no one's surprise, except perhaps
the Commerce Department, after the
domestic industry won this case, one
of the foreign producers began ship-
ping material that was 94 percent or
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95 percent silicon, apparently to the
same customers it had previously, and
presumably for the same purposes.
To my mind, this is an obvious case of
circumvention, and one which our
amendments to the law in 1983 were
intended to address. Commerce De-
partment lawyers, in contrast, argue
that those amendments do not give
them authority to revise the existing
antidumping duty order to include
these new imports. In other words, if
the lawyers get their way, the foreign
producers will get away with what can
on|y be regarded as a deliberate effort
to circumvent U.S. law.
Mr. President, I have written Secre-
tary of Commerce Barbara Franklin
on this matter, and I ask that the text
of my letter be printed in the Record
at the conclusion of my remarks.
This amendment is intended to deal
with situations like the silicon metals
case and the Smith Corona case,
which were not anticipated in 1979,
when we last made major revisions in
the law. It should come as no surprise
that over 13 years importers and for-
eign manufacturers have learned a
great deal about our law, including its
loopholes, and have discovered how to
exploit those gaps to their advantage.
The trend toward globalization of
production ha also contributed signifi-
cantly toward the problem by making
it easier for producers to move their
production or assembly from place to
place to stay ahead of a dumping duty
orders.
At the most obvious level, circum-
vention is fraud, and we already have
adequate provisions in our law to
address it, provisions which I dis-
cussed in greater detail when I intro-
duced S. 3046. Even with the law,
however, sufficient enforcement re-
sources will always be a problem in
i of this kind. It is not hard for a
determined importer consistently to
stay ahead of customs enforcement
authorities.
The pending amendment is intend-
ed to deal with more complicated situ-
ations, such as when the product in
question is in some fashion trans-
formed in a second country, thus per-
mitting the argument that the import
is no longer of the dumping country's
origin. Often that also involves a
Customs Service decision as to wheth-
er the product has been sufficiently
altered or sufficient value has been
added in the second country to trans-
fer origin.
The Smith Corona case involves the
most complicated situation when as-
sembly of a finished product is moved
into the United States. In that case,
the dumped end product is no longer
being imported, but most or all of its
component parts are, for assembly
here. Since both U.S. law and GATT
rules limit attaching dumping duties
to the like product, the duties cannot
simply and easily be transferred from
the finished product to its parts.
The solution to the problem where
final assembly is in the United States
and the components are imported
from countries other than that cov-
ered by the initial duty order, the
amendment would apply the existing
order in cases where the same compa-
ny was involved in the assembly in the
United States and the parts came
from historic suppliers. This is the
same approach as that proposed by
Congressman Rostenkowski, the chair-
man of the Ways and Means Commit-
tee, in H.R. 5100, his recently passed
omnibus trade bill.
Mr. President, this is a balanced
amendment that deals with an impor-
tant trade law problem. I urge its
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adoption.
There being no objection, the letter
was ordered to be printed in the Re-
cord, as follows:
U.S. Senate,
Washington, DC,
July 24, 1992.
Hon. Barbara H. Franklin,
Secretary of Commerce,
Washington, DC.
Dear Madam Secretary: I am writing to com-
ment on an important decision your Department
b considering regarding enforcement of the cir-
cumvention provisions of our antidumping law.
The case in question is Silicon Metal from the
People's Republic of China, Case No. A-670-806.
In brief, the petitioners in this case are arguing
that the PRC b circumventing the existing
dumping duty by shipping metal that is 94-96
percent silicon rather than the 96 percent silicon
which was the industry standard for silicon metal
at the time the petition was Tiled, and which b
the composition specified in the dumping order.
It b seeking modification of the eeope of the
order to include the 94-96 percent silicon metal
now being imported, which it contends b either
a minor alteration of the class or kind of mer-
chendbe covered by the order or a
later-developed product.
While thb appears to me to be ee a clear a case
of circumvention ee I have seen based on the
facts presented to me, and I cannot understand
the Departments reluctance to move quickly to
modify the order, I particularly want to comment
on Congressional intent with respect to the pro-
vision of law at issue in thb case. As you may
know, I eerved on the Finance Committee when
the circumvention language in the law, section
781 of the Tariff Act of 1930, was adopted es part
of the Omnibus Trade and Competitiveness Act
of 1988, and I followed the debate on these provi-
The later-developed products provision in par-
ticular came initially from the Senate and was
intended to epply to merchandise that wee simi-
lar to that covered by the order with respect to
general physical characteristics, expectations of
the ultimate purchasers, ultimate use, channeb
of trade, and advertisement and display; all crite-
ria which my understanding of the facts in thb
ease tell me are being met.
There b no question that Congress clearly
intended in cases like this, whether covered by
the minor alterations provision or the
later-developed products provision, that the order
be applied to products that are circumventing it.
Your legal staff seems to be under the impression
that the phrase 'clarify the scope of the order/
which eppears et e few points in the legblative
history, limits the euthority of the Department to
expand an order beyond its original terms. To
the contrary, thb language refers not to what the
Department b permitted to do under the circum-
vention provisions, but rather, to what Congress
did in enacting the circumvention provbione, i .e.
clarify that orders are to cover minor alterations,
newly developed products, and other forms of
circumvention when the statutory criteria are
met. The Department's current interpretation,
which b contrary to what I understood was in-
tended at the time, renders section 781 virtually
ueelcee in fighting circumvention. Indeed, thb
interpretation allows foreign producers to con-
tinue the very practices thst section 781 was
intended to prevent.
Congress wee concerned that foreign producers
could 'technically transform' merchandise eo that
it would fall outside the scope of an antidumping
order. For that reason, Congress required the
Department to dbremvd such technical transfor-
mations, and analyze circumvention using
'practical measurements,' including 'such criteria
ee the overall characteristics of the merchandise,
the expectations of ultimate users, the use of the
merchandise, the channeb of marketing and the
cost of any modification relative to the total value
of the imported product.' (S. Kept. 100-71, p.
100).
I would also note that your Department itself
has recognised that the circumvention provbione
require it to conduct a circumvention investiga-
tion even where 'the descriptions of the merchan-
dise, along with the Department end the ITC's
final determinations in the original petition,
make clear that (the merchandise) b not within
the scope of the antidumping duty order.' Brass
Sheet and Strip From Germany: Final Negative
Determination of Circumvention of Antidumping
Order. In that case, the Department concluded
that the allegedly circumventing merchandise did
not fall within the scope of the existing order,
but it nevertheless, "independently evaluated
each of the five criteria under the minor alter-
ations provision as set forth in the legblstive
hbtory.' In doing so, the Department recognised
that circumvention cases require a different in-
quiry - and it conducted that inquiry. Similar
circumstances exist in the silicon metal case.
I am also concerned that the Department ap-
pears to be suggesting that because it had previ-
ously rejected s requeet to expand the scops of
thb investigation to include material that con-
tained as little as 90 percent or lose silicon, it b
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now precluded from including within the scope of
the order meteriaJ conteining 04-96 percent sili-
con. Thet is UnUmount to saying that because
the Department made one mistake, it is required
to make another one in order to be consistent,
even though the facts of the second request, ss
well ss its legal basis, are different from the first.
The suggestion that tha proper form of relief in
such circumstances is to sue the Department
forces on the petitioners the most expensive and
time-consuming path open to them. I would
certainly hope, in the interest of minimising the
administrative burden, that the Department will
not end up taking the position that it will never
change ita mind unless forced to by the courts!
From the standpoint of the law, in addition,
such an interpretation appears to me to suggest
that petitioners should have the burden of antici-
pating every possible variation of the product in
question in advance of the investigation, even
though section 781 clearly encompasses situa-
tions that develop during, after, or as a result of
the investigation. That interpretation would also
render this provision effectively moot.
I understand that the Department has not yet
made ita decision in this matter. I am confident
that your decision will be in accord with the law
and Congressional intent. I hope the foregoing
comments will help clarify that intent.
Sincerely,
John D. Rockefeller IV.
The PRESIDING OFFICER. Is
there further debate on the amend-
ment?
Mr. BENTSEN. Mr. President, we
are happy to accept the amendment.
The PRESIDING OFFICER. Is
there further debate? Hearing none,
the question is on agreeing to the
amendment offered by the Senator
from New York.
The amendment (No. 2794) was
agreed to.
Mr. D'AMATO. Mr. President, I
move to reconsider the vote by which
the amendment was agreed to.
Mr. JOHNSTON. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. JOHNSTON. Mr. President,
what is the pending business?
The PRESIDING OFFICER. The
pending business is the amendment
offered by the Senator from Connecti-
cut (Mr. Dodd), 2790, to amendment
No. 2789 offered by the Senator from
Minnesota (Mr. Wellstone).
Mr. JOHNSTON. Mr. President,
may I direct an inquiry to the Senator
from Connecticut? Does the Senator
wish to vote on that matter at this
point?
Mr. DODD. Mr. President, first of
all, I say to the distinguished Senator
from Louisiana, this is a matter that
is being worked on right now. We are
trying to see if we can come up with
some resolution of this issue in terms
of how the matter will be disposed of.
That is an ongoing process at this
particular moment. I will not press
for the vote at this particular moment
on the issue.
Mr. JOHNSTON. I thank the Sena-
tor. As I understand the Senator,
there is hope that the matter will be
worked out soon.
Mr. DODD. Hope springs eternal I
am hoping that will be the case.
Mr. JOHNSTON. Mr. President,
that leaves three other amendments.
I wonder if Senator Dole's amendment
regarding ethanol and Senator
Grassley9 s ethanol amendment will be
offered.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the two ref-
erenced amendments, Dole ethanol,
Grassley ethanol, be dropped from the
list in the consent agreement pro-
pounded last night.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President,
that leaves Senator Dole's solid waste
disposal, phosphoric acid process
amendment.
There is the one remaining amend-
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ment, other than the Dodd amend-
ment, which is the phosphoric acid
amendment.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President,
the one clear message that the Ameri-
can public and the Congress are send-
ing to the President this year is that
they are not happy with the direction
of this country. They are demanding
change. More than any other legisla-
tion in the Congress, or in recent
history, for that matter, the National
Energy Security Act • this energy bill
now pending • has the potential to
bring about that change. It promises
far-reaching changes that will have a
profound and positive impact on the
American economy, on the environ-
ment, and on the daily lives of the
American people.
The energy policy of the past two
decades has led us to an
ever-increasing reliance upon foreign
sources of oil, the devastation of the
domestic oil and gas industry, and the
export of tens of thousands of Ameri-
can jobs, and tens of billions of Ameri-
can dollars.
With this vote today, we are taking
a monumental step toward changing
that failed policy of the past, replacing
it with a made-in-America energy
policy for the future.
With this vote, we are telling the
American people that we get the mes-
sage. We are willing to rise above
partisan politics to tackle one of the
most difficult and complex problems
facing our country. We are capable,
Mr. President, of delivering the
changes needed to promote America's
energy security.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. JOHNSTON. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr.
Wofford). Without objection, it is so
ordered.
LDC BYPASS PROVISIONS
Mr. FOWLER. Mr. President, I
would like to commend the distin-
guished Senator from Louisiana for
his dedication and persistence to the
pending national energy legislation. I
would like to ask a question concern-
ing one of the more contentious items
addressed in the legislation which
deals with the subject of natural gas
local distribution company (LDC)
bypass.
I had the occasion some years ago to
chair one of the Energy and Natural
Resources Committee hearingB which
was dedicated to this topic. I am well
aware of the strong views held on
both sides of the matter, and I believe
it to be in the best interest of all to
adopt the language in S. 2166, which
states that neither the so-called op-
tional certificate nor the enhanced
section 311 procedures can be used to
accomplish a LDC bypass if the LDC
objects.
Although the language in the Sen-
ate bill does not fully satisfy the con-
sumer groups, State public utility
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commissions, and LDC's, it does seem
to strike a politically realistic balance
in that the new, streamlined, and
enhanced regulatory procedures will
not be available for bypass while the
traditional Natural Gas Act section 7
procedures will remain available.
I would like to direct an inquiry to
my distinguished colleague, the chair-
man of the Energy Committee, as to
what his intentions are during the
conference with the House with re-
gard to the bypass language embodied
in the Senate bill?
Mr. JOHNSTON. LDC bypass is
one of a number of issues addressed in
the natural gas provisions of the Sen-
ate and House energy bills where the
two Houses have taken somewhat
different approaches. In order to
reconcile the differences between the
two bills in conference, some compro-
mises and tradeoffs will be necessary.
Therefore, while I cannot assure the
Senator from Georgia that the Senate
bypass language will emerge from
conference intact, I can give him my
assurances that in negotiating with
the House I will do my best to pre-
serve the balance and protect the
interests that are reflected in the
provision of the Senate bill.
Mr. FOWLER. I thank the chair-
man for his cogent response.
MURKOWSKI STUDY AMENDMENT NO.
2791
Mr. WIRTH. Mr. President, Senator
Murkowaki believes very strongly that
we should open the Arctic National
Wildlife Refuge to oil drilling. I hap-
pen to believe that this is exactly the
wrong thing to do. Now, I happen to
think we have already had a lot of
study of this proposal, but I am not
averse to having it studied a little
more. If nothing else, that might help
bring some of the worst hyperbole
about the benefits of drilling in the
Arctic refuge under rein.
Back at the beginning of the year,
administration officials began tossing
around rather large estimates of the
number of jobs that would be created
by oil development in the Arctic ref-
uge.
The President's budget message put
this number at around 200,000. Oth-
ers in the administration claimed
735,000 new jobs. My colleague from
Alaska quoted the 735,000 figure on
this floor.
The American Petroleum Institute
bought full page ads using this figure.
The really striking thing about this ad
is the breakdown of how many jobs
wiU supposedly be created in each
State. California supposedly will reap
80,000 new jobs. Florida and Illinois
get about 30,000 new jobs.
But Alaska only gets about 13,000
jobs, Mr. President. The State where
all this massive industrial develop-
ment is to take place only gains
13,000 new jobs according to this
study. All the construction crews, the
drilling crews, all the people involved
to transporting all that equipment to
the Arctic Circle, the people needed to
feed, clothe, and house those workers
- all the real jobs that would be creat-
ed if oil was even found - amount to
only 13,000 jobs.
Please remember that Interior Sec-
retary Hodel asserted that the chance
of even a minimum amount of produc-
ible oil - not the billions of barrels
figures we always hear, but just a few
hundred thousand barrels - was 19
percent. In other words, Hodel
thought the odds were 4 to 1 that no
oil development would take place.
In fact, Mr. President, the Depart-
ment of the Interior's environmental
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impact statement on oil development
in the Arctic refuge states that the
actual number of people who will be
employed for oil development in the
Arctic refuge for the boom cycle of a
few years of construction would be
about 6,000 people; 6,000 jobs, or
13,000 jobs, is nothing to sneeze at.
But here we are asked to believe that
in the rest of the country; in Hawaii,
Vermont, Kentucky, and every other
State in the Nation, 700,000 other
jobs would be created. These absurdly
inflated job estimates come from a
study commissioned by the American
Petroleum Institute back in 1990. We
did not hear much about it back then,
Mr. President, because the study is
embarrassingly flawed. But now job
creation is the new political hot potato
• so this study was resurrected.
These numbers are not based on
real jobs which might be created in
construction or in the oil industry.
They are, instead, based on a projec-
tion that finding oil in the Arctic
would have a major effect on the
whole national economy. But that
projection, and the conclusion that
opening the Arctic would create
700,000 jobs, is founded on two as-
sumptions which we know are simply
not true.
The first false assumption is that oil
from the Arctic refuge would reduce
world oil prices by $3.60 a barrel.
That is simply wrong. ANWR produc-
tion - if there was any - would range
from 0.1 percent to 2.2 percent of
total world demand. So it is not very
much in the context of the world mar-
ket.
But even more important to remem-
ber is that the Middle Eastern nations
have the ability to swamp any effect
that ANWR might have with their
own ability to turn production up or
down. Kuwait and Iraq produced
nearly 10 percent of the world's oil,
but their removal from the world
market was quickly replaced by their
OPEC neighbors.
According to a February 1992 report
by the Congressional Research
Service's Economics Division, the
likely effect of additional supplies
from ANWR would be that, 'OPEC
may cut output * * * to offset the
supply effect of ANWR, as it usually
has in similar situations.'
The result of that, Mr. President,
would be little or no change at all in
oil prices.
The second false assumption is that
lower oil prices create jobs. In the
first place, lower oil prices can cost us
as many or more jobs as it may create.
It is low oil prices that have cost us
400,000 real jobs in oil and gas pro-
duction over the past decade.
And if you think that low oil prices
cause the general economy to boom,
why is our economy in the shape it is
in, at a time when oil prices have been
stuck lower than they were before
Desert Storm started?
In December 1990 oil prices were
about $26 a barrel. Today, they are
$6 lower than that • about $20 a bar-
rel. Has that added thousands of jobs
to our economy? Does our economy
look more robust now than it did a
year ago?
The price drop over the past 14
months is twice what the authors of
this study claim would produce
735,000 jobs. But where are the jobs,
Mr. President? Right now, low oil
prices are costing us jobs, as those low
prices strangle our domestic oil and
gas industry. The Senate just voted by
an overwhelming margin to change
the tax rules to give a billion dollars'
worth of tax relief to oil and gas pro-
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duoers precisely because lower prices
have decimated the oilpatch.
Mr. President, there are many other
faulty assumptions that went into this
job projection. The study simply as-
sumes that we will find oil in ANWR,
even though the Department of the
Interior says the odds are that we will
not. Then it assumes that we will
find every potential oilfield there
chock full of oil - something the De-
partment of the Interior says has less
than a 1 in a 100 chance.
Then, Mr. President, we should not
forget that any jobs created by open-
ing ANWR would not, for the most
part, happen until sometime after the
year 2000. The oil industry has testi-
fied that the earliest we could get oil
from the Arctic Refuge is 10 years
after leasing - and that it could take
even longer. Members should know,
too, that there is lots of oil available
outside the Arctic Wildlife Refuge on
Alaska's North Slope. There are sever-
al very large known fields, fields with
literally billions of barrels of oil in
them, just sitting there. Why are they
sitting? Because today's low oil prices
make producing them unprofitable.
The same could well happen in the
Arctic Refuge.
In short, Mr. President, talk of
opening the Arctic refuge creating
thousands upon thousands of jobs is
unsupported by any reasonable analy-
sis.
Of course oil development would
create some jobs, as would OCS devel-
opment off California or the Florida
Keys, or damming the Grand Canyon
to provide cheap hydroelectric power.
But that does not mean we should do
these things.
If we are lucky, the study Senator
Murkowski has proposed will take
these facts into account, and help rein
in the wild and incredible projections
that have been bandied about on this
issue.
UNANIMOUS CONSENT AGREEMENT
Mr. JOHNSTON. Mr. President, I
will shortly ask for a unanimous con-
sent agreement on the Dodd amend-
ment. It has been worked out, al-
though we are adding one final clause.
I thank the Senator from Connecti-
cut and the Senator from Texas (Mr.
Gramm) for working out this very
difficult and contentious matter. It is
not finally worked out to the satisfac-
tion of either one because the issue
has not been disposed of, but at least
this unanimous consent agreement
will give a measure of procedure to
deal with this.
So, Mr. President, I ask unanimous
consent that when the Senate next
receives from the House a message on
S. 2733, the GSE bill, and the Senate
has disposed of the motion to disagree
to the House amendment, that the
Senate be deemed to have agreed to
either a motion to request a confer-
ence with the House or have agreed to
the House request for a conference,
without any intervening action or
debate, and that the Chair be autho-
rized to appoint conferees on the part
of the Senate; provided further, that
no amendment dealing with the sub-
ject of limited partnership rollups will
be in order to any legislation prior to
the Senate reconvening on September
8, 1992.
Mr. President, before I put that
unanimous consent I yield to Senator
Dodd.
Mr. DODD. Mr. President, I thank
the Senator for yielding.
Let me add that I have made an
assurance to Senator Gramm of Texas
that I will notify him a day in advance
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of the day which I plan on offering an
amendment dealing with the topic of
limited partnerships.
This is not necessarily part of the
unanimous consent agreement but as
a statement to be included in the
context of the unanimous consent
request that is now pending by the
Senator from Louisiana.
Mr. JOHNSTON. Mr. President, I
now put the request.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. DODD. Mr. President, I ask
unanimous consent that I may be able
to withdraw the Wellstone amend-
ment.
Mr. JOHNSTON. As amended by
the Dodd amendment.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment (No. 2789) was
withdrawn.
Mr. DODD. Mr. President, I with-
draw my own amendment (No. 2790)
as well.
The PRESIDING OFFICER. The
amendment is withdrawn.
The amendment (No. 2790) was
withdrawn.
Mr. DODD. Mr. President, if I could
just take 30 seconds, I want to person-
ally thank Senator Johnston and Sen-
ator Wallop, as managers of the legis-
lation, for their great patience and for
the consideration they have shown to
me, both yesterday evening and today.
I also want to thank my colleague
from Minnesota, Senator Wellstone,
who offered the underlying rollup
amendment on my behalf last night,
so that I could offer a second-degree
amendment to that amendment. I
thank him for his willingness to ac-
commodate me on a procedural mat-
ter.
Mr. President, I am willing to with-
draw my amendment today, in order
to help my friend from Louisiana
advance this legislation. I also believe
the unanimous consent agreement
we've worked out will greatly advance
the prospects for seeing the rollup
provisions adopted as part of the GSE
legislation.
As my colleagues know, the rollup
measure was passed overwhelmingly
by the Senate just a few weeks ago, as
part of the bill to reform
Government-sponsored enterprises.
Eighty-seven Members of this body
voted against a motion to table the
amendment. That's 87 Senators who
supported this measure. And yet, my
friend from Texas decided that the
wishes of 87 of his colleagues • and, I
might add, the wishes of millions of
investors througout this country -
should be disregarded, because he does
not like the measure.
He has indicated in the past that he
would do everything possible to pre-
vent rollup reform from becoming the
law of the land. And, so, he raised
procedural roadblocks to a
much-needed bill to reform
Government-sponsored enterprises - a
bill which passed by a vote of 77 to 19,
and which also contains provisions on
lender liability and a host of other
carefully developed provisions sup-
ported by our colleagues.
Mr. President, I felt I had no other
choice but to offer this amendment
gain last night, and let the Senate
work its will yet another time. But,
as my colleagues know, last night,
after I offered the amendment, my
friend from Texas indicated that he
would offer the crime bill and other
matters to the energy bill - again in
an effort to thwart the will of the
Senate and prevent the rollup bill
from becoming law.
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We made an attempt to work on the
problems he identified in the bill, and
last night, I thought we had an agree-
ment. But this morning, my staff was
advised that Senator Gramm had
asked that the entire dissenters rights
provisions of the bill be dropped - and
made into a study. It was represented
to us, quite simply, that the case had
not been made. I would remind my
colleague that the dissenter's rights
provisions are the provisions designed
to prevent limited partners who vote
against a rollup from having a bad
deal literally crammed down their
throats. No one can say, after review-
ing the record of abuses in these
transactions, that the case has not
been made for protections in this area.
So, of course, I could not agree to drop
these important provisions.
Mr. President, the Limited Partner-
ship Rollup Reform Act was intro-
duced over a year ago. There are now
74 Senate cosponsors.
My colleagues and I have received
thousands of letters on this issue.
Our constituents - not special inter-
ests, but small investors in our States
- have documented a long record of
abuse in limited partnership rollups.
They have been ripped off, they are
mad and they are upset. They have
asked for our help.
And, yet, we are told, the case has
not been made for action.
Mr. President, I am deeply disap-
pointed that we have not been able to
enact this measure at this time. How-
ever, I want it to be clear that this
issue will not go way.
I believe that the action we took
today will advance considerably the
chances of enacting this bill.
I am satisfied that with this
unanimous consent agreement, we will
be able to revisit this legislation before
adjournment this year and pass this
legislation, which goes a great dis-
tance to protect small investors.
There are approximately 8 million
small investors in limited partner-
ships, many of whom have invested a
great share of their savingB in these
arrangements. Many of those people
are in jeopardy today, and until we
pass some legislation that offers pro-
tection to them, they will remain in
jeopardy.
I will do my very best to see that
the legislation is adopted, and the
unanimous consent agreement pro-
vides us the chance of doing that.
Again, I want to thank my two good
friends from Louisiana and Wyoming
and apologize for causing them any
delay in the consideration of a very
good bill that they have brought to
the floor. I hope we will be able to
pass this energy bill very briefly and
move on to other matters. I thank
them for their patience and consider-
ation and for their help in bringing us
to the point where we have been able
to adopt this unanimous consent
agreement.
Mr. JOHNSTON addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Louisiana is recognized.
Mr. JOHNSTON. Mr. President, I
thank the Senator from Connecticut
very much and strongly support him
in his rollup legislation.
Mr. President, I have made some
study of this rollup legislation, and I
can tell him that it is, in my judg-
ment, an outrage the kind of skin
game that is going on with some of
those who wish to take advantage of
rolling up, that is, combining, collating
these real estate partnerships, putting
them together under one partnership
and using it for the benefit of the
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corporate head who takes it over rath-
er than for the benefit of the stock-
holders.
I will certainly help him on another
piece of legislation wherever it may
be. But I thank him for working out
the procedure by which he will consid-
er that matter on another bill.
Mr. President, what is the pending
business?
The PRESIDING OFFICER. The
pending business is the committee
substitute to H.R. 776.
Mr. BAUCUS addressed the Chair.
The PRESIDING OFFICER. The
Senator from Montana. ,
Mr. BAUCUS. I wonder if I might
engage in a colloquy with the chair-
man of the committee regarding juris-
diction of the EPW Committee with
respect to EPW issues in the House
bill. There are provisions in the
House energy bill which very directly
deal with the jurisdiction not of the
Energy Committee but of the Envi-
ronment and Public Works Commit-
tee.
I compliment the chairman on his
bill for going the extra mile to come
up with a bill basically staying with
the jurisdiction of the Energy Com-
mittee. I am wondering if the chair-
man of the committee would consent
to the two EPW members - which I
know the chairman has already
agreed to with respect to the nuclear
provisions, the jurisdiction of the
EPW committee - to also agree that
those two members, the chairman of
the committee, Chairman Burdick,
and Senator Chafee will be conferees
with respect to - and I can name them
here - several sections of the House
bill which deals directly with the juris-
diction of Environment and Public
Works Committee. I could read the
sections, but they have to do essential-
ly with carbon dioxide emissions con-
trols, language taken directly from the
Clean Air Act, also in the House bill
legislation, which is essentially lan-
guage in a bill introduced on this side
which was referred to the EPW com-
mittee.
I can go over the sections with the
chairman if he would like to. But I
would just like to ask the chairman
what he intends to do with respect to
those provisions.
Mr. JOHNSTON. Mr. President,
first of all, as the Senator from Mon-
tana, my good friend, knows, I have
made every effort to fully cooperate
with both him and the Environment
and Public Works Committee.
Just to recount, we had a waste oil
provision that we felt strongly about
on the committee but that the Sena-
tor from Montana also felt strongly
about. He asked that we drop that,
and we did. There was another provi-
sion with regard to WEPCO, which
was in the bill and had cleared the
committee but the Senator felt strong-
ly about that and we dropped that.
I mention that simply to point out
our desire in passage of the bill to
accommodate the EPW Committee.
Now that the bill has passed - and by
the way, Mr. President, we have ap-
preciated very much the leadership of
the Senator from Montana and his
help on the committee. He has been
very helpful. It has been really a
team effort in that respect.
Now when it came to conferees, Mr.
President, the usual procedures oh a
conference is that the committee who
has handled the bill, the one to which
the bill has been referred, appoints
the conferees. But because we had
received a request from the Environ-
ment and Public Works Committee, as
well as the Commerce Committee and
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4440
the Banking Committee, who had a
great interest in the bill, I had agreed
- 1 had not spoken for the Republican
minority, but from my own standpoint
as chairman - to have a member ap-
pointed, the chairman and ranking
minority member of each of those
committees, to serve on the confer-
ence and was not going to contest that
at all. And as a matter of fact, I
think that their presence there will be
helpful. I have suggested that not out
of recognizing their right to do so, -
because even though matters might be
in their jurisdiction, it is not necessar-
ily a custom to do that - but I think it
is a good custom to do it and it has
been followed in some cases.
Now with respect to the particular
matters at issue, for example, the
so-called global warming matter is a
highly contentious matter. The ques-
tion of where that jurisdiction resides
is, I do not know whether it is disput-
ed or whether it is joint between the
Energy Committee and the Environ-
ment and Public Works Committee,
but in any event it is not in the Sen-
ate bill. And the House provision is a
rather innocuous provision, as I recall.
It may still be highly contentious, but
from my standpoint it is rather innoc-
uous.
Suffice it to say that I could not
agree to that particular measure with-
out, in my view, having a big fight
over a relatively small matter. Since
it is not in the Senate bill, I do not
think it is any precedent; in other
words, I am not attempting to resolve
that question of whether you have
jurisdiction or do not have jurisdiction
over that particular measure. But I
hope the Senator would let us go for-
ward with the up-front offer of the
chairman and ranking minority mem-
ber on those principal measures in
which he has an interest and let us go
forward without global warming.
Believe me, global warming is so
exceedingly contentious. Frankly, I do
not understand why it should be so
contentious. I would be willing to do
some things in global warming per-
haps that my other colleague from
Montana would not be willing to do.
But we are not going to solve or pre-
vent from solution the global warming
problems in this measure. My guess is
that global warming will not end up in
the final report. That is just my
guess, because it is not worth fighting
over and would probably provoke a
good big fight.
So what I am asking of my dear
friend, who has been so helpful on
this bill, is that I hope he will recog-
nize that I had tried my best to be
cooperative with EPW. And I hope
that is a relationship that will contin-
ue, and I am sure it will, at least from
our standpoint, and I am sure it is
from the standpoint of the senior
Senator from Wyoming. But I hope he
will let us move forward without pro-
voking what I think might be a diffi-
cult sticking point over a small mat-
ter.
The PRESIDING OFFICER (Mr.
Pryor). The Senator from Montana.
Mr. BAUCUS. Mr. President, I ap-
preciate what the chairman of the
committee has just said. I must say,
these are not innocuous, small mat-
ters. Let me read the provision of the
House bill, on page 465, section 1317.
The title 'Early Banking of Emissions
Credits for Efficiency Improvements
from the Application of Clean Coal
Technologies. ' It goes on to say:
The Secretary, in consultation with the Admin-
istrator of the Environmental Protection Agency,
•hell promulgate regulations within IS months
after the date of enactment of this section Is
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4441
establish baseline emissions of carbon dioxide
from existing utility sources that apply clean coal
technologies. For purposes of the preceding sen-
tence, baseline emissions for sources subject to
title IV of the Act entitled 'An Act to amend the
Clean Air Act to provide for attainment and
maintenance • • •.
That is the Clean Air Act. That is
pretty basic, to establish baseline
emissions of carbon dioxide. If any-
thing is in the Environment and Pub-
lic Works Committee, it is the Clean
Air Act - anything in the jurisdiction
of the committee. This is language
referring directly to the Clean Air Act.
I can go on. The other sections are
1604 and 1605 with respect to C02
and global warming. Again, it directly
refers to the Clean Air Act and emis-
sions trading which is the heart - one
of the cornerstones of the Clean Air
Act we just passed not too long ago. I
am not saying they are not partially
within the jurisdiction of the Energy
Committee. I am not competent to
address that question. I certainly am
competent to address the question of
whether they are in the jurisdiction of
the EPW Committee. It is clear they
are. In fact, the language, which I
will read if the Senator would like me
to read it with respect to sections
1604 and 1605, is language in a bill
which was referred to the Environ-
ment and Public Works Committee.
I am not asking for more conferees.
I am just asking that the two confer-
ees from the EPW Committee be able
to conference not only on the nuclear
energy portions with respect to the
jurisdiction of the EPW Committee
but also conference on these issues. I
mean the chairman - he may be the
chairman of the conference. I do not
know. Certainly, the chairman of the
Senate conferees.
There will be other conferees there
in addition to the two conferees from
the Environment and Public Works
Committee, which is to say the chair-
man will certainly have more than his
say in the conference, as it should be.
We are just asking the chairman of
the committee and the ranking mem-
ber of the committee at least be able
to sit down and attend the conference
with respect to issues within the juris-
diction of their committee.
The PRESIDING OFFICER. The
Senator from Wyoming.
Mr. WALLOP. Mr. President, I
would say to my friend from Montana,
one of the things he well recognizes
about the bill and its passage through
this House in the first place was that
we tried very hard to make it an ener-
gy bill, energy conservation, energy
production bill. And we tried equally
hard and equally successfully to keep
it from being a Clean Air Act, a Clean
Water Act, or any such thing. It was
an energy policy bill.
I have to say if this bill should come
back from conference with carbon
dioxide credit systems and global
warming and other kinds of things, we
will not have, as close as we have
come, an energy policy. I just feel
that strongly about it.
This bill should come from confer-
ence as it goes to conference from the
Senate, as an energy policy bill and
not an environmental bill. To confuse
those things will be to dilute the ef-
forts that we have so steadfastly pur-
sued in trying to make a balanced bill
both from the standpoint of produc-
tion and conservation.
There are environmental benefits
from the conservation provisions of
this bill. Make no mistake about it -
enormous environmental consequenc-
es to the benefit of the country. But
for us to get wandering off into the
Clean Air Act, Clean Water Act, or
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f
other agencies of Government, would
be a dreadful mistake, and it would
mean for the first time that the Sen-
ate and the House, the Congress, got
close to making energy policy and
sought to sacrifice that on some other
alter.
So I just lay down my strong opposi-
tion to the request of the Senator
from Montana.
The PRESIDING OFFICER The
Senator from Montana.
Mr. BAUCUS. I do not quite under-
stand the Senator from Wyoming. On
the one hand, I hear the Senator from
Wyoming saying he wants this to be
an energy bill, not an environmental
bill.
On the other hand, the Senator is
saying he objects to EPW being a
member of the conference with re-
spect to EPW matters.
Mr. WALLOP. If the Senator would
yield, we have agreed to a level of
involvement for the Environment and
Public Works Committee here. That
has been crafted by the Senator from
Louisiana and I presume with the
chairman of the Environment and
Public Works Committee.
Mr. BAUCUS. Mr. President, might
I ask the chairman and ranking mem-
ber of the committee if they might be
interested in an alternative course
here? That is to state they will resist
in conference these provisions of the
House bill? That is those that deal
with jurisdiction of the Environment
and Public Works Committee? That
would be, essentially, sections 1317
dealing with C02 emissions banking;
sections 1604 and 1606 with respect to
carbon dioxide and global wanning;
emissions; and portions of section
2121 dealing with pollution preven-
tion.
Mr. WALLOP. That has an absolute
commitment from the Senator from
Wyoming on those issues.
Mr. JOHNSTON. Mr. President, I
am becoming reacquainted here with
those sections. We have a provision in
our bill with respect to least cost plan-
ning. The Secretary would prepare a
least cost plan, taking into consider-
ation C02 emissions. I think that is
more of a general - that is no baseline
for the Clean Air Act, that is for least
cost planning for utilities, I believe,
and for the Nation as a whole.
So that part is in the Senate bilL
And I think that part was within our
jurisdiction and I do not believe would
be within your jurisdiction.
I think those other matters with
regard to Clean Air Act, it would cer-
tainly be my inclination, not under-
standing them very well, but, clearer,
to resist those as I have said earlier.
In other words, I have no agenda to
seek those out and pass those. That is
my inclination. If you will trust me
that I am not fully acquainted with all
of the intricacies of them - that is my
general feeling.
And my friend from Wyoming; you
have heard him state in very dear
terms - I think he probably is mors
acquainted with these provisions than
I. If he feels very strongly about it, I
am sure that means we would both
resist them.
The PRESIDING OFFICER. The
Senator from Wyoming.
Mr. WALLOP. If the Senator from
Montana would yield again, it is clear
that these are public parts of that
legislation, and the Senator's view on
them is easily transmitted to either of
us. I appreciate particularly the view
that I just heard expressed by the
Senator from Montana on those par-
ticular issues.
So my own recommitment is yes, I
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will resist that.
The PRESIDING OFFICER. The
Senator from Montana.
Mr. BAUCUS. Mr. President, with
the commitments given by the Sena-
tor from Wyoming, and as I under-
stand the commitment given by the
Senator from Louisiana, namely, to
resist those sections in the House bill
that I mentioned particularly insofar
as they refer to the jurisdiction of the
Environment and Public Works Com-
mittee - and I do believe that is the
understanding that I have from him,
the Senator from Louisiana • I would
be inclined to no longer resist the
Senate going forward with this bill.
Might I again clarify the intention
of the Senator with respect to those
sections? Is the Senator saying in
conference he will resist those sections
that I indicated?
Mr. JOHNSTON. Mr. President, I
am not trying to hedge my response.
I am simply trying to tell the Senator
I do not fully understand the three
provisions.
But it is my feeling at this point
that is exactly what I would do; that
is, resist those. Let me put it this
way: If there would be any change in
attitude, I would certainly consult
with the Senator from Montana. And
I do not know why there would be a
change in attitude. Also, you have to
understand that, in a conference, I do
not know how strongly the other side
would be pushing for these matters
and whether it would be a deal break-
er if we did not go along with some
language. I am sure that is not the
case. But with that caveat, I can say,
yes, the Senator has accurately stated
my position.
Mr. BAUCUS. Mr. President, with
that understanding, and I appreciate
the comments of the Senator from
Wyoming and the Senator from Loui-
siana, I will not resist the Senator
going further on this bill. But it is
important to realize that if the House
were to press these issues that the
Senate conferees do resist them. And
I also understand the chairman will
consult with me, and appropriate
members of the committee.
Mr. WALLOP. If the Senator will
yield, should it be we cannot resist
forcefully enough and they come back
here with it, I will join with the Sena-
tor.
Mr. BAUCUS. I thank both Sena-
tors.
The PRESIDING OFFICER. Is
there further debate?
Mr. WALLOP. Mr. President, I ask
unanimous consent that the one re-
maining amendment that was part of
the unanimous consent agreement
entered into last night, the amend-
ment from the Republican leader, Mr.
Dole, on solid waste disposal and phos-
phoric acid, be dropped from that list.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. WELLSTONE. Mr. President,
let me begin by expressing my appreci-
ation to the chairman and ranking
minority members of the Senate Fi-
nance Committee and the Senate
Energy Committee for their leadership
and cooperation during the Senate
consideration of H.R. 776. They have
successfully navigated a comprehen-
sive energy package through the Sen-
ate, one which now includes some
important tax provisions to comple-
ment the Senate's action earlier this
year on S. 2166.
Of particular importance are the
provisions of title XIX, the new Fi-
nance Committee provisions, which
assist energy conservation and renew-
able energy technologies. These provi-
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4444
sions extend existing tax credits which
expired at the end of June, and autho-
rize new tax incentives for both re-
newable energy and energy efficiency
technologies. Earlier this year, I
joined with a number of my colleagues
in urging the Finance Committee to
adopt these provisions because of their
critical importance to the continued
existence of a renewable energy indus-
try in our country.
The provisions in title XDC regard-
ing coal miners health care also of
particular importance to me. The
efforts of my distinguished colleagues
from West Virginia and Kentucky -
Senator Rockefeller, Senator Byrd,
and Senator Ford - in securing posi-
tive action to protect the health care
benefits of retired miners and their
dependents has resulted in a major
accomplishment. I strongly encourage
the Senate conferees to insist on re-
taining these provisions in the final
legislation.
Mr. President, despite these positive
accomplishments, this legislation still
retains many negative features. Earli-
er this year, I expressed my concerns
with the provisions of S. 2166 which
are now incorporated into H.R. 776.
At that time, I explained my vote
against final passage of the bill at
some length. In part, I explained:
When ell b Mid end done, I believe that while
this bill he* been improved, it still retain* eerious
flaws. It violates many of the principles I believe
ars important, principles of public participation
in decisionmaking, principles of protecting the
consumer and taxpayer, principles of preserving
due process for farmers and ranchers. Further,
on balance 3. 2 166 proposes too much support for
nuclear power and coal, and too little for renew-
able energy and efficiency. Finally, I cannot
defend this legislation as representing an energy
policy which responds to our most urgent prob-
In deciding how to cast my vote
today, I take particular note of the
new provisions which are before the
Senate for the first time • the provi-
sions reported by the Senate Finance
Committee. Again, I believe that in
deciding my final vote I should exam-
ine these provisions in their totality.
While the Finance Committee's title
has some very positive provisions, on
balance it still represents a continua-
tion of the status quo - it supports
continued use of fossil fuels more than
a transition to renewable energy
sources. It provides some $400 million
in tax incentives for renewable energy
sources, but gives new tax breaks to
the oil and gas industry worth over
$1.5 billion - tax breaks which I joined
Senator Bradley in trying to strike
from this bill The tax benefits for
the oil and gas industry counterbal-
ance all of the title XDC's provisions
for solar energy, windpower, hiomass
fuels, alternative fuels, energy conser-
vation, and increased transit riderahip
combined.
These new tax provisions will effec-
tively make a bad situation somewhat
worse. A study conducted by the Cen-
ter for Renewable Resources in 1985
concluded that existing Federal laws,
particularly the tax laws, provide
major subsidies for nuclear power and
fossil fuels and far less support for
renewable energy sources. That study
concluded, for example, that the an-
nual subsidies for nuclear
amounted to some $15.56
those for oil production totaled $8.58
billion annually, while renewable ener-
gy sources received only $1.7 billion
per year.
In its totality, therefore, this bill's
provisions continue to support fossil
fuels and nuclear energy more than
energy efficiency and renewable <
gy sources. For this reason, I will i
my vote against RR 776 on final pass
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Perhaps in the future, the Congress
will see fit to begin unraveling the
complex laws which subsidize fossil
fuels and undermine investments in
energy efficiency and renewable re-
sources. This bill does contain a pro-
vision which I believe could lay the
groundwork for progress in this direc-
tion.
An amendment I offered to S. 2166
which was adopted by unanimous
consent, and which Representative
Sikorski successfully offered to the
House bill, requests that the National
Academy of Sciences conduct a com-
plete study of how the government
distorts the energy marketplace.
Specifically, this provision directs
DOE to contract with the National
Academy of Sciences to prepare a
study quantifying past and present
direct and indirect subsidies for differ-
ent energy resources. This study grew
out of the response I received last
summer to questions I had submitted
to the Department of Energy.
In testimony before the Senate,
Energy Goals Act Hearing July 18,
1991, the Department of Energy
agreed that a broad range of Govern-
ment actions impact the production
and consumption of energy. But,
DOE has not conducted a study of
energy subsidies, nor has it updated
earlier studies. Yet, DOE criticized
earlier studies for their very biased
view of Government action in the
energy marketplace.
What those previously attempting
the task of quantifying energy subsi-
dies have concluded is quite astonish-
ing. In the 1970's the Battelle Memo-
rial Laboratory conducted a study of
energy subsidies which concluded that
$252 billion was allocated to energy
producers between 1921 and 1978 -
the bulk of which subsidized fossil
fuels. In the 1980's, the Rocky Moun-
tain Institute concluded that there
were over $40 billion in annual subsi-
dies from various laws and regula-
tions, and again they concluded that
fossil fuels received the lion's share.
These studies demonstrate the criti-
cal importance of embarking upon
this discussion. The energy bill before
us today might amount to several
billion dollars of programs and incen-
tives over the next 5 years. For all of
our labors in producing this
1,000-page-plus new energy bill, the
sum total of its influence on the mar-
ketplace will only be a fraction of
what studies indicate existing subsi-
dies already exert. In fact, the influ-
ence of existing subsidies may exceed
the impact of this bill by a factor of 5,
10, or even more.
Given tight Federal budget - bud-
gets which cannot find the money to
fund essential health, education, and
other programs • it is time for Con-
gress to begin the hard job of making
new energy policy by unraveling exist-
ing subsidies instead of simply adding
more subsidies to the mix. If previous
studies are correct, it should be more
cost-effective, and more influential
upon the marketplace, for Congress to
address the tens of billions of dollars
in existing subsidies rather than cre-
ating a few new programs to promote
energy policy priorities.
To begin this process, Congress
needs a starting point • that is what I
hope this National Academy Study
will provide. An inherent problem for
any study of subsidies to overcome is
the fact that what one person may
view as a subsidy another person will
view as a legitimate business expense.
Therefore, it is imperative that any
such study be conducted by an impar-
tial group, one which takes no ideolog-
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4446
ical stance for or against on energy
source or fuel. Impartiality is essential
if any such study is to be an effective
policy instrument. In my view, the
National Academy of Sciences has
such a track record of impartiality
and its work product will have wide-
spread credibility. Moreover, a thor-
ough examination of energy subsidies
will require a great deal of sophistica-
tion. Unraveling the actual market
distortion of various tax provisions,
regulatory laws, agency programs, and
other Government actions will de-
mand the type of expertise which the
Academy embodies.
Mr. President, virtually every ener-
gy interest group testifying before the
Senate Energy Committee told us
they only wanted a level playing field.
In fact, I believe that if one took the
time to look back through the Energy
Committee's hearings over the past
decade one would find they have been
asking us to give them a level playing
field for many years. This provision,
therefore, may be the only provision of
this bill which responds to the re-
quests of every interest group. This
amendment will give us the informa-
tion we need to discover where the
level playing field really lies.
While I cast my vote against this
bill because the tax provisions contin-
ue subsidizing fossil fuels over renew-
able energy sources, I do wish to call
to the attention of my colleagues this
important provision. A provision
which I hope will help future Con-
gresses begin to make a fundamental
change in energy policy, to begin a
transition away from fossil fuels and
toward energy efficiency and renew-
able energy technologies, and to do so
in a fiscally responsible and economi-
cally efficient way.
Mr. BRADLEY. Mr. President,
when we moved to the energy nil
yesterday, there was circulated a long
list of amendments. While those
amendments covered the widest vari-
ety of issues, both relevant and irrele-
vant to the underlying bill, one area
not covered was natural gas
prorationing. This issue, which
sounds technical and arcane, is any-
thing but. It's volatile, intensely con-
troversial, and has spawned - un-
known to many of my colleagues -
some of the sharpest vitriol associated
with this bill.
At the center of the energy bill is a
new and greater commitment to natu-
ral gas. We streamline pipeline siting
and promote natural gas vehicles. We
open the door for increased gas use in
electric utilities and industry. Wher-
ever you look and however you ana-
lyze it, you will see in this bill an en-
dorsement of natural gas as a fuel of
choice for America's future.
Mr. President, this bill represents a
logical step. The Congress has for
almost 15 years pushed to create com-
petitive markets for gas. With each
legislative step, we've dismantled an-
other part of the huge regulatory
machine that controlled gas markets
for decades. Today, we're doing
things much differently than we did
even a decade age. We don't have
price controls. We don't have the
Fuel Use Act. We have a gas transpor-
tation system that's open access. We
have direct price negotiation between
the customer and the producer. We
have competition between gas produc-
ers for market share. We have abun-
dant supply. We have low prices.
It is in this context that I first be-
came aware and, ultimately, alarmed
about the issue of natural gas
prorationing. Prorationing is an issue
that, although esoteric, is as old as
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the oil business. In the dawn of the
oil business, wellfields in Pennsylvania
and Ohio were quickly drained by oil
producers who had no way to protect
their fields. Under the rules of cap-
ture which governed property rights,
mineral production was a
use-it-or-lose-it proposition, with each
driller racing to exhaust a shared
reserve. Prorationing, which estab-
lished and protected correlative rights,
was a natural and appropriate re-
sponse to this oilfield free for all. And
the same, legitimate rationale for
prorationing is applicable still.
The problem that I discovered, how-
ever, had three aspects. First, a series
of so-called reforms in prorationing
were proposed last fall. Some of these
reforms were implemented this past
spring. Three States - Oklahoma,
Texas, and Louisiana - were in the
forefront. These three States also
represent over 50 percent of domestic
natural gas supply.
Second, the rhetoric and public
statements of many officials and
oilmen were unambiguous and threat-
ening. When the Energy Committee
held a hearing on this on June 18, I
submitted for the Record some 12
pages of quotes from the press that
stated that the prorationing effort
had a simple goal. Accordingly to one
headline, all these reforms were,
'motivated purely by price.'
Third, the gas market itself seemed
to back up this tough talk. Prices
were historically low in January and
February. Four warmer than expected
winters and a national recession had
taken a toll. Most analysts pointed to
an anemic spring market, since almost
without exception the slackened de-
mand that accompanies warmer
weather means even lower prices. But
this did not happen. In fact, the op-
posite, the improbable occurred: prices
shot up. The price for May deliveries
of gas shot up 30 percent in just 6
days in mid-April.
Naturally, the thought of
State-sanctioned price controls is ab-
horrent. We have not worked for 15
years to free markets for gas so that
they can be manipulated by a few
States. Mr. President, these concerns
were not mine alone. Last May, 34
Senators endorsed an investigation of
these developments. In the House,
the Markey-Scheuer amendment was
adopted by a strong majority of Mem-
bers. This amendment attempts to
balance Federal and State powers and
make price manipulation by States
illegal.
I know there has been a lot of inter-
est as to whether I would pursue a
similar amendment here on the Sen-
ate floor. Given my interest and obvi-
ous concerns, such an action would be
a natural event. But I will state today
that I will forego at this time the
pursuit of any such legislative remedy.
Let me state quite clearly why I
have made this decision. For the
Record, I remain skeptical. First, I
believe the Oklahoma prorationing
law is bad for gas producers, and con-
sumers. It targets only large wells
and all large wells. It also targets
seasonal purchases by utilities that
are trying to buy gas in the period of
lowest prices and demand. Second, I
remain concerned that should these
three States begin to coordinate cut-
backs, we could easily see price manip-
ulation that could threaten our na-
tional interest and consumers. Lastly,
I am not convinced that existing law
provides a legal remedy for aggressive
actions taken by the producing States'
regulators. Following last month's
Energy Committee hearing, I sent a
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detailed set of questions to the De-
partment of Energy on this issue. I
have not received a reply.
Mr. President, my concerns remain.
But I'm willing to hold off. As a result
of my involvement with prorationing,
I have had extensive conversation
with the key regulators. While the
threat of many States working togeth-
er remains, I cannot conclude - given
the direct conversations I have had -
that this is the goal or intention of
many of those involved. The chair-
man of the Texas Railroad Commis-
sion, Lena Guerrero, and I have dis-
cussed this at length. I respect her
and I trust her. Her words have
made an impact on me. She could not
be stronger or more clear. She has
stated forcefully the position of the
TRC: Their prorationing reforms are
not targeted at the consumer, as in-
deed there are many gas consumers in
Texas. Rather, she is certain that the
adopted regulations - as opposed to
some of the proposals that have been
discussed at times - will remain a
straightforward and necessary updat-
ing of Texas prorationing authorities.
I have had conversations with other
legislators. Shortly after the Oklaho-
ma statute was enacted, Congressman
Synar called me directly to address my
concerns. I believe he and others will
work to see that we don't backslide
into a system of production controls
or a natural gas cartel.
On account of this reassurance, I do
not see a reason to push ahead at this
time. As I said, I do have some re-
maining skepticism. I have concerns.
But I will wait both to see how the
conference committee deals with the
issue, and to see how the producing
States implement their prorationing
proposals. For the moment, at least,
the advocacy of their representatives
leads me to give them the benefit of
my doubts.
REINSURANCE EXCISE TAX
Mr. SYMMS. Mr. President, during
the Finance Committee markup of the
energy bill, an amendment was added
which would increase the tax on rein-
surance purchased from foreign com-
panies. U.S. insurance companies
have opposed similar amendments
over the past 2 years and are opposed
to this amendment. The rate increase
will raise the cost of reinsurance sold
to consumers. In the current econom-
ic climate, there is no justification for
Federal action which would increase
insurance costs.
I am also concerned about the im-
pact of the amendment on our rela-
tions with foreign countries. The
United States has negotiated waivers
of the excise tax with more than a
dozen countries. Those treaties re-
duce the rate to zero on our treaty
partners. However, a foreign reinsur-
er would nonetheless pay a 1 percent
tax, not zero, even if it qualified un-
der the new rules. More recent trea-
ties provide a waiver of the tax, but
reduce the benefit of the waver if a
foreign reinsurer places reinsurance in
third countries that do not have simi-
lar waiver in their U.S. tax treaties.
The amendment would add a new
three-part test for loss of the treaty
benefit, in place of the one negotiated
in the treaties.
If foreign governments are to rejy
upon these treaties, we must respect
and abide by the terms of the treaty.
Adopting a new test after ratification
of these treaties will disrupt relations
with our trading partners, and impair
the ability of the U.S. Treasury to
negotiate favorable terms for our
multi-national companies doing busi-
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nesses abroad.
Only a few jurisdictions appear to
be the target of this measure. But we
have no assurance that are the only
ones affected. I am very reluctant to
impose a legislative solution to a prob-
lem which may be of very limited
dimension. I am even more wary of
adopting a measure that disrupts
relations with our major trading part-
ners.
An energy bill is a strange place to
impose a tax on insurance companies.
Indeed, the proposal originated in a
recently introduced House tax bill,
which was just the subject of hearings
in the House and never in the Senate.
In the view of the strong objections of
U.S. insurers, we ought not act in
haste, without fully understanding the
impact of these actions. I urge the
conferees to reject this proposal so
that we do not adversely affect domes-
tic companies and their policyholders.
EXEMPT BOND VOLUME CAP FOR HIGH
SPEED RAIL PROJECTS
Mr. MACK. Mr. President,
high-speed rail technology has proven
itself in many industrialized countries
throughout the world today. In fact,
both the French and the Japanese
have developed and currently run
high-speed trains. High-speed rail
offers a clean, efficient alternative to
other forms of mass transit. Yet, the
United States, which formerly has
enjoyed the status as leader in trans-
portation technology, now finds itself
not only lagging behind our foreign
neighbors but hindering our States
ability to fund such public projects.
The bond volume cap amendment
does not ask for any unique or un-
precedented exception to law or policy.
It simply extends the same benefits
available to States for funding other
public projects such as airports, sea-
ports, and solid waste disposal facili-
ties to high speed rail projects.
This change makes sense and is
long overdue. I am pleased that my
colleagues have joined in support of
this amendment.
INCREASING THE TAX-DEDUCTION FOR
THE SELF-EMPLOYED
Mr. MACK Mr. President, I wish to
clarify my position in support of Sena-
tor Specter's amendment offered yes-
terday on the floor which would per-
manently increase the tax deduction
for health insurance costs for the
self-employed from 25 to 100 percent.
This increase makes insurance more
affordable for self-employed individu-
als and their families by granting
them the same 100 percent deduction
for health benefit costs currently
granted to large businesses.
I have consistently supported this
provision which provides for fairness
in the business community. This
measure is contained in S. 1936, the
Senate Republican health care task
force bill of which I am an original
cosponsor. In addition, this provision
is included in the small business bill I
introduced, S. 2727.
I want to make one thing clear
about my support of this amendment,
however. I find it troubling that this
body has forced upon itself rules
which hamstring our ability to enact
good policy. My vote in support of
this amendment reflects my support
for raising the health insurance de-
duction as opposed to the revenue
provisions used to pay for it.
COAL HEALTH BENEFITS PROVISION -
AMENDMENT NO. 2787
Ms. MIKULSKI. Mr. President, I
am glad to see that the Senate has
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reached a compromise that will pro-
tect retired coal miners' health bene-
fits without imposing an unfair tax on
the coal industry. This compromise is
good for the retirees, but it also is
good for coal miners in Maryland and
elsewhere who were threatened by the
original tax that was proposed.
Coal mines in Maryland were clear-
ly threatened by a planned tax of up
to $l/hour, possibly more, on
nonsignatory companies that would
help pay for retirees' benefits. That
proposal was unfair: it asked compa-
nies that were treating their employ-
ees fairly and keeping their promises
to pay for someone else's problem.
And if it went through, it would have
hurt Maryland's coal mines and cost
us jobs - both in western Maryland
and in the Port of Baltimore, through
which coal is shipped.
That's why I worked with Senator
Rockefeller this spring to help Mary-
land get a fair deal. I told him I
wanted to help him protect the retired
miners in Maryland and across the
country. But I also told him that I
could only back him up if he promised
to help the nonsignatory mines in
Maryland. These mines never were
involved in the agreement that the
Bituminous Coal Operators Associa-
tion made to their employees, and
they shouldn't have to take on an
unfair share of the burden to help the
BCOA keep its promises.
Senator Rockefeller did help Mary-
land and other States, and has crafted
a proposal that is fair to all coal mines
and their workers. I want to congrat-
ulate Senator Rockefeller for his dedi-
cation and his hard work. Without
him and without his genuine concern,
120,000 coal miners and their families
would be losing their health care next
year. I'm happy to endorse this new
agreement, and to see that coal min-
ers will keep the benefits they earned.
I'm also glad that that no coal-related
jobs are threatened in Maryland or
elsewhere.
I support this compromise and I
encourage the House of Representa-
tives to join in endorsing it.
BTHANOL USE AND THE FUTURE
Mr. KERREY. Mr. President, I am
pleased to announce that the percent-
age of gasoline sold in Nebraska con-
taining ethanol reached an all-time
high in 1991. This represents the
highest State average in the Nation.
By volume, over 350 million gallons of
10-percent ethanol blended fuel were
sold in Nebraska in 1991, accounting
for 45 percent of all gasoline sales,
according to the Nebraska Gasohol
Committee.
Nationally, ethanol blended fuels
accounted for over 8 percent of all
gasoline sold in 1991.
This is a good indication of consum-
er acceptance of ethanol blended gaso-
lines and a recognition of the environ-
mental and economic benefits of etha-
nol.
This good news comes at a time
that we are awaiting a decision by the
U.S. Environmental Protection Agen-
cy (EPA) on Clean Air Act regulations
concerning reformulated fuel stan-
dards and oxygenate requirements.
The proposed rule could seriously
hamper the use of ethanol in ozone
nonattainment areas, and thereby
limit the use of domestically produced
renewable fuel.
In recent months, I have joined
other Senators and thousands of citi-
zens from the Midwest and elsewhere
in an effort to ensure that EPA follow
through on Congress' intent in writ-
ing the Clean Air Act amendments
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that ethanol qualify under these pro-
grams. Recently, even the President
indicated that he was supportive. We
are still awaiting an EPA decision and
I hope that the Congress will not have
to readdress this issue in the coming
year to ensure that the administration
follows through on our intent.
I am pleased that the Senate today
passed the Comprehensive National
Energy Policy Act (H.R. 776), which
includes a provision authored by Sen-
ator Daschle that would encourage
the use of ethanol to meet oxygenate
requirements mandated by the Clean
Air Act of 1990. Currently, the excise
tax exemption of 5.4 cents per gallon
is limited to fuels containing
10-percent ethanol by volume. Under
the bill's provision, ethanol blenders
would be allowed a 4.1-cent-per-gallon
tax exemption for a
7. 7-percent -by- volume ethanol blend,
and a 3-cents-per-gallon exemption for
a blend of 5. 7-percent-by- volume etha-
nol blend. This will partially respond
to some of the concerns raised about
whether ethanol will be able to partic-
ipate in the Clean Air Act's programs
as Congress clearly intended, though
it by no means removes the regulatory
obstacles faced by ethanol. I urge the
conferees to work to see that this
provision is included in the final ver-
sion of this energy legislation.
A VOTE FOR UMWA RETIREES
Mr. WARNER. Mr. President, the
national energy strategy legislation
now pending Senate passage contains
a landmark financing package for the
troubled retiree health insurance
program of the United Mine Workers
of America (UMWA).
This is good new for nearly 10,000
Virginia retirees and their families.
As recently as 3 weeks ago, a related
financing scheme for an industrywide
coal tax was dead in the water. With
the active support of President Bush,
however, we have reached a new fund-
ing agreement.
Under the legislation, UMWA retir-
ee health costs will be assigned to
both present and former members of
the Bituminous Coal Operators Asso-
ciation (BCOA), depending on the
length and time of employment as
recorded by the Social Security Ad-
ministration. For those orphan retir-
ees for whom former employers no
longer exist, they too well be assigned
on a proportional basis.
Major financial support will come
immediately to the UMWA health
funds by a transfer of $210 million
from the UMWA pension fund over
the next 3 years. Additional costs for
1996 and beyond will be covered by
transfer payments from the Federal
abandoned mine lands (AML) fund.
Virginia UMWA retirees should
sleep better tonight knowing that the
Federal Government has stepped in to
restore their health insurance pro-
gram. In the long term, the entire
coal industry will be sacrificing to
assure the continued delivery of these
benefits. We revere those who have
worked in the coalfields, however, and
the 40-year promise of these benefits
has been our overriding concern.
Mr. WALLOP. Mr. President, so far
as I know, with resolution of the issue
of rollups, there are now no further
amendments that can come before us.
I say to my friend that I hope he does,
and if he does not, I will, ask for the
yeas and nays on this bill. I think
Senators are entitled to it. I will have
just a few remarks after the chairman
before we go to a vote.
Mr. JOHNSTON. Mr. President, I
had previously made some remarks
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about this bill in one of those many
down times we had, which the press is
free to quote from as if I said them at
this more propitious time.
In any event, Mr. President, it has
been, of course, a pleasure working
with my distinguished ranking minori-
ty member and with the staff. I will
not go further with congratulations
than that, since we have had so many
fits and starts in this bill and since
the conference will be a long and diffi-
cult one.
There are well over a thousand
pages in this bill. I would not want to
count the number of pages that finally
come out of this bill as finally passed,
but there are well over a thousand
pages. There are many highly conten-
tious matters. There are some poten-
tial deal breakers in this bill.
I say that not to reflect pessimism
at all, because I also think, on the
other hand, that the demand of the
country for an energy policy is very,
very strong. The President of the
United States is for this bill, the
Speaker of the House is for this bill,
the majority leader of the Senate is
for this bill, the Democrats are for it,
the Republicans are for it, the country
needs it, and I say woe to him who
stands in the way of passing this bill
which is strongly needed by the Amer-
ican people.
I do not believe people are going to
try to stand in the door of progress in
this bill. And, on the other hand, I
sound the alarm of concern that we
have a long way to go to get this bill
passed.
From my standpoint, Mr. President,
I hope we can have a first meeting of
the conference early next week, if that
meets with the schedule and desires of
the distinguished Senator from Wyo-
ming.
I hope that meets with his schedule.
We plan to get this bill out, I hope,
quickly and decisively for the Ameri-
can people.
I thank all Senators and especially
the Senator from Wyoming.
The PRESIDING OFFICER The
Senator from Wyoming.
Mr. WALLOP. Mr. President, I
obviously return my thanks and admi-
ration to the Senator from Louisiana,
the chairman of the committee, who
has done an absolutely masterful job,
not once now, but twice on this floor
getting us to this point. The bill was
balanced when it passed the Senate
the first time 94 to 4. I believe that
we have preserved that balance after
the current debate and perhaps even
strengthened it with some of the Fi-
nance Committee provisions.
I am confident that we can main-
tain that balance through the confer-
ence. I commit to doing it, and I say
that it is extremely important to
maintain that balance.
I am confident, as is the chairman,
that we can reach agreement, if the
philosophy is to produce a consensus
agreement in the national interest
and not to produce a political state-
ment
We have not allowed partisan poli-
tics to dictate what we have accom-
plished, and that is one of the rare
accomplishments, I say to my friend
from Louisiana, that he has managed
to do. We have, even through it has
been an election year, been able to
achieve that, and we must assure that
the result of the conference is as bi-
partisan as has been the result of the
separate debates that have taken
place in this House.
I say to my friend also, and those
who were involved in the most conten-
tious issues, this Senator, for an en-
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4458
tirely different reason, is extraordi-
narily grateful that we were able to
resolve this matter. I say to my friend
in the Chair, who understands these
things quite well, on tomorrow I go
back to my home State of Wyoming to
celebrate with the rest of my family
our centennial on our ranch in Wyo-
ming. For us, hat was a matter of
such import that, had we not settled
the energy bill, I still would have
gone. So I am most grateful to have
been a part of this final thing. I will
not delay it any longer lest somebody
contrives some genius senatorial way
to get in our way.
Mr. JOHNSTON. Mr. President, I
ask for the yeas and nays on final
passage.
The PRESIDING OFFICER. Is
there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. WALLOP. Mr. President, I ask
unanimous consent that a list of ac-
knowledgements of the majority and
minority staff who have worked so
diligently be printed in the Record, as
well as two members of my personal
staff who have been so instrumental
in achieving this.
There being no objection, the list
was ordered to be printed in the Re-
cord, as follows:
COMMITTEE
Rob Wallace. Gray Ellsworth, Richard Grundy,
Jim Beirne, Marian Marshall, Judy Pensabene,
Howard Useen, Jim OToole, Gerry Handy, Carol
Craft, Gigi Beall, Kelly Fiecher.
Michael Hoon and Jodi Brayion, personal sUfT,
and the majority staff.
The PRESIDING OFFICER. If
there be no further amendment to be
proposed, the question is on agreeing
to the committee amendment in the
nature of a substitute, as amended.
The committee amendment was
agreed to.
The PRESIDING OFFICER. The
question is on the engrossment of the
amendments and third reading of the
bill.
The amendments were ordered to
be engrossed, and the bill to be read
the third time.
The bill was read a third time.
The PRESIDING OFFICER. The
bill having been read the third time,
the question is, Shall the bill pass?
The yeas and nays have been or-
dered. The clerk will call the roll.
The bill clerk called the roll.
Mr. FORD. I announce that the
Senator from North Dakota (Mr.
Burdick) is necessarily absent.
Mr. SIMPSON. I announce that the
Senator from Vermont (Mr. Jeffords)
and the Senator from Idaho (Mr.
Symms) are necessarily absent.
I further announce that the Senator
from North Carolina (Mr. Helms) is
absent due to Illness.
The PRESIDING OFFICER (Mr.
Dodd). Are there any other Senators
in the Chamber desiring to vote?
The result was announced • yeas 93,
nays 3, as follows:
(ROLLCALL VOTE NO. 163 LEG.)
YEAS-
93
Adams
Akaka
Baucus
Bentaen
Biden
Bingaman
Bond
Boren
Bradley
Breaui
Brown
Bryan
Bumpers
Burns
Byrd
Chafee
Coats
Cochran
Cohen
Conrad
Craig
Cranston
D'Amato
Danforth
Daschle
DeConcini
Dixon
Dodd
Dole
Domenici
Eton
Ford
Fowler
Gam
Glenn
Gore
Gorton
Graham
Gramm
Grassley
Harkin
Hatch
Hatfield
Heflin
Hollings
Inouye
Johnston
Kassebaum
Hasten
Kennedy
Kerrey
Kerry
Kohl
La u ten berg
Leahy
Levin
Liebennan
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Lott
Lugar
Mack
McCain
McConnaU
Matianbaum
Mikubki
Mitchell
Moynihan
Murkowiki
Nicklaa
Nunn
Packwood
Pall
Praaaler
Pryor
Raid
Riagla
Robb
Rockefeller
Roth
Rudman
Sanford
Sarbanaa
Siainr
Seymour
Shelby
Simon
Simpoon
Spaciar
Stevens
Thurmond
Wallop
Warnar
Wirth
NAYS-3
Woflbrd
Durenbargar
Smith
Welbtone
NOT VOTINC
i-4
Burdick
Halma
Jaflorda
Symma
So the bill (H.R. 776) as amended,
was passed.
Mr. WALLOP. Mr. President, I
move to reconsider the vote.
Mr. DOMENICI. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. WALLOP. Mr. President, I ask
unanimous consent that the Senate
amendment to H.R. 776, the energy
bill, be printed.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. JOHNSTON. Mr. President, I
move that the Senate insist on its
amendment, request a conference
with the House on the disagreeing
votes of the two Houses, and that the
Chair be authorized to appoint confer-
ees.
The motion was agreed to; and the
Presiding Officer appointed:
From the Committee on Energy and
Natural Resources, for all titles except
title XDC of H.R. 776 and title XX of
the Senate amendment (Revenue
provisions): Mr. Johnston, Mr. Bump-
ers, Mr. Ford, Mr. Bingaman, Mr.
Wirth, Mr. Conrad, Mr. Shelby, Mr.
Wallop, Mr. Hatfield, Mr. Domenici,
Mr. Murkowski, Mr. Nickles, and Mr.
Burns.
From the Committee on Govern-
mental Affairs, conferees for subtitle
B of title VI of the Senate amendment
(Federal energy management): Mr.
Glenn and Mr. Stevens.
From the Committee on Commerce,
Science, and Transportation, conferees
for subtitles A, B, and C, of title XII of
the Senate amendment (Outer Conti-
nental Shelf revenue sharing), pipe-
line safety issues (as contained in
Senate amendment No. 2785): Mr.
Hollings and Mr. Danforth.
From the Committee on Banking,
Housing and Urban Affairs, conferees
for title XV of the Senate amendment
(Public Utility Holding Company Act
reform): Mr. Riegie and Mr. Garn.
From the Committee on Environ-
ment and Public Works, conferees for
the following provisions of H.R. 776:
section 2481 (transshipment of pluto-
nium); title XXVIII (Nuclear Plant
Licensing); subtitle A of title XXDC
(below regulatory concern); section
3009 (exemption from annual charg-
es): Mr. Burdick and Mr. Chafee.
From the Committee on Veterans'
Affairs, conferees on sections 6101 and
6102 of title VI of the Senate amend-
ment (building energy efficiency): Mr.
Cranston and Mr. Specter.
From the Committee on Finance,
conferees on title XDC of H.R. 776 and
title XX of the Senate amendment
(revenue provisions): Mr. Bentsen, Mr.
Moynihan, Mr. Baucus, Mr. Boren,
Mr. Daschle, Mr. Breaux, Mr.
Packwood, Mr. Dole, Mr. Roth, Mr.
Danforth, and Mr. Chafee conferees
on the part of the Senate.
Mr. JOHNSTON. Mr. President,
with thanks to all I yield the floor.
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102d Cokoubsb 1 f Rgpow
SdStmion J HOUSE OP REPRESENTATIVES { 102-ioi8
ENERGY POLICY ACT OF 1992
CONFERENCE REPORT
TO ACCOMPANY
H.R. 776
October 5, 1992.— Ordered to be printed
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JOINT EXPLANATORY STATEMENT OP THE COMMITTEE OP
CONFERENCE
The managers on the part of the House and the Senate at the
conference on the disagreeing votes of the two Houses on the
amendments of the Senate to the bill (HLR. 776) to provide for im-
proved energy efficiency submit the following joint statement to
the House and the Senate in explanation of the action agreed upon
by the managers and recommended in the accompanying confer-
ence report.
TITLE I— ENERGY EFFICIENCY
SUBTITLE A— BUILDINGS
Sec. 101. Building Energy Efficiency Standards
Section 101(c) would amend the Cranston-Gonralex National
Affordable Housing Act (P.L. 101-625) to ensure that the Secretary
of Housing and Urban Development develops energy efficiency
standards for new homes financed through Federal mortgage pro-
grams as required by that Act The subsection also expands the
coverage of the standards from HUD insured mortgages only, to
the mortgage insurance and guarantee programs of the Depart-
ments of Agriculture and Veterans Affairs. Such standards shall
meet or exceed the requirements of the Council of American Build-
ing Officials Model Energy Code 1992 (CABO-MEC 1992) or, in the
case of multifamily high rises, the requirements of the American
Society of Heating, Refrigerating, and Air-Conditioning Engineers
standards (ASHRAE 90.1-1989), and shall be cost-effective with re-
spect to construction and operating costs on a life-cycle cost basis.
The Conferees believe that these consensus standards are costreffeo
tive with respect to construction and operating costs on a life-cycle
cost basis. If, in carrying out their responsibilities under this sub-
section, the Secretaries wish to conduct life-cycle cost analyses,
they should use a 26 or SO year term to reflect the facts that
houses have long useful lives and are commonly financed through
80 year mortgages.
subtitle b— ununxs
Sec. 111. Encouragement of Investments in Conservation and Energy
Efficiency by Electric Utilities
This section would amend the Public Utility Regulatory Poli-
cies Act of 1978 to require utilities and public utility commissions
to consider requiring three new Federal standards?
1. integrated resource planning which compares supply and
demand-side options on a systematic and comparable basis;
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2. cost recovery for energy efficiency programs and measures
that makes them at least as profitable as supply side measures;
and
3. rate changes that encourage investments in efficiency meas-
ures in generation, transmission and distribution of power.
Whether or not utilities and public utility commissions choose
to implement these policies, they must hold a public hearing and
state why they will not implement them. The Conferees recognize
that a number of States have already implemented some or all of
the standards encouraged under this section. The Conferees do not
intend that such States go through additional rulemaking proceed-
ings simply to satisfy the procedural requirement above, nor do
th^y intend that States repeat such proceedings in the future.
These States are encouraged to demonstrate that they have imple-
mented the standards by referencing actions they have already
taken. States have substantial discretion in how they implement
the standards encouraged under this section.
It is the intent of this subtitle to promote energy efficiency, in
particular by encouraging utilities, which have a unique relation-
ship with their customers, to expand demand-side management
(DSM) programs. It is also intended that utility commissions must
consider the impact which these expanded DSM programs may
have on small businesses already engaged in similar activities, and
shall implement these standards so as to assure that utility actions
will not provide utilities with unfair competitive advantages over
such small businesses. It is further intended that whenever practi-
cable and consistent with energy efficiency goals, utility commis-
sions will encourage approaches to the implementation of DSM ac-
tivities that would be mutually beneficial to utilities and small
businesses, such as through joint utility-small business arrange-
ments using rebates or vouchers.
The subsection dealing with small business protection neither
precludes, nor mandates, the adoption of competitive bidding for
demand-side management services. By adding this provision, the
Conferees do not intend that utilities be precluded from engaging
in energy conservation, energy efficiency or other demand-side
measures.
Whether utilities engage in such activities should continue to
be determined by state laws and state regulatory commissions,
keeping in mind the requirements of this subsection. The Conferees
intend that nothing in this subsection in any way interfere with
the ability of utilities to assure safe and reliable service. State reg-
ulatory commissions are encouraged to utilize their existing au-
thority in implementing this subsection; the implementation of this
subsection is not intended to require the creation of new adminis-
trative or regulatory procedures.
&c 114- Amendment of Hoover Power Plant Act
Section 114 would amend the Hoover Power Plant Act of 1984
to require the Western Area Power Administration (WAPA) to
issue rules requiring all but its smallest customers to engage in in-
tegrated resource planning (JRP). The Conferees recognise the ef-
forts that many customers nave already undertaken with respect to
IRP. The Conferees further recognise that these customers vary in
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size and capability to plan, and therefore intend that regulation*
be flexible enough to allow for reasonable variations in compliance
requirements.
In section 204(b) of such Act, as amended by this section, the
customer is required, in preparation and development of the IRP,
to provide for full public participation, including participation of
governing boards. This language reflects the sound policy that
better decisions result when the affected customers are involved in
the resource planning process. Preference entities serve the public
and are accountable to their consumers. By allowing the consumer
to participate in the IRP preparation and development process, rec-
ognition of the public interest is assured.
Section 204(c), as amended, would direct the Administrator to
accept integrated resource plans that are currently being imple-
mented by customers under other programs as fulfilling the re-
quirements of this provision "to the extent such plan substantially
complies with requirements of this title." The Conferees intend for
the Administrator to be flexible in determining what satisfies the
"substantial compliance" standard. IRP plans to take significant
resources to plan and implement
Finally, it is not the Conferees9 intent that WAPA force
changes in customers9 approved IRP plans. WAPA should accept
good faith efforts to comply with approved plans as generally satis-
fying compliance standards.
Sec. 115. Encouragement of Investments in Conservation and Energy
Efficiency by Gas Utilities
This section would amend the natural gas provisions of the
Public Utility Regulatory Policies Act of 1978 to require utilities
and State regulatory commissions to consider requiring two new
Federal standards:
1. implement integrated resource planning for State regulated
gas utilities; and
2. allow State regulated gas utilities to earn a profit on invest-
ments in energy efficiency.
States may choose not to implement these requirements, but
they must hold a hearing and state why they are not implementing
them.
The Conferees recognize that a number of States have already
implemented some or both of the standards encouraged under this
section. The Conferees do not intend that such States go through
additional rulemakingprooeedings simply to satisfy the procedural
requirements above. These States are encouraged to demonstrate
that they have implemented the standards by referencing actions
they have already taken. The Conferees believe that States should
have substantial discretion in how th$y implement the standards
encouraged under this section.
It is intended that Integrated Resource Planning dRP) be con-
sidered only for local gas distribution companies who directly serve
ultimate users of gas. In examining natural gas supply options
under IRP, it is not intended that the sources, conditions, or other
characteristics of the upstream supply of gas be analysed. Rattier,
the IRP is intended to examine and compare demand-side options
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with the general option of additional supplies to end use customers
by the load gas distribution company.
The subsection in this section regarding the competitive
impact of the implementation of these standards on small business-
es has the same intent as that described under section 111.
SUBTITLE C— STANDARDS
In general
The provisions of this subtitle would significantly expand the
coverage of the appliance energy efficiency standards program and
the energy labeling program under the Energy Policy and Conser-
vation Act (EFCA). It is the intent of the Conferees that the Secre-
tary shall seek to harmonize these standards internationally, par-
ticularly with standards established or under development in
Canada and Mexico, nations with which the United States conducts
substantial trade. Such harmonization will simplify enforcement,
reduce impediments to trade, and will reduce burdens on manufac-
turers.
In addition, the Conferees have concerns regarding the adequa-
cy of the current enforcement penalties under EPCA. These penal-
ties were established many years ago. Accordingly, the conferees
expect the Secretary to review the adequacy of the enforcement
provisions of these programs and to recommend changes to the
Congress, if appropriate.
Sec 121. Energy Efficiency Labeling for Windows and Window Sys-
tems
9 The National Fenestration Rating Council (NFRQ is initially
directed to develop this voluntary rating program according to
commonly accepted procedures for the development of national
testing procedure ana labeling programs. Such commonly accepted
procedures are those recognized by the Federal Trade Commission
(FT©, or that are consistent with FTC policy.
In addition, it is intended that, should NFRC develop this pro-
gram, its implementation and administration also will be in accord-
ance with commonly accepted procedures. Such procedures must
assure, at a minimum, that NFRC has sufficient oversight and au-
thority to assure that accreditation and certification procedures
result in compliance with its program.
Sec liS. Energy Efficiency Labeling for Commercial Office Equip-
ment
This section would require the Secretary to provide financial
assistance to support the development of a voluntary national test-
ing and information program for commercial office equipment in
accordance with commonly accepted procedure for the development
of such testing and information programs. Such commonly accept-
ed procedures are those recognized by the Federal Trade Commis-
sion or consistent with FTC policy.
If such a voluntary program is not established within 3 years,
then the Secretary and the Federal Trade Commission are directed
to develop test procedures and labeling rules for commercial office
equipment. •
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Sec. 126. Energy Efficiency Labeling for Luminaries
This section would require the Secretary to provide financial
assistance to support the development of a voluntary national test-
ing and information program for luminaries in accordance with
commonly accepted procedures for the development of such testing
and information programs. Such commonly accepted procedures
are those recognized by the Federal Trade Commission or that are
consistent with FTC policy.
Sec 127. Report on the Potential of Cooperative Advanced Appli-
ance Development
This section would require the Secretary, in consultation with
the Administrator of EPA, to prepare and submit a report to Con-
gress on the potential for the development and commercialization
of appliances which are substantially more efficient that those re-
quired by Federal or State law. Any recommendations relate to the
commercialization of such advanced appliances should take into ac-
count any issues regarding the marketing of such appliances.
The Conferees are aware that the Environmental Protection
Agency is already engaged in supporting industry efforts to develop
hi$h efficiency refrigerators and other products and do not intend
this study to delay those ongoing efforts. The study should particu-
larly focus on those appliances and products that EPA is not car-
rently working on. In addition, it is intended that the two agencies
will coordinate their efforts in this area and avoid duplication of
effort.
SUBTITLE F— FEDERAL AGENCY ENERGY MANAGEMENT
Sec. 155. Energy Savings Performance Contracts
This section would amend title Vm of the National Energy
Conservation Policy Act to further promote the use of energy per-
formance contracts.
It is estimated that the Federal government could reduce its
energy costs by approximately $1 billion annually through the in-
stallation of energy efficiency measures in its buildings. However,
the budget deficit has prevented the necessary investments from
being made by the government
energy savings performance contracts are a mechanism
through which private sector funds can finance Federal energy effi-
ciency improvements. The Conferees recognize that these contracts
differ significantly from traditional Federal procurement contracts.
Under these contracts, the contractor is expected to bear the risk
of performance, make a significant initial capital investment, guar-
antee significant energy savings to the government agency, and
from these savings the agency, in effect, makes payment to the con-
tractor.
Because these contracts differ significantly from traditional
Federal contracts, existing contracting regulations may be incon-
sistent. Current regulations were not formulated for application to
energy performance contracts. Accordingly, this provision author-
izes and directs the Secretary, with the concurrence of the Federal
Acquisition Regulation (FAR) Council, to develop procedures and
methods for the implementation of such contracts. Tb "*««^
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the benefits to the government of such contracts, the Secretary,
with the concurrence of the FAR Council, is given wide latitude to
develop substitute regulations where existing procurement regula-
tions are inconsistent with the goal of promoting energy perform-
ance contracts. These substitute regulations must, however, be con-
sistent with Federal procurement laws.
The section requires new procurement regulations be issued
within 180 days, and the Conferees expect prompt action to carry
out this requirement consistent with public participation.
It is also the expectation of the Conferees that uniform regula-
tions will be developed both to relieve Federal agencies of the need
to individually develop performance contract procedures and meth-
ods and to encourage energy service companies to contract with
Federal agencies on a uniform basis.
Finally, subsection (aX2XDXii) authorizes multiyear contracts
for up to 26 years, provided funds are available for payments to the
contractor in the first year. The section creates special protections
for the taxpayer in view of the risk inherent in committing the
Federal government to such multi-year contracts. For example, the
government may be liable for payment of a substantial cancellation
fee. Accordingly, subsection (aX2XDXiii) requires that a Federal
agency must notify the appropriate authorizing and appropriating
committees of the Congress before signing such a contract if it con-
tains a clause permitting a cancellation charge in excess of
$750,000. Subsection (aXZXDXi) also provides that such contracts be
awarded in a competitive manner, and the Conferees intend that
Federal agencies endeavor to secure the broadcast participation by
qualified firms.
TITLE H— NATURAL GAS
The Conferees agreed not to include most of the text of title II
of H.R. 776, regarding natural gas pipelines, in the conference
report The one exception is that the conference report includes an
amended section 201 regarding fewer restrictions on certain natu-
ral gas imports and exports.
The decision not to include most of title II includes section 214
of the House bill regarding State regulation of the production of
natural gas, Le., prorationing. However, the Conferees included a
new section 202, stating the sense of the Congress that natural gas
consumers and producers, and the national economy, are best
served by a competitive natural gas wellhead market One of the
reasons that Conferees decidod not to include section 214 is the rec-
ognition that, under existing law, a state cannot use its proration
authority for the purpose of restricting supplies and raising the
price of natural gas. Kg., Northwest Central Pipeline Corp. v. State
Corporation Commission of Kansas, 489 U.S. 493 (1989); Transconti-
nental Gas Pipe Line Corp. v. State Oil and Gas Board of Miss., 474
UA 409 (1986). The Conferees recognize that both the Congress
and the UJS. Supreme Court have long recognized the necessity of
state-administered systems for defining and enforcing property
rights in natural gas reservoirs. Still, states may not regulate natu-
ral gas production without regard to the effect that such regulation
may have on interstate commerce. Under existing law, a method of
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regulating production must: (1) achieve or advance the legitimate
state interests in conserving natural resources, preventing waste,
and protecting correlative rights; and (2) not be preempted by, or
overly disruptive of, Federal law. Should a state use its proration
authority for the purpose of restricting supplies and raising the
price of natural gas, the Conferees do not believe that such regula-
tion would satisfy the standard under existing law. The Conferees
believe that the new section 202, stating the sense of the Congress,
is consistent with existing law.
TITLE IV— ALTERNATIVE FUELS AND NON-FEDERAL
PROGRAMS
Section 408 authorises the Federal Energy Regulatory Commis-
sion (FERO, under the Natural Gas or Federal Power Acts, to con-
sider the environmental and other benefits of research and devel-
opment efforts on Alternative Fuel Vehicles ( AFV) by the Gas Re-
search Institute (GRD or the Electric Power Research Institute.
If the benefits exceed the direct costs of the research and de-
velopment, the FERC may allow natural gas pipelines and electric
utilities to recover the costs in their "just and reasonable'* rate fil-
ings under the Natural Gas and the Federal Power Acts.
Cost sharing is required to the maximum practicable extent.
This section recognizes that cost sharing may not be practicable for
all natural gas transportation, pollution control, and emissions re-
duction projects.
The cofunding provisions are intended to become effective for
new projects initiated after the date of enactment of this legislation
and would not require GRI to cancel existing contracts to comply
with the cofunding provision.
TITLE V— AVAILABILITY AND USE OF REPLACEMENT
FUELS, ALTERNATIVE FUELS, AND ALTERNATIVE
FUELED PRIVATE VEHICLES
The intent of section 501(aXD is not to cover all affiliates or
divisions of the many large energy companies which have some,
but not all, of their corporate units engaged in alternative fuels op-
erations.
For example, the oil and gas production affiliate or division of
a mqjor energy company described in 501(aXlXC) would be covered;
so might a propane pipeline unit or a natural gas processing divi-
sion, if the substantially engaged" test is met
But an oil tanker division, a gasoline marketing affiliate, or a
petrochemical unit whose mqjor operations are the production of
plastics, for example, would not be covered.
The Secretary has broad discretion to define the coverage of
this provision. For example, he may in his discretion exempt some .
crude oil-related operations of an oil and gas production affiliate
(but not the gas-related operations), or the petrochemical oper-
ations of a covered methanol unit (but not the methanol-related
business).
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TITLE VII— ELECTRICITY
Under current law, the Securities and Exchange Commission
has authority to permit, on a case-by-case basis, certain utility
functions outside the United States. Further, new section 32 of
PUHCA allows exempt wholesale generators located outside the
United States to engage in both wholesale and retail generation.
Hie provisions of new section 33 supplement these foreign options
for utility operations and do not in any way limit any person's abil-
ity to pursue SEC approval under current law or the EWG course.
The definition of an EWG has been drafted to permit an EWG
to sell wholesale power that it has not generated itself. Buyers of
wholesale power may desire to purchase capacity in increments
that exceed what the most economical unit would produce. Conse-
quently, the legislation would permit an EWG, for example, to gen-
erate 350 Megawatts and purchase an additional SO Megawatts in
order to met a purchaser's 400 MW capacity need.
The definition of an exempt wholesale generator contained in
section 32(aXD permits an exempt wholesale generator to own fa-
cilities and goods, such as fuel and related transportation, storage
and handling facilities, reasonably necessary for the operation of
its business.
Rates, charges, terms, and conditions for wholesale transmis-
sion services ordered under section 211 in all cases shall be just
and reasonable, and not unduly discriminatory or preferential. The
Conferees intend the term "associated services" to mean the cost of
ancillary services such as back-up power, interconnection costs, and
radial lines.
New section 212(h) of the Federal Power Act contains a savings
clause for State laws dealing with retail wheeling. Thus, State laws
that either prohibit or permit retail wheeling are unaffecting by
this subsection. And, if otherwise valid, remain in full force and
effect.
The Conferees do not intend to limit or modify the authority of
State commissions to review the prudence or imprudence of whole-
sale purchases by retail utilities under their jurisdiction.
The Bonneville Power Administration (BPA) has set policies
from time to time for furnishing transmission service on the Feder-
al Columbia River Transmission System. BPA has done so under
the laws which define its authority and obligations concerning
transmission, which laws remain fully effective and applicable. It is
expected that, when the FERC exercises its authority under section
211 to require BPA to provide transmission service, it will do so
consistent with the laws governing BPA. Transmission contracts
entered into in accordance with BPA's policies which are in exist-
ence on the date of enactment of this Act are unaffected by the
FERCs new authority to order access to transmission controlled by
BPA. Similarly, BPA's short-term transmission service allocation
methodology for economy energy trades is also unaffected by the
FERCs new authority to order access to transmission controlled by
BPA. However, the FERC is not bound by the transmission policy
choices BPA has made or may make in the future as to new firm
transmission service requests.
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A primary BPA obligation under the laws that define BPA's
authority and obligations is to provide transmission service over
available capacity tor its customers within the Pacific Northwest as
that region is defined in 16 UJ3.C. section 839a(14). Historically,
Bonneville Power Administration has built most of the intrare-
gional bulk transmission facilities in the Pacific Northwest This
was done on the basis of a regional consensus and the understand-
ing that BPA would make these transmission facilities available
for transmission of power for BPA's power and transmission cus-
tomers located in the Pacific Northwest. The utilities of the Pacific
Northwest have relied and continue to rely on that transmission.
BPA's use of its transmission system for firm transmission service
contracts for generating resources serving BPA customer loads
within the Pacific Northwest is not affected by any new authority
under this Act to provide access for interregional arrangements.
The FERC shall not issue any order tor transmission services
under section 211 which is likely to cause the uncompensated spill
of water from Federal or non-Federal reservoirs which otherwise
could be used to generate electric energy, because of its displace-
ment from a transmission system by energy transmitted under
such an order. Such spill shall be deemed contrary to the public
interest unless full compensation is provided to those entities suf-
fering such spill. Nothing in the preceding sentences should be un-
derstood to limit such ability as the FERC may otherwise have
under this Act to prevent or compensate other adverse impacts
that may result from an order issued under section 211 or this sec-
tion.
Rates for transmission services provided by BPA under an
order issued under section 211 are to be established by BPA and
reviewed by the FERC through the same process and using the
same statutory requirements as are applicable to all other trans-
mission rates established by BPA, with the additional requirement
that such rates for transmission services must also be just and rea-
sonable and not unduly discriminatory or preferential as deter-
mined by the FERC, taking into account BPA's other statutory au-
thorities and responsibilities. Nothing in the Federal Power Act or
BPA's organic legislation should be construed to prohibit the FERC
from approving rates, terms and conditions for transmission serv-
ices pursuant to section 211 which provide for the recovery of any
increased costs or lost revenues due to foregone sales or purchases
or other operating impacts resulting from such services, provided
that similar approvals are in general accorded to utilities subject to
sections 205 and 206. ^^
BPA may establish rates of general applicability for FERC-or-
dered transmission service which, once approved by the FERC, will
not be subject to review in individual cases but will be periodically
reviewed and, as appropriate, revised along with BPA's general
wholesale power and transmission rates. BPA may also establish,
and the FERC may approve, terms and conditions of general appli-
cability and sufficient specificity for FERC-ordered transmission
BPA's rates, terms and conditions for transmission services or-
dered by the FERC may differ from these reauired by the FERC of
other entities subject to this Act However, toe effect of any trans-
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mission services ordered by the FERC under section 211 cannot be
materially more or less favorable for BPA than for other entities
subject to the FERCs transmission service orders pursuant to this
Act with respect to: (1) overall cost recovery by the transmitting
utility, and (2) economic impact on the transmitting utility.
The FERC has the responsibility to implement this Act, includ-
ing section 212(i), and to consider and apply BPA's other federal
statutes.
TITLE Vffl— HIGH-LEVEL RADIOACTIVE WASTE
Section 801 addresses the Environmental Protection Agency's
(EPA) generally applicable standards for protection of members of
the public from release of radioactive materials into the accessible
environment as a result of the disposal of spent nuclear fuel or
high-level or transuranic radioactive waste. The Administrator's
authority to establish these standards is embodied in section 161b.
of the Atomic Energy Act of 1954, Reorganization Plan No. 3 of
1970, and section 121(a) of the Nuclear Waste Policy Act of 1982.
Section 801 builds upon this existing authority of the Adminis-
trator to set generally applicable standards and directs the Admin-
istrator to establish health-based standards for protection of the
public from release or radioactive materials that may be stored or
disposed of in a repository at the Yucca Mountain site. The provi-
sions of section 801 make clear that the standards established by
the authority in this section would be the only such standards for
protection of the public from releases of radioactive materials as a
result of the disposal of spent nuclear fuel or high-level radioactive
waste in a repository at the Yucca Mountain site. Any other gener-
ally applicable standards established pursuant to the Administra-
tor's authority under section 161b. of the Atomic Energy Act of
1954, Reorganization Plan No. 3 of 1970, and section 121(a) of the
Nuclear waste Policy Act of 1982 would not apply to the Yucca
Mountain site.
The provisions adopted by the Conferees in section 801 require
the Administrator to promulgate health-based standards for protec-
tion of the public from releases of radioactive materials from a re-
pository at Yucca Mountain, based upon and consistent with the
findings and recommendations of the National Academy of Sci-
ences. These standards shall prescribe the maximum annual dose
equivalent to individual members of the public from releases to the
accessible environment from radioactive materials stored or dis-
posed of in the repository. The provisions of section 801 do not
mandate specific standards but rather direct the Administrator to
set the standards based upon and consistent with the findings and
recommendations of the National Academy of Sciences.
The Administrator is directed to contract with the National
Academy of Sciences to conduct a study to provide findings and
recommendations on reasonable standards for protection of the
public health and safety by not later than December 31, 1993. In
carrying out the study, the National Academy of Sciences is asked
to address three questions: whether a health-based standard based
upon doses to individual members of the public from releases to the
accessible environment will provide a reasonable standard for pro-
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taction of the health and safety of the general public; whether it is
reasonable to assume that a system for poet-closure oversight of the
repository can be developed, based upon active institutional con-
trols, that will prevent an unreasonable risk to breaching the re-
pository barriers or increasing the exposure of individual members
of the public to radiation bevond allowable limits; and whether it is
possible to make scientifically supportable predictions of the proba-
bility that the repository's engineered or geologic barriers will be
breached as a result of human intrusion over a period of 10,000
years. In looking at the question of human intrusion, the Conferees
believe that it is also appropriate to look at issues related to predi-
cations of the probability of natural events.
In carrying out the study, the National Academy of Sciences
would not be precluded from addressing additional questions or
issues related to the appropriate standards for radiation protection
at Yucca Mountain bevond those that are specified. For example,
the study could include an estimate of the collective dose to the
general population that could result from the adoption of a health-
based standard based upon doses to individual members of the
public. The purpose of the listing of specific issues is not to limit
the issues considered by the National Academy of Sciences but
rather to attempt to focus the study on concerns that have been
raised by the scientific community.
Under the provisions of section 801, the Administrator is di-
rected to promulgate standards within one year of receipt of the
findings and recommendations of the National Academy of Sci-
ences, based upon and consistent with those recommendations. The
Conferees do not intend for the National Academy of Sciences, in
making its recommendations, to establish specific standards for
protection of the public but rather to provide expert scientific guid-
ance on the issues involved in establishing those standards. Under
the provisions of section 801, the authority and responsibility to es-
tablish the standards, pursuant to a rulemaking, would remain
with the Administrator, as is the case under existing law. The pro-
visions of section 801 are not intended to limit the Administrator's
discretion in the exercise of his authority related to public health
and safety issues.
The provisions to modify its technical requirements and crite-
ria for licensing of a repository to be consistent with the standards
promulgated by the Administrator within one year of the promul-
gation of those standards. In modifying its tecnnical requirements
and criteria, the Nuclear Regulatory Commission (NRO is directed
to assume, to the extent consistent with the findings and recom-
mendations of the National Academy of Sciences, that civilization
will continue to exist and that poet-closure oversight of the reposi-
tory will continue, and to include in its technical requirements and
criteria, engineered barriers to prevent human intrusion. As with
the Administrator, the provisions of section 801 are not intended to
limit the Commission's discretion in the exercise of its authority re-
lated to public health and safety.
The provisions of section 801 address only the standards of the
Environmental Protection Agency, and comparable regulations of
the Nuclear Regulatory Commission, related to protection of the
public from releases of radioactive materials stored or disposed of
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at the Yucca Mountain site pursuant to authority under the
Atomic Energy Act, Reorganization Plan No. 3 of 1970, the Nuclear
Waste Policy Act of 1982, and this Act The provisions of section
801 are not intended to affect in any way the application of any
other existing laws to activities at the Yucca Mountain site.
TITLE X— REMEDIAL ACTION AND URANIUM
REVTTALIZATION
SUBTITLE A-REMBDIAL ACTION AT ACTIVE PROCESSING SITES
Funds made available under this program are intended to be
provided for all costs that result from the disposition of byproduct
material at active processing sites (subject to the limitations of Sec.
1001(b)), including groundwater remediation, treatment of contami-
nated soil, disposal of process wastes, removal actions, air pollution
studies, mill and equipment decommissioning, site monitoring, ad-
ministrative expenses, and additional expenditures required by re-
lated standards and regulations. An example of remediation costs
would be cleaning up wind-blown by-preduct material in the vicini-
ty of the commingled site. The availability of such funds under this
program shall be considered by the Nuclear Regulatory Commis-
sion in determining the sufficiency of the financial surety arrange-
ments that must be established by mill operators for reclamation,
decontamination, and decommissioning pursuant to 10 C.F.R. Pt.
40, Appendix A (criteria 10 and 11).
TITLE XII— RENEW ABLE ENERGY
Section 1202 amends P.L. 101-218, the Renewable Energy and
Energy Efficiency Technology Competitiveness Act, by restructur-
ing the former joint venture program, the management plan, and
the R&D goals. The program retains as its basic goal the accelera-
tion of the commercialization of renewable energy and energy effi-
ciency technologies through collaboration between industry and
government on a cost-shared basis.
There are two nuyor changes. First, the technologies will be
chosen for Federal support on a competitive basis, as opposed to
the original statute, which mandated joint ventures in specific
technology areas. Second, the Secretary has been given wider lati-
tude to choose financial mechanisms, including interest rate buy-
downs, to use in implementing the demonstration and commercial
application program. The Secretary may utilize a financial inter-
mediary for advice or assistance in the implementation of the pro-
gram.
Elements of the revised program are modeled on the Clean
Coal Technology program. The Secretary is directed to issue a solic-
itation and evaluate and select projects for financial assistance on
the basis of DOE-developed criteria.
Section 1210. It is the understanding of the conference commit-
tee that the authorities established under Section 1210(a) will be
implemented only when the monies authorized under Section
1210(b) are appropriated.
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TITLE XVI— GLOBAL CLIMATE CHANGE
Sec. 1605. National Inventory and Voluntary Reporting of Green-
house Gases
The guidelines for the voluntary reporting of greenhouse gases
and the national inventory shall address coalbed methane emis-
sions, inventories and reductions. Persons who wish to establish
baselines shall be provided an opportunity to do so.
TITLE X VII— ADDITION AL FEDERAL POWER ACT
PROVISIONS
Section 1701(b) vacates the Federal Energy Regulatory Com-
mission's (FERQ current regulatory definition of the term "fish-
way" without prejudice to any definition or interpretation of the
term by rule and requires the Commission to obtain the concur-
rence of the Secretaries of Commerce and the Interior in issuing
any new regulatory rulemaking definition. It also indicates what
may constitute a fishway" under section 18 when a new rule is
developed and promulgated. However, the section does not affect
the authority of the Commission to continue to issue license orders
that could include fishway prescriptions under section 18.
In essence, the provision returns the Commission and the Sec-
retaries to the position they were in under section 18 of the Feder-
al Power Act prior to the FERC adopting by regulation the fishway
definition. The role of the Secretaries under the Act and this sec-
tion would continue to be as it was prior to the definition and the
role of the Commission in issuing licenses with conditions would
also be as it was before the rule. Nothing in this amendment is in-
tended to limit the roles or authorities of either the Secretaries or
the Commission.
TITLE X Vm— OIL PIPELINE REGULATORY REFORM
See. 1803. Protection of Certain Existing Rates
Subsection (a) of section 1803 identifies oil pipeline rates that
will be deemed just and reasonable lyy operation of law. Paragraph
(1) of subsection (a) provides that rates in effect for a 366-day
period before enactment of this legislation are deemed to be just
and reasonable for purposes of the Interstate Commerce Act (ICA)
if the rates were not subject to protest, investigation or complaint
within that 365-day period. Paragraph (2) of subsection (a) provides
that rates that were in effect on the 366th day preceding the date
of the enactment of this legislation are deemed to be just and rea-
sonable for purposes of the ICA even if the rates were not in effect
throughout the 366-day period preceding enactment, because an in-
tervening rate filing was made during the 866-day period, so long
as the rates in effect 366 days before enactment were not subject to
protest, investigation or complaint during the noted period. Con-
sistent with the foregoing, the Conferees intend that a person may
file a complaint up to, and including, the day preceding enactment
and that such a complaint need only comply with the FERC s exist-
ing regulations in order to satisfy the statutory requirement. So
long as a complaint filed during the period described above meets
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this standard, it will be sufficient to preclude a rate from being
deemed just and reasonable under section 1803(a). In view of the
feet that, but for the exceptions provided in subsections (b) and (c)
of section 1803, this will faeromplainants' last chance to challenge
such rates as well as the FERC/s last chance to review such rates
before they are deemed just and reasonable, the conferees expect
that the FERC will review such complaints carefully.
TITLE XK— ENERGY REVENUE PROVISIONS
A. Energy Conservation and Production Incentives
1. EMPLOYER-PROVIDED TRANSPORTATION BENEFITS
Present law
Under Treasury regulations, transit passes, tokens, fare cards,
vouchers, and cash reimbursements provided by an employer to
defray an employee's commuting costs are excludable from the em-
ployee's income (for both income and payroll tax purposes) as a de
minimis fringe benefit if the total value of the benefit does not
exceed $21 per month. If the total value of the benefit exceeds $21
per month, the full value of the benefit is includible in income.
Parking at or near the employer's business premises that is
paid for by the employer is excludable from the income of the em-
ployee (for both income and payroll tax purposes) as a working con-
dition fringe benefit, regardless of the value of the parking. This
exclusion does not apply to any parking facility or space located on
property owned or leased by the employee for residential purposes.
House bill
Under the House bill, gross income and wages (for both income
and payroll tax purposes) does not include qualified transportation
fringe benefits. In general, a qualified transportation fringe is (1)
transportation in a commuter highway vehicle if such transporta-
tion is in connection with travel between the employee's residence
and place of employment, (2) a transit pass, or (3) qualified parking.
Cash reimbursements made by the employer for such expenses
under a bona fide reimbursement arrangement also qualify for the
exclusion.
The maximum amount of qualified parking that is excludable
from an employee's gross income is $160 per month (regardless of
the total value of the parking). Other qualified transportation
fringes are excludable from gross income to the extent that the ag-
gregate value of the benefits does not exceed $60 per month (re-
gaidless of the total value of the benefits). The $60 and $160 limits
are indexed for inflation, rounded down to the next whole dollar.
A commuter highway vehicle is a highway vehicle with the ca-
pacity to seat at least 6 adults (not including the driver) and at
least 80 percent of the mileage use of which is for transporting em-
ployees between their residences and their place of employment
using at least one-half of the adult seating capacity of the vehicle
(not including the driver). Transportation furnished in a commuter
highway vehicle operated by or for the employer is considered pro-
vided by the employer.
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A transit pass includes any pass, token, farecard, voucher, or
similar item entitling a person to transportation on mass transit
facilities (whether publicly or privately owned). Types of transit fa-
cilities that may qualify for the exclusion include, for example,
rail, bus, and ferry.
Qualified parking is parking provided to an employee on or
near the business premises of the employer, or on or near a loca-
tion from which the employee commutes to work by mass transit,
in a commuter highway vehicle, or by carpool. As under present
law, the exclusion does not apply to any parking facility or space
located on property owned or leased lyy the employee for residen-
tial purposes.
Effective date. — The provision applies to benefits provided by
the employer on or after January 1, 1993.
Senate amendment
The Senate amendment is generally the same as the House
bill, except that the parking cap is $145 per month, rather than
$160 per month. In addition, the $60 and $145 limits are indexed
for inflation in $5 increments.
Under the Senate amendment, cash reimbursements for tran-
sit passes do not qualify for the transit exclusion if vouchers that
cure exchangeable only for transit passes are readily available to
the employer.
Effective date. — Same as the House bill.
Conference agreement
The conference agreement follows the Senate amendment,
except that the parking cap is $155 per month.
2. EXCLUSION OF ENERGY CONSERVATION 8UB8IDIE8 PROVIDED RV
PUBLIC UTILITIES
Present law
Section 8217(i) of the National Energy Conservation Policy Act
provided that the value of any subsidy provided by a utility to a
residential customer for the purchase or installation of a residen-
tial energy conservation measure was excluded from gross income.
That exclusion expired on June 309 1989.
House bill
For taxable years beginning after 1992, the bill provides an ex-
clusion from the gross income of a residential customer of a public
utility for the value of any subsidy provided by the utility for the
purchase or installation of an energy conservation measure.
For this purpose, an energy conservation measure is (1) any
residential energy conservation measure with respect to a dwelling
unit or (2) any commercial energy conservation measure with re-
spect to dwelling units in a building or structure that contains five
or more dwelling units. The term residential energy conservation
measure" has the meaning given to such term by section 210(11) of
the National Energy Conservation Policy Act (as in effect on the
date of the enactment of this provision). The term "commercial
energy conservation measure" means an installation or "^N%r-
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tion of an installation which is primarily designed to reduce the
consumption of petroleum, natural gas, or electric power, including
the items listed in section 710(bX5) of the National Energy Conser-
vation Policy Act (as in effect on the day before the date of the en-
actment of the Conservation Service Reform Act of 1986).
For taxable years beginning after 1993, the bill provides an ex-
clusion from the gross income of a commercial or industrial cus-
tomer of a public utility for 65 percent of the value of any subside
provided by the utility for the purchase or installation of an energy
conservation measure. For this purpose, an energy conservation
measure is (1) any commercial energy conservation measure (as de-
fined above) with respect to property that is not a dwelling unit or
(2) any specially defined energy property. The term "specially de-
fined energy property" has the meaning given to such term by sec-
tion 48(1X5) of the Code (as in effect on the day before the date of
enactment of the Revenue Reconciliation Act of 1990).
The bill does not apply to payments made to or from a quali-
fied cogeneration facility or a qualifying small power production fa-
cility pursuant to section 210 of the Public Utility Regulatory
Policy Act of 1978.
The bill denies a deduction or credit to a taxpayer (or in appro-
priate cases requires a reduction in the adjusted basis of property
of a taxpayer) for any expenditure to the extent that a subsidy re-
lated to the expenditure was excluded from the gross income of the
taxpayer.
Effective date. — The bill is effective for amounts received after
December 81, 1992.
Senate amendment
The Senate amendment is the same as the House bill, with the
following exceptions.
For taxable years beginning after 1998, the amendment pro-
vides an exclusion from the gross income of a commercial or indus-
trial customer of a public utility for 80 percent (rather than 65 per-
cent as under the House bill) of the value of any subsidy provided
by the utility for the purchase or installation of an energy conser-
vation measure with respect to the property that is not a dwelling
unit.
Under the Senate amendment, the term "energy conservation
measure" means an installation or modification of an installation
which is primarily designed to reduce consumption of electricity or
natural gas or improve the management of energy demand.
Under the Senate amendment, the term ^public utility" in-
cludes regulated public utilities, rural electric cooperatives, and
utilities that are owned and operated by the Federal Government
or a State or local government or any instrumentality or political
subdivision thereof.
The amendment applies to the value of any subsidy provided
by a public utility to a third party for the purchase or installation
of an energy conservation measure with respect to a customer of
the utility m the same manner as if the subsidy had been provided
directly to the customer.
The amendment applies to payments by a public utility to a
taxpayer for the acquisition of State tax benefits granted to the
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taxpayer by the State pursuant to a State-sponsored energy conser-
vation program.
Effective date. — The amendment is effective for amounts re-
ceived after December 31, 1992.
Conference agreement
The conference agreement generally follows the Senate amend-
ment with the following modifications.
For subsidies received in 1995, the conference agreement pro-
vides an exclusion from the gross income of a commercial or indus-
trial customer of a public utility for 40 percent (rather than 80 per-
cent as under the Senate amendment) of the value of any subsidy
provided by the utility of the purchase or installation of an enercy
conservation measure with respect to property that is not a dwell-
ing unit. For subsidies received in 1996, the 40 percent exclusion
becomes a 50 percent exclusion. For subsidies received after 1996,
the 50 percent exclusion becomes a 65 percent exclusion.
In addition, the conference agreement deletes the provision ap-
plicable to the value of any subsidy provided by a public utility to a
third party for the purchase or installation of an energy conserva-
tion measure. In deleting the provision, the conferees believe that
third party contractors should not be at a competitive advantage or
disadvantage with respect to the tax benefits provided by the exclu-
sion. In addition, the conferees believe that when a utility provides
a payment to a third party contractor, the utility is indirectly pro-
viding the subsidy to the person for whom the contractor is provid-
ing the energy conservation measure and the exclusion should
apply to such person. Thus, the conference agreement provides that
the exclusion applies to any subsidy provided directly or indirectly
to a utility customer, if such subsidy otherwise would be included
in income. For example, if a public utility provides a subsidy to a
customer to partially offset the cost of the installation of an energy
conservation measure on the customer's premises, the provision ap-
plies to exclude all or a portion of the value of such subsidy. like-
wise, if the public utility provides a payment to an independent
contractor so that the contractor can provide for the installation of
an energy conservation measure on the utility customer's premises
at a reduced price, the exclusion applies to the customer for the in-
direct subsidy supplied to the customer.
Finally, the conference agreement deletes the provision that
applies to payments by a public utility to a taxpayer for the acqui-
sition of State tax benefits granted to the taxpayer by the State
pursuant to a State-sponsored energy conservation program.
3. TREATMENT OF CLEAN-FUEL VEHICLES AND CERTAIN REFUELING
PROPERTY
Present law
Present law does not provide a special deduction or other
income tax benefit for investing in a motor vehicle that may be
propelled by a clean-burning fuel or for investing in property that
is used to refuel a motor vehicle that may be propelled by a dean-
burning fuel.
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House bill
In general
The House bill provides a deduction for a portion of the cost of
certain motor vehicles that may be propelled by a clean-burning
fuel. In addition, the House bill provides a deduction of up to
$100,000 per location for the cost of certain property that is used in
the storage of clean-burning fuel or the delivery of clean-burning
fuel into the fuel tank of a motor vehicle propelled by such fuel.
Deduction for qualified clean-fuel vehicle property
The House bill allows a deduction for the cost of qualified
dean-fuel vehicle property for the taxable year that the property is
placed in service. Qualified clean-fuel vehicle property is defined as
a motor vehicle that is produced by an original equipment manu-
facturer and that is designed so that the vehicle may be propelled
by a clean-burning fuel (an "original equipment manufacturer's ve-
hicle"), but only to the extent of the portion of the basis of the ve-
hicle that is attributable to: (1) an engine which may use the clean-
burning fuel; or (2) any property which may be used in the storage
or delivery to the engine of the clean-burning fuel or the exhaust of
gases from the combustion of the clean-burning fuel.
In addition, qualified clean-fuel vehicle property is defined as
any property that is installed on a motor vehicle which is propelled
by a fuel that is not a clean-burning fuel for purposes of permitting
such vehicle to be propelled by a clean-burning fuel (a retrofitted
vehicle")* but only if the property is an engine (or modification
thereof) which may use the clean-burning fuel or only to the extent
that the property may be used in the storage or delivery to the
engine of the clean-burning fuel or the exhaust of gases from the
combustion of the clean-burning fuel. For this purpose, the cost of
the original installation of the engine or any other such property is
to be treated as part of the cost of the engine or such property.
In order for property to qualify as Qualified clean-fuel vehicle
property, the property must be acquired for use by the taxpayer
(and not for resale) and the original use of the property must com-
mence with the taxpayer. In addition, the motor vehicle of which
the property is a part must satisfy any applicable Federal or State
emissions standards with respect to each fuel by which the vehicle
is designed to be propelled or, in the case of property installed on a
retrofitted vehicle, the property must satisfy any applicable Feder-
al or State emissions-related certification, testing, and warranty re-
quirements.1
In the case of any motor vehicle that may be propelled by both
a clean-burning fuel and any other fuel, the cost of any qualified
clean-fuel vehicle property that may be used by both the clean-
burning fuel and the other fuel is to be taken into account in deter-
mining the amount of the deduction only to the extent that the
cost of such property exceeds the cost of the property which would
»In the event that there are no Federal or State emissions-related standard* or requirement*
that apply to a motor vehicle (or to property installed on a motor vehicle) at the time of the
» of the motor vehicle (or property), this requirement is not to be construed to deny a
t for property that would otherwise constitute qualified dean-fuel vehicle property.
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have been used had the vehicle been propelled solely by the fuel
that is not a clean-burning fuel.
The cost that may be taken into account in determining the
amount of the deduction with respect to any motor vehicle is limit-
ed based on the type of the motor vehicle. In the case of a truck s
or van with a gross vehicle weight rating that is greater than
26,000 pounds or a bus which has a seating capacity of at least 20
adults (not including the driver), the limitation is $50,000. In the
case of a truck or van with a gross vehicle weight rating that is
greater than 10,000 but not greater than 26,000 pounds, the limita-
tion is $5,000. In the case of any other motor vehicle, the limitation
is $2,000.
The cost limitations are reduced for qualified clean-fuel vehicle
property that is placed in service after December 31, 2001. The oth-
erwise applicable limitations cure reduced by: (1) 25 percent for
property that is placed in service during 2002; (2) 50 percent for
property that is placed in service during 2003; and (3) 75 percent
for property that is placed in service during 2004. No deduction is
allowed with respect to qualified clean-fuel vehicle property that is
placed in service after December 31, 2004.
Deduction for qualified clean- fuel vehicle refueling property
The House bill also allows a deduction for the cost of qualified
clean-fuel vehicle refueling property for the taxable year that the
property is placed in service. Qualified clean-fuel vehicle refueling
property is defined to include any property (other than a building
or its structural components) that is used for the storage or dis-
pensing of a clean-burning fuel (other than electricity) into the fuel
tank of a motor vehicle propelled by the fuel, but only if the stor-
age or dispensing (as the case may be) of the fuel is at the point
where the fuel is delivered into the fuel tank of the motor vehicle.9
In order for property to qualify as qualified clean-fuel vehicle
refueling property, the original use of the property must commence
with the taxpayer and the property must be of a character that is
subject to the allowance for depreciation (i.e., unlike qualified
clean-fuel vehicle property, qualified clean-fuel vehicle refueling
property is required to be used in a trade or business of the taxpay-
er).
The aggregate cost that may be taken into account in deter-
mining the amount of the deduction with respect to qualified clean-
fuel vehicle refueling property that is placed in service at any loca-
tic is not to exceed the excess (if any) of (1) $100,000, over (2) the
aggregate amount taken into account under the provision by the
taxpayer (or any related person or predecessor) with respect to
property placed in service at such location for all preceding taxable
years. For this purpose, a person is treated as related to another
person if the person bears a relationship to the other person that is
specified in section 267(b) or section 707(bXD.
1 For purposes of the bill, a truck is to include a tractor that is used on public streets or high-
ways to tow a vehicle such as a trailer or semi-trailer.
'For this purpose, qualified clean-fuel vehicle property includes any property that is used to
compress natural gas into a usable fuel for motor vehicles provided that the property is located
on the site that the fuel is delivered into motor vehicles.
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Definition of clean-burning fuel and motor vehicle
Clean-burning fuel is defined a* natural gas, liquefied natural
gas, liquefied petroleum gas, hydrogen, electricity, and any other
fiiel if at least 85 percent of the fuel is methanol, ethanol, any
other alcohol, ether, or any combination of the foregoing. A motor
vehicle is defined as any vehicle with at least four wheels that is
manufactured primarily for use on public streets, roads, and high-
ways (but not including a vehicle operated exclusively on a rail or
rails).
Other rules
The basis of any property with respect to which a deduction is
allowed under this provision is reduced by the portion of the cost of
the property that is taken into account in determining the amount
of the deduction that is allowed with respect to the property. In ad-
dition, the Treasury Department is required to promulgate regula-
tions that provide for the recapture of the benefit of the deduction
for qualified clean-fuel vehicle property or qualified clean-fuel vehi-
cle refueling property if the property ceases to be property eligible
for the deduction.
The deduction for qualified clean-fuel vehicle property or quali-
fied clean-fuel vehicle refueling property is not allowed with re-
spect to property that is used predominantly outside the United
States or property that is owned or leased by governmental units
or certain tax-exempt organizations. In addition, the deduction for
such property is not allowed with respect to the portion of the cost
of any property that is taken into account under section 179.
The deduction for qualified clean-fuel vehicle property is not
subject to the luxury automobile depreciation limitations of section
280F (unlike the deduction allowed under section 179).4 In addi-
tion, the deduction for qualified clean-fuel vehicle property is al-
lowed as an adjustment to gross income rather than as an itemized
deduction. Consequently, the deduction is not subject to the 2-per-
cent adjusted gross income floor that otherwise applies to miscella-
neous itemized deductions or to the limitation on itemized deduc- -
tions that applies to taxpayers with adjusted gross income in excess
of a specified amount ($105,250 for taxable years beginning in
1992).
Effective date. — The provision applies to property that is
placed in service after June 30, 1993, and before January 1, 2005.
Senate amendment
The Senate amendment is the same as the House bill, except
as provided below.
Deduction for qualified clean-fuel vehicle property
' The Senate amendment does not contain the provision of the
House bill which provides that in the case of a motor vehicle that
may be propelled by both a clean-burning fuel and any other fuel,
only the incremental cost of permitting the use of the clean-burn-
♦ The depredation deductions allowed with respect to any each property, however, continue to
be subject to the limitations of section 280P.
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ing fuel is to be taken into account. Instead, the Senate amend-
ment provides that in the case of an original equipment manufac-
turer's vehicle,5 the amount of the deduction is determined baaed
on whether the motor vehicle may be propelled by (1) only a dean-
burning fuel (a "dedicated clean-fuel vehicle"), or (2) both a clean-
burning fuel and any other fuel (a "fuel-flexible vehicle" or "dual-
fuel vehicle").
In the case of an original equipment manufacturer's vehicle
that is a dedicated clean-fuel vehicle, the amount of the deduction
equals the cost of the motor vehicle, but no more than the coot lim-
itation applicable to the vehicle as provided in the House bill. In
the case of an original equipment manufacturer's vehicle that is a
fuel-flexible or dual-fuel vehicle, the amount of the deduction
equals $1,200, or, if greater, the incremental cost of permitting the
use of the clean-burning fuel,6 but no more than the cost limitation
applicable to the vehicle as provided in the House bill.
The Senate amendment also provides that qualified clean-fuel
vehicle property does not include an electric vehicle that qualifies
for the 15-percent credit described below.
Deduction for qualified clean-fuel vehicle refueling property
The Senate amendment provides a $75,000 per location limita-
tion on the amount of the deduction for qualified clean-fuel vehicle
refueling property. In addition, the Senate amendment provides
that qualified clean-fuel vehicle refueling property is to include any
property (other than a building, or its structural components) that
is dedicated to the recharging of motor vehicles propelled by elec-
tricity but only if the property is located at the point where the
motor vehicles are recharged. For this purpose, qualified clean-fiiel
vehicle refueling property generally includes any equipment that is
used to provide electricity to the battery of a motor vehicle that is
propelled by electricity (e.g., low-voltage recharging equipment,
quick (high-voltage) charging equipment, or ancillary connection
equipment such as inductive charging equipment) but does not in-
clude any property that is used to generate electricity (e.g., solar
panels or windmills) and does not mclude the battery used in a
motor vehicle propelled by electricity.
Income tax credit for qualified electric vehicles
The Senate amendment also provides an income tax credit
equal to 15 percent of the cost of a qualified electric vehicle for the
taxable year that the vehicle is placed in service.7 A qualified elec-
* An original equipment inauufacturer's vehicle is to include any motor vehicle that ie capa-
ble of being propelled by a dean-burning fuel prior to the original uee of the vehicle. Any motor
vehicle that is not capable of being propelled by a clean-burning fuel prior to the original uee of
the vehicle but is later modified ao that it may be propelled by a dean-burning fuel is to be
treated as a retrofitted vehicle.
* The incremental cost of permitting the use of a dean-burning fuel is the excess of the coat of
the vehicle over what the cost of the vehicle would have been had the vehicle been j " *
solely by the fuel that is not a dean-burning fuel It is anticipated that the i
be determined under regulations or other guidance to be published by the Internal
Service and that such regulations or other guidance will require the seller or other s
person to certify the amount of the incremental cost to the person that qualifies for
'The credit is phased out for qualified electric vehicles placed in service after December Si,
2001. The otherwise allowable credit is reduced by: (1) 26 percent far property that is placed m
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trie vehicle is defined as a motor vehicle (1) that is powered primar-
ily bv an electric motor drawing current from rechargeable batter-
ies, fuel cells, or other portable sources of electrical current; (2) the
original use of which commences with the taxpayer; and (3) that is
acquired for use by the taxpayer and not for resale. A motor vehi-
cle is defined as any vehicle with at least four wheels that is manu-
factured primarily for use on public streets, roads, and highways
(but not including a vehicle operated exclusively on a rail or rails).
. The credit for qualified electric vehicles for any taxable year is
not to exceed the excess (if any) of (1) the regular tax for the tax-
able year reduced by the credits allowable under Subpart A and
sections 27, 28 and 29 of the Code, over (2) the tentative minimum
tax for the taxable year.
The basis of a qualified electric vehicle is reduced by the
amount of the credit that is allowable with respect to the vehicle.
In addition, the Treasury Department is required to promulgate
regulations that provide for the recapture of the credit if the vehi-
cle ceases to be a qualified electric vehicle.
The credit for a qualified electric vehicle is not allowed with
respect to property that is used predominantly outside the United
States or property that is owned or leased by governmental units
or certain tax-exempt organizations. In addition, the credit is not
allowed with respect to the portion of the cost of any property that
is taken into account under section 179.*
Conference agreement
The conference agreement follows the House bill with the fol-
lowing modifications.
Deduction for qualified clean-fuel vehicle property
The conference agreement provides that qualified clean-fuel ve-
hicle property does not include an electric vehicle that qualifies for
the 10-percent credit described below.
Deduction for qualified clean-fuel vehicle re fueling property
The conference agreement provides that in addition to the
property described in the House bill, qualified clean-fuel vehicle re-
fueling property is to include any property (other than a building
or its structural components) that is dedicated to the recharging or
motor vehicles propelled l*y electricity but only if the property^ is
located at the point where the motor vehicles cure recharged. For
this purpose, qualified clean-fuel vehicle refueling property gener-
ally includes any equipment that is used to provide electricity to
the battery of a motor vehicle that is propelled by electricity (e.g.,
low-voltage recharging equipment, quick (high-voltage) charging
equipment, or ancillary connection equipment such as inductive
charging equipment) but does not include any property that is used
to generate electricity (e.£., solar panels or windmills) and does not
include the battery used m a motor vehicle propelled by electricity.
eervfao daring 2002; (2) 50 percent for property that it placed in serrios during 2000; and (8) 75
percent for property that is placed in eerrice during 2001 No credit k ollowed with respect to a
£nBfiad electric vehicle that k placed in eervice after December 81. 2004.
• The cradftk to coueJ 15 fmccut of the excess of (1) the o^
coot of each motor vehicle that is taken into account under section 179.
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Income tax credit for qualified electric vehicles
The conference agreement also provides an income tax credit
equal to 10 percent of the cost of a qualified electric vehicle for the
taxable year that the vehicle is placed in service. The maximum
amount of credit allowed with respect to any qualified electric vehi-
cle is not to exceed $4,000. The credit is phased out for Qualified
electric vehicles placed in service after December 31, 2001. The oth-
erwise allowable credit (as determined after the application of the
$4,000 per vehicle limitation) is reduced by: (1) 25 percent for prop-
erty that is placed in service during 2002; (2) 50 percent for proper-
ty that is placed in service during 2003; and (3) 75 percent for prop-
erty that is placed in service during 2004. No credit is allowed witn
respect to a qualified electric vehicle that is placed in service after
December 31, 2004.
A qualified electric vehicle is defined as a motor vehicle (1)
that is powered primarily by an electric motor drawing current
from rechargeable batteries, fuel cells, or other portable sources of
electrical current; (2) the original use of which commences with the
taxpayer, and (3) that is acquired for use by the taxpayer and not
for resale. A motor vehicle is defined as any vehicle with at least
four wheels that is manufactured primarily for use on public
streets, roads, and highways (but not including a vehicle operated
exclusively on a rail or rails).
The credit for qualified electric vehicles for any taxable year is
not to exceed the excess (if any) of (1) the regular tax for the tax-
able year reduced by the credits allowable under Subpart A and
sections 27, 28, and 29 of the Code, over (2) the tentative minimum
tax for the taxable year.
The basis of a qualified electric vehicle is reduced by the
amount of the credit that is allowable with respect to the vehicle.
In addition, the Treasury Department is required to promulgate
regulations that provide for the recapture of the credit if the vehi-
cle ceases to be a qualified electric vehicle.
The credit for a qualified electric vehicle is not allowed with
respect to property that is used predominantly outside the United
States or property that is owned or leased by governmental units
or certain tax-exempt organizations. In addition, the credit is not
allowed with respect to the portion of the cost of any property that
is taken into account under section 179.9
Recapture of deduction or credit
The conferees intend that the benefit of the deduction for
qualified clean-fuel vehicle property will be recaptured (Le., includ-
ed in gross income) under the provision only if at any time within
three years after the date that the property is placed m service, the
motor vehicle of which the property is a part is modified so that it
may no longer be propelled by a clean-burning fiiel.10 The amount
• The credit is to equal 10 permit of the excess of (1) the cut of the motor vehicle, over <8 the
cost of such motor vehicle that is taken into account under section 179.
'•The conferees intend that no recapture is to occur under the provision upon the sale or
other disposition (including a disposition I
vehicle, % however, the motor vehicle tf
an allowance for depredation, then the i
r disposition (including a disposition by reason c/snsc<*dentorc4hercesuahy)of thesaotor
do. % however, the motor vehicle ie (or has been) proi>etty of e character thM si eahject to
Uowancefordeprecmtion.thentheruliaofsectsn 1245 exe to apply upon the eels or other
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of the benefit to be recaptured is to be determined as follows: (1) if
the motor vehicle is modified so that it may no longer be propelled
by a clean-burning fuel within one year after it is placed in service,
then 100 percent of the deduction is to be recaptured; (2) if the
motor vehicle is modified so that it may no longer be propelled by
a clean-burning fuel within one year after the close of the period
described in (IX then 67 percent of the deduction is to be recap-
tured; and (8) if the motor vehicle is modified so that it may no
longer be propelled by a clean-burning fuel within one year after
the close of the period described in (2), then 88 percent of the de-
duction is to be recaptured.
The adjusted basis of the property is to be increased by the
amount of the benefit that is recaptured under the provision. If the
property to which the recapture rules apply is of a character that
is subject to an allowance for depreciation, then the additional
basis is to be recovered over the remaining recovery period for the
property beginning with the taxable year of recapture.
Similar recapture rules are to apply to the credit for qualified
electric vehicles (except that the amount of the benefit that is re-
captured is to increase the amount of tax due) and to the deduction
for qualified clean-fuel vehicle refueling property. In the case of
qualified clean-fuel vehicle refueling property, however, recapture
under the provision is to occur only if at any time before the end of
the recovery period for the property, the property is no longer used
predominantly in a trade or business of the taxpayer of dispensing
clean-burning fuel into the fuel tank of a motor vehicle propelled
by the ftoel (or, in the case of property used in the recharging of
electric vehicles, the property is no longer used predominantly in a
trade or business of the taxpayer of recharging motor vehicles pro-
pelled lyy electricity). As described above for clean-fuel vehicle prop-
erty, the amount of the deduction for clean-fuel vehicle refueling
property is to vest ratably over the recovery period for the proper-
ty.
4. INCOME TAX CREDIT FOR ELECTRICITY GENERATED USING CERTAIN
RENEWABLE RESOURCES
Present law
An investment-type tax credit is allowed against income tax li-
ability for investments in property producing energy from certain
specified renewable sources. Tlie nonrefundable credit, which is re-
ferred to as the business energy credit, equals 10 percent of the
cost of qualified solar or geothermal energy property. Solar energy
property that qualifies for this tax credit includes any equipment
that uses solar energy to generate electricity, to heat or cool (or
provide hot water for use in) a structure, or to provide solar process
heat Qualifying geothermal property includes equipment that pro-
duces, distributes, or uses energy derived from a geothermal depos-
it, but in the case of electricity generated geothermal power, only
property used up to (but not including) the transmission stage.
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The business energy credit is a component of the general busi-
ness credit. The general business credit may not exceed for any
taxable year the excess of the taxpayer's net income tax over the
greater of: (1) 25 percent of net regular tax liability above $25,000;
or (2) the tentative minimum tax. Any unused general business
credit generally may be carried back to the three previous taxable
years and carried forward to the subsequent 15 taxable years.
A production-type tax credit is allowed against income tax li-
ability for the production of certain nonconventional fuels. For
1991, the credit amount is equal to $5.35 per barrel of oil or BTU
oil equivalent. (This credit amount is adjusted for inflation.) Quali-
fied niels must be produced from a well drilled, or facility placed in
service, before January 1, 1993, and must be sold before January 1,
2003. Qualified fuels include: (1) oil produced from shale and tar
sands; (2) gas produced from geopressurized brine, Devonian shale,
coal seams, a tight formation, or biomass; and (3) liquid, gaseous, or
solid synthetic fuels produced from coal (including lignite), includ-
ing such fuels when used as feedstocks.
House bill
The House bill provides for a preduction-type credit against
income tax liability for electricity produced from either qualified
wind energy or qualified "closed-loop biomass" facilities. The credit
equals 1.5 cents (adjusted for inflation) per kilowatt hour of elec-
tricity produced from these qualified sources during the 10-year
period after the facility is placed in service. This production credit
is part of the general business credit, subject to the carryforward,
carryback, and the limitation rules of the general business credit
(except that the production credit from closed-loop biomass facili-
ties may not be carried back to a taxable year ending before Janu-
ary 1, 1993, and the production credit from qualified wind energy
facilities may not be carried back to a taxable year ending before
January 1, 1994).
Closed-loop biomass is defined as the use of plant matter on a
renewable basis as an energy source to generate electricity, where
the plants cure grown for the sole purpose of being used to generate
electricity. Accordingly, the credit is not available for the use of
waste materials (including, but not limited to, scrap wood, manure,
and municipal or agricultural waste) to generate electricity. More-
over, the credit is not available to a taxpayer who uses standing
timber to produce electricity.
The credit is proportionately phased out over a three-cent per
kilowatt hour range if the national average price of electricity from
the renewable source exceeds a threshold price of 8 centsper kilo-
watt hour. (This threshold is adjusted for inflation.) Thus, the
credit will not be available if the national average price of electrici-
ty from the renewable source is greater than three cents per kilo-
watt hour above the threshold price.
A facility which has received the business energy credit or the
investment credit is not eligible for the production credit. In addi-
tion, the credit is reduced proportionately for any governmental
grants or subsidized financing received (including the use of tax-
exempt bonds).
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Effective date. — The credit applies to electricity produced by a
qualified closed-loop biomass facility placed in service after Decem-
ber 31, 1992, and before July 1, 1999, and to electricity produced by
a qualified wind energy facility placed in service after December
31, 1993, and before July 1, 1999.
Senate amendment
The Senate amendment is the same as the House bill, except
that: (1) the beginning threshold for the phaseout range for the
credit is the national average price of electricity from the renew-
able source that is attributable to contracts entered into after De-
cember 31, 1989; and (2) the inflation adjustment is based on the
Gross Domestic Product implicit price deflator.
Conference agreement
The conference agreement follows the Senate amendment. In
addition, the conference agreement makes two clarifications. First,
in order to claim the credit, a taxpayer must own the facility and
sell the electricity produced by that facility to an unrelated party.
Accordingly, a public utility which owns and operates a qualified
facility would be able to claim the credit to the extent that the util-
ity ultimately sells the electricity generated to unrelated parties.
Second, the proportional reduction in credit that results when a
taxpayer receives subsidized financing through a governmental
program applies whether the subsidized financing is directly or in-
directly provided. In particular, governmental programs to compen-
sate financial intermediaries for extending low-interest loans to
taxpayers who purchase or construct qualifying facilities are an ex-
ample of subsidized financing.
5. REPEAL OF CERTAIN MINIMUM TAX PREFERENCES RELATING TO OIL
AND GAS PRODUCTION
Present law
Taxpayers who pay or incur intangible drilling or development
costs ("IDCs") in the development of domestic oil or gas properties
may elect either to expense or capitalize these amounts. If an elec-
tion to expense IDCs is made, the taxpayer deducts the amount of
the IDCs as an expense in the taxable year the cost is paid or in-
curred. Generally, if IDCs are not expensed, but are capitalized,
they can be recovered through depletion or depreciation, as appro-
priate; or at the election of the taxpayer, they may be amortized
over a 60-month period.
The difference between the amount of a taxpayer's IDC deduc-
tions and the amount which would have been currently deductible
had IDCs been capitalized and recovered over a 10-year period is an
item of tax preference for the alternative minimum tax ("AMT") to
the extent that this amount exceeds 65 percent of the taxpayer's
net income from oil and gas properties for the taxable year (the
"excess IDC preference"). In addition, for purposes of computing
the adjusted current earnings ("ACE") adjustment of the corporate
AMT, DX3b are capitalized and amortized over the 60-month period
beginning with' the month in which they are paid or incurred.
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Independent producers and royalty owners generally are al-
lowed a deduction for percentage depletion in computing their tax-
able income. A taxpayer's overall deduction for percentage deple-
tion is limited to an amount that is equal to 65 percent of the tax-
payer's pre-depletion taxable income for the taxable year. The
amount by which the depletion deduction exceeds the adjusted
basis of the property is an AMT preference (the "excess percentage
depletion preference"). Corporations must use cost depletion m
computing their ACE adjustment.
A taxpayer other than an integrated oil company is entitled to
an "energy deduction" for certain IDC and depletion items. The
energy deduction is the sum of 75 percent of the portion of the IDC
preference ' ' attributable to qualified exploratory costs and 15 per-
cent of the remaining IDC preference plus 50 percent of the mar-
ginal production depletion preference.12 The energy deduction may
not reduce the taxpayer's alternative minimum taxable income by
more than 40 percent.
House bill
For taxpayers other than integrated oil companies, the House
bill repeals (1) the excess IDC preference and (2) the excess percent-
age depletion preference for oil and gas. The repeal of the excess
IuC preference, however, may not result in more than a 40 percent
reduction (30 percent for taxable years beginning in 1993) in the
amount of the taxpayer's alternative minimum taxable income
computed as if the present-law excess IDC preference had not been
repealed.
In addition, for corporations other than integrated oil compa-
nies, the House bill repeals the ACE adjustments 19 for (1) IDCs
paid or incurred in taxable years beginning after December 31,
1992, and before January 1, 1998, and (2) percentage depletion for
oil and gas.
The House bill also suspends the minimum tax energy deduc-
tion for taxable years beginning after December 31, 1992, and
before January 1, 1998.
Effective date. — Except as provided above regarding the repeal
of the ACE treatment of IDCs, the House bill applies to taxable
years beginning after December 31, 1992, and before January 1,
1998.
Senate amendment
The Senate amendment is the same as the House bill, except
for the effective date.
Effective date. — Except as provided below, the Senate amend-
ment applies to taxable years beginning after December 31, 1992.
In the case of the ACE treatment of IDCs, the Senate amendment
I ■ The IDC preference is the amount by which the taxpayer'! alternative minimum taxable
income would be reduced if it were computed without regard to the excess IDC preference and
the ACE IDC adjustment
II The marginal production depletion preference is the amount by which the taxpayer's altar-
native minimum taxable income would be reduced if it were computed without regard to the
excess depletion preference and the ACE depletion adjustment related to marginal property.
'•Under the provision, the adjustment described m sec. 56<gX4XCXU (with reepect to the dawl-
lowance of deductions for items not deductible for earnings and profits purposes) will not apply
to percentage depletion for oil and gas.
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applies to IDGspaid or incurred in taxable years beginning after
December 81, 1992.
Conference amendment
Tbe conference agreement fellows the Senate Amendment
6. DETERMINATION OP INDEPENDENT OIL AND GAS PRODUCERS STATUS
Present law
Under present law, persons owning economic interests in oil
and gas producing properties may deduct an allowance for deple-
tion m computing taxable income. Independent producers and roy-
alty owners are permitted to claim the greater of cost or percent-
age depletion on the production of up to 1,000 barrels per day of
erode oil and natural gas produced from domestic sources. The per-
centage depletion allowance for oil and gas is computed as a fixed
percentage (Le., 15 percent) of the taxpayer's gross income from the
oil or gas property, subject to net income and taxable income limi-
tations.
Also under present law, taxpayers are permitted the option to
elect to deduct intangible drilling and development costs (BDCb) in
the case of domestically located oil and gas wells (sec. 268(c)). For
taxpayers other than independent oil and gas producers (Le., inte-
grated producers), however, 80 percent of the otherwise deductible
amount of IDOs must be capitalized and recovered over a 60-month
period.
Present law also provides a deduction from alternative mini-
mum taxable income for a portion of a taxpayer's AMT preferences
and adjustments related to EDCb and percentage depletion from
marginal properties. This AMT energy deduction is available to in-
dependent producers, but not to integrated companies.
A producer of oil or natural gas is considered an independent
producer unless that person (or a related person) also is engaged in
a significant amount of either retailing or refining activity. A tax-
payer meets the retailing exception (sec. 613A(dX2)), and is thus not
considered an independent producer, if the taxpayer directly, or
through a related person, sells oil or natural gas (excluding bulk
sales of such items to commercial or industrial users) or any prod-
uct derived from oil or natural gas (excluding bulk sales of aviation
fuels to the Department of Defense) through a retail outlet operat-
ed by the taxpayer (or a related person).14 The retailer exception
does not apply to a taxpayer with combined gross receipts from
retail sales of oil, natural gas, or petroleum products for a taxable
year of not more than $5 million.
A taxpayer is treated as a refiner, and thus is excluded from
independent producer status, if the taxpayer or a related person
engages in the refining of crude oil and on any day during the tax-
14 In addition, amice by the tnpmr to any pereon (1]
tract with the taxpayer to a— a Uaaeniarh, trade name,
er in marketing the oil, natural gam. or product derived tnerefrom, or GO given autnortty, pureu-
amant or contract with the taxpayer Cor related poretm) to occupy any retail outlet
, or controlled by the taxpayer, are treated a* retail ealee made by the taxpayer
therefrom, or (2) given authority, pureu-
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able year the refinery runs of the taxpayer (and related persons)
exceed 50,000 barrels.
For purposes of the retailer and refiner exceptions, a person is
a related person with respect to the taxpayer if a significant owner-
ship interest (i.e., 5 percent or more) in either the taxpayer or such
person is held by the other, or if a third person has a significant
ownership interest in both the taxpayer and such person.
House bill
No provision.
Senate amendment
The Senate amendment amends the operation of both the re-
tailer and refiner exceptions in determining whether a taxpayer is
an independent oil and gas producer. With respect to the retailer
exception, the Senate amendment permits gross receipts from
retail sales of natural gas and products derivedtherefrom oy a reg-
ulated public utility to be disregarded in determining whether a
taxpayer is a retailer. For this purpose, a regulated public utility is
as defined in section 7701(aX33) of the Code, except that the compa-
ny must generate at least one-half of its gross income for the tax-
able year from sources described in subparagraphs (A), (B), and (Q
of that section.
Also under the Senate amendment, for purposes of determin-
ing significant refining activity under the refining exception, the
requirement that a refinery run in excess of 50,000 barrels occur
on any day during the taxable year is eliminated. Instead, the bill
requires that the taxpayer's average daily refinery runs for the
taxable year exceed 50,000 barrels in order not to treat the taxpay-
er as an independent producer under the refiner exception.
Effective date.— Taxable years beginning after December 31,
1992.
Conference agreement
The conference agreement does not include the Senate amend-
ment.
7. BU8INE8S ENERGY TAX CREDITS FOR SOIAR AND OEOTHERMAL
PROPERTY
Present law
Nonrefundable business energy tax credits are allowed for 10
percent of the cost of qualified solar and geothermal energy proper-
ty (Code sec. 48(a)). Solar energy property that qualifies for the
credit includes any equipment mat uses solar energy to generate
electricity, to heat or cool (or provide hot water for use in) a struc-
ture, or to provide solar process heat. Qualifying geothermal prop-
erty includes equipment that produces, distributes, or uses energy
derived from a geothermal deposit, but, in the case of electricity
generated by geothermal power, only up to (but not including) the
electrical transmission stage. 1 5
11 For purpooae of the credit, a geothermal depoeit io defined m a deeaoetk floothenea
voir coneletiag of natural heat which ie etored in rocke or in an aojneone liquid or uoner,
er or not under preeeure (eec 613(e)(0).
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The business energy tax credits expired with respect to proper-
ty placed in service after June 30» 1992.
The business energy tax credits are components of the general
business credit (sec. 38(bXl)). The business energy tax credits, when
combined with all other components of the general business credit,
generally may not exceed for any taxable year the excess of the
taxpayer's net income tax over the greater of (1) 25 percent of net
regular tax liability above $25,000 or (2) the tentative minimum
tax. An unused general business credit generally may be carried
back 3 years and carried forward 15 years.
House bill
The House bill permanently extends the credits for qualified
investments in solar and geothermal property.
Effective date.— July 1, 1992.
Senate amendment
The Senate amendment is the same as the House bill, except
that it adds a credit equal to 10 percent of the cost of qualified
ocean thermal properly placed in service by a taxpayer after June
30, 1992. For this purpose, qualified ocean thermal property is
equipment which converts ocean thermal energy to usable energy.
Qualified ocean thermal property is property located at either of
two locations designated ay the Secretary of Treasury after consul-
tation with the Secretary of Energy.
Conference agreement
The conference agreement follows the House bill.
8. TREATMENT OF NUCLEAR DECOMMISSIONING FUNDS
Present law
A taxpayer that is required to decommission a nuclear power
plant may elect to deduct certain contributions that are made to a
nuclear decommissioning fund. A nuclear decommissioning fund is
a segregated fund the assets of which are to be used exclusively to
pay nuclear decommissioning costs, taxes on fund income, and cer-
tain administrative costs. The assets of a nuclear decommissioning
fund that are not currently required for these purposes must be in-
vested in (1) public debt securities of the United States, (2) obliga-
tions of a State or local government that are not in default as to
principal or interest, or (3) time or demand deposits in a bank or
an insured credit union located in the United States. These invest-
ment restrictions are the same restrictions which apply to Black
Lung trusts that are established under section 501(cX21) of the
Code.
The income of a nuclear decommissioning fund is subject to tax
at the highest rate of tax that applies to corporations (84 percent
under present law).
House bill
The House bill repeals the preeent-law investment restrictions
that apply to nuclear decommissioning funds. In addition, the
House mil reduces the rate of tax imposed on the income of nude-
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ar decommissioning funds to 22 percent for taxable yean beginning
in 1994 and 1995 and to 20 percent for taxable yean beginning
after 1995.
Effective date.— The provision of the House bill that repeals
the investment restrictions of present law is effective for taxable
years beginning after December 31, 1992. The tax rate of 22 per-
cent is effective for taxable yean beginning in 1994 and 1995 and
the tax rate of 20 percent is effective for taxable yean beginning
after 1995.
Senate amendment
The Senate amendment is the same as the House bill, except
that the Senate amendment does not reduce the rate of tax im-
posed on the income of nuclear decommissioning funds.
Conference agreement
The conference agreement follows the House bill.
9. BINDING CONTRACT BULB FOR NONCONVENTIONAL FUELS
PRODUCTION CREDIT
Present law
Nonconventional fuels are eligible for a production credit equal
to $3 per barrel or Btu oil barrel equivalent.16 (The credit amount
generally is adjusted for inflation, except for gas produced from a
tight formation.) Qualified fuels must be produced domestically
from a well drilled, or a facility placed in service, before January 1,
1993. The production credit is available for qualified fuels sold to
unrelated persons before January 1, 2003.
Qualified fuels include (1) oil produced from shale and tar
sands, (2) gas produced from geopressured brine, Devonian shale,
coal seams, a tight formation, or biomass (i.e., any organic material
other than oil, natural gas, or coal (or any product thereof), and (3)
liquid, gaseous, or solid synthetic fuels produced from coal (includ-
ing lignite), including such fuels when used as feedstocks.
House bill
Under the House bill, a facility that produces gas from biomasB
or produces liquid, gaseous, or solid synthetic fuels from coal (in-
cluding lignite) will qualify for the credit if it is placed in service
before January 1, 1996, pursuant to a written binding contract in
effect on December 31, 1992.
Senate amendment
No provision.
Conference agreement
The conference agreement follows a modified version of the
House bill. Under the conference agreement, a facility that pro-
duces gas from biomass or produces liquid, gaseous, or solid syn-
thetic fuels from coal (including lignite) generally will be treated as
1 'AtamkMl •£■**»>«* inanity mm that anaunt af tha qualify** foal whkfc aaa a
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beinp placed in service before January 1, 1998, if it is placed in
service by the taxpayer before January 1, 1997, pursuant to a writ-
ten binding contract in effect before January 1, 1996. In the case of
a facility that produces coke or coke gas, however, this provision of
the conference agreement applies only if the original use of the fa-
cility commences with the taxpayer.
If a facility that qualifies for the above-stated binding contract
rule is originally placed in service after December 31, 1992, produc-
tion from the facility may qualify for the credit if sold before Janu-
ary 1, 2008.
10. TAX-EXEMPT BONDS FOB PACILITIXS fOB THS LOCAL FURNISHING OP
KLBCnUdTY
Present law
Interest on certain private activity bonds is exempt from Fed-
eral regular individual and corporate income tax. However, issu-
ance of most such bonds is subject to annual State private activity
bond volume limitations. One type of tax-exempt private activity
bond is an exempt-facility bond to finance facilities for the local
furnishing of electricity.
The use of exempt-facility bonds for this purpose is limited to
financing of facilities for electric systems the service area of which
does not exceed either (1) two contiguous counties or (2) a city and
a contiguous county. The local furnishing exception does not apply
to bonds for facilities that are part of an integrated system to
supply electricity to a region.
House bill
The House bill authorizes the Federal Energy Regulatory Com-
mission ("FERC") to order electric utilities (including those qualify-
ing under the local furnishing exception) to provide transmission
("wheeling") services to other parties that generate electricity.
These FERC orders also may require the utilities to enlarge their
transmission systems.
The House bill further provides that the local furnishing ex-
ception is not violated by wheeling activities conducted pursuant to
such FERC orders if no tax-exempt bend financing is provided for
the non-local furnishing activities.
Effective dates. — Date of enactment.
Senate amendment
No provision.
Conference agreement
The conference agreement follows the House bill, with techni-
cal clarifications. First, the conferees wish to clarify that the deter-
mination of whether a facility which is subject to a FERC wheeling
order is used in local furnishing activities is to be made on the
basis of the facts and circumstances of each case, as under present
law.
Second, the escrow requirement for defeasance of outstanding
bonds in the event of non-local-farnishing uses of bond-financed fa-
cilities pursuant to the FERC orders is modified to clarify its appli-
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cation to partial uses. Finally, the conferees wish to clarify their
intent that this escrow requirement is to apply only to circum-
stances involving disqualification of outstanding bonds as a result
of the FERC orders authorized under the conference agreement; no
inference is intended as to the appropriate treatment of bonds the
interest on which becomes taxable in other circumstances.
11. EXPAND EXCEPTION TO PRO RATA DISALLOWANCE OF BANK
INTEREST EXPENSE RELATED TO INVESTMENT IN TAX-EXEMPT BONDS
Present law
Banks and other financial institutions generally are denied a
deduction for the portion of their interest expense (e.g., interest
paid to depositors) that is attributable to investments in tax-
exempt bonds acquired after August 7, 1986. This disallowance is
computed using a pro rata formula that compares the institution's
average adjusted basis in tax-exempt bonds acquired after that date
with the average adjusted basis of all assets of the institution.
An exception to this pro rata disallowance rule is permitted for
governmental bonds and qualified 501(cX3) bonds issued by or on
behalf of governmental units that issue no more than $10 million
of such bonds during a calendar year.
House bill
The House bill increases from $10 million to $20 million the
amount of bonds that an issuer may issue in a year without becom-
ing ineligible for this exception to the interest expense deduction
pro rata disallowance rule.
Effective date.— Bonds issued after December 31, 1992.
Senate amendment
No provision.
Conference agreement
The conference agreement does not include the House bill pro-
vision.
12. TAX-EXEMPT BOND FINANCING OF CERTAIN HYDRO-ELECTRIC
GENERATION FACILITIES
Present law
Interest on certain private activity bonds is exempt from Fed-
eral regular individual and corporate income taxes. However, issu-
ance of the bonds is subject to annual State private activity bond
volume limitations. One type of tax-exempt private activity bond is
an exempt-facility bond. Exempt-facility bonds are bonds the pro-
ceeds of which are used to finance the following: airports; docks
and wharves; mass commuting facilities or high-speed intercity rail
facilities; water, sewage, solid waste, or hazardous waste disposal
facilities; facilities for the local furnishing of electricity or gas;
local district heating or cooling facilities; and certain low-income
rental housing projects.
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HotutbUl
No provision.
Senate amendment
The Senate amendment authorizes a new type of exempt-facili-
ty bond for environmental enhancement of hydroelectric fenera-
tion facilities. At least 80 percent of the net proceeds of each bond
issue must be used to finance property for the promotion of fisher-
ies or other wildlife resources. Qualifying expenditures must be re-
lated to a governmentally owned and operated hydroelectric facili-
ty and may not include amounts which increase or allow an in-
crease in the capacity of the existing generation equipment. Issu-
ance of these bonds is not subject to the annual State private activ-
ity bond volume limitations.
Effective date. — Bonds issued after date of enactment.
Conference agreement
The conference agreement follows the Senate amendment.
13. BONDS FOB HIGH-SPEED INTERCITY BAIL FACILITIES
Present law
High-speed intercity rail facilities qualify for tax-exempt bond
financing if trains operating on the facility carry passengers and
their baggage at average speeds in excess of 150 miles per hour be-
tween stations. Such facilities need not be governmentally-owned,
but the owner must irrevocably elect not to claim depreciation or
any tax-credit with respect to bond-financed property.
Twenty-five percent of each bond issue for high-speed intercity
rail facilities must receive an allocation from a State private activi-
ty bond volume limitation. If facilities are located in two or more
States, this requirement must be met on a State-by-State basis for
the financing of facilities located in each State.
House bill
No provision.
Senate amendment
The Senate amendment repeals the requirement that 25 per-
cent of each high-speed intercity rail facility bond issue receive an
allocation of a State private activity bond volume limitation if the
bond-financed property is governmentally owned.
Effective date.— Bonds issued after December 31, 1993.
Conference agreement
The conference agreement does not include the Senate amend-
ment.
14. PARTIAL EXCISE TAX EXEMPTION FOR CERTAIN GASOLINE MIXTURES
WITH ETHANOL OB OTHER ALCOHOL
Present law
Federal excise taxes generally are imposed on gasoline and
special motor fuels used in highway transportation and by motor-
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boats (14.1 cents per gallon). A Federal excise tax also is imposed
on dieeel fuel used in highway transportation (20.1 cents per
gallon).
A 5.4-cents-per-gallon excise tax exemption is allowed from the
excise taxes on gasoline, dieeel fuel, ana medal motor fuels for
mixtures of any of these fuels with at least 10-percent ethanol. A ft-
cents-per-gallon excise tax exemption is allowed for mixtures with
at least 10-percent alcohol that is other than ethanol. Because
blended fuels are generally 10 percent alcohol, a reduction of 5.4 or
6 cents per gallon of gasohol or other blend is equivalent to a subsi-
dy of 64 or 60 cents per gallon of qualifying alcohol.
For purposes of the partial excise tax exemption, the term al-
cohol includes methanol and ethanol, but does not include alcohol
produced from petroleum, natural gas, or coal (including peat), or
alcohol with a proof less than 190.
The partial excise tax exemption is scheduled to expire after
September 80, 2000.
House bill
No provision.
Senate amendment
The Senate amendment modifies the partial excise tax exemp-
tion for gasoline that is mixed with ethanol or other alcohol to
extend its application to 5.7- or 7.7-percent alcohol blends. The cur-
rent 5.4- ana 6-cents-per-gallon exemptions for alcohol mixtures are
pro-rated to maintain the subsidy level of 54 or 60 cents per gallon,
respectively, for ethanol or other alcohol that is mixed with gaso-
line.
Effective date. — Gasoline removed or entered after September
80, 1992.
Conference agreement
The conference agreement follows the Senate amendment. The
conferees wish to reiterate that the purpose of this provision, as
stated in the legislative history of the Senate amendment, is to pro-
vide taxpayers with greater flexibility to mix alcohol with gasoline
to meet the mandated targets of the Clean Air Act
16. APPLICATION OP ALCOHOL FUELS TAX CREDIT AGAINST ALTERNATIVE
MINIMUM TAX
Present law
An income tax credit is provided for alcohol used in certain
mixtures of alcohol and gasoline (e£ ., gasohol), dieeel ftiel, or any
other liquid fuel which is suitable tor use in an internal combus-
tion engine if the mixture is sold by the producer in a trade or
business for use as a fuel or is so used by the producer (pec. 40X
The credit also is permitted for alcohol (e.g.. qualified methanol
fuel) which is not in a mixture with gasoline, dieeel, or other liquid
fuel which is suitable for use in an internal combustion engine,
provided that the alcohol is used by the taxpayer as a ftielln a
trade or business or is sold by the taxpayer at retail to a person
and placed in the ftiel tank of the purchaser's vehicle. The credit
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generally is equal to 60 cents for each gallon of alcohol (at least 190
proof) used by the taxpayer in the production of a qualified mix-
ture or as a fuel; the credit generally is 45 cents per gallon of 150
to 190 proof alcohol fuel.17 The credit is scheduled to expire with
respect to sales or uses after December 31, 2000.
In addition, a 10-cents-per-gallon income tax credit is allowed
to eligible small ethanol producers. For this purpose, a small etha-
nol producer is any fuel ethanol producer with productive capacity
to produce less than 30 million gallons of alcohol per year. This
credit is limited to the first 15 million gallons of ethanol for use as
a fuel produced per year by such a small producer.
The amount of any taxpayer's alcohol fuels tax credit is re-
duced to take into account any benefit received with respect to the
alcohol under the special reduced excise tax rates for alcohol fuel
mixtures of alcohol fuels. For purposes of the credit (other than
with respect to the determination of the productive capacity of an
ethanol producer), the term alcohol includes methanol and ethanol,
but does not include alcohol produced from petroleum, natural gas,
or coal (including peat), or alcohol with a proof less than 150.
The alcohol fuels tax credit is a component of the general busi-
ness credit (sec. 38(bXD). The alcohol fuels tax credit, when com-
bined with all other components of the general business credit, gen-
erally may not exosed for any taxable year the excess of the tax-
payer's net income over the greater of (I) 25 percent of net regular
tax liability above $25,000 or (2) the tentative minimum tax. An
unused general business credit generally may be carried back 3
years and carried forward 15 years.
House bill
No provision.
Senate amendment
The Senate amendment provides that taxpayers claiming the
alcohol fuels tax credit may utilize that credit to offset a portion of
their alternative minimum tax liability. Specifically, the bill allows
the alcohol fuels credit to offset up to 50 porcent of a taxpayer's
pre-credit alternative minimum tax.18 As under present law, any
unused credit would be available for a 3-year carryback and a lb-
year carryover.
Effective date.— Taxable years beginning after September 30,
1992. However, the Senate amendment is limited to alcohol fuels
credits actually generated in those years. That is, the Senate
amendment does not allow an alcohol fuels credit generated in a
taxable year beginning on or before September 80, 1992, and car-
ried forward to a taxable year beginning after September 30, 1992,
to offset alternative minimum tax in that later year. Similarly, it
does not allow an alcohol fuels tax credit generated in a taxable
year beginning after September 30, 1992, to be carried back and
"fo the caee afro credit with reepoct to any eiooholwh^
nOoB applies initead of the 60-cent-pergsllon rate, and a rate of 40 oants par gallon applies
fiMteaii oftho 4Sosnt?srgsUon rate {esc 40(h)).
»• Oilier components a/thsfsoeral business credit wooU irt be permitted to offset IT
Bub* minimum tax under tbs bilL
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used to reduce alternative minimum tax in a taxable year begin-
ning on or before September 30, 1992.
Conference agreement
The conference agreement does not include the Senate amend-
ment.
16. ALLOWANCE OF CREDIT FOR AMOUNTS TRANSFERRED FROM THB
TRANS-ALASKA PIPELINE LIABILITY FUND INTO THE OIL SPILL LIABIL-
ITY TRUST FUND
Present Law
The Trans-Alaska Pipeline Liability Trust Fund ('TAPS
Fund") was established by the Trans-Alaska Pipeline System Au-
thorization Act The TAPS Fund was financed by a fee of five cents
per barrel on oil that was loaded on a vessel from the pipeline.
Amounts in the TAPS Fund are to be transferred to the Qu Spill
Liability Trust Fund ("Oil Spill Fund") after all outstanding claims
against the TAPS Fund have been resolved. At the time of the
transfer, contributors to the TAPS Fund are to be provided a credit
for amounts paid to the TAPS Fund, and interest accrued on these
amounts, prior to January 1, 1987. Each contributor's credit cannot
exceed its pro rata share of such amounts (i.e., the contributions
and interest prior to January 1, 1987) transferred from the TAPS
Fund into the Oil Spill Fund.
The TAPS Fund credit is available only against the excise tax
on petroleuum products that is used to finance the Oil Spill Fund.
Under present law, that excise tax is not applicable after December
31, 1994, or if the unobligated balance in the Oil Spill Fund exceeds
$1 billion.
House bill
No provision.
Senate amendment
The Senate amendment permits taxpayers to use TAPS credits
against regular corporate income taxes to the extent that the cred-
its may not be used against the oil spill excise tax by reason of the
lapse of that tax. The TAPS credits used against corporate income
taxes cannot be carried back to taxable years before the lapse
occurs.
Effective date. — Date of enactment
Conference agreement
The conference agreement, follows the Senate amendment
with two modifications. First, the agreement limits the aggregate
income tax credits and petroleum excise tax credits for any taxpay-
er to cm amount not exceeding the petroleum excise tax credits
that could have been claimed between December 81, 1989, and the
date that the petroleum excise tax expires by lapse of time (cur-
rently scheduled for December 31, 1994). The limit is calculated as-
suming that (i) the balance of the Oil Spill Fund did not exceed $1
billion during that period, and (ii) the amounts in the TAPS Fund
actually transferred to the Oil Spill Fund were instead transferred
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on January 1, 1990. This limitation is in addition to the present-law
limitations on a contributor's credit. Second, the agreement pro-
vides for transfers of funds from the Oil Spill Fund to the general
fund equal to the amount of the TAPS credits claimed as income
tax credits; however, these transfers are not to be made to the
extent they would reduce the balance of the Oil Spill Fund below
$1 billion.
B. Revenue-Offset Provisions
1. INCREASE BASE TAX HATE ON OZONE-DEPLETING CHEMICALS
Present law
An excise tax is imposed on certain ozone-depleting chemicals.
The amount of tax generally is determined by multiplying the base
tax rate applicable for calender year by ozone-depleting factor as-
signed to the chemical. Certain chemicals are subject to reduced
rateof tax for years prior to 1994.
Between 1992 and 1995 there are two base tax rates applicable,
depending upon whether the chemicals were initially listed in the
Omnibus Budget Reconciliation Act of 1989 or whether they were
newly listed in the Omnibus Budget Reconciliation Act of 1990. The
base tax rate applicable to initially listed chemicals is $1.67 por
pound for 1992, $2.66 per pound for 1993 and 1994, and an addition-
al 45 cents per pound per year for each year thereafter. The base
tax rate applicable to newly listed chemicals is $1.87 per pound for
1992, $1.67 per pound for 1998, $8.00 per pound for 1994, $8.10 per
pound for 1995, and an additional 45 cents per pound per year for
each year thereafter.
House bill
Base tax amount. — The House increases and applies the same
base tax amount to both initially listed chemicals and newly listed
chemicals. The new base tax amount would be $1.85 per pound in
1992, $2.75 per pound in 1998, $8.65 per pound in 1984, $4.55 per
pound in 1995. For years after 1995, the base tax amount would in-
crease by 45 cents por pound por year.
Rigid foam insulation and halons.— The House bill reduces the
applicable percentage for certain ozone-depleting chemicals used in
rigid foam insulation, and certain halons. In The case of rigid foam
insulation the applicable percentage is reduced from 15 percent to
13.5 percent for 1992 and from 10 percent to 9.6 percent in 1998.
For Halon-1211 the applicable percentage would be 4.5 percent for
1992 and 3.0 percent for 1993. For Halon-1301 the applicable per-
centage would be 1.4 percent for 1992 and 0.9 percent for 1998. For
Halon-2402 the applicable percentages would be 2.3 percent for
1992 and 1.5 percent for 1993.
Medical sterilants.— The House bill provides for a reduced rate
of tax for certain ozone-depleting chemical used as medical steri-
lants for 1992 and 1993. The applicable percent for such chemicals
for 1992 is 90.3 percent and is 60.7 percent for 1993.
Effective date.— The provision is effective for taxable chemicals
sold or used on or after July 1, 1992. Floor stocks taxes are imposed
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on taxed chemicals held on the effective dates of changes in the tax
rate.
Senate amendment
The Senate amendment is the same as the House hill except
for the effective date. The Senate amendment is effective for tax-
able chemicals sold or used on or after October 1, 1992. Floor stocks
taxes are imposed on taxed chemicals held on the effective dates of
changes in the base tax rate.
Conference agreement
The conference agreement follows the House bill and Senate
amendment with several modifications.
Baee tax amount— The conference agreement increases and
applies the same base tax amount to both initially listed chemicals
and newly listed chemicals. The new base tax amount will be $8.85
per pound in 1993, $4.35 per pound in 1994, and $5.35 per pound in
1995. For years after 1995, the base tax amount will increase by 45
cents per pound per year as under present law.
Rigid foam insulation and halms.— The House bill reduces the
applicable percentage for certain ozone-depleting chemicals used in
rigid foam insulation, and certain halons. In the case of rigid foam
insulation the applicable percentage is reduced from 10 percent to
7.46 percent in 1993. For Halon-1211, the new applicable percent-
age is 2:49 percent for 1993. For Halon-1301, the new applicable
percentage is 0.75 percent for 1993. For Hakm-2402, the new appli-
cable percentage is 1.24 percent for 1993.
Medical sterilants and propellants for metered doee inhaler*. —
The conference agreement provides for a reduced rate of tax for
certain ozone-depleting chemicals used as medical sterilants for
1993 and for ozone-depleting chemicals used as propellants for me-
tered dose inhalers for years after 1992. The reduced rate of tax is
$1.67 per pound for qualifying chemicals.
Metered dose inhalers are aerosol devices that deliver precise-
ly-measured doses of therapeutic drugs directly to the lungs. Such
devices are used primarily for the treatment of asthma and chronic
obstructive pulmonary diseases, including chronic bronchitis and
emphysema.
Methyl chloroform.— The conference agreement provides for a
separate rate of tax for methyl chloroform for sales and uses in
1993. The rate of tax applicable for 1993 is determined by multiply-
ing the base tax amount applicable for the calendar year by the
ozone-depleting factor assigned to methyl chloroform, and multiply-
ing this result by 63.02 percent Thus, the rate of tax applicable for
methyl chloroform for 1993 is the base tax amount of $3.35 per
pound, multiplied by the ozone-depleting factor for methyl chloro-
form of 0.1, multiplied by 0.6302 for a total of $0,211 per pound.
Effective date.— The provision is effective for taxable chemicals
sold or used on or after January 1, 1993. Floor stocks taxes are im-
posed on taxed chemicals held on the effective dates of ffh^tig— in
the base tax amount.
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2. DENY DEDUCTION FOR CLUB DUBS
Present law
No doduction is permitted for dub dues unless the taxpayer es-
tablishes that his or hers use of the club was primarily for the fur-
therance of the taxpayer's trade or business and the specific ex-
pense was directly related to the active conduct of that trade or
business. No deduction is permitted for an initiation or similar fee
that is payable only upon joining a club if the useful life of the fee
extends over more than one year. Such initiation fees are nonde-
ductible capital expenditures.19
Howe bill
No provision.
Senate amendment
Under the Senate amendment, no deduction is permitted for
club dues. This rule applies to all types of clubs: business, social,
athletic, luncheon, or sporting clubs. Specific business expenses
(e.g., meals) incurred at a club would be deductible only to the
extent they otherwise satisfy present-law standards for deductibil-
ity.
Effective date. — The provision is effective for club dues paid
after tne date of enactment.
Conference agreement
The conference agreement does not include the Senate amend-
ment. (However, the conference agreement on H.R. 11 includes the
Senate amendment.)
3. REQUIRE REPORTING OF TAXPAYER IDENTIFICATION NUMBERS OF
PARTIES IN SELLER-FINANCED MORTGAGE TRANSACTIONS
Present law
Taxpayers are generally allowed an itemized deduction from
adjusted gross income for the amount of qualified residence inter-
est paid. If qualified residence interest is paid to an individual, the
name and address (but not the taxpayer identification number 80)
of the interest recipient must be reported on Schedule A of the
payor's tax return.
Individuals receiving taxable interest in excess of $400 are re-
quired to report the amounts received and the names (but not the
addresses or taxpayer identification numbers) of the payors on
Schedule B of the payee's tax return.
House bill
The House bill provides that if any taxpayer claims a deduc-
tion for qualified residence interest on any seller-provided financ-
ing, such taxpayer (the buyer) shall include on his or her tax
return the name, address, and taxpayer identification number of
»• Kenneth D. Smith, 24 TCM 899 (1986).
"An individual's taxpayer identification number is aanarally that individual's Social Securi-
ty i — ~*~~-
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the person (the seller) to whom the interest 1b paid or accrued. In
Seneral, this information must be furnished on Schedule A of the
uyer's tax return for every year in which the buyer deducts this
interest
The House bill further provides that if any person receives or
accrues interest from seller-provided financing, such person (the
seller) shall include on his or her tax return the name, address,
and taxpayer identification number of the person (the buyer) from
whom the interest is received or accrued. In general, this informa-
tion must be furnished on Schedule B of the seller's tax return for
every year in which the seller is required to include this interest in
income.
If any person involved in seller-provided financing is required
to include on his or her tax return the taxpayer identification
number of another person, such other person is required to ftirnish
his or her taxpayer identification number to such person. Informa-
tion would not be required to be reported under this provision to
the extent it would be duplicative of existing information repenting
requirements.
Failure to meet the requirements for information reporting de-
scribed above are subject to information reporting penalties under
section 6728. In general, these penalties are $50 for each failure.
Effective date. — The provision is effective for taxable years be-
ginning after December 31, 1991.
Senate amendment
No provision.
Conference agreement
The conference agreement follows the House bill. The confer-
ees anticipate that all parties to real estate closings will make
every effort to inform both buyers and sellers of the requirements
of this provision, and will also facilitate (to the maximum extent
possible) the exchange of taxpayer identification numbers between
buyers and sellers.
4. EXPANSION OF 46-DAY INTEREST-FREE PERIOD FOR CERTAIN REFUNDS
Present law
No interest is paid by the Government on a refund arising
from an income tax return if the refund is issued by the 45th day
after the later of the due date for the return (determined without
regard to any extensions) or the date the return is filed (sec
6611(e)).
There is no parallel rule for refunds of taxes other than
income taxes (i.e., employment, excise, and estate and gift taxes),
for refunds of any type of tax arising from amended returns, or for
claims for refunds of any type of tax.
If a taxpayer files a timely original return with respect to any
type of tax and later files an amended return claiming a reftind,
and if the IRS determines that the taxpayer is due a refund on the
basis of the amended return, the IRS will pay the reftind with in-
terest computed from the due date of the original return.
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House bill
No interest is to be paid by the Government on a refund aris-
ing from any type of original tax return if the refund is issued by
the 45th day after the later of the due date for the return (deter-
mined without regard to any extensions) or the date the return is
filed.
A parallel rule applies to amended returns and claims for re-
funds: if the refund is issued by the 45th day after the date the
amended return or claim for refund is filed, no interest is to be
paid by the Government for that period of up to 45 days (interest
would continue to be paid for the period from the due date of the
return to the date the amended return or claim for refund is filed).
If the IRS does not issue the refund by the 45th day after the date
the amended return or claim for refund is filed, interest would be
paid (as under present law) for the period from the due date of the
original return to the date the IRS pays the refund.
A parallel rule also applies to IRS-initiated adjustments
(whether due to computational adjustments or audit adjustments).
With respect to these adjustments, the IRS is to pay interest for 45
fewer days than it otherwise would.
Effective date. — The extension of the 45-day processing rule is
effective for returns required to be filed (without regard to exten-
sions) on or after July 1, 1992. The amended return rule is effective
for amended returns and claims for refunds filed on or after July 1,
1992 (regardless of the taxable period to which thev relate). The
rule relating to IRS-initiated adjustments is applicable to refunds
paid on or after July 1, 1992 (regardless of the taxable period to
which they relate).
Senate amendment
No provision.
Conference agreement
The conference agreement does not include the House bill pro-
vision. (However, the conference agreement on H.R. 11 includes the
House bill provision (with a different effective date).)
5. ACCESS TO TAX INFORMATION BY THE DEPARTMENT OF VETERANS
AFFAIRS
Present law
The Internal Revenue Code prohibits disclosure of tax returns
and return information of taxpayers, with exceptions for author-
ized disclosure to certain Governmental entities in certain enumer-
ated instances (Code sec. 6103). Unauthorized disclosure is a felony
punishable by a fine not exceeding $5,000 or imprisonment of not
more than five years, or both (sec. 7213). An action for civil dam-
ages also may be brought for unauthorized disclosure (sec. 7431).
Among the disclosures permitted under the Code is disclosure
to the Department of Veterans Affairs (DVA) of self-employment
tax information and certain tax information supplied to the IRS
and SSA by third-parties. Disclosure is permitted to assist DVA in
determining eligibility for, and establishing correct benefit
amounts under, certain of its needs-based pension and other pro-
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grams (sec 6108(lX7Xviii)). The income tax returns filed by the vet-
erans themselves are not disclosed to DVA.
The DVA disclosure provision expired after September 80,
1992.
House bill
The House bill extends the authority to disclose tax informa-
tion to the DVA for five years.
Effective date.— The DVA disclosure provision is effective Octo-
ber 1, 1992, and expires after September 30, 1997.
Senate amendment
No provision.
Conference agreement
The conference agreement does not include the House bill pro-
vision.
6. DEDUCTION FOR MOVING EXPENSES
Present law ~ \
An employee or self-employed individual may deduct from
gross income certain expenses incurred as a result of moving to a
new residence in connection with beginning work at a new loca-
tion. For a taxpayer to claim a moving expense deduction, the new
principal place of work has to be at least 85 miles farther from his
or her former residence than was the former principal place of
work (or his or her former residence, if he or she has no former
place of work).
House bill
No provision.
Senate amendment
The Senate amendment increases the mileage threshold for the
moving expense deduction to 66 miles.
Effective date.— Taxable years beginning after December 81,
1992.
Conference agreement
The conference agreement does not include the Senate amend-
ment.
7. PERCENTAGE DEPLETION DEDUCTION FOB MEBCURY, ASBESTOS,
UBANIUM, AND LEAD
Present law
Taxpayers are allowed to deduct a reasonable allowance for de-
pletion mating to the acquisition and certain related costs of
mines or other hard mineral deposits. The depletion deduction for
any taxable year is calculated under either the cost depletion
method or the percentage depletion method, whichever results in
the greater allowance for depletion for the year.
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Under the cost depletion method, the taxpayer deducts that
portion of the adjusted basis of the property which is equal to the
ratio of the units sold from that property during the taxable year,
to the estimated total units remaining at the beginning of that
year.
Under the percentage depletion method, a deduction is allowed
in each taxable year for a statutory percentage of the taxpayer's
gross income from the property. The statutory percentage for mer-
cury, asbestos, uranium, and lead is 22 percent, except that in the
case of mercury and lead mined outside the United States the rate
is 14 percent, and in the case of asbestos mined outside the United
States the rate is 10 percent The percentage depletion deduction
for these minerals may not exceed 50 percent of the net income
from the property for the taxable year (computed without allow-
ance for deletion). Percentage depletion is not limited to the tax-
payer's basis in the property; thus, the aggregate amount of per-
centage depletion deductions claimed may exceed the amount exr
pended by the taxpayer to acquire and develop the property.
House bill
Tie House bill repeals the percentage depletion deduction for
mercury, asbestos, uranium, and lead. Thus, the depletion deduc-
tion for these minerals would be determined under the cost deple-
tion method.
Effective dote.— Taxable years beginning after December 31,
1992.
Senate amendment
No provision.
Conference agreement
Hie conference agreement does not contain the House bill pro-
vision.
8. TELEPHONE EXCISE TAX EXEMPTION FOR NEW8 SERVICES
Present law
A three-percent excise tax is imposed on amounts paid for local
and toll Gong-distance) telephone service and teletypewriter ex-
change service. Certain exemptions are provided, including an ex-
emption for certain communications services furnished to news
services for the use in collection or dissemination of news (except
local telephone service to news services).
House bill
The House bill repeals the exemption from the telephone
excise tax for communications services furnished to newB services
for use in collection or dissemination of news.
Effective date. — The provision is effective for service after De-
cember 31, 1992.
Senate amendment
No provision.
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Conference agreement
The conference agreement does not include the provision.
9. EXCISE TAX ON OBTAIN INSURANCE PREMIUMS PAID TO CERTAIN
FOREIGN PERSONS
Present law
An excise tax generally is imposed by Code section 4871 on any
insurance policy covering u JS. risks that is issued by a foreign in-
surer not engaged in business in the United States. The tax is im-
posed at the following rates: (1) 4 percent of the premium paid on a
casualty insurance policy or indemnity bond; (2) 1 percent of the
premium paid on a policy of life, sickness, or accident insurance, or
annuity contracts on the lives or hazards to the person of a U A
citizen or resident; and (3) 1 percent of the premium paid on a
polipy of reinsurance covering any of the contracts taxable under
(Dor (2).
House bill
No provision.
Senate amendment
The Senate amendment revises the excise tax imposed on in-
surance premiums paid to foreign insurance companies by raising
to 4 percent the excise tax on certain premiums paid to foreign per-
sons for reinsurance covering casualty insurance and indemnity
bonds. The Senate amendment subjects premiums to the increased
excise tax unless (1) the premiums are paid to a foreign insurer or
reinsurer that is a resident of a foreign country, (2) the insurance
income (including investment income) relating to the policy of rein-
surance is subject to tax by a foreign country or countries at an
effective rate that is substantial in relation to the tax imposed
under the Code on similar premiums received by UJS. reinsurers,
and (3) the insured risk is not reinsured (whether directly or
through a series of transactions or business relationships or prac-
tices having the same effect) by a resident of another foreign coun-
try who is not subject to a substantial tax (as defined in condition
(2)) on the income. In cases where all three conditions are satisfied,
the excise tax is imposed at the present-law rate of 1 percent.
The Senate amendment authorizes such collection and enforce-
ment mechanisms (e.g., closing agreements) as the Secretary may
specify in order to ensure that any excise tax due on any reinsur-
ance of the U.S. risk is collected.
Effective date.— The provision applies to premiums paid after
the date of the bill's enactment, but only to the extent that they
are allocable to reinsurance coverage tor periods after December
31, 1992.
Conference agreement
The conference agreement does not include the Senate
ment.
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10. CHANOE8 IN WITHHOLDING ON OAMBUNO WINNINQ8
Present law
In general, proceeds from a wagering transaction are subject to
withholding at a rate of 20 percent if such proceeds exceed $1,000
and if the amount of such proceeds is at least 800 times as large as
the amount wagered. The proceeds from a wagering transaction
are determined by subtracting from the amount received the
amount wagered. Any non-monetary proceeds that are received are
taken into account at fair market value.
In the case of State-conducted lotteries, proceeds from a wager
are subject to withholding at a rate of 20 percent if such proceeds
exceed $6,000, regardless of the odds of the wager. This rule applies
only if the wager is placed with the State agency conducting the
lottery or with its authorized agents or employees.
In the case of sweepstakes, wagering pools, or lotteries other
than State-conducted lotteries, proceeds from a wager are subject
to withholding at a rate of 20 percent if such proceeds exceed
$1,000, regardless of the odds of the wager.
No withholding tax is imposed on winnings from a slot ma-
chine, bingo, or keno.
House bill
No provision in H.R. 776. (However, H.R. 6660 as passed by the
House contains a provision for an increase in the rate of withhold-
ing similar to that included in the conference agreement below.)
Senate amendment
No provision in H.R. 776. (However, H.R. 11 as amended by the
Senate contains the same provision as included in the conference
agreement below.)
Conference agreement
The conference agreement increases the rate of withholding on
gambling winnings from 20 percent to 28 percent. The conference
agreement also increases the threshold for withholding on proceeds
from a wagering transaction from $1,000 to $5,000. Tlie additional
requirement for withholding that the proceeds of the wager be at
least 800 times the amount of the wager applies to the same extent
as under present law.
Effective date. — The provision is effective for payments made
after December 81, 1992.
11. INCREASE BACKUP WTTHHOLDINO RATE
Present law
Under section 3406, a payor is required to withhold on "report-
able payments", such as interest and dividends, at a rate of 20 per-
cent if: (1) the payee fails to furnish his taxpayer identification
number (TIN) to the payor, (2) the IRS notifies the payor that the
payee's TIN is incorrect; (3) a notified payee underreporting has oc-
curred (as described in sec. 3406(c)); or (4) a payee certification fail-
ure with respect to reportable payments has occurred (as described
in sec. 8406(d)).
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House bill
No provision.
Senate amendment
No provision. (However, H.R. 11, as amended by the Senate,
contains the same provision that is included in the conference
agreement below.)
Conference agreement
The conference agreement increases the rate of withholding
with respect to backup withholding from 20 percent to 31 percent
Effective date.— The conference agreement is effective for
amounts paid after December 31, 1992.
12. CLASSIFICATION OF OBTAIN INTERESTS IN CORPORATIONS AS STOCK
. OR INDEBTEDNESS
Present law
There presently is no definition in the Internal Revenue Code
or the income tax regulations which can be used to determine
whether an interest in a corporation constitutes debt or equity for
Federal income tax purposes. The characterization of an invest-
ment in a corporation as debt or equity for Federal income tax pur-
poses generally is determined under principles developed in case
law by reference to numerous factors intended to identify the eco-
nomic substance of the investor's interest in the corporation.
House bill
No provision in H.R. 776. (However, section 3 of H.R. 6641 as
passed by the House contains a similar provision as included in the
conference agreement below.)
Senate amendment
No provision in H.R. 776. (However, H.R. 11 as amended by the
Senate contains the same provision as included in the conference
agreement below.)
Conference agreement
The conference agreement provides that the characterization
(as of the time of issuance) of a corporate instrument as stock or
debt by the corporate issuer is binding on the issuer and on all
holders. This characterization, however, is not binding on the Sec-
retary of the Treasury. Neither a holder nor an issuer is excused
from any interest or penalties that might result under present law
from an improper characterization.
Except as provided in regulations, a holder who treats such in-
strument in a manner inconsistent with such characterization
must disclose the inconsistent treatment on such holder's tax
return.
The Secretary of the Treasury is authorized to require such in-
formation as is deemed necessary to implement the provision.
Effective date— Instruments issued after the date of
ment.
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13. TREATMENT OF PRB-CONTRIBUTION GAIN IN CERTAIN PARTNERSHIP
REDEMPTIONS
Present law
If property contributed to a partnership by a partner is subse-
quently distributed to another partner within 5 years of the contri-
bution, the contributing partner generally recognizes gain as if the
property had been sold for its fair market value at the time of the
distribution. Present law generally does not require a partner who
contributes appreciated property to a partnership to recognize pre-
contribution gain upon a subsequent distribution of other property
to that partner even if the value of that other property exceeds the
partners basis in his partnership interest
House bill
No provision in H.R. 776. (However, H.R. 11 as passed by the
House contains the same provision as included in the conference
agreement below.)
Senate amendment
No provision in H.R. 776. (However, H.R. 11 as amended by the
Senate contains the same provision as included in the conference
agreement below.)
Conference agreement
The conference agreement requires a partner who contributes
appreciated property to a partnership to mclude pre-contribution
gain in income to tne extent that the value of other property dis-
tributed by the partnership to that partner exceeds his adjusted
basis in his partnership interest. The provision applies whether or
not the contributing partner's interest in the partnership is re-
duced in connection with the distribution. In accordance with the
5-year limitation of present law, the provision applies only if the
distribution is made within 5 years after the contribution of the ap-
preciated properly. The conference agreement provides rules for
taking into consideration multiple contributions by the same part-
ner within the five-year period and generally permits the netting
of pre-contribution losses against pre-contribution gains. Generally,
the character of the gain is determined by reference to the charac-
ter of the net pre-contribution gain.
For example, assume A and B form a partnership. A contrib-
utes appreciated property X and B contributes property Y, which
has a basis equal to its value at the time of contribution. Y is dis-
tributed to A within 5 years, at a time when there have been no
intervening distributions or dispositions of property by the partner-
ship. Under the provision, A includes in income his pre-contribu-
tion gain with respect to X to the extent the value of Y exceeds A's
basis in his partnership interest
Appropriate basis adjustments are to be made in the basis of
the distributee partner's interest in the partnership and the part-
nership's basis m the contributed property to take account of gain
recognized by the distributee partner.
Gain recognition generally is not required to the extent the
partnership distributes property which had been contributed by the
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distributee partner. Rules are provided, however, to prevent avoid-
ance of pre-contribution gain (under this provision and under the
recognition provisions of present law) through the use of entities.
Under these rules, if the property distributed consists of an in-
terest in an entity, gain recognition is required to the extent that
the value of the interest in the entity is attributable to property
contributed to the entity after the interest in it was contributed to
the partnership. Similarly, the conference agreement provides that
if contributed property is distributed indirectly to a partner other
than its contributor, the contributing partner is subject to tax on
the pre-contribution gain as if the property had been distributed di-
rectly rather than indirectly.
For example, assume that A and B form a partnership. A con-
tributes appreciated property X and B contributes property Y,
which is also appreciated. A also contributes the stock of C, a cor-
poration with no substantial assets. Instead of distributing Y to A,
the partnership contributes Y to C, then distributes the stock of C
back to A. Under the provision, A must include in income pre-con-
tribution gain with respect to X to the extent the value of the C
stock (taking into account the volume of Y) exceeds his basis in his
partnership interest. In addition, B must include in income pre-con-
tribution gain with respect to Y.
The conferees intend that the provision be coordinated with
the rules governing partnership terminations (sec. 708).S1 Pre-con-
tribution gain otherwise required to be recognized under the provi-
sion is not triggered by a constructive termination under section
708(bXlXB). A constructive termination does not change the appli-
cation of the sharing requirements of 704(c) of present law to pre-
contribution gain with respect to property contributed to the part-
nership before the termination. Partners will recognize gain in con-
nection with any distribution of partnership property within 5
years following the constructive termination, to the extent of their
respective shares of the pre-termination appreciation in the value
of the partnership property that is not already required to allocat-
ed to the original contributor (if any) of the property.
Effective date. — The provision applies to partnership distribu-
tions on or after June 25, 1992.
14. DENY DEDUCTION FOR TRAVEL EXPENSES PAID OR INCURRED IN
CONNECTION WITH EMPLOYMENT LASTING ONE YEAR OR MORE
Present law
Unreimbursed ordinary and necessary travel expenses paid or
incurred by an individual in connection with temporary employ-
ment away from home (e.g., transportation costs, and the cost of
meals and lodging) are generally deductible, subject to the two-per-
cent floor on miscellaneous itemized deductions. Travel expenses
11 Thie coordination m intended to bo conaietent with the coordination
to the promt-law pro-contribution gain ruin in the can of a
Report of the Committee on the Bodiot, Hoon of Bnimiitatl
' at 1867; and Sonata Finance "
tion Act of 1969 (Sept. 20, 1969) at 1867; and Senate finance Onninittee, Gonmittee Prnt, 1
nue Reconciliation Act of 1969 (Oct 12. 1969) at 197-198.
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paid or incurred in connection with indefinite employment away
from home, however, are not deductible.11
The position of the Internal Revenue Service as to whether em-
ployment is temporary or indefinite is as follows:
(1) If a taxpayer anticipates employment to last for less than
one year, whether such employment is temporary or indefinite will
be determined on the basis of the facts and circumstances.
(2) If a taxpayer anticipates employment to last for one year or
more and that employment does, in fact, last for one year or more,
there is a presumption that the employment is not temporary but
rather is indefinite, and that the taxpayer is not away from home
during the indefinite period of employment. However, under cer-
tain circumstances, this one-year presumption of indefiniteness
may be rebutted where the employment is expected to, and does,
last for one year or more, but less than two years.
(3) An expected or actual stay of two years or longer will be
considered an indefinite stay, regardless of any other facts and cir-
cumstances.*3
House bill
No provision.
Senate amendment
No provision. (However, H.R. 11 as amended by the Senate
contains the same provision that is included in the conference
report below.)
Conference Agreement
The conference agreement treats a taxpayer's employment
away from home in a single location as indefinite rather than tem-
porary if it lasts for one year or more. Thus, no deduction would be
permitted for travel expenses paid or incurred in connection with
such employment. As under present law, if a taxpayer's employ-
ment away from home in a single location lasts for less than one
year, whether such employment is temporary or indefinite would
be determined on the basis of the facts and circumstances. This
change is not intended to alter present law with respect to volun-
teer individuals providing voluntary services to charities described
in section 501(cX3).
Effective date. — The provision is effective for costs paid or in-
curred after December 31, 1992.
15. REPORTING OF AMOUNTS OF PROPERTY TAX REIMBURSEMENTS PAID
TO SELLERS OF RESIDENCES
Present law
Individual taxpayers who itemize deductions may deduct State
and local real property taxes. Under Code section 164(dXD» if real
property is sold during any real property tax year, the part of the
real property tax that is properly allocable to that part of the year
" Ptorifa ▼. Commiaioner, 358 U A 59 (1958), offy 254 F^d 488 (4th Or. 1957X no g. 27 T.C
149(1957).
"Rev. Rul. 88-82, 1988-1 OR 45.
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that ends on the day before the date of sale 1b treated as imposed
on the seller. The part of the real property tax that 1b properly al-
locable to that part of the year that begins on the date of sale is
treated as imposed on the buyer.
Under present law, real estate transactions are required to be
reported on a return to the IRS and on statements to the custom-
ers. In general, the primary responsibility for reporting is cm the
"real estate reporting person/' that is, the person responsible for
closing the transactions, including any title company or attorney
who closes the transaction. If there is no person responsible for
closing the transaction, the real estate reporting person is the first
person who exists in the following order the mortgage lender, the
seller's broker, the buyer's broker, or such other person designated
in regulations prescribed by the Secretary.
House bill
No provision in H.R. 776. (However, H.R. 5638 as passed by the
House contains the same provision as included in the conference
agreement below.)
Senate amendment
No provision in H.R. 776. (However, H.R. 11 as amended by the
Senate contains the same provision as included in the conference
agreement below.)
Conference agreement
The conference agreement provides that in the case of a real
estate transaction involving a residence, the real estate reporting
person is required to include on an information return and on the
customer statements the portion of any real property tax that is
treated as a tax imposed on the purchaser. The conferees expect
that the Treasury will promptly provide guidance with respect to
the reporting requirement imposed by the bill. In connection there-
with, the conferees anticipate that such guidance will permit the
real estate reporting person to report sucn portion by reference to
specified line items on the HUD-1 form or any comparable form
provided at the closing of the transaction.
Effective date. — The provision is effective for transactions after
December 31, 1992.
16. U8B OP 501 (C) (21) BLACK LUNG TRUST ASSETS TO FUND RETIREE
HEALTH BENEFITS
Present law
A qualified black lung benefit trust described in section
501(cX21) of the Internal Revenue Code is exempt from Federal
income taxation, In addition, a deduction is allowed for contribu-
tions to a qualified black lung benefit trust to the extent such con-
tributions are necessary to fund the trust
Under present law, no assets of a qualified black lung benefit
trust may be used for, or diverted to, any purpose other than (1) to
satisfy liabilities, or pay insurance premiums to cover liabilities,
arising under the Black Lung Acts, (2) to pay administrative co
of operating the trust, or (3) investment in U JS., State, or local i
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rarities and obligations, or in time demand deposits in a bank or
insured credit union.
Under present law, excess trust assets may be paid into the na-
tional Black Lung Disability Trust Fund, or into tne general fund
of the U JS. Treasury.
House bill
No provision in H.R. 776. (However, H.R. 11 as passed by the
House included the provision described in the conference agree-
ment below.)
Senate amendment
No provision in H.R. 776. (However, H.R. 11 as passed by the
Senate mcluded the provision described in the conference agree-
ment below.)
Conference agreement
Th» conference agreement allows excess assets in qualified
black lung benefit trusts to be used to pay accident and health ben-
efits or premiums for insurance for such benefits (including admin-
istrative and other incidental expenses relating to such benefits)
for retired coal miners and their spouses and dependents. The
amount of assets available for such purpose is subject to a vearly
limit as well as an aggregate limit The yearly limit is to be the
amount of assets in excess of 110 percent of the present value of
the liability for black lung benefits determined as of the close of
the preceding taxable year of the trust. The aggregate limit is the
amount of assets in excess of 110 percent of the present value of
the liability for black lung benefits determined as of the close of
the taxable year of the trust ending prior to the effective date, plus
earnings thereon. Each of these determinations is required to be
made by an independent actuary.
The amounts used to pay retiree accident or health benefits
are not includible in the income of the company, nor is a deduction
allowed for such amounts.
Effective date.— The provision is effective for taxable years be-
ginning after December 31, 1991.
17. INCLUSION OP PROPERTY QUALIFYING FOR THE MARITAL DEDUCTION
IN THE GROSS ESTATE
Present law
A marital deduction against the estate and gift tax generally is
permitted for the value erf property passing between spouses. No
marital deduction is permitted, however, if, upon termination of
the spouse's interest, possession or enjoyment of the property
passes to another person (the "terminable interest rule"). Certain
exceptions to this rule may apply if the spouse receives a general
power of appointment over, or an income interest in, a "specific
portion" of property (sec. 2056(bX5), (6), (7)). The spouse is subject to
transfer tax on property over which he or she holds a general
power of appointment.
A Treasury regulation defines a "specific portion" to be a frac-
tional or percentage share of a property interest (Trees. Reg. sec.
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20.2056(b}-5(c)). Finding this regulation invalid, courts have held
that the term "specific portion" includes a fixed dollar amount. See
Northeastern Pennsylvania National Bank A Trust Co. v. United
States, 387 U.S. 213 (1967); Estate of Alexander v. Commissioner, 82
T.C. 34 (1984), a/Td, No. 8401600 (4th Cir. April 3, 1985). Under the
court holdings, appreciation in certain marital deduction property
may be includible in neither spouse's estate.
House bill
No provision in H.R. 776. (However, H.R. 11 as noosed by the
House contains the same provision as included in the conference
agreement described below).
Senate amendment
No provision in H.R. 776. (However, H.R. 11 as amended by the
Senate contains the same provision as included in the conference
agreement described below).
Conference agreement
The conference agreement provides that, for purposes of the
marital deduction, a specific portion" only includes a portion de-
termined on a fractional or percentage basis. Thus, a trust does not
qualify under the exceptions to the terminable interest rule unless
the required income interest and general power of appointment are
expressed as a fraction or a percentage of the property.
It is intended that no inference be drawn from the provision
with respect to the definition of "specific portion" under present
law. The conference agreement does not generally affect the mari-
tal deduction allowed for a pecuniary formula marital deduction
bequest. See, e.g., Rev. Proc. 64-19, 1964-1 C.B. 682.
Effective date.— The provision generally applies to gifts made,
and decedents dying, after date of enactment. The provision does
not apply to a transfer under a will or revocable trust executed
before the date of enactment if either (1) on that date the decedent
was under a mental disability to change the disposition of his prop-
erty and did not regain his competence to dispose of such property
before the date of death, or (2) the decedent dies within three years
after the date of enactment, The provision applies, however, if the
will or trust is amended after the date of enactment in any respect
that increases the amount of the transfer qualifying for the marital
deduction or alters the terms by which the interest ]
C. Health Benefits for Retired Coal Miners
Present law
The United Mine Workers of America (UMWA) health and re-
tirement funds were established in 1974 pursuant to an agreement
between the UMWA and the Bituminous Coal Operator's Associa-
tion (BCOA) to provide pension and health benefits to retired coal
miners and their dependents. The funds have been maintained for
this purpose through a series of collective bargaining agreements.
The funds created in 1974 were a restructuring of the original ben-
efit fund, which was established in 1946.
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The funds consist of four different plans, each of which is
ftmded through a separate trust The 19m) Pension Plan provides
retirement benefits to miners who retired on or before December
81, 1975, and their beneficiaries. The 1950 Benefit Plan provides
health benefits for retired mine workers who receive pensions from
the 1950 Pension Plan and their dependents. The 1974 Pension
Plan provides retirement benefits to miners who retire after De-
cember 81, 1975, and their beneficiaries. The 1974 Benefit Plan pro-
vides health benefits to miners who retire after December 31, 1975.
It also provides health benefits to miners whose last employers are
no longer in business or, in some cases, no longer signatory to the
applicable bargaining agreement These miners are generally re-
ferred to as "orphan* retirees.
The Surface Mining Control and Reclamation Act of 1977, as
amended, imposes a reclamation foe on coal mining operators, pay-
able quarterly to the Secretary of the Interior for deposit in the
Abandoned Mine Reclamation Fund (the AML Fund). The fee gen-
erally is the lesser of (1) 85 cents per ton of coal produced by sur-
face coal mining and 15 cents per ton of coal produced by under-
ground mine or (2) 10 percent of the value of the coal at the mine.
The foe far lignite is the lesser of 2 percent of the value of the coal
at the mine or 10 cents per ton. The reclamation fee is scheduled to
expire after September 80, 1995.
House bill
The House bill extends the abandoned mine reclamation fee
through Septembor 30, 2010.
Effective date. — Date of enactment
Senate amendment
The Senate amendment provides that the 1950 Benefit Plan
and the 1974 Benefit Plan are' to bo merged into a new UMWA
Combined Benefit Fund ("Combined Fund*) to provide health and
death benefits for eligible retirees and their dependents. The Com-
bined Fund is to bo financed primarily by health benefit premiums,
death benefit premiums, and unassigned beneficiaries premiums
imposed on assigned operators. The Combined Fund will receive ad-
ditional funding from transfers from the 1950 Pension Plan and
the AML Fund. The amendment also creates a 1992 Benefit Fund
to provide benefits for persons not eligible under the Combined
Fund.
The Senate amendment extends the abandoned mine reclama-
tion fund foe through September 80, 2004.
Conference agreement
The conference agreement follows the Senate amendment
D. Trad* Provision: ANncntcuifvxNTiON or Antidumping and
COUNTIRV AIUNG DUTY ORDERS
Present law
The Omnibus Trade and Competitiveness Act of 1988 emended
antidumping and countervailing duty law to authorise the Depart-
ment of Commerce to take action to address attempts to drcum-
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vent outstanding orders through UU. or third country assembly op-
erations using parts imported from the country subject to the origi-
nal order.
House bill
No provision.
Senate amendment
Authorises Commerce Department to expand order to include
imported parts from any country, not just the country subject to
the order.
Conference agreement
The conference agreement does not include the Senate amend-
ment.
TITLE XXI— ENERGY AND THE ENVIRONMENT
Sec H18. Electric and Magnetic Fields Research and Public Infer-
motion Dissemination Program
It is the intont of the Conferees to provide for the establish-
ment of a national EMF program through the broad based repre-
sentation of all of the affected interest groups on the Advisory
Board for the program. To insure the participation of state regula-
tors critical to the success of the comprehensive national program,
the Conferees urge the Secretary of Energy and the Secretary of
Health and Human Services to provide foe the appropriate repre-
sentation of state regulatory and health officials on the Advisory
Board for the program.
It is the intent of the Congress that the Program provide far
the dissemination to the public of information on electric and mag-
netic fields. Such information dissemination shall reflect the latest
information, including relative risk assessments, on electric and
magnetic fields, and wall be updated periodically as appropriate, ft
shall be in a form that is appropriate and useful to people who are
not experts. It may include, for example, the development and dis-
semination of a pamphlet
TITLE XXIV— NON-FEDERAL POWER ACT HYDROPOWER
PROVISIONS
Sec S407.
The Conferees adopted a provision with respect to three hydro-
electric projects located in the State at Alaska. It is intended and
expected that the FERC will undertake, on a highly expedited
basis, action on the applications made pursuant to this section.
TITLE XXX— MISCELLANEOUS
Sec 3016. Tar Sands
It is the Conferees9 intent that no inference, either positive or
negative, should be drawn regarding the use at the definition at tar
sands for purposes other than the study provided for in this
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8*c 9017. Farmouts
The House and Senate bills contain similar language excluding
oil and gas interests transferred in a farmout agreement from
. The Senate recedes to the House
oil and gas interests transferred in
property for bankruptcy purposes. The
language with a technical amendment
Ssc 3018. Radiation Exposure Compensation
The Senate amendment contained a provision (section 19106)
that would amend the Radiation Exposure Compensation Act (42
U AC. 2210 note) to provide that an individual whose claim for
compensation is denied may seek judicial review solely in a district
court of the United States.
The House trill contained no similar provision.
The Senate provision was included to clarify the Radiation Ex-
posure Compensation Act, which does not specify the appropriate
forum for judicial review of denied claims. The ambiguity could
generate needless litigation and consume claimant awards. The
Senate provision resolves this ambiguity by designating U.S. Dis-
trict Court as the forum for judicial review.
TITLE XXIV— SECTION 2405
While the Conferees are not adopting section 5804(f) of the
Senate amendments, this should not be interpreted as discouraging
water conservation activities. Water conservation in the Columbia
River Basin has tremendous potential for providing benefits for
fish mitigation and enhancement, electric power production and
other river uses. The Conferees encourage water conservation ac-
tivities in the Pacific Northwest within existing Federal statutes.
TITLE XXIV— SECTION 2406
Congress recognizes that the Army Corps of Engineers and the
Confederated Tribes of the Colville Reservation, as the private
sponsor, are cooperating on a project to raise the height of Chief
Joseph Dam, in Washington State, to increase hydroelectric pro-
duction; and that the Bonneville Power Administration is actively
involved with the Colville Tribes and Corps of Engineers in current
discussions on the various methods of funding the project, if the
project proves to be cost-effective, and on how BPA will market the
increased power to be generated. This cooperative effort is appro-
priate because the Chief Joseph Project (dam and reservoir) is lo-
cated at or on the Colville Reservation. Funding alternatives for
the project would include either Bonneville direct funding with the
Colville Tribes being compensated for their contributions to the
project or indirect Bonneville fimdtag through the Tribes as the
project sponsor. Nothing in Title XXIV is intended to interfere
with or limit the ability of the Army Corps of Engineers and the
Confederated Tribes of the Colville Reservation to continue their
cooperative efforts to develop the pool raise at the Chief Joseph
Protect, or interfere with the continued cooperative discussions
with the Bonneville Power Administration.
This provision would clarify that the Secretaries of the Depart-
ments of the Army and the Interior can accept and use funds pro-
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vided directly by the Bonneville Power Administration to construct
and operate hydropower improvements, and operate and maintain
Federal power facilities, at Federal projects in the Pacific North-
west. Direct funding will increase coordination, efficiency aiyl
power output at Federal projects in a fiscally responsible manner.
No taxpayer subsidy of ratepayers is involved. Tie provision will
also provide a means of replacing a portion of the electric energy
which will be lost because of changes being made to the operation
of the Pacific Northwest hydroelectric system to achieve recovery
of the Columbia River basin salmon runs in a cost effective manner
to the Bonneville ratepayer. This provision would allow the use of
existing Bonneville financial flexibility to implement hydropower
improvements, including any fish and wildlife mitigation and en-
hancement facilities affected by the improvements. This provision
would not modify or affect the applicability of any provisions of the
Northwest Power Act or S3 U.S.C. section 2286 (P.L. 99-662, section
1146) which authorizes the Secretary of the Army to accept funds
from others to mitigate for fish and wildlife in connection with
projects constructed or operated by the Secretary.
From the Committee on Energy and Commerce, for consid-
eration of the House bill (except title XDO, and the Senate
amendment (except title XX), and modifications committed
to conference:
John D. Dinokll,
Philip R. Sharp,
Edward J. Markky,
Billy Tauzin,
Edolphus Towns,
Al S WUT,
MotSynar,
Norman F. Lint,
Carlos J. Mookhead,
Provided, that Mr. Bliley is appointed only for consider-
ation of titles I, VII, XII, XVfi, and XXXI of the House
bill, and titles V, VI, and XV of the Senate amendment:
Tom Bulky,
Mr. Fields is appointed only for consideration of titles III,
IV, V, XIV, XVm, and XX of the House bill, and titles IV
and XVI of the Senate amendment:
Jack Fields,
Mr. Oxley is appointed only for consideration of titles II,
vi, vra, a, x, xi, xm, xv, xvi, xxi, xxn, xxm,
XXIV, XXV, XXVI, XXVII, XXVm, XXIX, and XXX of
the House bill, and titles I, n, Vm, DC, X, XI, XII, Xm,
XIV, XVH, XVm, XIX, and XXI of the Senate amend-
ment; and in lieu of Mr. Lent for title VII of the House bill
and title XV of the Senate amendment:
Michael 6. Oxley,
From the Committee on Ways and Means, for consider-
ation of title XIX of the House bill, and section 19108 and
title XX of the Senate amendment, and modifications com-
mitted to conference:
Dan:
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Sam Gibbons,
JJ. Pickle,
Charles B. Rangel,
Pets Stark,
As additional conferees from the Committee on Ways and
Means, for that portion of section 1101 of the House bill
which adds new sections 1701 and 1702 to the Atomic
Energy Act of 1974, and that portion of section 10108 of
the ornate amendment which adds new sections 1701 and
1702 to the Atomic Energy Act of 1954, and modifications
committed to conference:
Dan Rostenkowski,
Sam Gibbons,
J J. Pickle,
Charles B. Rangkl,
Pets Stark,
As additional conferees from the Committee on Education
and Labor, for consideration of sections 20141, 20142, 20143
(except those portions which add new sections 9702(aX4),
9704, 9706(aX4X 9706, and 9712(dX5) to the Internal Reve-
nue Code of 1986) of the Senate amendment, and modifica-
tions committed to conference:
William D. Ford,
William Clay,
Obobob Miller,
Dale E. Kildee,
As additional conferees from the Committee on Education
and Labor, for consideration of those portions of section
901 which add new sections 1805 and 1312 to the Atomic
Energy Act of 1954, that portion of section 1101 which
adds a new section 1704 to the Atomic Energy Act of 1954,
and section 8004 of the House bill and sections 4402, 6601-
04, 10104, 18119, and 19118 of the Senate amendment, and
modifications committed to conference:
William D. Ford,
Pat Williams,
As additional conferees from the Committee on Foreign
Affairs, for consideration of sections 1205, 1208, 1213-14,
1802-05, 1606, and 908 of the House bill, and sections
5101-04, that portion of section 5201 which adds a new sec-
tion 6 to the Renewable Energy and Energy Efficiency
Technology Competitiveness Act of 1989, 14108-09, and
14801-4)2, of the Senate amendment, and modifications
committed to conference:
Dantb B. Fascell,
Sam Gbjdenson,
Howard Wolpe,
Mel Levins,
Edward Feiohan,
Harry Johnston,
Euot L. Enoel,
William Bboomfield,
Tost Rom,
John Miller,
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Am o Houghton,
As additional conferees from the Committee on Foreign
Affairs, for consideration of sections 1211, 1607, 2481, and
2704 of the House bill, and sections 1201, 6701-02, 10223(b),
13102, 17101-02, 19101, and 19109 of the Senate amend-
ment, and modifications committed to conference:
Dante B. Fascell,
Sam Gbjdenson,
William Broomfield,
As additional conferees from the Committee on Govern-
ment Operations, for consideration of sections 121(e) and
(f), 122, 127, and 128 of the House bill, and sections 6207,
6216, 6218, and 6220-6221 of the Senate amendment, and
modifications committed to conference:
John Conyers, Jr.,
Albert G. Bustamante,
Bill Conger,
As additional conferees from the Committee on Govern-
ment Operations, for consideration of sections 302 and
304-306 of the House bill, and sections 4102, 4105-4106,
4112-4113, 4116, and 4119 of the Senate amendment, and
modifications committed to conference:
John Conyers, Jr.,
Bob Wise,
Al McCandless,
As additional conferees from the Committee on Interior
and Insular Affairs, for consideration of sections 133, 1314,
1607, 3002, 3004, 3009, 3101, 3102, and 3104 and titles Vffl-
XI and XXIV-XXK of the House bill, and sections 6302-
5304, 5308, 6303, 6501, 6506, 13115, 13118, 13120-13121,
14114, 19110, 19112 and titles DC, X, XII, XVm of the
Senate amendment, and modifications committed to con-
ference:
George Miller,
NickRahall,
Bruce F. Vbnto,
Ron de Lugo,
Sam Gbjdenson,
Barbara F. Vucanovich
(I concur in the Conference
Report and the Statement
of Managers except for
section 801),
John J. Rhodes,
Provided, Mr. Murphy is appointed in lieu of Mr. DeFazio
for consideration of title XXV of the House bill and section
14114 of the Senate amendment only and Mr. Abercrombie
is appointed in lieu of Mr. DeFazio for consideration of sec-
tion 2481 of the House bill only:
Austin J. Murphy,
Neil Abercrombie,
As additional conferees from the Committee on Interior
and Insular Affairs, for consideration of that portion of
section 723(h) which adds a new section 212(h) to the Fed-
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end Ptower Act, 1812-1818, 1408, 2012, 2118(g), 2807, and
8008 of the House hill, and sections 19104, and 20143(b)
and titles Vm and XXI of the Senate amendment, and
modifications committed to conference:
George Miller,
NickRahall,
As additional conferees from the Committee on the Judici-
ary, for consideration of section 8010 of the House bill, and
section 19102 of the Senate amendment, and modifications
committed to conference:
JackBrooks,
Don Edwards,
Dan Glickman,
Edward Fdohan,
Harley O. Staggers, Jr.,
Howard L. Berman,
Craig Washington,
Hamilton Fish, Jr.,
Henry J. Hyde,
Tom Campbell,
Lamar Smith,
As additional conferees from the Committee on the Judici-
ary, for consideration of section 11107 of the Senate
amendment, and modifications committed to conference:
Jack Brooks,
Don Edwards,
As additional conferees from the Committee on the Judici-
ary, for consideration of section 19106 of the Senate
amendment, and modifications committed to conference:
Jack Brooks,
Barnet Frank,
George W. Gekas,
As additional conferees from the Committee on Merchant
Marine and Fisheries, for consideration of section 1607,
and title XXIV of the House bill, and title XII of the
Senate amendment, and modifications committed to con-
ference:
Gerry Studds,
Dennis M. Hertel,
Bob Davis,
Jack Fields,
James M. Inhofe,
As additional conferees from the Committee on Merchant
Marine and Fisheries, for consideration of sections 205,
1602, 1701(b) of the House Mil, and sections 5204, 5302,
5304, and 11103 and title XXI of the Senate amendment,
and modifications committed to conference:
Gerry Studds,
Bor Davis,
As additional conferees from the Committee on Public
Works and Transportation, for consideration of sections
121-128, 182, 411, 2458, 2461-2464, 2705, 3102, and 3104
and title XVm of the House bill, and sections 4120, 4401,
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6808, 6808, 6101, 6201-6224, 6804, and 10224 of the Senate
amendment, and modifications committed to conference:
Robert A. Rob,
Norman Y. Minbta,
Hknry J. Nowak,
Douglas Applbgatb,
Ron db Lugo,
Gus Savage,
RobertA. Bobski,
John Paul Hammkbschmidt,
Bud Shuster,
Thomas E. Petri,
Jambb M. Inhor,
As additional conferees from the Committee on Public
Works and Transportation, for consideration of sections
164(h), that portion of section 728 which adds a new sec-
tion 212(i) to the Federal Power Act, 410, and 1816 of the
House hill, and sections 12108, 12204, and 14118 of the
Senate amendment, and modifications committed to con-
Robert A-Ror,
Norman Y. Minbta,
John Paul Hammebschmidt,
As additional conferees from the Committee on Science,
Space, and Technology, for consideration of sections 901-
02T1208, 1207, 1801, 1806-09, 1815, 1818-19, 2471, 2502-08,
2513, 8005, 8007, 8009 and titles VI and XX-XXIH of the
House bill, and sections 4201-18, 4805, 4401, 5201-02, 5204-
06, 6104, 6501, 6506, 19108, and titles II, Vm, subtitle A of
title X, except those portions adding new sections 1511,
1601, 1606, 1607, 1701-1708 to the Atomic Energy Act of
1954, XTTT, and XIV of the Senate amendment, and modifi-
cations committed to conference:
Gbobob E. Brown, Jr.,
Marilyn Lloyd,
Jambb H. Schbubb,
Howard Wolpe,
Richard H. Stalling^
Timothy Roemee,
Dick Swbtt,
Robert S. Walker,
DonRttter,
Sid Morrison,
Harris W. Fawell,
As additional conferees from the Committee on RaniHwg
Finance and Urban Affairs, for consideration of sections
5207, 6101-6108 of the Senate amendment, and modifica-
tions committed to conference:
Henry Gonzalez,
Mar y Ross Oakar,
Marge Roukkma,
As additional conferees from the Committee on Veterans9
Affaire, far consideration of section 1984 of the House trill,
Atij modifications committed to conference*
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O. V. ]
Don Edwards,
Douglas Appleg ate,
Harley O. Staggers, Jr.t
Bob Stump,
John Paul Hammerschmidt,
As additional conferees from the Committee on Veterans'
Affaire, for comideration of sections 6101 and 6102 of the
Senate amendment, and modifications committed to con-
ference:
G.V. Montgomery,
Harley O. Staggers, Jr.,
Bob Stump,
Manager* on the Pari of the House.
From the Committee on Energy and Natural Resources,
for all titles ascent title XIX of RR 776 and title XX of
the Senate amendment (revenue provisions):
J. Bennett Johnston,
Dale Bumpers,
Wendell it Ford,
Jeff Bdvgaman,
Tim Wdrh,
Kent Conrad,
Malcolm Wallop,
Maes O. Hatfield,
Pfen V. Domenici,
DonNkkleb,
Conrad Burns,
From the Committee on Governmental Affairs, conferees
for subtitle B of title VI of the Senate amendment (Federal
energy management):
John Glenn,
Ted Stevens,
From the Committee on Commerce, Science, and Transpor-
tation, conferees for subtitles A, B, and C of title XII of the
Senate amendment (Outer Continental Shelf revenue shar-
ing), pipeline safety issues (as contained in Senate amend-
ment No. 2786):
Ernest F. Holunos,
From the Committee on Banking, Housing, and Urban Af-
fairs, conferees for title XV of the Senate amendment
(Public Utility Holding Company Act reform):
DqnRdbgle,
JakeGarn,
From the Committee on Veterans9 Affairs, conferees on
sections 6101 and 6102 of title VI of the Senate amend-
ment (building energy efficiency):
Alan Cranston,
Arlen Specter,
From the Committee on Finance, conferees on title XIX of
Hit 776 and title XX of the Senate amendment (revenue
provisions):
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Lloyd Bwtben,
Daniel Patrick Moynihan,
MaxBaucus,
David L. Borkn,
Tom Daschle,
JohnBbeaux,
Bob Packwooo,
Bob Dot*
John C. Daniobih,
John ft Chare,
Manager* on the Part of the Senate.
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4519
CONGRESSIONAL RECORD
(HOUSE)
October 5. 1992
REPORT ON RESOLUTION WAIVING
POINTS OF ORDER AGAINST CONFER-
ENCE REPORT ON H.R. 776. COMPREHEN-
SIVE NATIONAL ENERGY POLICY ACT.
AND AGAINST CONSIDERATION OF SUCH
CONFERENCE REPORT
Mr. HALL of Ohio from the Com-
mittee on Rules, submitted a privi-
leged report (Kept. No. 102-1013) on
the resolution (H. Res. 601) waiving
points of order against the conference
report to accompany the bill (H.R.
776) to provide for improved energy
efficiency, and against the consider-
ation of such conference report which
was referred to the House Calendar
and ordered to be
printed.
WAIVING POINTS OF ORDER AGAINST
CONFERENCE REPORT ON H.R. 776.
COMPREHENSIVE NATIONAL ENERGY
POLICY ACT
Mr. DERRICK. Mr. Speaker, by
direction of the Committee on Rules,
I call up House Resolution 601 and
ask for its immediate consideration.
The Clerk read the resolution, as
follows:
H. RES. 601
Resolved. That upon adoption of this resolution
it shall be in order to consider the conference
report to accompany the bill (H.R. 776) to provide
for improved energy efficiency. All points of
order against the conference report and against
its consideration are waived. The conference
report shall be considered as read.
The SPEAKER pro tempore (Mr.
Montgomery). The gentleman from
South Carolina (Mr. Derrick) is recog-
nized for 1 hour.
MODIFICATION OF RESOLUTION OF-
FERED BY MR. DERRICK
Mr. DERRICK Mr. Speaker, I ask
unanimous consent that House Re-
solution 601 be amended by striking
the period at the end and adding the
following: 'and shall be debatable for
not to exceed 2 hours, equally divided
and controlled by the chairman and
ranking minority member of the Com-
mittee on Energy and Commerce.'
The SPEAKER pro tempore. The
Clerk will report the modification.
The Clerk read the proposed modi-
fied resolution as follows:
H. RES. 601
Resolved, That upon adoption or this resolution
it shall be in order to consider the conference
report to accompany the bill (H.R. 776) to provide
for improved energy efficiency. All points or
order against the conference report and against
its consideration are waived. The conference
report shall be considered as read (and shall be
debatable for not to exceed two hours, equally
divided and controlled by the chairman and rank-
ing minority member of the Committee on Ener-
gy and Commerce.)
The SPEAKER pro tempore. Is
there objection to the request of the
gentleman from South Carolina?
There was no objection.
Mr. DERRICK Mr. Speaker, for the
purpose of debate only, I yield the cus-
tomary 30 minutes to the gentleman
from Ohio (Mr. McEwen), pending
which I yield myself such time as I
may consume. During consideration
of this resolution, all time yielded is
for the purpose of debate only.
(Mr. DERRICK asked and was given permis-
sion to revise and extend his remarks.)
Mr. DERRICK Mr. Speaker, House
Resolution 601 provides for 2 hours of
debate on the conference report on
H.R. 776, the Comprehensive National
Energy Policy Act. The rule further
waives all points of order against the
conference report and against its con-
sideration. The rule also provides
that the conference report will be con-
sidered as read.
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Mr. Speaker, last year when Iraq
invaded Kuwait, the price of oil quick-
ly rose to over $40 a barrel. Rising oil
prices worsened the economic prob-
lems already facing our Nation and
the Persian Gulf war soon focused our
attention on the need to improve this
country's future energy security.
Presently 43 percent of the energy
consumed in the United States is
petroleum based. Today we import
over half of the oil consumed in this
country. Not since 1947 has the Unit-
ed States been energy independent.
We cannot allow ourselves to remain
vulnerable to energy supply disrup-
tions. We must secure a more stable
energy future and this conference
report will help us achieve this goal.
The conference report includes pro-
visions to promote energy efficiency
and decrease our dependence on for-
eign oil. The agreement fosters the
production of alternative fuels and
would require certain motor vehicle
fleets to purchase an increasing num-
ber of automobiles that run on alter-
native fuels.
Under the conference report, the
Federal Government would be requir-
ed to purchase, lease, or acquire for
its light-duty fleets at least 5,000 al-
ternative fuel vehicles in 1993 increas-
ing to 10,000 in 1995. By 1996,
one-fourth of all newly purchased
Federal fleet vehicles would have to be
alternatively fueled, and this figure
would increase to 75 percent by 1999.
The conference report also promotes
energy conservation and requires the
Federal Government to use energy
more efficiently. The agreement en-
courages public utilities to reduce
demand for energy and establishes
efficiency standards for lights, electric
motors, showerheads, commercial
heating and cooling equipment.
The conference report encourages
competition in the generation of
wholesale electricity and streamlines
the Federal licensing of nuclear pow-
erplants. In addition the agreement
supports new supply technologies that
use sunshine, wind, geothermal heat
and biomass as fuels. Finally the
agreement would increase research on
clean-burning coal technologies.
Mr. Speaker, House Resolution 601
will expedite consideration of this
important conference report and move
our Nation toward a more stable ener-
gy future. I urge my colleagues to
support the rule and the conference
report.
Mr. Speaker, I reserve the balance
of my time.
Mr. McEWEN. Mr. Speaker, I yield
myself such time as I may consume.
Mr. Speaker, I rise in support of
this rule and in support of the most
important piece of legislation, the
Comprehensive National Energy Po-
licy Act.
My distinguished Committee on
Rules colleague, the gentleman from
South Carolina (Mr. Derrick), has
outlined this rule for consideration of
the conference report on H.R. 776. It
provides 2 hours of debate time, and
waives all points of order against the
conference report.
I would like to commend the distin-
guished chairman of the Committee
on Rules, the gentleman from Massa-
chusetts (Mr. Moakley), as well as the
ranking member, the gentleman from
New York (Mr. Solomon) for reporting
a rule that permits prompt consider-
ation and approval of this conference
report by the full House.
Mr. Speaker, the Comprehensive
National Energy Policy Act is a major
step forward for America, for competi-
tiveness, energy self- sufficiency, and
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4521
for economic well-
being.
Energy is the lifeblood of a growing,
modern, industrial economy. Energy,
harnessing the power of fuels like oil,
natural gas, coal, and the atom, puts
people to work, enables them to do
more, and produce more than ever
before and keeps our Nation strong.
The conference report embodies a
comprehensive national energy policy.
It incorporates major agreements
regarding electrical utilities, alter-
native fuels, natural gas, offshore oil
drilling, nuclear plant licensing, and
uranium enrichment.
I note that the report also includes
some revenue measures which, I be-
lieve, are perhaps ill advised, such as
taxing employees in America for their
parking benefits in excess of $155 a
month.
However, this is a comprehensive
energy strategy, one so broad that I
am certain anyone could find fault
with at least some part of it. The bill
is probably especially troubling to
those whose idea of an energy policy
in America really should be that 'you
don't use any.'
But despite some flaws of the con-
ference report, I look forward to its
passage in the full House and to ap-
proval by the other body today and
signing by the President this week.
Mr. Speaker, I would like to take a
moment to note that the conference
report includes an important provi-
sion on uranium enrichment that will
take a significant step toward revital-
izing that essential source of domestic
energy production. As the sponsor of
legislation designed to revive
America's flagging uranium enrich-
ment industry, I am especially pleased
to see that this act will create an inde-
pendent, Government-owned uranium
enrichment corporation.
I commend the chairman and the
ranking member of the Committee on
Energy and Commerce, the gentleman
from Michigan (Mr. Dingell) and the
gentleman from New York (Mr. Lent),
along with the chairman and ranking
member of the Subcommittee on En-
ergy and Power, the gentleman from
Indiana (Mr. Sharp) and the gentle-
man from California (Mr. Moorhead),
for their efforts to address this critical
issue.
One cannot speak of uranium en-
richment unless one speaks of our
distinguished colleague, the gentle-
woman from Tennessee (Mrs. Lloyd),
who has worked endlessly as a mem-
ber of the Committee on Science,
Space, and Technology and is the
chairman of a subcommittee to keep
this effort alive for many years.
Mr. Speaker, one of the reasons it
has taken so long for this part of the
bill to be enacted is that in the Com-
mittee on Rules this morning, when
we were working on this rule, we had
before us all of the committees that
had areas of jurisdiction on this act
before us.
I would like to just read them, be-
cause these are the full committees,
and they are not referred to the vari-
ous subcommittees that had juris-
diction on energy policy. We have the
Committee on Energy and Commerce,
we have the Committee on Agricul-
ture, the Committee on Foreign Af-
fairs, the Committee on Government
Operations, the Committee on the
Judiciary, the Committee on Interior
and Insular Affairs, the Committee on
Merchant Marine and Fisheries, the
Committee on Public Works and
Transportation, the Committee on
Science, Space, and Technology, as
well as the Committee on Ways and
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4522
Means for taxation.
Mr. Speaker, one of the difficulties
of getting legislation through the
House is that every one of these com-
mittees had jurisdiction, their subcom-
mittees had jurisdiction, and we had
to get them all to work together.
Fortunately, the Committee on
Rules, when this particular uranium
enrichment provision was ignored by
certain committees that were opposed
to it, we in the Committee on Rules
were able to leapfrog those who stood
in the way of progress, and have it
before us today.
For many years now, Congress has
struggled with the idea of privatizing
the Nation's ailing uranium enrich-
ment enterprise, which is currently
managed by the U.S. Department of
Energy.
It produces enriched uranium for
nuclear power reactors, which gener-
ate nearly 20 percent of the Nation's
electricity supply, and for our nuclear
navy. Quite simply, a competitive,
financially healthy enterprise is criti-
cal to maintaining our energy securi-
ty.
The Department of Energy and the
U.S. Government simply cannot com-
pete as effectively as the uranium
enrichment market requires. As a
result, in recent years we have lost
more than 50 percent of the world
market due to foreign competition and
an unsteady commitment to nuclear
power here in the United States. A
private business entity, given the flex-
ibility it needs to compete effectively,
would be better equipped to respond
rapidly and appropriately to market
signals in order to maximize benefits
and to preserve this vital source of
jobs, revenue, and enhancement to
our balance of trade.
By implementing a sound restruc-
turing proposal, and by deploying
advanced, more cost effective and
efficient enrichment technology, we
can preserve and reinvigorate a valu-
able domestic industry. In so doing;
we protect American jobs, we protect
the labor force that is employed at the
Department's current facilities, and
we promote quality enrichment servic-
es that are indeed 'made in America.'
This conference report also includes
a provision to guarantee that the site
selection process for locating the
AVLIS technology - which is the next
generation of advanced uranium en-
richment technology • is conducted in
as fair and equitable a manner as
possible. My amendment specifically
requires that the selection of a site for
the AVLIS facility shall be made on a
competitive basis, taking into con-
sideration economic performance, that
is, the history of the operation of the
plant and its employees, environmen-
tal compatibility, and use of any exist-
ing facilities or investment by the U.S.
taxpayer.
Mr. Speaker, again I thank the
chairman and ranking member of the
Rules Committee for this rule, and I
urge Members to support it, and the
conference report, so that we can
complete the important work of sett-
ing a national strategy for energy use
and development which the President
can sign.
Mr. Speaker, I reserve the balance
of my time.
Mr. DERRICK. Mr. Speaker, for
purposes of debate only, I yield 2 min-
utes to the gentleman from Oregon
(Mr. Wyden).
(Mr. WYDEN asked and was given
permission to revise and extend his
remarks.)
Mr. WYDEN. Mr. Speaker, the
National Energy Policy Act of 1992 is
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4523
worthy of our support. It will reduce
our dependence on foreign oil, in-
crease competition in the electric utili-
ty industry, and nudge our Nation
toward greater reliance on renewable
energy resources.
There are many notable aspects of
this bill. I would like to call special
attention to the whistleblower protec-
tion provisions. These provisions lock
into Federal law strong protections for
workers at the Nations nuclear wea-
pons facilities and civilian nuclear
reactors who speak the truth about
threats to public health, safety, and
the environment.
In September 1990, a Federal dis-
trict court judge in eastern Washing-
ton threw out the case of a former
We8tinghouse Hanford employee who
had blown the whistle on safety viola-
tions at DOE's Hanford nuclear reser-
vation. The employee's claim was
denied because he worked for a DOE
contractor, not the Federal Govern-
ment. While Government
whistleblowers are protected against
retaliation, the judge found that Con-
gress has deliberately refused to pro-
tect DOE contractor employees when
they report environmental safety, and
health violations. Today we will
change that.
In November of last year, I intro-
duced, with our friend Representative
Mike Synar, H.R. 3941, to close this
glaring gap in the current law. Much
of that bill survives in the energy bill
today.
Mr. Speaker, whistleblowers per-
form a true public service, often at a
very high personal cost. The investi-
gations of the Energy and Commerce
Oversight Subcommittee has conclu-
sively established that DOE
whistleblowers have been harassed,
criticized, reassigned, denied advance-
ment, and terminated by their private
employers for their actions.
The work of the Department of
Energy is done by private contractor
employees. There are 16,000 private
employees at the Hanford nuclear
reservation in Washington, 22,000 at
DOE's Savannah River, GA, site,
20,000 at the Oak Ridge, TN, site, and
another 15,000 in Idaho. In contrast,
there are only 19,000 DOE employees
in the entire country.
Contract employees are in the best
- and perhaps only - position to pro-
tect the public. That's why we must
protect them. When you don't hear
from the private contract employees,
the chances of getting serious health,
safety, and environmental problems
out on the table and corrected are
dramatically reduced.
The recent court decision means
that whistleblowers simply do not
have any protection. As a result, they
can be muzzled and their important
safety concerns left unattended.
This energy conference report stipu-
lates that private contractor employ-
ees will have the right to the same
kind of grievance procedures and rem-
edies now enjoyed by most public em-
ployees that disclose wrongdoing and
face retaliation. This includes the
right to have an impartial investigator
review the complaint, the right to an
administrative hearing, access to the
courts, and the opportunity for mean-
ingful relief.
These provisions are critical to the
thousands of employees who work at
Department of Energy facilities across
our country. They are especially im-
portant in the Pacific Northwest be-
cause whistleblowers have consis-
tently been the ones to bring to light
health and safety problems at the
Hanford nuclear reservation.
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4524
Hundreds of billions of gallons of
toxic and hazardous waste have been
dumped on the ground at Hanford
over the last 40 years. The toxic ooze
from leaking waste has reached the
ground water and threatens the Co-
lumbia River, the lifeline of the
Northwest economy and culture.
Whistleblowers played a critical role in
identifying this contamination and,
with their continued vigilance, we will
clean up this environmental quag-
mire.
I want to thank Representative Sam
Gejdenson for his tireless and persis-
tent efforts on behalf of this legisla-
tion, as well as Chairman Dingell,
Chairman Miller, Chairman Ford,
Chairman Sharp, Chairman Synar,
and the Government Accountability
project for championing this cause
throughout the legislative process.
I urge my colleagues to support this
legislation.
Mr. DERRICK Mr. Speaker, I
might comment that this might be the
last time the gentleman from New
York (Mr. Scheuer) will speak on the
floor, and we were both elected at the
same time. He has been a great Mem-
ber of this body, and we are going to
miss him.
Mr. Speaker, for purposes of debate
only, I yield 4 1/2 minutes to the gen-
tleman from New York (Mr. Scheuer).
Mr. SCHEUER. Mr. Speaker, I
thank the gentleman for those com-
ments.
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. SCHEUER. I am happy to yield
to the distinguished chairman of the
Subcommittee on Energy and Power
of the Committee on Energy and Com-
merce. He has done a marvelous job
bringing this bill to the floor.
Mr. SHARP. The gentleman is very
generous, but the gentleman <
an extraordinary amount of credit for
his work, both on the Committee on
Science, Space, and Technology and
on the Committee on Energy and
Commerce.
There are numerous sections of this
bill that derive directly from his work
on alternative fuels, renewable*, and
other issues, especially on energy con-
servation. I just think it is very im-
portant that others in our society
know that.
Mr. SCHEUER. Mr. Speaker, I
thank the gentleman from Indiana for
his kindness.
Mr. Speaker, I rise in strong sup-
port of H.R. 776. This bill is the prod-
uct of over a year and a half of hear-
ings, negotiations, markups, and con-
ferences. It was not easy, but finally
we do have a bill, and finally we have
a national energy policy, not the er-
satz product that came down from the
White House a year or so ago with
great fanfare, when we could safety
and honestly say, there is less there
than meets the eye. This is a true
energy bill that defines our energy
future and helps us get there.
Mr. Speaker, I would say to my
colleagues, the Congress has been
subject to a lot of criticism in the last
year, some of it deserved, much of it
not. With this energy bill, Congress
can hold its head high. It is a very
good bill, and its authors should be
proud.
I want to pay a special tribute to
the chairmen, the gentleman from
Indiana (Mr. Sharp), the gentleman
from California (Mr. Brown), the gen-
tleman from Michigan (Mr. Dingell),
for their leadership and tenacity in
sticking with it and bringing it to the
House.
This bill does have some weak-
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4525
nesses. There are a few sections in it
that I wish were not there, and there
are other measures that I would have
hoped could have been in there but
did not make it.
The passage and enactment of H.R.
776 will significantly reduce our de-
pendence on foreign oil, it will
strengthen our economy, and it will
help us clean up the environment.
Among the highlights of this bill is
the efficiency title. The bill will lead
to more efficient buildings, more effi-
cient appliances, and products like
air-conditioning, heating, ventilation,
windows, lighting, and the like. It will
encourage States to engage in what
we call least cost planning. That
means meeting our energy needs from
the most cost-effective point of view.
Frequently, that may mean energy
efficiency improvement. Rather than
build very expensive new capital
plants, States all over the country are
using least cost planning to meet their
energy needs.
I would say the State of California
and the State of New York have abso-
lutely done superb work in meeting
their future energy needs through a
combination of energy efficiency appli-
cations across the length and breadth
of energy consumption and through
conservation. This is the way to go.
Much of the language in this title is
derived from a bill I introduced with
several of my colleagues from the
Committee on Energy and Commerce,
H.R. 2451, the National Energy Effi-
cient Standards Act. The tax sections
and the research sections which came
out of my Subcommittee on Environ-
ment of the Committee on Science,
Space, and Technology, which I have
had the honor to chair for some years,
will also lead to a much more energy
efficient economy.
The bill also has strong alternative
fuel sections which will reduce oil
consumption in the transportation
sector. The research provisions for
alternate fuels also came out of my
subcommittee of the Committee on
Science, Space, and Technology, and
parts of the bill I introduced, H.R.
2366, the National Alternative Fuels
and Motor Vehicles Act, were also
included.
Mr. Speaker, I am delighted that we
were able to come to a mutually satis-
factory conclusion on the natural gas
prorationing issue. The Markey-
Scheuer amendment was one of the
more difficult issues that the con-
ference committee dealt with, but
they were able to reach a compromise
language, and for that I thank them
profoundly.
The compromise language will pro-
tect gas consumers from OPEC style
price fixing schemes by producing
States, while still allowing producing
States to regulate their domestic gas
production industries.
The electricity regulation title of
H.R. 776 will change the structure of
the electricity industry as we know.
The PUHCA reform/transmission ac-
cess sections will increase competition
in the bulk power market, leading to
lower prices and better service.
I am disappointed that we were not
able to include language on regional
transmission groups (RTG's). I have
been working on RTG's for over a
year and I think RTG language would
have been a valuable addition to this
bill.
Despite a virtually unprecedented
agreement reached by all interested
groups - the large public power council
and my friend from the New York
Power Authority, Chairman Richard
Flynn, utilities, municipal and co-op
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systems, environmentalists, consumer
advocates, and others, time just ran
out.
I hope that this does not preclude
the formation of such groups to the
extent permitted by applicable law. I
further hope that, in view of the tre-
mendous amount of effort and the
consensus achieved on this matter by
the diverse groups who worked on
RTG's, the next Congress will address
this issue and enact RTG legislation.
In closing, Mr. Speaker, I want to
congratulate the many members who
worked very hard to get us here to-
day. I especially want to congratulate
Chairmen Sharp, Dingell, and Brown
for the excellent leadership they have
shown.
America needs an energy bill for our
security, for our economy, and for our
environment. With passage of H.R.
776, we finally have one.
Mr. McEWEN. Mr. Speaker, I yield
2 minutes to the distinguished gentle-
man from Wyoming (Mr. Thomas).
Mr. THOMAS of Wyoming. Mr.
Speaker, I appreciate the gentleman
yielding the time. I rise in support of
the rule and of the bill.
I think it is most difficult to come
to a consensus on moving forward on
energy policy. There is just inherently
a good deal of difference between
those areas of the country that are in
production and those areas that are
mostly in utilization, and I think this
bill and this rule have come a long
way to do that. I am particularly
pleased that the one-step nuclear
licensing is in here, and I think that is
very necessary to have effective and
efficient utilization of this resource.
The uranium enrichment moves us
forward as well, and certainly the mill
tailings cleanup. These are mill tail-
ings that were produced by Federal
contracts and are the responsibility of
the Federal Government. I am de-
lighted with that.
I think competition for electric gen-
eration will be enhanced here, as well
as the movement of electricity.
So, Mr. Chairman, I am pleased
that this important bill will be
brought before the House. I think it is
something that has been worked on
for a very long time, and does re-
concile these differences, and will
move us forward in producing some
energy as opposed to restricting the
development of low-sulfur coal in the
West, which of course allows us to
comply with the clean air rules.
I support the bill.
Mr. DERRICK Mr. Speaker, for
purposes of debate only, I yield 4 min-
utes to the distinguished gentleman
from California (Mr. Brown).
Mr. BROWN. Mr. Speaker, I thank
the distinguished gentleman for yield-
ing me this time.
May I say that I rise in very strong
support for the rule, I hope it will be
adopted, but in somewhat weaker sup-
port for the bill itself. But I hope that
it will be adopted, and I intend to vote
for it.
I wish to call attention to one fea-
ture of this bill which relates to an-
other matter that I want to discuss.
The Department of Energy organic
legislation requires that the programs
of the Department of Energy be sub-
ject to annual authorization. That
mandate is carefully fulfilled by one of
the two committees which has auth-
orizing jurisdiction.
The jurisdiction over the Depart-
ment of Energy is divided about half
and half between the House Armed
Services Committee and the House
Committee on Science, Space, and
Technology. Each year, the House
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Armed Services Committee meticu-
lously authorizes in great detail those
programs under its jurisdiction, basi-
cally the nuclear weapons program.
The counterpart committee in the
Senate, chaired by the distinguished
senior Senator from Georgia, Senator
Nunn, in close cooperation with the
House, similarly authorizes their por-
tions of the bill, and the House and
Senate both adopt the authorization
for the military portions of the De-
partment of Energy.
Despite the mandate of the Organic
Act, nothing like that has happened in
the civilian programs of the Depart-
ment of Energy for the last 10 years.
What is the difference?
The difference is that in the Senate,
the other body, the distinguished
chairman of the authorizing com-
mittee is also the chair of the appro-
priations subcommittee. He feels no
necessity to authorize the civilian
programs of the Department of Ener-
gy, and as a consequence, they have
not been authorized.
In this bill that the rule proposes to
take up, we sought to implement the
provisions of the Organic Act, and to
fully authorize all of the civilian pro-
grams of the Department of Energy.
That was bitterly resisted on the part
of the Senate for the reasons that I
have indicated. The distinguished
Senator from Louisiana is really not
interested in authorizing programs
because in his role as appropriator, he
can do it with much less difficulty.
So we have struggled in this bill to
authorize as much as we can, but
relatively little of the civilian pro-
grams are authorized, and none, none
of the programs with regard to autho-
rizing of facilities and construction
projects is in here. They still go unau-
thorized.
Now how does this relate to the
other problem that I mentioned? This
House about 3 weeks ago was faced
with about $100 million in Depart-
ment of Energy authorization for
facilities which had no authorizations
but were to be funded in the appro-
priation bill for energy and water.
The House, in its wisdom, struck that
provision to fund those unauthorized
projects in the energy and water bill
in the civilian portion of the Depart-
ment of Energy.
Lo and behold, in the Department
of Defense appropriation bill now
before us, the language stricken by
the House 3 weeks ago now reappears
intact, appropriating and authorizing
in a defense bill for the civilian pro-
grams of the Department of Energy.
This is the most egregious effort to
trample on the rights of the House
that I have ever seen in my 28 years
here. And I think that all Members of
the House should be alerted to this
fact.
I have asked the members of the
Rules Committee not to protect this
egregious act with a rule. I do not
know what they in their wisdom will
do. But if this act authorizing $100
million in projects already rejected in
a department not under their juris-
diction comes before this bill pro-
tected, I will seek to defeat the rule,
and I want all Members of the House
to know that at this time.
Mr. McEWEN. Mr. Speaker, I yield
3 minutes to my distinguished col-
league, the gentleman from California
(Mr. Moorhead) the dean of the Cali-
fornia delegation.
Mr. MOORHEAD. Mr. Speaker, I
rise in support of the rule and the
conference report on H.R. 776, the
Energy Policy Act. This rule moves
Congress one step closer toward the
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adoption of a long-awaited and much
needed national energy policy.
I wish to especially congratulate
Butler Derrick and Bob McEwen for
the work that they have done on this
rule, and in fact the entire Rules
Committee for their expeditious han-
dling of this matter. And I certainly
wish to congratulate Bob McEwen for
his work on uranium enrichment
provisions of this legislation on which
he has done an excellent job.
H.R. 776 increases America's energy
independence and competitiveness,
creates jobs, and fuels economic
growth. It is the result of years of
work by Members and staff on both
sides of the aisle, and in both bodies.
The Energy Policy Act reforms the
regulation of electric utilities to en-
sure competition in both generation
and transmission. Reform of electric
utility regulation is firmly grounded
on the provision of transmission ac-
cess. All electricity consumers benefit
from the increased competition among
electricity supply options.
Therefore, I support the rule and
urge adoption of the conference re-
port.
Mr. DERRICK Mr. Speaker, for
purposes of debate only, I yield 3 min-
utes to the gentleman from Kansas
(Mr. Slattery).
Mr. SLATTERY. Mr. Speaker, I rise
in support of this rule. I am pleased
that we have before us today legisla-
tion that establishes a national energy
strategy that will significantly reduce
our Nation 's dependence on foreign oil
and fossil fuels.
This comprehensive energy strategy
is designed to set meaningful goals to
promote energy independence, conser-
vation and commercial development of
alternative renewable energy techno-
logies.
The need for a national energy poli-
cy is obvious. Currently, the United
States imports about 50 percent of the
oil that we use. We spend about $40
billion a year on foreign oil. That is
almost one-fourth of our total trade
deficit.
Mr. Speaker, this legislation would
reduce U.S. oil imports by 8 million
barrels a day by 2010. That is equal to
about 40 percent of the oil we import-
ed in 1990.
This bill would require companies
that produce, transport, or sell alter-
native fuels like ethanol refiners, op-
erators of natural gas pipelines, and
even electric utilities to begin switch-
ing their vehicle fleets to alternative
fuels. This includes vehicles fueled by
natural gas and electricity, two alter-
native fuels that I believe hold special
promise for the future.
This bill would also require the
Department of Energy to enter into
joint ventures with industry to devel-
op electric vehicles and to establish a
program to get alcohol- based fuels
into commercial markets.
Electric vehicle research that is
going on at Kansas State University is
exciting. The research partnership
between the Kansas electric utility
research program and the DOE is
exactly the kind of private-public sec-
tor cooperation we need to perfect and
market this promising technology.
Fortunately, the bill does not in-
clude provisions dealing with
prorationing that would have resulted
in waste of natural gas by unduly
restricting the authority of the States
to regulate production of natural gas
for environmental and waste-preven-
tion purposes.
The handwriting is on the wall, Mr.
Speaker, we must ween this country
from our dependence on imported
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fossil fuels for the sake of the environ-
ment and our national security. This
legislation, with its increased efficien-
cy standards and alternative-fuel pro-
visions, will help us achieve that goal.
I urge adoption of this rule and
support the national comprehensive
energy bill.
I would like to also especially thank
the chairman, the gentleman from
Indiana (Mr. Sharp), and the ranking
minority members like the gentleman
from New York (Mr. Lent), and the
gentleman from California (Mr.
Moorhead), and the chairman, the
gentleman from Michigan (Mr.
Dingell), for their tireless efforts in
bringing this legislation to the floor
today.
Mr. DERRICK. Mr. Speaker, for
purposes of debate only, I yield 1 min-
ute to the distinguished committee
chairman, the gentleman from Michi-
gan (Mr. Dingell).
(Mr. DINGELL asked and was giv-
en permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, ordi-
narily a comment of this sort I would
regard as superfluous, but I believe at
this time it is important. I want to
commend the distinguished Commit-
tee on Rules, particularly the chair-
man and the ranking minority mem-
ber, for granting this rule and urge
my colleagues to support the rule. I
hope all will recognize that the legisla-
tion is very much in the public inter-
est and represents a good compromise
between widely differing viewpoints.
The Committee on Rules has, in-
deed, covered itself with credit during
very difficult times recently, working
on a broad array of legislation and
helping the House to expedite the
consideration of its business. They
deserve our thanks and our accommo-
dations for the rule.
As I have said, the legislation and
the conference report are excellent,
should be adopted by the House, sent
to the President so he can sign it and
so that we can continue to move for-
ward in the development of a rational
energy policy for this country.
Mr. DERRICK Mr. Speaker, I
thank the gentleman from Michigan
for his kind remarks.
Mr. Speaker, for the purposes of
debate only, I yield 3 minutes to the
gentleman from Massachusetts (Mr.
Mar key).
Mr. MARKEY. Mr. Speaker, I am
very pleased to rise today in support
of H.R. 776, the Energy Policy Act of
1992. This landmark legislation will
help keep down our dependence on
imported oil and greatly strengthen
our national economy.
The multitude of historic changes in
U.S. energy policy that are embodied
in this act are of special importance to
New Englanders. Our energy bills are
among the highest in the Nation and
with very limited local energy resourc-
es we are forced to export billions of
dollars annually from our region in
energy bills.
A decade of inaction on energy poli-
cy by two successive administrations
has put our regional and national
energy economy at great risk. But
H.R. 776 will help to reduce this risk
in two basic ways: First, it will help us
consume less energy; and second, it
will help to hold down energy prices.
Taken together these changes will
lower the amount of money we export
from New England in energy bills.
H.R. 776 will help protect us from the
next oil price shock while promoting
environmentally responsible energy
choices.
I have worked throughout my con-
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gressional career in support of nation-
al energy policies like those now em-
bodied in H.R. 776 - balanced, respon-
sible, low cost to consumers, and
nondamaging to the environment.
That is why energy efficiency is at the
heart of this bill.
Doing more with less is not just a
definition of industrial productivity.
It is the best prescription for interna-
tional competitiveness in energy, and
it is the foundation of a
proenvironment, progrowth energy
strategy for New England and the
Nation.
The Energy Policy Act conference
report reflects the conclusion of many
tough battles between House and
Senate producers and consumers and
environmentalists. Like most other
Members of Congress I do not support
all aspects of the conference report.
Of special note, I believe the bill
should have: First, tightened stan-
dards on automobile fuel economy;
second, established a Northeast re-
serve of petroleum products; and third
put in statute the moratorium on
offshore oil and gas drilling off New
England and elsewhere. Additionally,
I remain strongly opposed to provi-
sions of this bill that will: First, cut
the public's role in the licensing of
nuclear powerplants; second, force
EPA to loosen the environmental
standards at the Yucca Mountain
high-level nuclear waste site; and
third, allow utility companies to make
enormous investments overseas with-
out adequate protection of ratepayers.
Despite these shortcomings, I am
certain that on net this is an excep-
tionally beneficial legislative product.
The provisions on energy efficiency,
competition and access to the utility
grid, natural gas, renewable energy
production, the strategic petroleum
reserve, and much more will funda-
mentally affect the way in which our
Nation produces and uses energy.
More than any other bill in our
Nation's history this bill relies simul-
taneously on marketplace-
oriented policies that are not only
good for consumers but good for the
environment.
For example, the equipment effi-
ciency standards in H.R. 776, which I
introduced last year as H.R. 2451 with
Representative Michael Bilirakis and
others, will save the energy-equivalent
of a half-a-million barrels of oil per
day. These standards generate
enough energy savings so that the
Nation will be free to build 30 fewer
1,000-megawatt size power-plants by
the year 2010. Avoiding investments
in these unnecessary powerplants will
yield $50 billion in net savings to our
economy over the next two decades.
And furthermore, by avoiding running
these unneeded powerplants we will
avoid generating millions of tons of
carbon dioxide, the pollutant that is
the leading cause of global warming.
Similarly, the bill's reform of the
electric utility industry, by updating
the regulatory regime and opening up
the transmission grid to independent
power producers, renewable energy
generators, and others, and encourag-
ing access to affordable Canadian
natural gas, all combine to make bad
investments in powerplants less likely.
And as we learned the hard way over
the past 15 years, all of our worst
investments in power generation have
been nuclear powerplants. So by en-
hancing competition in this monopo-
listic industry we will end up with
cheaper and cleaner power sources.
Working closely with Chairmen
John Dingell and George Miller, and
Representatives Phil Sharp, Carlos
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Moorhead, and Norman Lent, and
many others, I am very pleased and
honored to have played a role in help-
ing to shape this important legisla-
tion.
Several provisions that I authored
will directly help consumers and busi-
nesses in Massachusetts and the Na-
tion keep down energy costs. These
are:
New energy efficiency standards.
The conferees adopted the Markey-
authored minimum efficiency stand-
ards for electric motors, certain light
bulbs, showerheads, and heating-
ventilating-air-conditioning (HVAC)
equipment. These are important new
standards that will have a major im-
pact on our Nation's energy diet: they
will prevent the need to construct
more than 30 Seabrook-sized power-
plants. These are consensus stan-
dards that were worked out by envi-
ronmentalists and manufacturers and
done a bipartisan basis with Represen-
tative Bilirakis.
Access to Canadian natural gas.
Conferees adopted a measure offered
by Representative Markey and Repre-
sentative Norman Lent that protects
New England's access to clean-burn-
ing, affordable Canadian natural gas.
This will help wean us from imported
oil and save consumers money.
Competitive electricity generation.
The conference-approved
Markey-Moorhead legislation will
promote a competitive electricity mar-
ket. By providing for access to the
electric transmission grid by indepen-
dent power producers, renewable ener-
gy generators, municipal utilities, and
others there will be more options for
consumers to choose cheaper power
sources. This, along with PUHCA
reform, will lead to a revolution in the
electricity industry - with enormous
benefits for consumers and the envi-
ronment.
Natural gas prorationing. The con-
ferees adopted language based on the
Markey-Scheuer floor amendment -
which had passed 238-169. This com-
promise section will allow consumers
to challenge the recent actions taken
by Oklahoma and Texas and other
gas-producing States to limit produc-
tion of natural gas in order to in-
crease prices. These new actions have
already increased prices enough so
that - if left unchecked - the heating
bill of the average Boston home that
heats with gas could go up $85 this
year.
Mr. McEWEN. Mr. Speaker, I yield
5 minutes to the distinguished gentle-
man from Virginia (Mr. Bliley), a
member of the Committee on Energy
and Commerce.
(Mr. BLILEY asked and was given
permission to revise and extend his
remarks.)
Mr. BLILEY. Mr. Speaker, I am
pleased that this body is moving with
such businesslike speed to consider
this conference report for the national
energy strategy. I applaud the firm
leadership of our chairman, the gen-
tleman from Michigan (Mr. Dingell),
the chairman of the subcommittee,
the gentleman from Indiana (Mr.
Sharp), and on our side, the ranking
minority member, the gentleman from
New York (Mr. Lent) - who will be
leaving us, sad to say - and the rank-
ing Republican on the subcommittee,
the gentleman from California (Mr.
Moorhead).
I also want to note the contribution
of the President in moving the debate.
I would like to just take a minute
and speak to one aspect of this bill,
and that is the reform of the Public
Utility Holding Company Act of 1935.
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That act has been on the books for a
long time with almost no amendments
to it. It came about because of a lot of
abuses on the part of utility holding
companies.
But times have changed. No one
foresaw the development of indepen-
dent power producers in the 1930's.
What we see with PUHCA is that this
is the wave of the future to put pri-
vate business bidding against each
other to meet peak demands for elec-
trical power, and as we move forward
with the Clean Air Act, electricity is
going to be more and more a part of
our energy program, even more im-
portant than it is today.
We are going to need more capacity.
What we were able to do, not only to
reform the act to get rid of the most
onerous burdens from these people,
but we also made sure that once they
made a bid that they would get access
to the transmission lines, because
there are some who have excess capa-
city today who do not want these
independent power producers to have
access, because they are fearful, and
rightly so, that they will be underbid
for their excess power by these inde-
pendent producers. But we were able
to make sure that that stayed in the
bill.
My friends, it is a good bill. Like
other speakers have said before me, it
is not everything that we would want.
There are a lot of things I would
like to have seen in this bill, but, sad-
ly, they are not there. But what we
do have is a definite improvement
over existing law. I am particularly
pleased that we were able to add an-
other provision to allow our utility
companies - the best in the world - to
compete for new business in emerging
countries, countries coming out from
behind the Iron Curtain, to produce
power.
Under the Holding Company Act
they were denied. They could go over
and invest in hotels or resorts, every
other thing, but the one thing that
they had the most expertise in, and
that is the generation and transmis-
sion of electric power.
We were able to correct that, and
our utilities will be able to compete in
what could be a $500 billion market
over the next few years.
So it is a good bill. I urge its pas-
sage.
Now, if I might engage the chair-
man of the subcommittee, the gentle-
man from Indiana (Mr. Sharp) in a
brief colloquy.
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. BLILEY. I yield to the gentle-
man.
Mr. SHARP. I thank the gentleman
for yielding.
Mr. Speaker, this Member would
have to indicate that possibly in gen-
eral debate we can do that, but we
have to check the legal language just
to make sure that we are certain of
the legal meanings, because this is to
establish the legal record and we are
double checking that right now.
Mr. BLILEY. I can understand that.
I too am not a lawyer and do not la-
bor under that handicap.
Thank you Mr. Speaker. I am
pleased that this body is moving with
such business-like speed to consider
the conference report for the national
energy strategy. I applaud your firm
leadership on this issue, Mr. Dingell,
as you have successfully steered this
bill through it's parliamentary maze.
I also want to note the contribution
of the President in moving this de-
bate. Earlier this spring, President
Bush and Admiral Watkins put forth
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a comprehensive national energy
strategy. That was strong, innovative
and correctly relied on both emerging
technologies and market principles.
And here in the House, we Republi-
cans led, by my friends, Mr. Lent and
Mr. Moorhead, built on the Presi-
dent's proposal and introduced our
own national energy strategy.
Now I understand that some have
criticized this bill as being undramat-
ic. Well I for one think that the Con-
gress can stand for a little less drama
and stand for more common sense. I
think the bill before us, though far
from perfect, contains a lot of com-
mon sense. It builds on current good
programs and gets us started in some
proper new directions. I think this
bill is worthy of this committee's sup-
port.
I think a successful energy plan
must address three main points: Con-
servation, efficiency, and development
of domestic energy sources. Now I
think that all three of these principles
are incorporated in a provision of
particular concern to me, the reform
of the Public Utility Holding Company
Act. As you know, I have been work-
ing for PUHCA reform legislation for
the past 4 years and am delighted
that this hard work is about to pay
off. I have long held that proper
PUHCA reform is projobs, procompet-
itiveness, and proenvironment.
The Public Utility Company Act
(PUHCA) was passed in 1935 to pro-
tect ratepayers from real-live abuses
by utilities. Over the years the law
has served us well; however, the law-
makers of that day could not envision
the development of the independent
power producer.
In 1978 Congress passed the Public
Utilities Regulatory Policies Act
(PURPA) brought into existence a
new entity called a nonutility
cogenerator. In the decade since
PURPA's enactment, over 20 percent
of new electricity generating capacity
has been supplied by nonutility gene-
rators. Just as important, this gener-
ation has been reliable or more reli-
able than that of traditional utility
generators.
And the trends would indicate an
even larger role for these independent
power producers. The Department of
Energy estimates that even with
strong conservation measures that
this Nation will require from 50 to
100 gigawatts of increased electric
capacity. This is equivalent to 500 to
1,000 new powerplants. By the year
2010, 40 percent of our Nation's ener-
gy demand will be electricity.
Unfortunately, we have squeezed
nearly every drop of benefit out of
PURPA. We are rapidly running out
of suitable steam-hosts that would
allow these IPP's to qualify as facili-
ties under PURPA.
Without the benefit of a steam-host,
these IPP's are forced to comply un-
der the untenable requirements of
PUHCA. Attempts by IPP's to work
within this 1935 law have created
what one lawyer has termed the
PUHCA pretzel, a legal and financial
labyrinth that robe the IPP of its
efficiencies.
Now if this new industry is to grow
to fruition, we must remove the
PUHCA impediment. I recognize that
PUHCA was created to address real
abuses by real utilities and I do not
advocate the scrapping of the law. I
do believe that we can refine the law
to retain the present protection for
the rate payer while encouraging the
benefits of increased competition.
And there are great benefits to al-
lowing competition into the wholesale
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electric generating industry. The
Department of Energy estimates that
full-fledged competition will bring
savings of nearly $2 billion per year.
Beyond these initial savings to the
ratepayer will be the boon to industry.
Lower energy costs means lower cost
products and services. We will need
every advantage when competing with
Asia and a unified Europe.
Finally, let us not forget the bene-
fits of the synergy of competition. I
am reminded that not a single drug
has ever been invented in a Com-
munist country. Competition spawns
innovation and technology transfer. I
am convinced that our best hope for
the commercialization for clean coal
technology lies in the hands of the
entrepreneurs. Our environment and
economy can benefit from the crea-
tivity of the private sector.
The legislation today addresses
PUHCA reform in a thorough and
comprehensive manner. It removes
the outdated barriers to competition;
yet, builds on the current law to en-
sure maximum consumer protection.
Just as noteworthy, this legislation
expands on the current trend toward
a more open, more efficiently utilized
transmission system. This added
enhancement will allow this Nation to
fully enjoy the benefits of competition.
Transmission lines are the highways
of commerce in the electric utility
industry. Fair and open access to
these lines is essential to fulfill the
purposes of the electricity title of this
legislation: The promotion of competi-
tion and the lowering of electric rates.
But the availability of transmission
access will prove meaningless if that
access is not provided under reason-
able rates, terms and conditions. In
the past, price and nonprice terms
have been distorted to block access or
make it uneconomic.
The transmission pricing provision
contained in H.R. 776 are intended to
ensure that transmission services are
available under just and reasonable
rates. Some parties have wanted us
to specify detailed pricing standards
that would dictate results in every
circumstance. But all circumstances
are not alike, and it would be inappro-
priate for Congress to straitjacket the
FERC.
Others had wanted us to endorse or
condemn various pricing methodolo-
gies: opportunity cost pricing; margin-
al cost pricing, embedded cost pricing.
We did not take this approach. In-
stead, the pricing language in the
legislation establishes a single guiding
principle: A reaffirmation of the
just-and- reasonable pricing standard
that has governed electric rate setting
for years. Included in this concept of
just and reasonable is a clear rejection
of the extreme notion of allowing
transmission owners to collect mono-
poly rents, or extortionary rates.
We did recognize recent FERC deci-
sions that have concluded that, under
certain circumstances, rates could
deviate from the previous pricing
methodology of embedded cost pricing
without violating the
just-and-reasonable standards. FERC
has taken this approach in several
instances where the costs are legiti-
mate and verifiable, the collection of
these costs does not stifle nor distort
competition, and the Commission has
determined that it is appropriate to
assign those costs - or a portion of
those costs - to the transmission cus-
tomer. The language contained in
H.R. 776 is intended to reinforce this
rigorous responsibility on the FERC.
Indeed, I would point out that the
notion that requesters of transmission
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system enlargement should always
bear the entire cost of system enlarge-
ment was debated and rejected by the
conferees.
Mr. Speaker, in my view, the FERC
has an affirmative responsibility un-
der this legislation to ensure that
transmission rates are set in a man-
ner that will encourage, not stifle,
competition. We are not regulators
and cannot legislate pricing formulas
that would be appropriate to all types
of transactions. For that reason, the
conferees established more general
pricing guidance. Thus under section
723, any costs assigned to a trans-
mission customer must be legitimate,
verifiable, and economic. Transmis-
sion rates must promote economically
efficient transmission and generation.
Economic benefits of providing trans-
mission services must be given equal
weight to economic cost; for instance,
in determining who should bear the
cost of transmission additions, existing
transmission customers must be treat-
ed as native load customers. The
protection of transmitting utility cus-
tomers and the need to promote com-
petition through lowest reasonable
transmission costs. I am hopeful that
this guidance will dissuade FERC
from approving excessive transmission
rates.
I want to commend my colleague
from Louisiana, Mr. Tauzin, and my
fellow Virginian, Mr. Boucher for
their leadership on the issue. Their
unique perspectives and individual
talents have combined to make this
legislation more substantial and credi-
ble. I also want to note the Herculean
efforts the chairman of the Energy
and Power Subcommittee, Mr. Sharp,
for using his resources to push the
debate toward maturation.
Finally, I am pleased that the con-
ference adopted a provision that I
proposed that will allow utility invest-
ment in overseas markets. In the
years to come I suspect that we will
refer to this as the 'sleeper issue' of
the national energy strategy.
Currently, a utility affiliate compa-
ny is permitted to invest in overseas
land deals, foreign banks, foreign oil
wells, even foreign movies - U.S. utili-
ty affiliates are prevented from engag-
ing in only one type of foreign enter-
prise - the one they know the best.
They are not permitted to generate or
distribute electricity under the cur-
rent law.
Presently, there are enormous in-
ternational investment opportunities
for U.S. companies and utilities. In
the next several years, more than 60
countries around the world are ex-
pected to privatize their utility sys-
tems or actively encourage indepen-
dent power generation. Recent stud-
ies estimate that the global market for
investment in electric generation,
transmission, and distribution systems
will range upward of $500 billion.
Unfortunately, PUHCA's con-
straints have made it difficult for
United States utilities to compete
with the Germans and the Japanese.
United States companies are being
beaten to the punch because of this
regulatory snafu. The PUHCA provi-
sions in the bill will finally allow utili-
ty affiliates to participate in generat-
ing projects but will still be barred
from any role in the distribution.
This is not good enough. Countries
that are looking for help need Ameri-
can expertise for the whole system,
not just generation. The Germans
and the Japanese still have an advan-
tage. This does not mean that just the
utility affiliate will lose - American
turbine manufacturers lose,
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American-made electric meters, like
the ones made in Indiana lose, and
the American worker loses jobs.
Now I realize that there may be
some concern about consumer protec-
tion. I would argue that the same
protection afforded ratepayers on
other affiliate dealings will still exist,
while the provision adopted allows for
even further oversight. Ladies and
gentlemen, we have a window of op-
portunity to make this energy bill a
jobs bill as well. I am pleased to have
had the cooperation of the conference
on this matter.
Mr. DERRICK Mr. Speaker, for
purposes of debate only, I yield 2 min-
utes to the gentleman from Arkansas
(Mr. Alexander).
(Mr. ALEXANDER asked and was
given permission to revise and extend
his remarks.)
Mr. ALEXANDER. Mr. Speaker, I
thank the gentleman for yielding. Mr.
Speaker, for almost 20 years I, togeth-
er with many other Members of this
body, have worked to help establish a
national energy policy. We are a Na-
tion with abundant resources, with
the world's best research and technol-
ogy for energy conversion, but we are
a nation that has for many years now
been in need of a national energy
policy. The Comprehensive National
Energy Policy Act being considered in
the House of Representatives is de-
signed to provide just that.
I believe that this bill is one of the
defining acts of economic, energy, and
environmental policy of the 20th cen-
tury. I commend the leaders of this
committee, who have helped bring it
to the floor today.
I support H.R. 776 because it will
help produce cleaner fuel, provide fuel
that is healthier to humans and to
plant life and to produce less green-
house gas to pollute our atmosphere.
There is overwhelming evidence
that the effects of having no energy
policy have been debilitating to our
Nation. First of all, we continually
become more and more dependent on
foreign oil. Imports from other coun-
tries supply more than 50 percent of
the United States' annual needs. The
percentage of our Nation's energy
requirements met by foreign imports
has risen from 23 percent in 1982 to
the 1991 level of 52 percent.
The economic cost to the United
States of this dependence is enormous.
A current report from the Library of
Congress research service estimates
that, based on Energy Information
Agency figures, the cost to the United
States over the next 10 years will be
about $750 billion in 1990 dollars and
will increase to about $1 trillion in
1990 dollars during the decade from
2000 to 2010. One trillion dollars in
one decade is a burden to the econo-
my.
Dependence on imports causes us to
rely on suppliers in politically unstable
regions like the Middle East where 2
years ago we were forced to fight a
war in order to protect the oil supply
at an enormous cost to the U.S. tax-
payers.
To illustrate this added cost I refer-
ence a General Accounting Office
study that was conducted at my re-
quest in August 1991. The resulting
report entitled, 'Southwest Asia, The
Cost of Protecting U.S. Interests,'
shows that assistance provided to the
Persian Gulf from 1980 to 1990 was
approximately $420 billion and im-
ports totaled 140 billion gallons.
Therefore the additional cost to con-
sumers of each gallon of imported
gasoline was about $3 per gallon.
Three dollars per gallon of gasoline
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was spent by the U.S. Government to
protect this country's interest in oil
imports. Our country cannot afford
to pay this price.
I would like to insert a summary of
the before-mentioned GAO report in
the Record.
Another cost of depending on petro-
leum products is more and more evi-
dent as it takes its toll on human and
animal health. It has been demon-
strated that ill effects on the human
body are caused by air pollution which
is generated by the increasing number
of automobiles on our Nation's streets
and highways. Recent Environmental
Protection Agency studies attribute
about one-half of the several hundred
air-quality-related cancer deaths per
year to toxic air pollutants from gaso-
line vapors and vehicle exhaust.
Also, the cost to plant life from
damaging auto emissions is increasing
and is becoming more noticeable.
In a recent U.S. Department of
Agriculture report entitled, 'Agricul-
ture and the Environment,' Walter
Heck, a USD A specialist states:
We used to think air pollution was
just a city problem. Now, we know
that pollutants can be transported
hundreds of miles and can be found in
elevated concentrations in rural and
forested areas. Some of the most im-
portant crops sensitive to pollution
are soybeans, cotton, peanuts, tobacco,
clover, alfalfa, and potatoes.
We must, for the economic well-
being, the security, and the health of
the United States, lessen our depen-
dence on foreign oil.
This energy bill, if enacted, would
include a goal of 30 percent displace-
ment of foreign oil imports through
the next 10 years. That means oil
imports could be reduced by 50 per-
cent once we attain the goal contained
in the Comprehensive National Ener-
gy Policy Act.
The energy bill offers the prospect
of saving $500 billion in the decade
from 2000 to 2010 which could then
be reinvested in our economy creating
up to 750,000 jobs.
Enactment of a national energy
policy would create a new rich market
for farm fuel and other alternative
fuels produced in many different re-
gions of this country. This bill offers
the United States the prospect of an
economic development opportunity
larger than any other in the history of
this Republic.
With up to a 50-percent reduction
in foreign oil imports, one can envi-
sion a massive shift of wealth from
the oil fields of the Middle East to the
farmlands of the mid-South.
There are many opportunities for
the production of alternative fuels
from a variety of domestic sources.
Examples of energy producing pro-
ducts are ethanol, methanol, liquid
petroleum gas, compressed natural
gas, coal gasification, solar power, and
hydrogen.
For the last 2 years I have served as
a member of the U.S. Alternative
Fuels Council. There are 19 appointed
members from both industry and gov-
ernment. We have met on 11 occa-
sions over the past 2 years. After
thorough deliberation by the Council
we have put together a final report,
makingfindingsand recommendations
for the implementation of Govern-
ment incentives to further utilize
various alternative fuels. The goal in
drafting this report has been to for-
mulate a plan developing cost-
effective alternative transportation
fuels that promote environmental
quality and energy security.
I would like to make the final re-
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port of the U.S. Alternative Fuels
Council a part of the Record at this
time.
Among the most exciting energy
developments currently underway is a
joint demonstration project between
the United States and Brazil to con-
vert biomass to ethanol.
The United States-Brazil project
utilizes advanced technology develop-
ed in Brazil over the last two decades.
This technology has enabled Brazil to
become the leading ethanol producer
in the world. About 95 percent of the
automobiles in Brazil are run on etha-
nol, referred to as alcool by the Brazil-
ians.
The biomass conversion project
combines Brazilian technology with
the research and development that
has taken place in the United States
over the past 20 years. The project
demonstrates the cost competitiveness
of energy produced from biomass to
gasoline. The goal of the project is to
produce ethanol from biomass at a
cost of 60 cents per gallon.
The energy bill before us authorizes
up to $205 million for research and
development for alternative fuels re-
search. This is an increase of about
$75 million over last year's goals. In
the district I represent, Arkansas
State University is conducting re-
search to discover crops that have
high energy potential. Agricultural
crops like corn, milo and soybeans,
and indigenous plants like switchgrass
and swamp weeds can be used to pro-
duce energy domestically.
The money authorized by this ener-
gy bill will provide opportunities for
enhanced research activities Arkansas
State University and others to acceler-
ate these research efforts and to speed
along the cause of finding additional
plants that can readily be converted
to alternative fuels.
Additionally abundant potential
feedstocks such as rice straw, soybean
trash, cotton seed hulls and wheat
stubble all have potential to be turned
into fuel. Substances that are now
nothing more than waste products can
be used to create energy.
For almost 20 years I have worked
to establish a comprehensive energy
policy for the United States. I have
served on the National Alcohol Fuels
Commission and the U.S. Alternative
Fuels Council. Along with my col-
leagues, I have urged the Congress to
take the important steps necessary to
promote the development of alterna-
tive fuels.
We must now finally seize the op-
portunity to make the most of avail-
able domestic sources of energy and to
discover new ones. We must decrease
our dependence on foreign oil, protect
the health of our citizens, and stop
sending money abroad to pay for what
we can provide for ourselves without
the costs associated with imports. We
must support the Comprehensive
National Energy Policy Act.
DOMESTIC GASOLINE CONSUMPTION
Barrels
Gallons
Gallons
/day
/day
fraar
Year
1980
6.579
276
100.470
1981
6.588
277
101.106
1982
6.539
275
100.376
1983
6.622
278
101.470
1984
6.693
281
102.566
1985
6.831
287
104.766
1986
7.034
295
107.676
1987
7.206
303
110.696
1988
7.336
308
112.420
1989
7.328
308
112.420
1990
7.235
304
110.960
Not*. - Approximate total consumption, 1980-90:
1.166,000.000.000 gallons. Data pnmdM ay En-
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srgy Information Administration.
Tha Congraaaional Re— arch Services advisee
that from 1980 to 1990, importa from the Persian
Gulf region comprised approximately 12 percent
of total gasoline consumption about
140.000.000.000. gallons.
REAL COST OF A GALLON
OF GASOLINE
GAO reports the following costs for protecting
foreign oil supplies during ths years 1980-90:
Military activities
(SW Asia-dedicated) $21,400,000,000
Military activities
(SW Asis-oriented)
Othsr contingencies
and mobility
programs
Kuwaiti reflagging
operation
Operations Desert
Shield and Storm
Military assistance
to strategic
SW Asis countries
Economic assistance
to strategic
SW Aaia countries
Multilateral financial
aid (U.N. and
World Bank)
VS. aid for
energy activities
Multilateral aid
for energy
activities (World Bank)
Total
Total, excluding
multilateral aid
If aasiatance provided to the Persian Gulf re-
gion from 1980 to 1990 was approximately $420
billion, and importa totaled 140 billion gallons,
the additional cost of imported gasoline that
consumers don't see st the pump is about $3 per
gallon]
UNITED STATES ALTERNATIVE FUELS
COUNCIL FINAL REPORT
INTRODUCTION
The United Slates Alternative Fuels Council
was crested by Section 4 of the Alternative Motor
Fuels Act of 1988 (AMFA). Public Law 100-494.
AMFA states that
(1) The chairperson of the Commission shall •
• • establish a United States Alternative Fuela
Council to report to the Commission about mat*
5.800.000.000
272.600.000.000
240.000.000
61.000.000.000
30.800.000.000
28.000.000.000
6.626.000.000
130.000.000
466.000.000
427.062.000,000
419.970.000.000
tors related to alternative motor fuela.
(2) The Council shall be composed of members
ss follows: (A) one Member of the House of Rep-
resentstives sppointed by the Speaker of the
I louse of Representatives, (B) one Member of the
House of Representatives sppointed by the Mi-
nority Loader of tlte House of Representatives;
(C) one Member of the Sensts sppointed by the
Majority Leader of the Senate; (D) one Member of
the Senate appointed by the Minority Leader of
the Senate; and (E) 16 persons from the privste
sector or from State or local government who are
knowledgeable about alternative motor fuela and
their possible uses snd the production of elterne-
tive motor fuels snd vehicles powered by such
fuels, to be sppointed by the chsirperson of the
Commission.
PURPOSE OF THIS REI»ORT
The purpose of this report is to communicste
ths fins! findings snd recommendetions of the
Council which the reader will find listed later as
'ststements of fsct' snd 'policy recommends-
lions.' These findings represent the consensus of
the Council ss measured by concurrence from st
lesst 75% of the members who were present st
the September 9. 1992 meeting. Over the psst 30
months the Council has discussed msny topics,
but this report only contains recommendations
upon which three-fourths of the Council mem-
bers sgrce.
COUNCIL MEETINGS
The Council met 1 1 times on the following
dates and locations:
Date snd location: Msy 9. 1990, Washington.
DC; June 14-15, 1990, San Diego. CA; August
15-16. 1990, Dearborn. MI; November 16-16.
1990. Philadelphia. PA; December 12. 1990.
Washington. DC; February 14-15. 1991. Denver,
CO; May 17, 1991. Washington. DC; September
19-20. 1991. Kansas City. MO; January 23-24,
1992. Orlando. FL; April 29. 1992. Washington.
DC; September 9. 1992. Golden, CO.
COUNCIL MEMBERSHIP
The members of the United Slates Alternative
Fuela Council were:
Mr. J.K. Aldous, Senior Vice President, Ameri-
csn Automotive Associstion.
Mr. George Babikian. President. ARCO Prod-
ucts Compsny.
Mr. Robert Campbell, President snd CEO. Sun
Compsny, Inc.
Dr. Robert Hahn. Visiting Scholar, American
Enterprise Institute.
Mr. Ban Henneke, Jr., President, Energy Fuels
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Development Corporation.
Mr. David Hentschel. Chairman, Occidental Oil
& Gss Corporation.
Mr. Howard Hinton, Vice President, Midwest
Grain Products.
The Honorable Charles Imbrecht, Chairman,
California Energy Commission.
Mr. EUwin Larson, President and CEO (re-
tired), Brooklyn Union Gas Company.
Mr. Ray Lewis, President, American Methanol
Institute.
Mr. David Merrion, Senior Vice President,
Detroit Diesel Corporation.
The Honorable John Rockefeller IV, VS. Sena-
tor.
The Honorable Charles Grassley, U.S. Senator.
The Honorable Bill Alexander, U.S. Congress-
man.
The Honorable Jerry Lewis, VS. Congressman.
Mr. Federico Pens, (Former Msyor of Denver,
CO), CEO/President, Pena Investment Advisors,
Inc.
Ms. Helen Petrauskas, Vice President of Envi-
ronmental & Safety Engineering, Ford Motor
Company.
Mr. Theodore Weigle, Jr., Vice President,
Bechtel Corporation.
Mr. Robert Yuhnke, Senior Counsel, Environ-
mental Defense Fund.
Mr. Herbert Lapp, President, II. J. Lapp &
Associates.
MISSION STATEMENT
In response to its legislative charter, the Coun-
cil formulated the following mission statement:
The United States Alternative Fuels Council
shall recommend a plan for developing
cost-efrectivealternative transportation fuels that
promote environmental quality and energy secu-
rity.
POLICY GUIDELINES
It is the position of the United States Alterna-
tive Fuels Council that the United Slates should:
1. Maintain government-established standards
for the environment.
2. Encourage diversification of energy supply
dependence with regard to location and type
while encouraging increased domestic production
of all practical, efficient and economic sources of
energy, traditional and non-traditional.
3. Maintain VS. competitiveness in a global
economy.
4. Encourage coordination of a national startup
and program development for alternative fuels
which account for local, state and regional re-
quirements.
6. Encourage a robust and durable policy, valid
across the broadest range of economic, environ-
mental and fuel supply balance scenarios.
6. Avoid any drastic petroleum taxes or import
foes.
7. Encourage a 'Level Playing Field' that al-
lows alternative fuels and vehicles to compete
fsirly based on their cost and performance char-
acteristics.
8. Increase supply-side-push incentives to pro-
duce alternative fuel vehicles and alternative fuel
availability.
9. Periodically reexamine existing fuel and
vehicle supply/production requirements relative
to meeting national goals.
10. Do not insist on 'tight* early links between
alternative fuel vehicles and alternative fuel
ssles.
GENERAL STATEMENTS OF FACT
1. All alternative fuels identified ut inherently
less polluting snd improve energy security.
2. Mobil/stationsry source trading programs
have a high probability of causing cost effective
alternative fuel use for environmental purposes.
3. The import of MTBE, methanol. LPG or
LNG from Persian Gulf sources does not improve
our energy security.
GENERAL POLICY RECOMMENDATIONS
1. The government should not discriminate for
or against individual alternative fuels in the
marketplace.
2. The government should not use mandates to
promote the use of particular alternative fuels or
vehicles. It should only consider mandates as a
general atrategy of last resorts.
3. Do not artificially make gasoline consider-
ably more expensive to make alternative fuels
more competitive unless there mrt demonstrable
societal benefita.
4. Uae incentives that clearly 'sunset* when
fuels are viable on their own.
6. Use cost -effectiveness as the tool to sort out
which policies should be spplied first for each
fuel.
6. Environmental impact of alternative fuels
should be measured against *VS. average* gaso-
line on a reactivity-weighted basis.
7. Any alternative fuel which on a
reactivity-weighted basis, is less polluting should
be encouraged in every ozone non-attainment
area in the United States if it is cost effective.
3. If the use of an alternative fuel reduces
dependence snd has no greater total cost than
gasoline from imported petroleum, its use should
be encouraged by federal, state and local govern-*
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9. Whan an alternative fuel reduces pollutants
compared to a crude oil-based fuel at no greater
cost, its use should be encourage by federal, state
and local governments.
10. The non-petroleum portion of reformulated
gasoline (the amount of ethanol or methanol or
their ethers used in the reformulation) should be
counted towards the use of alternative fuels for
all compliance under the Clean Air Act, National
Energy Strategy, etc.
1 1. All alternative fuels should pay equal road
taxes on an appropriate basis. Gross vehicle
weight msy be the simplest way to do this.
12. Information programs should be conducted
to educate potential customers about bene-
fits/availability of Alternative Fuel Vehicles and
to train Alternative Fuel Vehicle service person-
nel.
15. Primarily non-financial incentives should
be provided for Alternative Fuel Vehicle owners,
such ss use of high occupancy vehicle (HOV)
lanes, exemption from certain parking restric-
tions, etc.
14. National standards for fuel specific and
electric vehicle recharging infrastructure should
be established.
16. Flex fuel vehicles should optimize the bene-
fits of alternative fuel.
STATEMENTS OF FACT FOR CNG/LPG
1. The use of North American natural gas ss
CNG improves energy security.
2. The use of North American natural gas to
produce methanol increases our energy security.
3. The use of LPG from North American gas
liquids improves energy security.
4. LPG is coot effective if used in step vans,
high mileage delivery/taxible-light duty vehicle
use, and in public and school bus applications.
6. CNG is coot effective in high milesge, medi-
um and heavy duty applications, in step vans,
high mileage delivery/taxicab-light duty vehicle
use, and in public and school bus applications.
6. CNG and LPG are not coot effective in nor-
mal mileage light duty vehicles.
7. Dual-fueled CNG/LPG vehicles are penalized
by extra vehicle weight and/or reduced cargo
3. The government should exempt entities that
retail vehicular CNG from FERC jurisdiction,
with the exception of entities normally regulated
by FERC.
4. Rate basing of natural gas or electric vehi-
cles should be avoided.
STATEMENTS OF FACT FOR ETHA-
NOUMETHANOL
1. The use of North American natural gas to
produce methanol increases our energy security.
2. Methanol is coot effective ss an ether for
octane enhancement, reduction of photo-reactive
hydrocarbon compounds, and meeting oxygen
standards of the Clean Air Act.
3. Ethanol is coot effective ss s blend for oc-
tane enhancement in the reduction of
photo-reactive hydrocarbon compounds, and
meeting oxygen standards of the Clean Air Act.
4. Reformulated gasoline, ss the carrier of
alternative fuels, is the least costly, most effi-
cient, snd most rapidly implemented way to sub-
stantially increase the use of alternative fuels in
the United States.
6. NEAT and near NEAT methanol use is best
implemented through the initial use of light duty
flex-fuel vehicles snd heavy duty-dedicated vehi-
cles.
POLICY RECOMMENDATIONS FOR
ETHANOUMETHANOL
1. Eliminate artificial barriers to entry for
ethanol and methanol in the distribution channel
for liquid transportation fuels.
2. So long as the effective subsidies exist, we
should provide true proportionality of Federal
Excise Tax for Ethanol blended fuels.
3. Increase R&D to reduce costs of producing
ethanol and methanol from renewable resources.
STATEMENTS OF FACT FOR ELECTRIC
VEHICLES/FUEL
1. The use of electricity in cost effective wsys
improves our energy security if not generated
from oil.
2. Electricity is cost effective in light rail msss
transit, inter-city rail, and perhaps in
limited-range delivery vehicles.
POUCYRECOMMENDATIONS FORCNG/LPG
1. LPG uses should be aggressively pursued to
provide butane outlets ss volatility of gasoline is
reduced.
2. LPG safety tests should be conducted and
the information concerning LPG's ssfety record
should be disseminated.
POLICY RECOMMENDATIONS FOR
ELECTRIC VEHICLES/FUEL
1. Rate basing of natural gas or electric vehi-
cles should be avoided.
2. Electric vehicle analysis should include bat-
tery recycling and disposal.
3. Inspections and maintenance requirements
for electric vehicles should be waived.
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FINAL STATEMENT
The Council resolved at its earlier deliberations
on December 12, 1990, that an alternative fuels
program 'should make progress from year to year
with a goal that by the year 2010 alternative
fuels will be used for at least 26 percent of all
motor vehicle miles traveled.' The policies and
recommendations finally adopted by the Council
on September 9, 1992, are not expected to attain
the 26 percent goal within the time frames iden-
tified. Policy makers should be advised that
more aggressive policies and public investments
would be required to attain the 26 percent goal.
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. ALEXANDER. I yield to the
gentleman from Indiana.
Mr. SHARP. Mr. Speaker, the gen-
tleman, for many, many years, has
been a true leader especially in the
area of alcohol fuels, not to mention
other energy issues, and the work of
the commission he has been a central
leader of is very important to the
work of the Congress, and we appre-
ciate his effort.
Mr. DERRICK. Mr. Speaker, for
purposes of debate only I yield 2 min-
utes to the gentleman from California
(Mr. Panetta), the distinguished chair-
man of the Committee on the Budget.
(Mr. PANETTA asked and was
given permission to revise and extend
his remarks.)
Mr. PANETTA. I thank the gentle-
man for yielding time to me.
Mr. Speaker, during debate on H.R.
776, the National Energy Policy Act, I
would like to state for the record by
great disappointment that the final
version of this legislation does not
contain the long-term Outer Conti-
nental Shelf oil and gas leasing defer-
rals which were included in the
House-passed version of the bill.
As my colleagues know, I have led
the fight in the Congress in opposition
to Outer Continental Shelf (OCS) de-
velopment in environmentally sen-
sitive areas. For more than a decade
we have fought year-to-year battles to
protect these areas through annual
leasing bans on the Interior appro-
priations bill.
It has always been my position that
while OCS development has a legiti-
mate role to play in our Nation's en-
ergy policy, it should not be our first
line of defense. We must pursue con-
servation measures and alternative
sources of energy before we seek the
development of sensitive areas of our
Nation's coastlines. Moreover, I be-
lieve the Congress should set up a
process by which we would per-
manently protect the particularly
sensitive areas of our coastline while
allowing development to safely pro-
ceed in other ares. This effort has
been hampered by the Department of
the Interior's inadequate data base
which has been criticized by the Na-
tional Academy of Sciences as being
inadequate and unreliable as a basis
for making decisions concerning the
environmental impacts of leasing. For
this reason, the Congress has held
that the Department should not pro-
ceed with leasing in particular areas
until we can adequately determine the
impacts of offshore development.
The legislation passed by the House
provided appropriate deferrals for
these area while joint Federal/State
scientific panels obtain the infor-
mation necessary to make responsible
decisions concerning the impacts of
development on sensitive regions. The
language in the House bill was based
on past action by the Congress, the
President and recommendations for
the National Academy of Sciences.
These deferrals and study require-
ments would have provided an impor-
tant step toward achieving a (sir,
scientific-based resolution of this diffi-
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cult issue.
Despite the tremendous efforts of
Chairman George Miller, Chairman
Gerry Studds, and other House con-
ferees, the OCS title of the bill was
struck by the conferees due to the
objections of the administration to a
moratorium on the development of
environmentally sensitive areas in
Florida, Alaska, and North Carolina -
despite the administration's past sup-
port for such bans and its expressed
support for a cancellation and
buy-back of the leases in Florida.
I am sure those opposing the deve-
lopment moratorium on these areas
hoped and expected the House would
forgo these bans in exchange for a
leasing deferral in other areas. But,
as we have demonstrated many time
in the past, our national coastal coali-
tion steadfastly refused to allow a
divide-and-conquer approach to our
Nation's coastline. When faced with
the inevitability of losing the develop-
ment bans, the House moved to strike
the OCS title all together.
Such objections by the adminis-
tration demonstrate that - in spite of
its rhetoric and token actions - it is
still unwilling to prohibit offshore oil
development in environmentally sensi-
tive areas. This flip-flop should not
come as a surprise. Twice before the
California delegation has negotiated
similar agreements with the adminis-
tration that would have protected the
sensitive areas, while allowing leasing
to go forward in areas of high re-
source potential. Both times the ad-
ministration unilaterally walked out
on the deal.
So those lessons and our experience
with this bill show that we must be
ever vigilant in our fight to protect
our precious coastal resources. We
will continue our battle through an-
nual leasing moratoria and will seek
the enactment of legislation in the
next Congress to provide long-
term protection for these sensitive
areas. I, as well as the members of
our national coastal coalition, are
deeply grateful to Chairman Sidney
Yates, Chairman George Miller, and
Chairman Gerry Studds for all of
their past efforts and I hope that we
can count on their continued support
as we pursue a long-term resolution to
this contentious issue.
Mr. DERRICK. Mr. Speaker, for
purposes of debate only, I yield 2 min-
utes to the gentlewoman from Tennes-
see (Mrs. Lloyd).
(Mrs. LLOYD asked and was given
permission to revise and extend her
remarks.)
Mrs. LLOYD. I thank the gentle-
man for yielding to me.
Mr. Speaker, I am pleased to add
my wholehearted support for the en-
ergy conference report before us to-
day. Passage of this legislation repre-
sents the culmination of many months
of delicate negotiations among Mem-
bers and staff.
In drafting the research and devel-
opment titles of the bill, our commit-
tee, the Energy Subcommittee of the
Committee on Science, Space, and
Technology, attempted to craft policies
that will maximize the use of our
indigenous resources while developing
a complement of new technologies
that are more efficient and environ-
mentally compatible.
The provisions also seek to provide
a path between development and
commerical applications, an often-
neglected step in the process of tech-
nology commericalization. A
uranimum enrichment corporation
will now come into existence.
The bill's research and development
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provisions are aimed at attaining sev-
eral strategic goals which I believe are
of great importance to our energy
self-reliance.
By setting the goals of strengthen-
ing national energy security, increas-
ing the use of energy efficiency in our
economy, reducing pollutants and
maintaining the technological com-
petitiveness of our industries, I believe
we have given our Nation a blueprint
for our energy future.
In closing, I would like to offer my
sincere thanks and appreciation of all
of my colleagues who have worked so
diligently to bring this energy package
before us today, the chairman of the
committee, the gentleman from Michi-
gan (Mr. Dingell), the gentleman from
Indiana (Mr. Sharp), the gentleman
from California (Mr. Miller), the gen-
tleman from New York (Mr. Lent),
and the gentleman from California
(Mr. Moorhead), and, in particular,
the great leadership of our Committee
on Science, Space, and Technology
and its chairman, the gentleman from
California (Mr. Brown).
Mr. McEWEN. Mr. Speaker, I yield
myself 4 minutes.
Mr. Speaker, I would like to associ-
ate myself with the remarks of the
gentlewoman from Tennessee (Mrs.
Lloyd) and repeat what I said earlier
in the consideration of the bill, that
no one has worked harder or con-
tributed more to the success of this
legislation than the distinguished
Member, the gentlewoman from Ten-
nessee (Mrs. Lloyd).
The first bill that I introduced upon
coming into the House of Representa-
tives in 1981 was to establish a U.S.
uranium enrichment corporation.
During the 10 years that we have
labored together on this, I have been
completely indebted to Mrs. Lloyd's
leadership on the Science, Space, and
Technology Subcommittee, and I com-
mend her on her success of having
this included in the Energy Strategy
Act before us today.
I was mentioning about the diffi-
culty of getting this legislation passed,
and I referred to the various commit-
tees, in the Rules Committee this
morning, as having jurisdiction. Our
Committee on Rules overlooked two of
them. One of them was the distin-
guished Committee on Veterans' Af-
fairs, of which the Member in the
chair is the chairman, as well as the
Committee on Poet Office and Civil
Service. This points out the problem
we have when you have legislation
that comes in under the current situa-
tion where 12 subcommittees have
jurisdiction over one bill.
Let me make the observation that
this bill encourages greater use of
renewable energy, it establishes the
Uranium Enrichment Corporation to
run the Department of Energy's en-
richment enterprise; it has one-stop
licensing for nuclear power in Ameri-
ca, after all these years of having a
serious of designs, and also having a
licensing in a two-step process where
you are licensing the construction and
then, having built the plant, investing
hundreds of millions of dollars, you
are not able to use it and you had to
get licenses again. This bill says that
you have one license that you can
build and you can use, and also it
provides for the Department of Ener-
gy to have a standardized facility, a
standardized construction program
like they have in the rest of the world,
and encourages use of domestic coal in
an environmentally acceptable man-
ner, allows the use of the strategic
petroleum reserve when prices sky-
rocket in situations like the 1990 Iraqi
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embargo. All great, important steps
forward.
Mr. Speaker, the only thing that
causes the most concern has to do
with the tax provisions, and the tax
provisions are one which are always a
hindrance because it discourages do-
mestic production.
Some of the areas of particular
concern that are beneficial, however,
extend permanently the energy invest-
ment credit for solar and geothermal
properties.
Also, it modifies the partial excise
exemption for gasoline that is mixed
with ethanol and extends its applica-
tion to 5.7 or 7.7 blends.
Now, currently it is at 10 percent.
Under the Clean Air Act that went
into effect this past year it would not
qualify, so this cleans that up so that
we can continue such facilities as at
South Point, OH, that produces etha-
nol to be blended into our gasoline
stream. It would still be able to be
used and still be able to have the in-
centive.
There is an increase in the rate of
withholding for paramutual winnings,
without much discussion or debate.
There is also an increase in the
backup withholding to one-third.
It denies deductions for travel ex-
penses for those who have to be
moved to a new job location and trav-
el back and forth. The travel expens-
es are denied after 1 year, another
area of concern for me personally, as
well as some other provisions that, as
we said, while not perfect are a great
step forward.
The conference agreement includes
provisions of the Senate bill which
establish the rules to fund the retire-
ment health benefits of the United
Mineworkers, the coalminers, a provi-
sion that was considered earlier in the
House and was not acted upon is in-
cluded in here.
Mr. Speaker, let me leave off as I
began. This has been a very tortuous
task that has taken many, many
years. I commend the leadership of
the various committees that were
involved, all 12 of them, in bringing
this to the floor, particularly the gen-
tleman from Michigan (Mr. Dingell)
and the gentleman from New York
(Mr. Lent).
I am delighted to have been in-
formed moments ago that the Presi-
dent does intend to sign this legisla-
tion. If the other body can act expedi-
tiously today, I believe it is in the best
interests of our country that we do
this. •
Mrs. VUCANOVICH Mr. Speaker, I
rise in opposition to the rule for the
consideration of the report of the
committee of conference on H.R. 776
- the Energy bill. I oppose this rule
because it waives all points of order.
Had it not done so, I would have
raised a point of order against section
801 as exceeding the scope of the con-
ference. I made a request in oral and
written testimony to the Rules Com-
mittee to not protect this section of
the conference report from such chal-
lenge, but the committee chose to
agree to the request of the chairman
of the House conferees that the waiv-
er be granted. Because of this I urge
a 'no' vote on the rule and a 'no* vote
on the conference report on H.R. 776.
Mr. McEWEN. Mr. Speaker, I yield
back the balance of my time.
Mr. DERRICK Mr. Speaker, I yield
back the balance of my time.
The SPEAKER pro tempore. (Mr.
Montgomery). Without objection, the
previous question is ordered on the
resolution as modified.
There was no objection.
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The SPEAKER pro tempore. The
question is on the resolution as modi-
fied.
The question was taken; and the
Speaker pro tempore announced that
the ayes appeared to have it.
Mr. BILBRAY Mr Speaker, I object
to the vote on the ground that a quo-
rum is not present and make the
point of order that a quorum is not
present.
The SPEAKER pro tempore. Evi-
dently a quorum is not present.
The Sergeant at Arms will notify
absent Members.
The vote was taken by electronic
device, and there were - yeas 380,
nays 36, not voting 16, as follows:
(ROLL NO. 471)
YEAS- 380
Abercrombie
Ackerman
Alexander
Anderson
Andrews(ME)
Andrews(NJ)
AndrewsfTX)
Annumio
Anthony
Applegate
Archer
Aspin
Atkins
AuCoin
Baoclius
Baker
Barrett
Barton
Batsman
Beilenson
Bennett
Bsntley
Bereuter
Berman
Bsvill
Blackwell
Bliley
Boshlert
Boehner
Bonior
Borski
Boucher
Brewster
Brooks
Broomfield
Browder
Brown
Bruce
Bryant
Bustamante
Byron
Callahan
Camp
Campbell(CA)
Campbell(CO)
Cardin
Carper
Carr
Chapman
Clay
Clinger
Coble
Coleman(MO)
Coleman(TX)
CollinsdL)
CollinsiMl)
Combest
Condi!
Conyers
Cooper
CostsUo
Coughlin
Cox(IL)
Coyne
Cramer
Dannemeyer
Dardsn
Davis
dels Garza
DeFazio
DeLauro
DeLay
Dollums
Derrick
Dickinson
Dicks
Dingell
Dixon
Donnelly
Dooley
Downey
Drsisr
Durbin
Dwyer
Dymally
Early
Eckart
EdwanUCA)
EdwardsCTX)
Emerson
Engsl
English
Erdreich
Espy
Evans
Ewing
Fascell
Fswell
Fazio
Feighan
Fields
Fish
Flake
Foglietta
Ford(MI)
Ford(TN)
Frank(MA)
FranksXCT)
Frost
Gallo
Gaydos
Gejdenson
Gekas
Gephardt
Geren
Gibbons
Gilchrest
Gillmor
Gil man
Gingrich
Click man
Gonzalez
Goodling
Gordon
Gradison
G randy
Green
Guarini
Gunderson
HalKOH)
Hall(TX)
Hamilton
Hansen
Harris
Hastert
Hatcher
HayesdL)
Hayes(LA)
Hefner
Henry
Herger
Hertel
Hoagland
Hobson
Hochbrueckner
Hollo way
Hopkins
Horn
Horton
Houghton
Hoyer
Hubbard
Huckaby
Hughes
Hunter
Hutto
Hyde
Inhofe
Ireland
Jacobs
Jefferson
Jenkins
Johnson(CT)
JohnsonCSD)
Johnston
Jones
Jontz
Kanjorski
Kasich
Kennedy
Kennedy
Kildee
Kleczka
Klug
Kolba
Kolter
KopeUki
Kostmayer
Kyi
UFalce
Lantos
LsRocco
Laughlin
Leach
Lehman(CA)
Lehman(FL)
Lent
Lsvin(MI)
LevineCA)
Lewis(CA)
Lightfoot
Livingiton
Uoyd
Long
Lowey(NY)
Luken
Machtley
Man ton
Markey
Martin
Martinez
Matsui
Mavroules
Mazzoli
McCandless
McCoUum
McCrery
McCurdy
McDade
McDermott
McEwen
McGrath
McHugh
McMillan(NC)
) McMillen(MD)
McNulty
Meyers
Mfume
Michel
MillertCA)
MillertOH)
MillertWA)
MineU
Mink
Moakley
Molinari
Mollohan
Montgomery
Moody
Moorhead
Moran
Morella
Morrison
Murphy
Murtha
Myers
Nagle
Natcher
Neal(MA)
Neal(NC)
Nichols
Nowak
Nussle
Oakar
Oberstsr
Obey
Olin
Olver
Ortiz
Orton
OwensKNY)
Oxley
Pallone
PanetU
Parker
Pastor
Patterson
Paxon
Payne<NJ>
PaynsCVA)
Peass
Palosi
Penny
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Perkins
Peterson(FL)
Peterson(MN)
Petri
Pickett
Pickle
Porter
Poshard
Price
Pureell
Quillen
Rahall
RemeUd
Rangel
Ravenel
Ray
Reed
Regula
Rhodes
Richardson
Ridge
RiW
Rinaldo
Ritter
Roe
Roomer
Rogers
Rohrabecher
Rose
Roetenkowski
Roth
Roukema
Rowland
RoybeJ
Russo
Sabo
Sanders
Sangmeister
Ssntorum
Sarpelius
Savage
Sawyer
Sax ton
Schaefer
Scheuer
SchifT
Schroeder
Schulze
Schumer
Sensenbrenner Serrano
Sharp
Shays
Shuster
Sisiaky
Skaggs
Skeen
Skelton
Slattery
Slaughter
Smith(FL)
Smith(IA)
Smith(NJ)
Smilh(OR)
Smith(TX)
Snowe
Solan
Solomon
Spence
Spratt
SUggers
Stalling*
Stark
Stenholm
Stokes
Studds
Stump
Sundquist
Swett
Swift
Synar
Tallon
Tanner
Tauzin
TayloKMS)
Thomas(GA)
Thomss(WY)
Thornton
Torres
Torricelli
Towns
Traficant
Traxler
Unaoeld
Valentine
Vento
Viecloeky
Volkmer
Walker
Walsh
Washington
Waters
Weldon
Wheat
Whitten
Williams
Wilson
Wise
Wolf
Wolpe
Wyden
Wylie
Yates
Yatron
Young<FL)
ZelifT
NAYS- 36
Zimmer
Allard
Allen
Armey
Bilbray
Bilirakis
Bunning
Burton
Coz(CA)
Crane
Cunningham
Doolittle
Dorgan(ND)
Dornan(CA)
Duncan
Gallegly
Goss
Hammerschmidt
Hancock
Hefley
James
Johnson(TX)
Kaptur
Lagomarsino
Lancaster
Lewis(CA)
Lewis(FL)
Marlenee
Packard
Roberts
Ros-Lehtinen
TayloKNC)
Thomas(CA)
Upton
Vender
Jsgt
Vucanovich
Young(AK)
NOT VOTING
• 16
Ballanger
Barnard
Boxer
Chandler
Clement
EdwanMOK)
Lowery(CA)
OwensOJT)
Stearns
McCleskey
Shaw
Waxman
Mraxek
Sikorski
Weber
Mr. VANDER JAGT and Mr.
ARMEY changed their vote from 'yea'
to 'nay.'
Mr. EDWARDS of Texas changed
his vote from 'nay* to 'yea.'
So the resolution, as modified, was
agreed to.
The result of the vote was an-
nounced as above recorded.
A motion to reconsider was laid on
the table.
CONFERENCE REPORT ON H.R. 776,
COMPREHENSIVE NATIONAL ENERGY
POLICY ACT
Mr. SHARP. Mr. Speaker, I call up
the conference report on the bill (H.R.
776) to provide for improved energy
efficiency.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr.
Mazzoli). Pursuant to the rule, the
conference report is considered as
having been read.
The SPEAKER pro tempore. Pur-
suant to the rule, as modified, the
gentleman from Indiana (Mr. Sharp)
will be recognized for 1 hour, and the
gentleman from California (Mr.
Moorhead) will be recognized for 1
hour.
The Chair recognizes the gentleman
from Indiana (Mr. Sharp).
(Mr. SHARP asked and was given
permission to revise and extend his
remarks.)
Mr. SHARP. Mr. Speaker, I yield
myself 3 minutes.
I might indicate to my colleagues,
we have so many committees involved
that we are going to have to, unfortu-
nately, restrict all of us to very, very
few words today.
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Mr. Speaker, when the conference
report on H.R. 776 is signed into law,
we will take giant steps toward easing
this country's oil addiction and to-
ward a more secure and environmen-
tally improved energy future. The
Department of Energy estimates H.R.
776 will reduce oil imports by up to 20
percent by the year 2000 and house-
hold electricity bills by $130 annually.
H.R. 776 will have lasting effects on
energy options available to consumers
in this country, the amount of energy
we use, the price we pay for electri-
city, the creation of jobs, and the qual-
ity of our environment.
Seldom does the House consider
legislation as complex. Seldom do we
consider legislation which will touch
so many aspects of our lives.
H.R. 776 is the most comprehensive
energy legislation to come before this
House in almost 15 years. When
Washington is accused of gridlock we
will all be able to point to this
achievement. We have bridged parti-
san and regional divisions. We have
bridged the gulf between the Presi-
dent and the Congress. We have draft-
ed legislation which looks to the fu-
ture and not to the next election.
The news media and some of the
debate here may focus on the few
areas of controversy in the legislation.
Stories about the bill have already
noted that two controversial provi-
sions never were submitted to the
Members for notes - the questions of
opening the Arctic National Wildlife
Refuge to drilling and proposals to
increase automobile and light truck
fuel economy. In addition, the confer-
ence was forced to drop other issues,
including a title on the Outer Conti-
nental Shelf and streamlining natural
gas pipeline construction, because we
simply were unable to resolve funda-
mental differences between House and
Senate negotiators.
While we don't claim success on all
levels, I submit to the House that this
legislation is an overall success. It is
sweeping in its coverage - touching on
virtually every sector of the U.S. ener-
gy industry. An extraordinary degree
of consensus underlies the entire bill.
At the very center of H.R. 776 is the
theme that we must take the long
view in terms of our national energy
policy. We must take actions now to
substantially reduce our dependency
on foreign oil, reduce the risk to our
economy of disruptions in price or
supply, reduce the deficit, protect
consumers, and begin to control our
own energy future.
That theme is embodied in the pro-
visions of H.R. 776 dealing with ener-
gy efficiency.
According to a report on the
President's national energy strategy
following months of hearings, 'the
single loudest message - from the
American people - was to increase
energy efficiency in every sector/ Yet
the single loudest criticism of the
President's original energy proposal
was its inadequate focus on the more
efficient use of energy resources. We
have remedied that shortcoming with
H.R. 776 by redirecting the Depart-
ment of Energy and our Nation to-
ward action which will save energy in
the near term. And, unlike some of
the major energy programs of the
1970's, we have done this in a way
that relies on existing State and in-
dustry programs and standards, rath-
er than on developing Federal regula-
tions and bureaucracy.
H.R. 776 promotes energy efficiency
in five major ways. They include:
First, improving the efficiency of
buildings; second, requiring the Feder-
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al Government - the largest single
user of energy in this country - to use
energy more efficiently; third, encour-
aging public utilities to reduce de-
mand for energy; fourth, establishing
energy efficiency standards for lights,
electric motors, showerheads, and
commercial heating and cooling equip-
ment; and, fifth, improving industrial
energy efficiency.
The bill contains significant new
support for renewable energy. It pro-
motes domestic demonstration and
export of solar, geothermal, wind, and
biomass technologies. The tax provi-
sions of the bill include production
and investment tax credits. Together
they will help ensure that renewable
technologies will be part of the more
secure energy future we seek.
Replacing gasoline with alternative
fuels such as natural gas, electricity,
methanol, ethanol, and propane is the
portion of the bill that will take the
biggest bite out of oil imports. Again,
using a combination of tax incentives
and mandates, and using Federal
vehicle purchases as a key to the pro-
gram, H.R. 776 will help us strike at
our Nation's largest oil problem: The
nearly 200 million cars and trucks on
U.S. highways that each day consume
a volume equivalent to our oil imports
- one-seventh of the entire world's oil
supply.
Under an alternative fuel provider
program, the alternative fuels in-
dustry will lead the way in buying
alternative fueled vehicles and using
alternative fuels. By imposing these
requirements on those who have
ready access to the fuels and stand to
profit from the success of alternative
fuels in the marketplace, we have a
high probability of a successful jump
start toward a nonoil future.
I am especially pleased with the
alternative fuels provisions we were
finally able to agree to in the confer-
ence, because they are the most im-
portant actions we have taken that
will actually reduce our dependency
on foreign oil. I know these detailed
remarks will clarify their intention.
The alternative fuel provider vehicle
purchase and fuel use mandate in
section 501 is different from the fleet
requirement program in section 507.
These differences are intentional.
The alternative fuel provider pro-
gram, like the Federal and State pro-
grams, must occur. While the Secre-
tary is given some flexibility after
1997 to reduce the percentage acquisi-
tion requirements, but to no less than
20 percent, or to delay the increase in
the percentage acquisition require-
ments, the program must begin in
model year 1996 with a 30-percent
acquisition requirement.
The fleet requirement program
under section 507, on the other hand,
will not necessarily go into effect. The
Secretary is required to do a
rulemaking and is authorized to im-
pose requirements on fleets other
than alternative fuel provider fleets,
but the Secretary may decide not to
have a fleet requirement program
under section 507.
Under section 501, covered persons
must actually run their alternative
fueled vehicles on alternative fuels
when the vehicles are operating in an
area where the fuel is available. This
requirement was not included in the
fleet requirement program in section
507, because the conferees were con-
cerned that alternative fuel providers
might charge unreasonable fuel prices
to fleets that are not alternative fuel
providers if such fleets were required
to use the alternative fuel. Presum-
ably the alternative fuel providers
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would not overcharge themselves. If
there is a fleet requirement program
under section 507, we hope and expect
that alternative fuel providers will
price their alternative fuels competi-
tively in order to encourage fleets to
use the alternative fuels.
Under the section 501 requirement,
vehicles garaged at personal resi-
dences are not exempt. Under Section
507, such vehicles are exempted.
Under subsection c, electric utilities
may comply with the purchase and
fuel use mandates 2 years later than
other covered persons if and only if
they, first, notify the Secretary by
January 1, 1996 that they plan to
comply using electric motor vehicles,
and, second, actually use electric mo-
tor vehicles to comply with this sec-
tion.
H.R. 776 will also introduce historic
changes to the electricity industry -
increasing competition among suppli-
ers and providing protections for con-
sumer pocketbooks. It is worth noting
that this provision, which amends two
fundamental New Deal era reforms
and had been expected to be very
controversial, was the subject of ex-
traordinarily cooperative negotiation
in the conference.
The final product, a true compro-
mise, is a stronger statement than
either the House or Senate bill of the
Congress' desire to see competition in
the generation of electricity and the
availability of access to the Nation's
transmission grid for all comers with-
out regard to monopoly or market
power. In this case, the Congress has
sent a strong message to monopolists
to learn to compete and to seek power
at prices that will benefit consumers -
or get out of the way.
Many of us are particularly satisfied
with the substantive result in the
electricity title in part because the
provisions take us where the House
was headed in 1978 when the House
offered and the Senate rejected a ver-
sion of transmission access.
This year, the veterans of that bat-
tle were joined by a visionary and
hard-working group of House collea-
gues - Mr. Markey, Mr. Moorhead,
Mr. Tauzin, Mr. Boucher, Mr. Bliley,
and others • who dedicated themselves
to studying transmission access and
the Public Utility Holding Company
Act, to drafting fine legislation and to
defying the conventional wisdom to
accomplish these sweeping changes.
To these colleagues I offer special
tribute.
To Chairman John Dingell, I offer
gratitude for his special counsel on
this difficult issue. He stood firm for
protecting consumers against monopo-
ly power and insisted that no changes
be made until he was convinced that
Government would always be allowed
to impose a public interest standard
over any exemptions from the Public
Utility Holding Company Act. He
supported the title strongly only after
he was certain the rascality he pro-
tects us all from was not giving to be
allowed to thrive.
Finally, I want to thank the confer-
ees or their restraint in resisting ef-
forts to have Congress constrain the
discretion of the Federal Energy Reg-
ulatory Commission (FERC) in the
areas of electricity policy. I am partic-
ularly pleased that the provision con-
cerning the pricing of transmission
services maintains the traditional
broad statutory approach of the origi-
nal Federal Power Act (FPA). The
FERC must retain sufficient discre-
tion to apply the traditional,
time-tested FPA standards - just and
reasonable, and not unduly discrimi-
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natory or preferential - to particular
cases as electricity markets evolve. I
would note that H.R. 776 repeats
these words verbatim from the cur-
rent act, and makes them the center-
piece of our pricing provision.
In the same vein, I am pleased that
the conferees specifically chose to
neither endorse or reverse any prior
FERC decision on transmission pric-
ing.
On another matter of deep interest
to me, the conference agreed to adopt
an economic trigger for use of the
strategic petroleum reserve (SPR), in
other words to allow the President to
sell oil from the strategic petroleum
reserve to ease the economic conse-
quences of a significant oil price spike.
The conferees agreed to allow the
President to use the SPR more quick-
ly in situations such as the period
during the United States embargo of
Iraq in August 1990. The embargo
reduced the world oil supply by over 4
million barrels a day. Oil prices dou-
bled leading to an estimated loss of
$200 billion in GNP and throwing the
economy into recession. However, the
administration refused to use the
reserve in part because no shortage
had occurred. In today's decontrolled
oil markets, no shortage is likely ever
to occur following a disruption; in-
stead prices rise, sometimes precipi-
tously.
The conferees changed the draw-
down criteria so that a shortage need
not occur before the SPR is drawn
down. A reduction in supply such as
the Iraqi embargo that causes oil pric-
es to increase and is likely to harm
the economy would allow the Presi-
dent to use the reserve. The Presi-
dent does not have to wait for gas
lines, proof of the onset of a recession,
or the absence of available petroleum
products in certain areas to use the
SPR.
Second, the conferees decided to
allow the President to try to prevent
oil price shocks by releasing tens of
millions of barrels of SPR oil if he
believes an energy supply interruption
is likely, instead of being forced to
wait until the tanks are empty and
the damage to the economy is done.
This anticipatory drawdown will allow
the SPR to be used more effectively by
placing oil on the markets at the earli-
est possible time when the calming
effect on markets is the strongest.
H.R. 776 marks the first time the
Congress has acted affirmatively to
address the issue of global climate
change. The global warming title,
with its studies and voluntary reduc-
tions programs, is only part of the
story. Concerns about global warming
have been woven into the fabric of
this bill - through the efficiency and
renewable provisions, the alternative
auto fuels programs, the clean coal
technology export provisions that can
increase the efficiency of coal combus-
tion in developing countries, and
more.
Throughout the bill there is a com-
mitment to environmental im-
provement in the context of energy
security. It was one of our goals from
the start. I believe that energy and
environment are firmly linked and
that a secure energy future must be
achieved in tandem with a future of
clean air, water, and preservation of
our precious natural resources. To do
otherwise is to mortgage the future
and the health of our children and
their children.
The House and Senate agreed to a
provision streamlining the approval
process for nuclear plant licensing.
Although it goes further than I would
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have liked in limiting the public's
opportunity to participate in licensing
decisions, a Federal appeals court has
recently upheld a Nuclear Regulatory
Commission rule which set out a simi-
lar process.
This provision will not change the
reality that for nuclear power to be-
come a part of our energy future the
industry will have to win back the
confidence of consumers and environ-
mentalists. That cannot be done by
shutting the public out. It must be
done by giving the public confidence
in the priorities and practices of the
nuclear industry and its regulators.
The conferees also adopted a provi-
sion regarding the setting of radiation
protection standards regulating the
disposal of high-level nuclear waste at
Yucca Mountain, NV. The House pro-
vision would have partially reinstated
certain standards that were struck
down by the courts in 1987, and have
not been promulgated.
The conference report would re-
quire the Environmental Protection
Agency (EPA) to promulgate a health-
based radiation standard to protect
the public based on the recommen-
dations of a study by the National
Academy of Sciences. The study would
be completed by the end of next year.
Mr. Speaker, the intent of the pro-
vision is to break the ongoing institu-
tional deadlock on the matter of the
standards in a way that will base the
decision on sound scientific judgment.
It is not meant in any way to
supercede the authority of EPA to
make its final expert decision through
the usual rulemaking process.
One of the key issues that needs to
be examined and resolved as part of
this study and rulemaking process is
the question of whether a health-
based standard limited to individual
dose levels could be sufficient to pro-
tect the health and safety of the pub-
lic, or whether such a health-based
standard would need to limit collective
dose to the general population as well.
Protection of the public health and
safety is not simply a matter of how
much radiation an individual may
receive, but is also a question of how
many individuals are exposed to radia-
tion whether at one time or over time.
Because of the critical nature of the
collective versus individual dose ques-
tion, this issue needs to be given thor-
ough and objective scientific review.
Then, under this provision, EPA in
its rulemaking could consider collec-
tive dose limits to the extent that
such limits are needed to fulfill the
general requirement to protect public
health and safety, so long as the con-
clusion of the EPA is based on and
consistent with a wide range of expert
scientific opinion, including but not
limited to the NAS study.
It is important that the record be
clear on this issue. The House confer-
ees - representing the House Interior
and Insular Affairs Committee and
the Energy and Commerce Committee
- refused to accept Senate proposals to
set a radiation standard in law and
refused to accept a Senate proposal to
preclude the EPA from fully consider-
ing collective dose or human intrusion
in setting its own standard. The ap-
propriate process for setting a stan-
dard is an expert agency rule-making
based on the best scientific informa-
tion possible.
In addition, conferees adopted
House language that would provide
that, whenever the Nuclear Regu-
latory Commission designates certain
practices involving nuclear materials
as below regulatory concern, States
have authority to regulate the dispos-
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4553
al of low-level waste and the incinera-
tor of materials produced onsite.
The legislation also increases protec-
tion of certain whistleblowers, employ-
ees of civilian and military nuclear
facilities who report safety violations.
It is in the interest of fairness - and
safety - that these protections from
retaliatory actions be enacted.
H.R. 776 addresses numerous issues
related to the Nation's nuclear fuel
supply. Among these issues were
three key questions concerning finan-
cial reform of the Department of En-
ergy (DOE) uranium enrichment pro-
gram. First, how will we pay for the
past unrecovered costs of operating
this program? Second, how will we pay
for the costs of cleanup for the enrich-
ment plants that currently exist?
Third, how will we pay for the costs of
building a new plan in the future?
In the past, DOE provided fuel to
Government and civilian nuclear pow-
erplants through this program. Al-
though DOE was required by law to
recover the cost of providing this ser-
vice, it lost billions of dollars by charg-
ing below-market prices. Gov-
ernment estimates of unrecovered
production costs range from $3 billion
according to DOE to over $11 billion
according to the General Accounting
Office.
Furthermore, DOE faces over an
additional $20 billion in unrecovered
costs stemming from expenses for
environmental cleanup of the current
fuel plants. To date, no money has
been set aside for this purpose. How-
ever, the President in his fiscal year
1993 budget proposed a cleanup fee,
assessing nuclear utilities half the
cleanup costs.
There was much congressional de-
bate over the issue of how these costs
should be recovered, especially to
what extent DOE's nuclear utility
customers should be expected to share
in paying for these costs. Many Mem-
bers felt that because the plants were
originally built for defense purposes,
utilities should not pay any of the
fixed costs related to original plant
investment or environmental condi-
tions existing before the utilities be-
came customers.
Nevertheless, when these plants
were made available to serve civilian
customers, a cost-recovery require-
ment was inserted in the Atomic En-
ergy Act at section 16 lv. The legisla-
tive history is clear that the intent of
this provision was to fully recover all
of the costs of providing these services
to commercial customers, including a
proportional share of prior fixed costs
based on use.
The terms of the cost recovery re-
quirement of 16 lv. were in fact very
favorable to commercial customers.
Although the Government was re-
quired to fully recover its costs, it
could not charge a price higher than
costs. Therefore, for many years
when the utilities would have had to
pay a higher market price to obtain
these services from other sources, the
Government was restrained by this
provision to charge a lower price set
at costs.
Furthermore, by getting use of
these plants in return for paying a
proportional share of fixed costs, utili-
ties were able to avoid the even great-
er costs of building a plant of their
own and paying for all of the original
plant investment and eventual clean-
up costs. In this way, the overall
terms of cost-recovery under 16 lv.
were meant to balance the interests of
the commercial customers and the
taxpayers.
However, in practice the cost recov-
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ery requirements of 16 lv. have not
worked very well. Because of unpro-
ductive investments and a failure to
adequately account for cleanup costs,
the program ended up charging prices
that were not only below market, but
also below costs. Now, because of
international competition to provide
these services, it is not possible to
recover these costs through future
prices.
The history of this program demon-
strates that now is the time to thor-
oughly reform the Government's ura-
nium enrichment operation. The bill
does this by establishing a wholly
owned Government corporation to
provide these services in a more busi-
nesslike fashion.
The U.S. Treasury would hold stock-
in this corporation equal to at least $3
billion and the Corporation would pay
net revenues to the Government in
the form of a dividend. Eventually
this corporation could be privatized
through sale of this stock to the pri-
vate sector as long as the stock was
sold at a price that was at least equal
to its estimated value. The dividends
and proceeds from the sale of the
stock would constitute recovery of
past unrecovered production costs.
Under the bill, environmental costs
of DOE current fuel plants would be
paid for out of a new cleanup fund.
The Government and utilities pay into
the fund for 15 years in proportion to
their past use of the facilities. The
utilities' share is collected through a
special annual assessment not to ex-
ceed $150 million a year or $2.25 bil-
lion over 15 years, indexed to infla-
tion. This proposal is a compromise
proposal and is a modification of the
President's own proposal.
Finally, the corporation would have
the authority to sponsor a private,
for-profit corporation to build a new
enrichment plant if the Corporation
decides it would be a good investment.
However, the private, for-profit corpo-
ration would have to attract private
sector financing for the construction
of any new plant, and under no cir-
cumstances would any borrowing or
other obligations of this private corpo-
ration be considered the responsibility
of the Government.
One issue that will be important to
the future of the corporation will be
the use and availability of
highly-enriched uranium from the
former Soviet Union. Currently, a
Government-to-Government agree-
ment is being negotiated between the
United States and former Soviet
States. This agreement could specify
that a private entity or the corpora-
tion would provide the necessary ser-
vices to blend and convert the
highly-enriched uranium into
low-enriched uranium.
If the agreement specifies that the
corporation would be responsible for
these services, then the corporation
would determine the least-cost ap-
proach and select a vendor through a
competitive process. However, if the
agreement specifies that a private
entity will provide these services, then
such services would be provided by a
private entity, but the corporation
would be the exclusive U.S. marketing
agent for the resulting low-enriched
uranium.
In provisions largely originating in
the Science Committee, H.R. 776 es-
tablishes cost-shared research and
development programs for a wide
range of emerging energy technologies
in four separate titles of the bill. It
deals with technologies aimed at re-
ducing dependence on imported oil,
curbing environmental damage, inn-
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proving the Nation's economic com-
petitiveness, and improving adminis-
tration of research and development
at the Department of Energy.
While most of the natural gas provi-
sions were dropped from the final bill,
the conferees did agree to expressly
forbid discrimination against imported
natural gas. In addition, the confer-
ees went on record that consumers
and producers are best served by a
competitive natural gas market, and
that the states cannot fix gas prices
with OPEC-style regulation. The joint
statement of the managers makes it
very clear that abuse of State
prorationing authority will violate the
intent of the conferees.
H.R. 776 contains a number of pro-
visions relating to the Nation's most
plentiful fossil resource, coal. The
conferees agreed to provisions that
would reduce emissions harmful to
the environment, increase the efficien-
cy of using coal and improve the cost
effectiveness of coal use. Costs would
be controlled and cost- sharing ar-
rangements with project sponsors are
specified.
House provisions on coalbed meth-
ane were adopted and modified, allow-
ing the useful extraction of methane
gas trapped in underground coal
seams while disputes over land and
mineral rights are resolved. This will
unlock an abundant domestic re-
source, enhance mine safety, and re-
duce greenhouse gas emissions.
Section 1339, ownership of coalbed
methane, is quite similar to section
1314 of the House bill. It directs cer-
tain States to establish a forced pool-
ing mechanism for simultaneously
encouraging coalbed methane develop-
ment and resolving ownership. This
section is modeled after a State of
Virginia statute.
State oil and gas laws, and most
mineral leases, were written prior to
coalbed methane becoming a viable
resource. The uncertainty of owner-
ship has been the largest impediment
to development of coalbed methane.
The conference agreement requires
affected States, within 3 years of en-
actment, to establish a mechanism
whereby the resource can be develop-
ed pending resolution of competing
ownership claims. If the States fail to
deal with the issue in that time, the
Interior Secretary, with the participa-
tion of the Secretary of Energy, would
implement the program in section
1339, which includes forced pooling
arrangements, whereby a coalbed
methane developer would drill for the
gas while the profits were held in
escrow pending the resolution of con-
flicting ownership claims.
The Secretary of the Interior, with
the participation of the Secretary of
Energy, must exempt any State from
the coalbed methane requirements if
the State legislature passes a law or
resolution requesting such exemption.
The Secretary also would have to
exempt a State based upon a
Governor's petition, if and only if the
Governor-had given the State's legis-
lature 6 months to overrule the peti-
tion.
The Secretary of the Interior, with
the participation of the Secretary of
Energy, is authorized to add or delete
States from the list of affected States,
based upon the criteria in subsection
(b). Certain States are designated by
the statute as Affected States, until
the Secretary publishes a different
list. Certain other States are per-
manently excluded from becoming
Affected States.
Section 1339 promotes coalbed
methane development in a manner
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that is protective of our Nation's coal
resources and coal mine safety. It
provides certain protections for coal
owners and operators whose coal re-
source, including current and future
coal mining operations, might be af-
fected by coalbed methane develop-
ment. Subsection (j) provides that no
coalbed methane well operator may
stimulate a coal seam without the
consent of any coal owner or operator
whose coal might be affected by the
stimulation. If a coal operator with-
holds consent, the coalbed methane
well operator may appeal to the Secre-
tary of the Interior • or the State, if
there is a State program. If the con-
sent is withheld on the grounds that
it would impair current or future
mine safety, and a coalbed methane
well operator appeals to the Secretary,
the Secretary must defer to the appro-
priate State or Federal mine agency in
making any determination that differs
from the coal owner or operator's
judgment.
Mr. Speaker, many people deserve
credit for this legislation. It was pre-
ceded by introduction in the House of
literally hundreds of pieces of legisla-
tion - all dealing with energy issues.
The President and his Energy Secre-
tary engaged in long study of these
issues and submitted their plan to the
Congress. Even though the Congress
substantially rearranged the priorities
expressed in the administration's
energy bill, I believe Admiral Watkins'
interest was essential to bridge some
of the political and substantive differ-
ences. Credit goes to my Republican
colleagues in the House who, under
the leadership of Congressman Norm
Lent offered their own vision of a
national energy policy. Senators
Johnston and Wallop put together a
comprehensive bill that became the
basis for Senate action.
Members provided the inspiration
for many titles of this legislation.
Various Members put their own stamp
on the efficiency provisions, the elec-
tricity reforms, alternative fuels, coal,
global warming and many other provi-
sions. The hundreds of hours of work
by many Members is reflected in the
final product.
Mr. Speaker, I wish I could name all
of the Members who introduced leg-
islation that became part of or models
for action we later took. There are
simply too many to mention them all.
Mr. Speaker, I am proud to bring
H.R. 776 before the House for a vote
on the conference report. This legisla-
tion has been a long time in coming,
but the House can take pride in this
bipartisan achievement.
If we pass this bill, and the Senate
follows, we can go home and tell our
constituents that we have defied the
conventional wisdom about the Con-
gress. We have beaten gridlock. We
have surmounted partisan and region-
al divisions, and we have delivered
legislation that looks to the energy
future of this great Nation and will
protect jobs, the economy and the
environment.
Mr. Speaker, I would again like to
thank the gentleman from California
(Mr. Moorhead), who was a vital part
of the effort here; his senior ranking
Republican member on the full com-
mittee, the gentleman from New York
(Mr. Lent), and the chairman of our
full committee, the gentleman from
Michigan (Mr. Dingell), who has been
a vital leader for many years on this
issue and has performed his usual
miraculous leadership in helping us to
bring this complex bill before the Con-
Mr. Speaker, there are 12 com-
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4557
mittees involved, and while credit
belongs to many people on both aides
of the aisle, in particular I want to
hail the staff of the various com-
mittees and Members who did an
extraordinary job. I will include for
the Record the list of the members of
the staff who contributed so much.
Special appreciation goes to these
staff members: Jack Riggs, staff direc-
tor, Sue Sheridan, Tom Runge, Wesley
Warren, Rick Counihan, Judi
Greenwald, Shelley Fidler, John
Berner, Paul Downs, Judith Quinn,
Judy O'Brien, Susie Miller, and Lisa
Burton.
Mr. Speaker, I would like to make a
joint statement on behalf of myself
and Messrs. Markey, Moorhead, and
Lent, on title II, the natural gas provi-
sions of H.R. 776.
While title II is short, there is a lot
in this bill for both natural gas con-
sumers and producers: Many of the
new power plants under the new
PUHCA reforms will be natural gas
powered. So may many of the alter-
nate fuel vehicles encouraged by the
alternate fuel titles. Greater reliance
on clean burning, abundant, natural
gas will help our environmental, ener-
gy security, and oil import problems.
To maximize the benefits of natural
gas, we have • over the last few years
• legislated partial decontrol of well-
head prices in the 1978 Natural Gas
Policy Act (NGPA); approved the Ca-
nadian Free-Trade Agreement; and
enacted the complete decontrol of
wellhead prices beginning this coming
January 1, 1993, under the Natural
Gas Wellhead Decontrol Act.
Title II continues this course of
comprehensive congressional enact-
ments to ensure a broad policy of free
and competitive wellhead markets in
North America by, in effect, deregu-
lating Canadian natural gas imports
in section 201, and by restating and
broadening our national Federal policy
in favor of vigorous competition in our
gas wellhead markets, in section 202.
This overall series of recent and
new enactments are critical because of
what has recently happened as Feder-
al regulation of wellhead markets has
eased, and the accompanying Federal
preemption of State pricing regulation
by a comprehensive scheme of Federal
price controls has started to phase
out. In particular, some producing
States have considered reoccupying
this important field of interstate com-
merce with a new type of regulation -
wellhead production regulation that
could be used to cut back output in
order to raise the general price level
of natural gas.
Such a replacement of harmful
Federal price lowering regulation and
market intervention with equally
harmful State price raising regulation
and intervention, would be inimical to
a comprehensive national energy
strategy aimed at free market-based
growth of natural gas use. It would
hurt gas use both in new areas under
the other titles of the bill, and in the
traditional gas markets of our Nation.
Such intervention would send inaccu-
rate price signals to producers and
consumers, would impair economic
efficiency, and would be fundamen-
tally in conflict with a competitive
well head market.
Some supporters of new producing
State initiatives have asserted there is
no evidence whatever that their aim is
to set up a State-administered hori-
zontal price fixing cartel. We hope
that is true.
However, we are familiar with the
long history of economic waste and
reasonable market-demand prora-
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tioning administered by the Texas
Railroad Commission in the 1950*8
and 1960*8. We have reviewed how
that scheme was indeed copied by
OPEC when it was formed • see gener-
ally, 'The Price/ by Daniel Yergin.
And we have inquired into several
official statements regarding these
new State initiatives.
The following letter from one State
official indicates the type of State
activity that most concerns us:
State of Oklahoma,
Office of the Secretary of Energy,
Oklahoma City, OK,
October 22, 1901.
Representative Grover Campbell,
State Capitol Building,
Oklahoma City, OK.
Dear Representative Campbell:
I enclose a draft of a bill which is being pre-
pared for introduction in the 1992 legislative
session. As a member of the Energy, Environ-
ment, and Natural Resources Committee, I led
you should be kept informed about proposed
legislation in the field of Energy.
The subject of this legislation is seasonal mar-
ket demand proration of natural gas. As you are
no doubt aware, Oklahoma enacted the nation's
first market demand laws relating to both oil and
gas in 1913, when s condition of severe ovsrsup-
pry had resulted in low field prices and wide-
spread waste.
These laws were enforced and worked very well
until the mid- 1970's when the first Arab embargo
and punitive federal price controls on natural gas
resulted in a severe shortage of supply. Later,
when the shortage of gas had turned to surplus,
the Oklahoma Supreme Court held thet the Cor-
poration Commission could not impose more
stringent production controls except after person-
al notice which is a practical impossibility.
Recent events have clearly demonstrated the
cost to Oklahoma and its citizens resulting from
an excess of natural gas supply. During the sum-
mer of 1991, gas field prices sank to the lowest
level in many years, below the cost of replace-
ment, simply because of overaupply in the field.
Those whe profit from the oversupply and
resulting depressed price are the gas traders, the
interstate pipe-lines, and the Eastern consumers.
Those who loss are the developers, the State, and
above all, the Oklahoma mineral owners. We
should never forget that natural gas, unlike an-
nual crops, is a nonrenewal
gas is sold at a distress price,
suffers a financial loss which can never be ta-
couped.
This proposal would simply impose a seasonal
limitation on production from natural gas wells.
It is well known that the market for gas is sea-
sonal: high in the winter months; low in the
summer months. Pipe lines are rapidly develop-
ing storsgs facilities, specifically designed to
further extend the period of low field prices.
When there is an excess of supply over de-
mand, the simple solution is to reduce the over-
supply by storing gas in the ground. If every
producer were willing to cut production propor-
tionately during the summer period, no legisla-
tion would bs necessary. However, we sil know
that as s practical matter, such joint action, even
if it would mean higher prices immediately, sim-
ply will not occur.
This proposal would impose a daily gas produc-
tion limitation of 60% of well deliverability dur-
ing the winter 6 months' period and 26% of
deliverability during the summer 6 months* peri-
od. Wsluprodudngessing-hssd gas snd wells of
low capacity (under one million cu/Tt/day) would
be exempt, because the impact of these wells on
the market ie small. Production from super-wells
would bs further limited to 26% of deuVeranilHy
over 10 million eu/ft/day year round. Overage or
underage could be made up only during a similar
seasonal period, to minimise manipulation. PK
nally, the present draft includes an automatic
sunset provision, under which the allowable re-
strictions would expire automatically at the sad
of two years unless renewed by legislative act. If
for any reason the plan ie not working, it can
simply bs allowed to die.
No one state can unilaterally overcome the
distress prices resulting from seasonal oversup
ply. No stats would want to impose production
restrictions, and then see the market maws la
another state with no improvement in field aris-
es. For thie reason, the gas producing stales of
the Southwest are in close cooperation in these
efforts to address the problem of oversupnry and
low field prices. The Texas Railroad rnmmlsaisn
already has conducted hearings preparatory la
issuing an Order imposing seasonal market de-
mand proration on gas wells in that stats. Simi-
lar initiatives are under way in Kinase, Arkan-
sas, Louisiana and Colorado.
Oklahoma is fortunate in that all stales recog-
nize the necessity for legislation here. Hub
B»eensUuitOklaiK>oMnod^>uUwiUUtsalaetto
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actually impose binding production restrictions.
We will know whether other states will act before
final paaaaga of the bill by the Oklahoma legisla-
ture. However, it is essential that Oklahoma
move forward in concert with the other states.
I would appreciate your careful attention to
this proposal. I would be glad to meet with you
to discuss the matter further if you desire. If
you share my conviction that this legislation
would be of significant benefit to Oklahoma, its
economy, and especially its citizen -landowners,
your joiner ss a legislative sponsor would be
extremely valuable.
Very truly yours,
Charles Nesbitt.
Secretary of Energy.
I and my colleagues realize there is
a long history of legitimate State regu-
lation to further the goals of physical
conservation, to prevent unfair drain-
age among producers in a common
reservoir, to enforce well-spacing
rules, and so on. The Congress has
not intended, by its previously noted
enactments or by title II of this bill, to
preempt these State authorities.
But it is also clear that there is no
reference to such legitimate activities
in the above-noted letter explaining
the purpose, intent, and structure of
the proposed new State law. More-
over, the proposal described there was
subsequently toughened to shut in
more gas over longer periods of time.
We of course are not deciding the
lawfulness of that State enactment:
This is entirely a question for the
Federal courts, in the context of a
preemption challenge to this or other
State laws or regulations that sub-
stantially and unreasonably interfere
with the broad Federal policy of well-
head competition.
The intent of Congress, however,
will be a central question in any possi-
ble future disputes. Accordingly, we
here restate and extend our legislative
support for free national gas produc-
tion markets, in new section 202. We
strongly endorse the specific accompa-
nying statement of managers language
spelling out how the noted series of
recent Federal laws and rulings have
combined to prevent the States from
using their regulation of producers or
pipelines to restrict supplies and raise
prices. We believe section 202 is an
express statutory statement of the
general policy and purpose, and that
it correctly sums up where we have
come from and where we are going,
both under sections 201 and 202 of
this bill and under the three previous-
ly noted Federal enactments.
For these reasons, we believe the
Federal courts can now draw the right
lines here: We think they can distin-
guish between regulation which has
the substantial purpose and effect of
raising prices - which is preempted •
and the many legitimate types of reg-
ulation - which are not preempted.
Indeed, the Federal courts have
engaged in similar types of line draw-
ing for a century, under the Federal
antitrust laws: There, the focus is on
the difference between reasonable
restraints of trade, and unreasonable
ones. Analogous inquiries into the
geological justifications of a challenged
law or rule; its legislative history or
official explanations of it; whether its
likely purpose, structure, and effect
are more aimed at higher market
prices and across-the-board shutins of
gas, or instead vindicate producer
property rights against drainage, and
so on, all could be an essential part of
a court's scrutiny.
By thus preserving and extending
our national policy of free trade and
free markets for natural gas, we be-
lieve title II is a significant part of our
new comprehensive national energy
policy.
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As for section 201, we note it ap-
plies, for example, to imports of Cana-
dian natural gas into the United
States; exports of natural gas to Cana-
da from the United States; and im-
ports of liquefied natural gas into the
United States.
While applications for import or
export approval still need to be made,
imports or exports falling under new
section 3(bX3) are automatically ap-
proved, and by this act are deemed to
be consistent with the public interest.
The application process will still serve
the function of affording the Federal
Government a record of the foreign
commerce taking place.
This automatic approval, however,
is not intended to modify the authori-
ty of the FERC or jurisdictional State
commissions to review the prudence of
the purchased gas when a jurisdiction-
al utility seeks to include the cost of
such natural gas in rates subject to
the jurisdiction of the appropriate
State or Federal agency.
The public interest finding in this
new section of the Natural Gas Act
accordingly does not alter the authori-
ties of the FERC or State commissions
previously available with respect to
the prudence of natural gas purchas-
es.
In drafting new section 3(b)(2) of
the Natural Gas Act, we intended that
imported natural gas not be discrimi-
nated against on the basis of its na-
tional origin. As noted, this would be
inconsistent with our Federal policy of
vigorous price competition in a decon-
trolled market.
The conferees intend for the Feder-
al Energy Regulatory Commission to
regulate such imported natural gas on
a basis comparable to its regulation of
domestic natural gas. Just as FERC
does not take sides in the market
competition between Oklahoma natu-
ral gas and Texas natural gas, it could
not take sides between domestic gas
and Canadian gas.
Hence, if FERC treats Canadian gas
differently - on the basis of the place
of its production, or in other respects
based on its national origin - or in
some manner gives preference to do-
mestic natural gas on the basis of its
national origin, such action would
violate new section 3(b)(2). Of course,
such action might also violate other
provisions of the Gas Act, and the
Canadian Free-Trade Agreement as
well.
Finally, as drafted, the new fast
track process would not be available
for LNG exports to, for example, Pa-
cific rim nations other than Canada.
Current law on LNG exports would
remain unchanged.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Texas (Mr. Barton).
(Mr. BARTON of Texas asked and
was given permission to revise and
extend his remarks.)
Mr. BARTON of Texas. Mr. Speak-
er, we are finishing a process today
that started 4 years ago when Presi-
dent Bush and the Congress made a
commitment to a comprehensive na-
tional energy strategy. To develop
that strategy, a series of field hearings
were held around the country. A
voluminous series of hearings were
also held here in the Congress, both in
the House and in the other body.
After those hearings, bills passed both
Houses, and one of the largest
House-Senate conferences in this Con-
gress, has produced the piece of legis-
lation which is before us today.
I am going to vote for this bill, and
I would urge all my colleagues to vote
for the bill. It has many good things
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in it. As in all comprehensive bills,
there are some things that are not
quite so good.
I would like to call special attention
to an amendment offered by the gen-
tleman from Tennessee (Mr. Clement)
and myself on the House side that
passed on a rollcall vote by an almost
2 to 1 margin when the bill was before
us earlier this summer. It revitalizes
the nuclear licensing process, which
will in turn revitalize the nuclear
power industry in this country. My
amendment will provide for standard-
ized design of the reactors and the
plant facilities, pre-site selection, and
a one-step licensing process. This one
step license will provide both a con-
struction and an operating permit to
build and operate a nuclear
powerplant.
The Barton-Clement amendment
retains full rights for environmental
groups and local groups who have
concerns about the design and safety
of nuclear powerplants. It is our hope
that the Barton-Clement amendment
will make it possible to at least consid-
er additional nuclear powerplants in
this country in the next 10 years.
H.R. 776 is not a perfect bill. It
does not allow for any exploratory
drilling in Anwar up in Alaska, and it
has some provisions that are onerous
with regard to Texas. For example, it
puts the intrastate electrical transmis-
sion system under possible jurisdiction
of the FERC here in Washington, DC.
H.R. 776 is a step in the right direc-
tion. It is a good piece of legislation.
I would commend the chairman, the
gentleman from Michigan (Mr.
Dingell), the chairman of the subcom-
mittee, the gentleman from Indiana
(Mr. Sharp), the ranking member, the
gentleman from New York (Mr. Lent),
the ranking member of the subcom-
mittee, the gentleman from California
(Mr. Moorhead), and all of the literal-
ly hundreds of Congressmen who have
served on the conference committee to
make this bill possible.
I am including additional, specific
comments on H.R. 776.
I do wish it went farther in bolster-
ing our domestic oil and gas reserves.
I am disappointed that the bill does
not include language to allow the
Arctic National Wildlife Refuge
(ANWR) and our Outer Continental
Shelf to be explored for possible oil
and gas reserves. This can be done in
a safe and environmentally sound
fashion. By banning exploration in
these areas we are precluding the
development of over 60 billion barrels
of oil. As we all know and have re-
peated several times in the last 2
years, the invasion of Kuwait has
sharply reminded us the dangers of
being overly dependent on foreign oil
in unfriendly hands. I wish the lesson
and danger would have produced
more real domestic energy incentives
in H.R. 776.
I am supportive of the tax provision
allowing intangible drilling costs to be
calculated under the alternative mini-
mum tax (AMT). This will be extreme-
ly beneficial to independent oil and
gas producers in Texas and through-
out the Nation.
Another provision I am not happy
with is the electricity title. I am con-
cerned that changes in the Public
Utility Holding Company Act and the
transmission access language in the
bill could adversely effect the access
and reliability of our nationals largest
utility grids. I am also disappointed
an amendment could not have been
adopted to keep the Texas intrastate
electricity grid from coming under
jurisdiction of the Federal Energy
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Regulatory Commission (FERC).
The Nuclear Reactor Licensing Act
will create a fair licensing process.
The public will have three hearing
opportunities in which to raise safety
issues before plant construction be-
gins. Those hearings will be held
during the review and approval of
advanced, standardized designs, dur-
ing the early permitting of a site for
future construction and in the review
of a combined construction and oper-
ating license.
The language also provides an ave-
nue for the public to raise new safety
information and amendments to the
combined license based upon such
information. NRC decisions related to
that amendment request are also
explicitly subject to judicial review.
As an engineer, I know that this
new generation of standardized ad-
vanced reactors promises to be one of
the world's most efficient nuclear
energy plants, utilizing new techno-
logy that represents the future of the
nuclear energy option in the United
States. Without implementing the
necessary changes, we will not have
another nuclear energy plant ordered
in this country.
Mr. speaker, while we are working
out our problems here at home, other
countries are benefiting from the
fruits of our labor. For example, Gen-
eral Electric'8 standardized, advanced
boiling-water reactor (ABWR), engi-
neered by GE Nuclear Energy, is cur-
rently under construction in Japan by
Tokyo Electric Power Co. (TEPCO)
and is expected to begin operation in
1996. TEPCO, which began construc-
tion on the first plant in an impres-
sive 58 months, broke ground on the
second unit in January.
Mr. SHARP. Mr. Speaker, I yield 3
minutes to the gentleman from Cali-
fornia (Mr. Brown), the distinguished
chairman of the Committee on Sci-
ence, Space, and Technology, who has
played a major role in this legislation
and supplied a very important provi-
sion.
(Mr. BROWN asked and was given
permission to revise and extend his
remarks.)
Mr. BROWN. Mr. Speaker, I thank
the gentleman for yielding time to me,
and I will try to be brief.
Mr. Speaker, I rise in support of the
conference report on H.R. 776, the
Energy Policy Act of 1992. The legisla-
tion before us today represents the
first comprehensive energy bill that
has come before Congress in over 10
years. In this bill, we are setting a
new course for our Government ener-
gy programs in order to secure clean-
er, safer, more reliable energy produc-
tion and use. We are replacing 10
years of silence with a comprehensive
statement on the importance of a
national energy policy to our national
security and welfare.
This legislation has had a torturous
course through the legislative process
over the last 20 months of hearings,
markups, and conference. From then
through today, over a dozen commit-
tees in the House and Senate have
been involved during many long days
and nights, with over 100 Members of
the House and Senate working as
members of the conference committee.
None of this would have been of use
without the guidance of Mr. Dingell,
chairman of the House Committee on
Energy and Commerce; Mr. Lent, the
ranking minority member of that
committee; and Mr. Sharp, the chair-
man of the Energy and Commerce
Subcommittee on Energy and Power.
In the other body, Senator Johnston
and Senator Wallop have provided
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similar guidance. Over the last 20
months, these Members have provided
the dedication which has resulted in
the bill before us today.
The House Science, Space, and
Technology Committee is responsible
for authorizing a number of research,
development, and demonstration pro-
grams in this bill. In addition, we
were conferees on the proposals to
transform the Federal Government's
uranium enrichment enterprise into a
more competitive entity. Our portion
of the Energy Policy Act of 1992 is the
result of hard work by Mr. Scheuer,
the chair of the Subcommittee on the
Environment, and by Mrs. Lloyd, the
chair of the committee's subcommittee
on Energy. Without the able leader-
ship of these two individuals, this bill
would not contain the valuable re-
search, development, and demonstra-
tion programs authorized in H.R. 776.
The Science, Space, and Technology
Committee began work on this legisla-
tion in February of last year. Our full
committee and our subcommittees on
Environment and Energy have held
13 hearings over that time. They
have heard from numerous witnesses
on the need for comprehensive energy
legislation and then responded with a
comprehensive package of research,
development, and demonstration pro-
grams. Our committee reported its
legislative package in May 1992, and
has been active in the progress of the
legislation through the final agree-
ments represented in this Conference
report.
The energy research, development,
demonstration, and commercial appli-
cation programs authorized by this
bill are 5-year programs designed to
develop new energy production and
conservation technologies. We have
also authorized programs in more
basic research and in math and sci-
ence education. The research topics
covered by this bill range from clean
coal technologies to renewable energy
technologies, fusion, energy conserva-
tion, nuclear power generation, and
electric vehicles and includes a new
program to research the potential
health effects of electric and magnetic
fields (EMF).
The legislation is driven by a com-
prehensive set of goals designed to
push energy research programs to-
ward the development of reliable ener-
gy sources which can decrease depen-
dence upon imported oil, reduce ad-
verse environmental effects from ener-
gy generation and use, create markets
for cleaner energy technologies, and
enhance our competitiveness through
renewable energy and energy conser-
vation technologies.
To achieve these goals, a series of
programs are authorized to research
and develop new energy technologies
with a goal of moving them rapidly to
demonstration and eventual commer-
cial applications. I should note that
there is a strong emphasis on this
thrust toward commercialization of
energy technologies. This emphasis is
an appropriate goal of any applied
research program, but in this bill it
also represents a consensus among all
of the committees involved that we
should speed the commercial adoption
of the results of our energy research
efforts.
Among the new energy research,
development, and demonstration ini-
tiatives in this bill are:
A comprehensive program to re-
search and demonstrate electric vehi-
cles on a scale to move them to com-
mercial availability.
Major new initiatives to improve
energy efficiency in the industrial,
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transportation, and building sectors
including programs to develop ad-
vanced technologies for the pulp and
paper industry • the fourth largest
energy-using sector in the United
States • the steel and aluminum in-
dustry, advanced buildings, and tech-
nologies designed to improve the envi-
ronment.
New initiatives designed to enhance
our competitiveness through an ad-
vanced materials and advanced manu-
facturing program.
An enhancement of the ongoing
advanced nuclear reactor design pro-
gram which is seeking to develop pas-
sively safe, standard reactor designs,
with accelerated schedules for starting
the certification process at the Nucle-
ar Regulatory Commission (NRC).
A new program to research the
potential health effects of electric and
magnetic fields. This 5-year program
would be centered at the Department
of Energy (DOE), with health-efTects
research the responsibility of the Na-
tional Institute of Environmental
Health Sciences, and would be jointly
funded by the Federal Government
and the private sector.
Enhanced programs to increase the
efficiency of extraction of oil and gas
resources from existing reservoirs.
Enhanced programs for new electric
generation technologies, such as fuel
cells.
New and enhanced programs to
reduce dependence on imported oil,
mostly through research and develop-
ment programs on increased fuel effi-
ciency and on alternative fuel develop-
ment, in addition to the electric vehi-
cle program.
Improvements to ongoing programs,
as well as new initiatives in renewable
energy technologies.
In addition, there are a number of
improvements made in the planning
and administration of energy re-
search, development, demonstration,
and commercial application programs.
Finally, we have reformed the cur-
rent uranium enterprise conducted by
the Department of Energy into a new
unit which will be more able to com-
pete in the current international mar-
ket for enriched uranium. This was
accomplished through a fair balance
of taxpayer and utility ratepayer in-
terests and will result in a more flexi-
ble operation, more able to respond to
changes taking place in the world,
such as the conversion of warheads to
reactor fuel.
This conference report represents a
compromise between the House and
Senate positions and between the
positions of the various House com-
mittees involved. We wanted a more
complete authorization but had to
compromise with the Senate. We envi-
sioned a number of reforms to the
authorization and appropriations
process, but had to settle on less than
the House-passed bill provided. This
is the natural course of compromise.
But the research, development, dem-
onstration, and commercial applica-
tion programs authorized in this bill
represent a significant step forward.
There are a few clarifications to
some of the negotiated sections of this
bill which I feel need to be made at
this point. We negotiated with the
House Interior Committee over provi-
sions for a Tribal Government Energy
Assistance Program contained in sec-
tion 2606. 1 want to make clear that it
was the intent of the conferees, as
discussed in a public meeting of the
conference committee, that this pro-
gram is not to be a new program but
is to come out of existing program
authorizations at DOE.
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During our negotiations with the
Senate, we were pleased that the Sen-
ate agreed with the need for a number
of vital House-passed provisions on
energy efficiency, renewable energy,
and advanced materials and manufac-
turing. These program enhancements
and new program starts were fully
described in the committee's report to
accompany H.R. 776 (House Report
102-474, part 2), and I would refer to
that document for detailed informa-
tion of the intent of those programs.
This legislation is the first of what
we hope will be a series of authoriza-
tion bills in coming years. We have
already started work on legislation
authorizing a new mission for the
laboratory system in the Department
of Energy (DOE). We are also looking
for authorizations for the remaining
DOE programs not authorized in H.R.
776.
We are also hoping to continue the
cooperative relationship which we
forged with the Energy and Com-
merce Committee during the conside-
ration of this bill. For those who feel
that there is a logjam in Congress and
who wondered about a process which
puts over 100 Members of Congress on
a conference committee, this bill is
testament to what can happen when
cooperation and dedication prevail.
For the radical reformers of Con-
gress, I want to stress that the exist-
ing process is not easy and is not
clean, but it does not need radical
reform. There are changes we can
make, and I am endorsing many of
them for consideration in the upcom-
ing Democratic caucus. But when
there is determination to accomplish
a complex goal, such as enactment of
a national energy strategy, we can do
it under the existing system of rules
and processes.
While I am on the subject of reform
proposals, I would like to note that
none of this work contained in these
many hundreds of pages would have
been possible without the dedicated
work of congressional staffers. While
some have maligned the work of con-
gressional staff, I would note that the
progress of this bill is due to the ef-
forts of our dedicated staff people.
Many all-night sessions have been
held over the last few months, and
the staff of the Science, Space, and
Technology Committee are to be con-
gratulated for their work as well as
the staff of all of the committees.
Special recognition should be given to
the one person who was responsible
for reviewing and assembling this
entire bill, Mr. Tim Brown of the leg-
islative counsel's office.
It is my hope that we can continue
the progress being made today and
refine and amplify these programs
with additional legislation in the com-
ing Congress. I look forward to contin-
uing a good working relationship with
other committees and with the Senate
in preventing another 10 years from
passing before we take up energy au-
thorization legislation again.
Mr. MOORHEAD. Mr. Speaker, I
yield 1 minute to the gentleman from
Virginia (Mr. Bliley).
(Mr. BLILEY asked and was given
permission to revise and extend his
remarks.)
Mr. BLILEY. Mr. Speaker, I rise in
strong support of this conference re-
port. I would like to engage the chair-
man of the subcommittee, the gentle-
man from Indiana (Mr. Sharp), in a
colloquy.
Section 711 of the Public Utility
Holding Company Act Reform creates
a new section 32. Under section 32 the
Federal Energy Regulatory Commis-
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sion must determine that an applicant
is an exempt wholesale generator.
I would like to make clear that our
intent in this provision is that FERC's
determination should be purely minis-
terial. We do not intend that FERC
apply any standard or impose any
requirement except that the applicant
meets the statutory definition of an
exempt wholesale generator.
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. BULEY. I yield to the gentle-
man from Indiana.
Mr. SHARP. Mr. Speaker, I would
say that I agree with the gentleman
from Virginia. The intent is that ap-
plicants that meet the definition set
forth in section 32 will be determined
to be EWG's by FERC.
Mr. BULEY. Mr. Speaker, I thank
the gentleman.
Mr. MOORHEAD. Mr. Speaker, I
yield 1 minute to the gentleman from
Pennsylvania (Mr. Walker).
Mr. WALKER. Mr. Speaker, I thank
the gentleman for yielding time to me.
Mr. Speaker, I was hoping that the
gentleman from California (Mr.
Brown) would still be on the floor,
because I want to make a point of
clarification with him.
In title XIII, which authorizes coal
research and development,
$278,139,000 is authorized for 1993.
This is $42 million less than the cur-
rent funding level and sets the policy
of this bill that the Federal govern-
ment should earnestly start graduat-
ing this mature technology to the
private sector. The 'such sums as are
necessary' that are directed in the
out-years indicates this trend should
continue. It should also be clearly
stated that the subtitle A coal autho-
rization covers not just the R&D sec-
tions specifically referenced in title
Xm, but all fossil energy research and
development operating expenses as
well, including program direction and
management support, cooperative
research and development, fossil ener-
gy environmental restoration, and
plant and capital equipment.
Would the gentleman from Califor-
nia be good enough to confirm that
that is the intent of our committee?
Mr. BROWN Mr. Speaker, will the
gentleman yield?
Mr. WALKER. I yield to the gentle-
man from California.
Mr. BROWN. I thank the gentle-
man for yielding. I would like to state
that that is exactly my understanding.
Mr. WALKER. I thank the gentle-
man.
Mr. Speaker, it should also be noted
for the Record that no additional
funding for the Clean Coal Technology
Program is authorized in this bill.
Instead, the Secretary of Energy could
request such authorization for fund-
ing to cover additional solicitations
only if he determines there would be
sufficient added benefits.
Another issue I want to raise deals
with new versus modified programs.
The bill authorizes discretionary ener-
gy assistance for U.S. Insular areas
and Indian nations similar to that
provided to the States. I supported
this, and the House conferees agreed
during a House conferees' caucus that
such assistance should be implement-
ed as part of an existing Department
of Energy Program. Additional re-
sources, therefore, are not necessary
for this purpose. It simply requires a
prioritization of ongoing technical and
financial assistance activities,
Titles XX through XXIII, authoriz-
ing the remainder of DOE's energy
research and development, also turned
out pretty well. I am some what disap-
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pointed about having budget numbers
for only 2 years, since the House
started out with 5, but I'm neverthe-
less pleased to have a Department of
Energy authorization bill for the first
time in many years. Since the R&D
programs themselves are set up for 5
years years, the 2-year budget autho-
rizations clearly establish the need for
new authorization legislation in fiscal
year 1995. 1 look forward to reevaluat-
ing needs and justifications at that
time.
The energy R&D authorizations are
pretty straightforward. The total
spending provided $2.59 billion is fully
consistent with the President's fiscally
prudent plan. Some growth and real-
location of resources is then autho-
rized for in 1994, however, nothing
like the $5 billion of new spending
called for in the committee- reported
bill. Increased effort is provided for
enhanced oil recovery and new uses of
natural gas. Design certifications are
implemented for new reactors and the
first-of-a-kind engineering program is
codified through its completion. Re-
newable energy sources, such as hy-
drogen energy, are especially stressed.
And conservation is promoted, al-
though at a level 4 percent below the
amount the President requested for
1993. How ironic, President Bush is a
bigger conservationist than the Demo-
cratic Congress, to the tune of $13
million. A coordinated research pro-
gram on whether electromagnetic
fields produced by electricity really
have any scientifically proven human
biological effects is prescribed to put
this issue to rest once and for all with-
in 5 years.
Finally, the Government-run uran-
ium enrichment operation is trans-
formed into a market-based corpora-
tion owned by the Government. This
allows business flexibility to negotiate
new contracts and market, price and
sell uranium commercially. Some
government constraints remain, some
of which are good, some burdensome.
However, the language does protect
the taxpayer from liability by limiting
the corporation's borrowing and re-
quiring construction and commercial-
ization of new facilities and technolo-
gies only after full privatization. And
the resolution of providing for the
decontaminationanddecommissioning
of enrichment facilities is acceptable
with cost to the ratepayer limited to
about 30 percent of its $7.2 billion
cost.
Mr. SHARP. Mr. Speaker, I yield
such time as she may consume to the
gentlewoman from Ohio (Ms. Oakar).
(Ms. OAKAR asked and was given
permission to revise and extend her
remarks.)
Ms. OAKAR. Mr. Speaker, I rise in
support of the bill and thank the
chairman for putting the energy effi-
ciency standards on housing in the
bill.
Mr. Speaker, I would like to rise in
support of the conference report. I
want to endorse several sections that
promote energy efficiency in this
country. Energy efficiency holds the
potential of savings about 25 percent
of all energy being used in the United
States as well as other countries.
Specifically, the Federal mortgage
requirement in the bill amends section
109 of the Cranston-Gonzalez Nation-
al Affordable Housing Act. I authored
section 109, which requires that the
Secretary of HUD promulgate energy
efficiency standards for all new single
and multifamily federally assisted
housing. The standards, to be estab-
lished with the assistance of a broad
government-private sector advisory
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task force, must be equal to or greater
than the standards in the most recent
edition of the Council of American
Building Officials' Model Energy Code
(CABO-MEC).
The provision in the energy bill
clarifies section 109 by requiring HUD
mortgages to meet the 1992
CABO-MEC; by adding Farmers Home
Administration; and by providing for
updating and self-execution of section
109 within 1 year of the date of enact-
ment.
Adoption of the CABO-MEC reduces
total energy consumption for hearing
and cooling by an average of 25 per-
cent. If these standards are across
the board in the years ahead, they will
apply to all new construction. A study
by the Alliance to save energy esti-
mates that this provision, alone, can
result in the saving of 482 tanker
loads of imported oil over a 30-year
period. A homeowner on average
would pay less than $8 more in mort-
gage payments and save $15 per
month in energy bills. Adoption of
the CABO-MEC will also benefit the
environment.
The following organizations have
endorsed the application of
CABO-MEC to federally assisted and
insured housing: Consumer Federa-
tion of America, Alliance to Save En-
ergy, American Council for an
Energy-Efficient Economy, National
Association of State Energy Officials,
and the North American Insulation
Manufacturers Association.
The clarification to section 109 of
the Cranston-Gonzalez Act represents
one of the most effective ways home-
owners can contribute to energy con-
servation and, environmental protec-
tion and, save on personal utility bills.
Additionally, the home energy rating
standards and revised manufacturing
housing standards, together with pro-
visions in the housing bill on strength-
ening solar energy financing end
launching a pilot program for imple
menting the energy efficient mortgage
program we enacted in 1990, will be a
huge step forward in energy.
Mr. Speaker, I urge my colleagues
to support this bill
Mr. SHARP. Mr. Speaker, I yield 5
minutes to the distinguished gentle-
man from Illinois (Mr. Rostenkowski),
chairman of the Committee on Ways
and Means.
(Mr. ROSTENKOWSKI asked and
was given permission to revise and
extend his remarks.)
Mr. ROSTENKOWSKI. Mr. Speak-
er, I rise in support of the conference
agreement on H.R. 776, the Compre-
hensive National Energy Policy Act of
1992. This legislation contains impor-
tant tax incentives which will contrib-
ute significantly to the implementa-
tion of our Nation's energy policy.
This so-called green tax package is
paid for with offsetting revenue provi-
sions to ensure that the legislation is
revenue-neutral over the 5-year peri-
od.
These provisions will encourage
Americans to conserve energy; to seek
new, cleaner sources of energy; to
develop new ways to use clean energy
sources; and to adapt current energy
technology to protect the environ-
ment.
For instance, to encourage energy
conservation and the use of (ewer
cars, the conference agreement ex-
cludes from income up to $60 per
month in employer-provided transpor-
tation benefits, such as transit passes
and vanpooling, and limits the exdu-
sion from income for
employer-provided parking to $166 per
month.
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In addition, the agreement fully
excludes from income energy conser-
vation subsidies provided by public
utilities to residential customers. For
commercial or industrial customers,
the exclusion is phased in, reaching 65
percent in 1997.
The agreement also provides incen-
tives for vehicles powered by clean
fuels. It includes a deduction for a
portion of the incremental cost of
motor vehicles that may be propelled
by a clean-burning fuel, as well as a
deduction of up to $100,000 per loca-
tion for certain refueling property for
clean-burning fuels. In addition, a
10-percent credit of up to $4,000 per
vehicle would be available for qualified
electric vehicles.
To encourage the use of alternative
sources of energy, the conferees
agreed to provide a production credit
of 1.5 cents per kilowatt hour for
electricity produced from qualified
wind energy facilities or closed-loop
biomass facilities. In addition, the
energy investment credit for solar and
geothermal property would be made
permanent.
Other provisions included in the
agreement would: First, repeal perma-
nently, the minimum tax preferences
for intangible drilling costs and excess
percentage depletion for independent
oil and gas producers; second, repeal
the investment restrictions currently
applicable to nuclear decommissioning
funds and reduce the tax rate on in-
come of these funds; third, extend the
section 29 nonconventional fuels pro-
duction credit for certain facilities
that produce gas from biomass or that
provide liquid, gaseous, or synthetic
fuels from coal; fourth, provide rules
allowing otherwise qualifying facilities
to continue to be eligible for
tax-exempt bond financing of
local -furnishing facilities; fifth, modify
the partial excise tax exemption for
gasoline mixed with ethanol or other
alcohol; sixth, create a new type of
exempt-facility bond outside of the
private activity bond volume cap, for
environmental enhancement of hydro-
electric generation facilities; and sev-
enth, allow taxpayers who have con-
tributed to the Trans-Alaska Pipeline
Liability Fund to claim income tax
credits in certain circumstances.
The cost of these tax incentives is
offset by a number of revenue-raising
provisions. These include first, an
increase in the ozone-depleting chemi-
cals (CFC) tax rate; second, a new
reporting requirement in
seller-financed mortgage transactions;
third, an increase in the withholding
rate on gambling winnings to 28 per-
cent and in backup withholding on
interest and dividends to 31 percent;
fourth, a requirement that certain
interests be consistently classified as
stock or indebtedness; fifth, the elimi-
nation of a loophole that permitted
avoidance of pre-contribution gain on
property contributed to a partnership;
sixth, the denial of a deduction for
travel expenses paid or incurred in
connection with employment lasting
one year or more; seventh, a new
reporting requirement relating to the
imposition of property tax in the pur-
chase of a residence; eighth, permit-
ting of excess assets in a qualified
black lung trust to be used to pay
accident and health benefits for re-
tired coal miners; and ninth, a limita-
tion on when a trust can qualify for
the marital deduction under the es-
tate and gift tax.
The conference agreement also in-
cludes the provisions of the Senate bill
which establish rules for the financing
and provision of health benefits to
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retired United Mine Workers and
their families.
While the House conferees share the
concern of the Senate for these retired
coal miners, we only very reluctantly
agreed to these provisions.
The House conferees are very un-
easy with the provision included in
the Senate bill for financing these
benefits. It appears to create numer-
ous inequities among the companies
that will be required to pay for these
benefits, and could set an unfortunate
precedent for legislating a solution to
what is in essence a private dispute.
Yet in spite of these seemingly ma-
jor and perhaps fatal flaws in their
amendment, the Senate presented this
to the House conferees on a take-it-or-
leave-it basis - threatening defeat of
the most comprehensive energy legis-
lation in years if even the smallest
problem were corrected by House con-
ferees. The House conferees were
prevented from undertaking good
faith negotiations on the enumerable
problems with the Senate version
which have been brought to our atten-
tion.
We should have been able to dis-
cuss, for instance, why companies that
had paid a withdrawal liability under
the 1988 collective bargaining agree-
ment should not be able to claim a
credit for that payment against this
new liability, rather than paying twice
for the same retirees.
I also would like to know why a
company that merely leases property
to a mining operator is potentially
liable for the mining operator's retir-
ees under these provisions.
I would like to have discussed the
difficulties some companies will have
providing a security for the 1992 fund.
I want to understand why only one
partner in a joint coal mining venture
should have to bear the entire liability
for the retirees of the operating com-
pany simply because the other joint
venturer was not directly related to
the signatory operator.
It would have been more responsible
to discuss the effects of these provi-
sions on companies that are already
financially strapped or attempting to
emerge from reorganization and for
whom payment of these premiums
could put them out of business.
I would like to have been able to
discuss the concerns of companies
that will be liable under these provi-
sions for retirees who worked for
them for only 6 months or less, and
those that will be liable because they
were contract miners, despite the fact
that by the terms of the contract, the
other company was responsible for the
health benefits of the workers.
There are also companies who made
certain that when they sold their coal
operations the price paid by the pur-
chaser under the buy-sell agreement
reflected the full assumption of retiree
health organizations by the purchaser.
I wonder how equitable it is to reach
back to the selling company which
received a lower sales price in this
case.
We should also have had discussions
about the numerous companies that
are no longer in the bituminous coal
business but who are pulled back into
these provisions in some cases decades
after they stopped mining and at a
time when the funds were not in fi-
nancial trouble.
It has been brought to my attention
that it may make more sense if the
first responsible signatory operator
were the company that employed the
miner the longest. The provisions as
adopted go to this company last.
Finally, some companies have sug-
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gested that they are willing to pay the
liability imposed by these provisions,
but they will be disadvantaged in the
export coal market. They have sug-
gested that the Federal Government
help them out by providing an export
credit for metallurgical coal.
The many difficulties with these
provisions lead me to conclude that
we will be forced to reconsider this
arrangement in the very near future,
possibly as soon as next year, before
the provisions take effect on October
1. It is only with these grave reserva-
tions that the House conferees agreed
to accept the Senate amendment. In
this regard, I fully intend to have the
Ways and Means Committee review
the Senate provisions at the earliest
opportunity next year.
Mr. Speaker, H.R. 776 is one of the
most important pieces of legislation
produced by this Congress, and I urge
my colleagues' support for this confer-
ence agreement.
Mr. MOORHEAD. Mr. Speaker, I
yield myself 4 1/2 minutes.
Mr. Speaker, I rise in strong sup-
port of the conference report and urge
the adoption of the Energy Policy Act.
This conference report is the culmi-
nation of 3 years of hard work and
planning. I must single out praise for
President George Bush, who in 1989
had the foresight to develop a national
energy, long before the invasion of
Kuwait put energy back on the front
pages.
But I would be remiss if I did not
also commend chairman John Dingell
and Phil Sharp, as well as ranking
member Norm Lent, for their efforts
at shaping this legislation, bringing it
successfully to the floor for this House
and then crafting a compromise with
the Senate. This is legislation that is
important for our Nation and all of
her people, and represents the most
expansive change in American energy
policy in almost two decades. H.R.
776 reduces energy demand through
improved efficiency standards and
integrated resource planning; encour-
ages the use of clean coal and domes-
tic natural gas; enhances national
energy security by lessening the need
for the importation of foreign oil; and
increases the country's use of clean,
safe, and domestic renewable energy
by almost 10 percent.
Additionally, and very importantly,
Mr. Speaker, this legislation would
reform the regulation of electric utili-
ties to ensure competition in both the
generation and transmission of whole-
sale electric supplies. Some have
called this legislation historic and
certainly the reform of the laws gov-
erning the electric utility industry has
been dramatic. With this legislation,
we enter into a new era of competi-
tion in wholesale electricity supplies.
We have found that the best way to
regulate is through competition.
When competition increases, the need
for bureaucratic oversight is reduced,
excessive regulatory costs are avoided,
and the consumer benefits.
The Department of Energy esti-
mates that wholesale electricity com-
petition could bring efficiencies up to
$1.8 billion per year. These savings
will result in more disposable income
for the average American, lower prices
for the goods he buys, and increased
competitiveness for American business
and industry.
Mr. Speaker, I am most pleased
that the conference has adopted most
of the House provisions which provide
increased transmission access for
wholesale electric competitors. When
Mr. Markey and I introduced trans-
mission access legislation over 1 year
84-335 O -94 -13
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ago, we were told that this issue was
too contentious for this Congress. We
were told that it was unlikely that the
transmission monopoly could be bro-
ken.
It is never easy for any industry to
restructure. The end of the monopoly
on generation and transmission ser-
vices will undoubtedly require such
restructuring. While this change will
be difficult for some, it will create
opportunities for others, for those who
can provide the American consumer
and businessman with the cleanest,
most reliable and most economic
sources of electricity, this bill means
access to the marketplace for a super-
ior product. This will benefit our envi-
ronment as it benefits our economy.
Mr. Speaker, I have noted the hard
work of our committee chairman and
ranking member, but I would also like
to pay tribute to the fine staff who
worked literally thousands of hours in
preparation for today's vote. In par-
ticular, I want to commend the staff
of the energy and commerce minority,
who played a significant role in shap-
ing this legislation. Our thanks go to:
Jessica Laverty, Cathy Van Way, Mar-
garet Durbin, Len Coburn, Freida
Dope, John Hambel, Darlene
McMuUen, and Anne-Whitney Powers.
Mr. Speaker, I have been privileged
to have been able to play a role in
crafting this legislation. It is a good
bill for American, and I urge My col-
leagues to join me in plotting
America's energy future by voting to
adopt the conference report.
Mr. SHARP. Mr. Speaker, I yield 2
minutes to the gentleman from Cali-
fornia (Mr. Miller), the distinguished
chairman of the Committee on Interi-
or and Insular Affairs.
(Mr. MILLER of California asked
and was given permission to revise
and extend his remarks.)
Mr. MILLER of California. Mr.
Speaker, I rise in support of the con-
ference committee report on H.R. 776
and urge my colleagues to vote for its
adoption.
The legislation before us today is
not, as they say, all it could be. Im-
portant measures adopted by the
House were dropped or modified. I
am particularly concerned by the con-
ference report's diminution of
protections for our rivers and natural
resources from ill-advised energy pro-
jects. I am also disappointed by the
failure of the conferees to adopt cer-
tain measures involving Alaska and
protection of our coastal environment.
I am pleased, however, to report to
the House that the conferee did excel-
lent work on a number of issues giv-
ing us a measure we should all sup-
port.
I am gratified that the conference
agreement includes critical measures
dealing with coal surface mining;
dams in the national parks regula-
tions of certain nuclear waste, Indian
energy initiatives, uranium enrich-
ment services, and an important ener-
gy efficiency program for the Western
Area Power Administration.
Specifically, the conferees agreed to
the following major provisions under
the jurisdiction of the Interior Com-
mittee:
COAL STRIP MINING IN NATIONAL
PARKS. AND NATIONAL FORESTS
The conferees approved the imposi-
tion of a 1-year moratorium on the
administration's so-called valid exist-
ing rights regulation that would have
opened up national forests, parka, and
other protected areas to coal strip
mining.
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OIL SHALE CLAIMS
The conference agreed to a modifi-
cation of the Interior Committee bill
to require a resolution of old oil shale
claims on Federal lands in the west in
a manner protecting valid property
rights but eliminating faulty claims.
COALBED METHANE
A version of the Interior Committee
bill provision establishing a national
program to resolve property disputes
between the owners of coal and meth-
ane gas was approved by the conferees
thus removing substantial impedi-
ments to methane development.
OCS ACHIEVEMENTS
The conferees agreed to kill a pro-
posal that could have denied the U.S.
Treasury of undetermined millions of
dollars in offshore oil and gas reve-
nues oil companies may be required to
pay the Federal Government of
deepwater drilling.
INDIAN ENERGY INITIATIVES
The conferees approved provisions
to promote Indian tribe energy
self-sufficiency through improved
management capacity, vertical inte-
gration, project development and the
creation of an Indian Energy Resource
Commission to study barriers to ener-
gy development.
DAMS IN THE NATIONAL PARKS
The conferees agreed to a provision
that would prohibit FERC from issu-
ing an original license for a hydropow-
er project located within the bound-
aries of any unit of the National Park
System.
NUCLEAR REGULATION/BELOW
REGULATORY CONCERN
The conference committee approved
a measure to revoke the NRC's BRC
policy to deregulate nuclear waste and
allow such waste to be disposed of in
landfills along with ordinary garbage.
NUCLEAR POWER/WHISTLEBLOWERS
The conference committee approved
provisions to strengthen the protec-
tion of whistleblowers in the nuclear
power industry and extend such pro-
tection to workers in the DOE weap-
ons complex.
WESTERN AREA POWER ADMINISTRATION
The conferees agreed to require util-
ity customers of the Western Area
Power Administration to devote more
resources in increase energy efficiency.
URANIUM ENRICHMENT
The conferees approved provisions
that will save taxpayers billions of
dollars by requiring the nuclear indus-
try to pay $2.25 billion of the cost of
cleaning up the uranium enrichment
complex and prohibiting further Fed-
eral investment in the unnecessary
AVLIS technology which could cost
billions of dollars to construct.
Mr. Speaker, the road to this point
has not been without its hazards and
rough spots. Through the persever-
ance of many Members and the pa-
tient, methodical leadership of Chair-
man Dingell and Mr. Sharp we have a
bill, and a good bill at that. This bill
is real, it will make a difference about
how we generate and use energy for
decades to come, and I urge it approv-
al by this House.
Mr. Speaker, I would like to com-
ment on the legislation's
whistleblower provisions. Title XXIX
of the conference agreement creates a
new paragraph (3) in section 210(b) of
the Energy Reorganization Act of
1974. Paragraphs (3)(A) and (3)(B)
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impose a limitation on the investiga-
tive authority of the Secretary of La-
bor in whistleblower cases. If the
complainant does not make a prima
facie showing that protected activity
contributed to the unfavorable person-
nel action alleged in the complaint,
the Secretary must dismiss the com-
plaint and cease the investigation.
And if the employer demonstrates by
clean and convincing evidence that it
would have taken the same unfavor-
able personnel action in the absence of
such behavior, the Secretary must
cease the investigation. These limita-
tions apply only to the Secretary's
prosecution of the complaint. The
complainant is free, as under current
law, to pursue the case before the
administrative law judge if the Secre-
tary dismisses the complaint. At the
administrative law judge hearing and
in any subsequent appeal, the
complainant's burden of proof will be
governed by new section 210(b)(3) (c)
and (d). Once the complainant makes
a prima facie showing that protected
activity contributed to the unfavor-
able personnel action alleged in the
complaint, a violation is established
unless the employer establishes by
clean and convincing evidence that it
would have taken the same unfavor-
able personnel action in the absence of
such behavior.
The conferees intend to replace the
burden of proof enunciated in Mt.
Healthy v. Doyle, 429 U.S. 274 (1977),
with this lower burden in order to
facilitate relief for employees who
have been retaliated against for exer-
cising their rights under section 210.
To remedy the long delays in ob-
taining relief for complainants with
meritorious cases, the conference
agreement amends section
210(bX2XA) of the Energy Reorganiza-
tion Act to require the Secretary to
order interim relief for any complain-
ant who prevails at the hearing level.
Once an administrative law judge
determines that the complaint has
merit, the Secretary must, without
delay, order the employer to abate the
violation and reinstate the complain-
ant to his or her former position to-
gether with the compensation - in-
cluding back pay - terms, conditions,
and privileges of his or her employ-
ment.
Mr. Speaker, I am disappointed that
the conference committee could not
reach agreement on the provisions in
title XXIV relating to oil and gas leas-
ing on the Outer Continental Shelf.
Much of the OCS has been off limits
to leasing in recent years by virtue of
moratoria placed in the annual appro-
priations bills. Despite my firm desire
that the authorizing committees reach
a long-term resolution of these con-
tentious issues, the conference was
unable to accomplish this task.
Most of the blame for the failure to
include an OCS title lies with the
Bush administration. Responding to
the administration's position, the
Senate's failure to support lease can-
cellations - or even the House proposal
to impose modest drilling bans in
Bristol Bay, AK, Florida, and North
Carolina - caused the conference to
split apart. I especially regret that
provisions guaranteeing long-term
protection for the California coast and
providing for the establishment of
environmental sciences review panels
were lost.
The failure of the Senate to accept
the Alaska provisions in title XXIV of
the House bill is a source of great
frustration to me. In particular, the
language directing use of the Exxon
Valdez oilspill settlement funds for
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land acquisition had been worked out
to the satisfaction of all parties and
the Senate was in agreement. Clearly,
it is the overwhelming sense of the
Congress that the $50 million in crim-
inal restitution funds should be used
for land acquisition and that the Fed-
eral Trustees should seek to include
land acquisition as a significant com-
ponent of any restoration plan involv-
ing the $900 million civil settlement.
Other significant provisions dropped
because of Senate opposition include:
extension of ANILCA title VIE subsis-
tence review standards to OCS lease
sales in Alaska; a requirement for
Alyeska to file a contingency plan with
the Coast Guard to implement its
clear responsibilities under existing
law, including section 204(b) of the
Trans-Alaska Pipeline Authorization
Act, to respond to oilspills in Prince
William Sound, and a section intended
to reverse an unjust decision of the
TAPS liability fund on subsistence
claims connected with the Exxon
Valdez oilspill.
Section 2464 of the House bill was
intended to resolve unnecessary confu-
sion over the role of the TAPS liability
fund and the relationship between
State and Federal law in Exxon
Valdez related litigation. In my view,
this provision is consistent with exist-
ing law. The TAPA Act does not limit
the right of any claimant to pursue
other remedies under State or Federal
laws against parties other than the
TAPS liability fund. The TAPS fund's
factual and legal determinations are
not binding in any other proceeding.
Specifically, section 204(c) of the
TAPA Act provides that '(t)he unpaid
portion of any claim may be asserted
and adjudicated under other applica-
ble Federal or State law.' This means
that all aspects of a person's claims
which are not fully compensated by
the TAPS fund, including claims other
than those allowed by the fund, may
be pursued.
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. MILLER of California. I am
happy to yield to the gentleman from
Indiana.
Mr. SHARP. Mr. Speaker, my un-
derstanding is that the bill would
allow a new Government corporation
to market commercial grade uranium
derived from former Soviet highly
enriched uranium, subject to the
terms of a government-to-government
agreement.
Mr. MILLER of California. The
gentleman is correct.
Mr. SHARP. I also understand that
the President's announcement for the
current government-to-government
agreement states that the costs of any
deal involving former Soviet highly
enriched uranium would be budget
neutral.
Mr. MILLER of California. That is
also correct.
Mr. SHARP. Does the gentleman
interpret 'budget neutral' to mean
that any deal for former Soviet HEU
could allow the corporation to make a
profit, but would at a minimum re-
quire the Government to recover all of
its costs associated with the deal on a
year-to-year basis, including all of the
costs of the Government corporation?
Mr. MILLER of California. The
gentleman is correct again and makes
an extremely important point.
Mr. SHARP. Therefore, it is the
intent of the legislation that any in-
volvement of the corporation in deal-
ing with former Soviet HEU would be
budget neutral pursuant to a
government-to-government agree-
ment?
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Mr. MILLER of California. Abso-
lutely.
Mr. SHARP. I thank the gentleman
and I will submit a copy of the
President's announcement on this
subject for inclusion in the Record at
this point.
The Whit* House,
Office of the Press Secretary,
Washington DC,
August 31, 1992.
STATEMENT BY THE PRESIDENT
Over the pest year the United States end the
former Soviet Union heve agreed to cut their
strategic nuclear arsenals by two-thirds and to
eliminate roost of their tactical nuclear weapons,
including all ground-launched systems. As a
result of these dramatic reductions, thousands of
nuclear warheads are being dismantled in Russia
and the United States. The United States and
Russia are cooperating closely to help ensure the
safe and secure transport, storage and dismantle-
ment of former Soviet nuclear weapons.
I em pleased to announce that the Russian
Federation and the United States have now also
initialed an agreement to ensure that
high(y-enriched uranium from dismantled nucle-
ar weapons will be used only for peaceful purpos-
es. Our two governments heve initialed an
agreement, which we expect to sign quickly,
providing for the conversion of this material into
civilian reactor fuel. We heve also agreed to
establish measures to ensure thet tlie nonprolif-
eration, physical security, materiel accounting
and control, and environmental requirements
covering this material are fully met.
Under the agreement, the United States end
Russia would seek within the next twelve months
to conclude an implementing contract, establish-
ing the terms of the purchase of weapons-grade
uranium by the VS. Department of Energy and
the dilution of thet materiel to reactor-grade
uranium for sale aa commercial reactor fuel. The
contract would also provide for the participation
of the VS. private sector and the use by the
Russian Federation of a portion of tlie proceeds
to increase the safety of nuclear reactors in tlie
former Soviet Union.
Abroad, thia agreement will help ensure that
nuclear weapons-grade material does not fsll into
the wrong hands, while providing funds to pro-
mote economic reforms and the transition to a
market-based economy. At home, this agreement
will secure long-term supplies of leas expensive
fuel for VS. nuclear power stations to the benefit
of American consumers, with no advene impact
on American jobs. Thus, this U& -Russian
agreement illustrates how foreign policy secom-
plishments can promote our domestic ttrrarsj-rr
well-being while making the world a safer place
to live.
Implementation of the agreement will be bud-
get neutral for the VS. Government on a
year-by-year basis. Payment for purchase) of
HEU would come from savings in the Depart-
ment of Energy's enrichment operations. Pur-
chase of HEU from nuclear warheads dismantled
in Russia would heve no adverse imped on VS.
consumers or jobs in the uranium mining or
processing industries. The Department of Ener-
gy would use tlie HEU to reduce the electricity
costs st its enrichment facilities, while continu-
ing to operate et current employment levels and
to process domestically-produced uranium. The
agreement will not be funded under the Soviet
Nuclear Threat Reduction (Nunn-Lugar) Act of
1991.
The White House,
Office of the Press Secretary.
Washington, DC,
August 31. 1982.
FACT SHEET ON US. -RUSSIAN AGREE-
MENT ON HIGHLY-ENRICHED URANIUM
An agreement concerning the disposition of
highly-enriched uranium (HEU) from the dav
mentlement of nuclear weapons in Russia has
been initialed by Major General (Retired) William
F. Burns, representing the United 8Utes of
America, and Deputy Minister of Atomic Energy
Nikolai Yegorov, representing the Russian Feder-
ation. The agreement requires formal approval by
both governments, alter which it will be signed
end enter into effect.
The agreement is in two parte. The first part
establishes the parties' objectives. It
tliem to cooperate in the conversion, ae i
practicable, of the HEU resultingfrom <
ment of nuclear weapons
low-enriched uranium (LEU) for use ae cosasasr
del reactor fuel. It also calla on the parlies to
establish appropriate measures to ensure that
thia transaction ia executed in a manner missis
tent with sll applicable nonproliferation, physical
security, material accounting and control, and
environmental requirements.
The second part of the agreement commits the
parties to seek to enter into an implsmsnting
contract within twelve months to a
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4677
objectives set forth in the first part. The agree-
ment specifies that the implementing contract
will provide, among other things, for the follow-
ing: Annual conversion of no less than 10 metric
tons of HEU in the first five years and no less
than 30 metric tons thereafter; the purchase by
the VS. Department of Energy of HEU for con-
version in the United States to LEU and sale for
commercial purposes; the purchase by the VS.
Department of Energy of LEU converted from
HEU at facilities in Russia and the sale of such
LEU for commercial purposes, if so agreed; the
participation of the VS. private sector; and the
use by the Russian Federation of a portion of the
proceeda of HEU sales to upgrade the safety of
nuclear reactors in the former Soviet Union. Tlie
use by the Russian Federation, at its discretion,
of a portion of any proceeda from the sale of
HEU to finance the construction and operation
of facilities in Russia to convert HEU to LEU.
Mr. MOORHEAD. Mr. Speaker, I
yield 4 minutes to the gentleman from
New York (Mr. Lent), the ranking
member of the Committee on Energy
and Commerce.
(Mr. LENT asked and was given
permission to revise and extend his
remarks.)
Mr. LENT. Mr. Speaker, we did it.
I am proud to join my colleagues
from both sides of the aisle in voting
for this conference report.
This report affirms the leadership of
President Bush in fashioning a na-
tional energy strategy to lessen our
dependence on foreign energy supplies
and to lower energy costs for all
American consumers. It also contains
a number of delicately crafted compro-
mises, particularly in the areas of al-
ternative fuels and public utility com-
pany holding act reform and transmis-
sion access, which demonstrate the
leadership abilities of both the chair-
man of the House delegation, Mr.
Dingell, the chairman of the confer-
ence, Senator Johnston, the subcom-
mittee ranking Republican, Carlos
Moorhead, and the chairman of the
Subcommittee on Energy and Power,
Mr. Sharp.
For the last 15 years, America has
been without an energy policy.
Thanks to the vision of President
George Bush, who started the ball
rolling more than 3 years ago, we will
be voting today on a comprehensive
package that will decrease America's
dependence on foreign oil and bring
relief to consumers through competi-
tion in the production of electricity.
This is a good bill, one which repre-
sents the very best work of every
Member of the House. President Bush
has indicated that he will sign this
legislation when it reaches his desk,
and I urge my colleagues to join me in
supporting the conference report.
I also want to join my friend, the
gentleman from California (Mr.
Moorhead), in commending the minor-
ity committee staff who have put in so
many long hours on this and indeed
worked on the concept of a compre-
hensive energy bill before there was
even a national energy strategy from
the President. They are Jessica
Laverty, Cathy Van Way, Len Coburn,
Darlene McMullen, Freida Depe,
Anne- Whitney Powers, and Margaret
Durbin. I also want to commend the
majority staffs of both the full com-
mittee and the subcommittee for their
fine work.
In conclusion, Mr. Speaker, I want
to clarify that the conferees did not
intend, with respect to retail wheeling,
that FERC be permitted to use the
grandfathering provision to impair
existing retail wheeling contracts. It
appears some question has arisen as
to whether new section 212(h)(2)(B) of
the Federal Power Act is intended to
permit FERC to order a utility to
continue, but not to expand or change
the nature of, existing voluntary retail
wheeling arrangements. For example,
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if a utility is presently wheeling to
retail customers a small fraction of
the energy requirements of such cus-
tomers, the grandfathering provision
would not permit FERC to order that
utility to wheel a larger fraction of the
energy requirements of such custom-
ers or to provide wheeling service to
such customers involving energy and
capacity. It is not our intent to per-
mit FERC to use the grandfathering
provision to impair or modify existing
retail wheeling contracts.
I also want to provide specific com-
ments on other aspects of the bill.
NATURAL GAS • SECTION 201
The Energy Policy Act of 1992 con-
tains important provisions that re-
move regulatory barriers which hinder
the importation of natural gas from
countries with which the United
States has entered into a free trade
agreement requiring national treat-
ment for trade in natural gas. Cur-
rently, this means Canadian gas must
be treated the same as domestic gas.
Once the North American Free Trade
Agreement is ratified, this will also
apply to Mexican gas.
Section 201, of this act, is vital to
assuring that U.S. regulators do not
interfere with the importation of nat-
ural gas to customers in the United
States. Its provisions provide critical
protection to the citizens of my home
State, New York, who receive supple-
mental volumes of natural gas from
Canada. The purpose of these provi-
sions is not to give imported natural
gas an advantage, but to ensure a
level playing field for imported gas.
Importantly, access to multiple natu-
ral gas supply sources will increase
competition and lower consumer pric-
es.
Specifically, section 201 adds three
new provisions to section 3 of the
Natural Gas Act concerning imported
natural gas. Section 201(aXD deems
that imported natural gas be treated
as a first sale within the meaning of
the Natural Gas Policy Act of 1978.
Now, imported gas, like domestic de-
controlled gas, need not be licensed.
Section 201(aX2) bars FERC from
discriminating against, or giving a
preference to, any natural gas on the
basis of where it was produced. Im-
ported gas cannot be treated different-
ly than domestic gas.
Section 201(b) deems the importa-
tion to the United States, and expor-
tation from the United States, of nat-
ural gas consistent with the public
interest. By making this determina-
tion, applications for import of Cana-
dian natural gas are granted automat-
ic approval. The result is, imported
natural gas is not subjected to burden-
some import licensing proceedings
that place it at a disadvantage relative
to domestically produced gas.
I believe it is sound energy policy to
prevent unfair discrimination against
imports of natural gas from Canada.
Greater access to natural gas will help
reduce our dangerous dependence on
unreliable sources of imported oil.
Moreover natural gas has a positive
environmental impact. It is the clean-
est burning fossil fuel and all UJ3.
citizens benefit from its use.
These gas import provisions are also
good trade policy. Regulatory
discrimiantion against Canadian gas
would violate the United States- Can-
ada free trade agreement.
Finally, these provisions are good
competitive policy. U.S. producers
supply over 92 percent of the natural
gas needs in this country. Fair treat-
ment of imports helps maintain
healthy competition in the United
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States without posing any threat to
U.S. producers. Greater access to a
variety of natural gas sources will
help create a more stable natural gas
market so that more U.S. consumers
will benefit from this economic and
environmentally sound source of ener-
gy-
These important new provisions
could not have been enacted without
the able leadership of Chairman
Dingell, Subcommittee Chairman
Sharp, the ranking Republican mem-
ber on the Energy and Power Subcom-
mittee, Mr. Moorhead, and Mr.
Markey and Mr. Towns. I thank each
of them for joining me in working for
this important result.
I also want to address other issues
related to retail wheeling, uranium
enrichment, and whistleblowers.
URANIUM ENRICHMENT
I would like to address the confer-
ence report on title DC, the United
States Enrichment Corporation. The
point of restructuring the uranium
enrichment enterprise is to try to put
this Government business on a com-
petitive standing in the world enrich-
ment market. Restructuring propo-
nents have long argued that an effec-
tive bill would benefit the Nation's
energy security, preserve
high-technology American jobs, and
improve the Nation's trade imbalance.
I believe this bill allows the Corpo-
ration to achieve these goals. Even
though I would prefer to see aspects
of present regulation, such as section
16 lv of the Atomic Energy Act of
1954, repealed in its entirety, I under-
stand that section 16 lv is applied only
to the Department of Energy for the
purpose of cost recovery on DOE's
administrative cost on the lease of
gaseous diffusion plant (GDP) facili-
ties. The depreciation and imputed
interest on current assets of the
GDP's and other facilities owned and
operated by the DOE will not be
passed on to the Corporation nor to
the utility customers.
I commend the efforts to clean the
slate on the unrecovered cost issue
and pave the road for the Corporation
to regain its competitive edge in the
world market.
WII1STLEBLOWER PROTECTION
In section 3004, we have expanded
substantially the legal rights of and
private legal remedies available to
whistleblowers working at the
Nation's nuclear facilities. We have
extended the statute of limitations
from 30 to 180 days, we have extend-
ed the scope of whistleblowing activi-
ties protected under the act, and we
have provided for interim relief to be
awarded in appropriate circumstances.
But we have also taken care to avoid
encouraging the filing of frivolous
complaints by making it clear that
administrative resources are not to be
consumed in the investigation of any
complaint.
We have sought to strike a balance
that ensures that employees are pro-
vided adequate relief in any cases
where they would not have suffered
adverse employment action but for
their protected whistleblowing activi-
ty, while at the same time sending a
clear message that any attempt to
burden the system with frivolous com-
plaints about employment actions that
have their origins in legitimate consid-
eration will meet with a swift dismiss-
al and denial of any relief. Thus, it
should be clear that this amendment
provides employees at nuclear facili-
ties with no insulation against legiti-
mate exercises of the rights of their
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employers to enforce discipline with
and to provide direction to the em-
ployees in their workforces.
I wish to thank the leadership of
Chairman Dingell and Sharp on these
difficult issues, as well as the diligent
efforts of Chairman Brown of the
Science, Space, and Technology Com-
mittee, and Chairman Miller of the
Interior and Insular Affairs Commit-
tee.
Mr. SHARP. Mr. Speaker, I yield 4
minutes to the gentleman from Texas
(Mr. Pickle), a distinguished member
of the Committee on Ways and Means.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Texas (Mr. Pickle).
The SPEAKER pro tempore. The
gentleman from Texas (Mr. Pickle) is
recognized for 6 minutes.
Mr. PICKLE. Mr. Speaker, I rise
today in support of the energy bill. I
support this bill because it includes
important incentives for solar energy
and much needed relief for indepen-
dent producers who explore and devel-
op our domestic energy supplies. And
I'm especially pleased about new in-
centives for expanding our use of
alternative fuels, like compressed
natural gas. Alternative fuels will not
only help curb our imports of petro-
leum, but will also improve our envi-
ronment by cutting down on harmful
emissions. These are all good, and
vital pieces to our national energy
strategy.
But there is one part of this bill
which is deplorable, and that is the
bituminous coal health benefit bailout.
Mr. Speaker, this bailout, as well in-
tended as it may be, is a terrible injus-
tice, and sets a precedent in the area
of employee benefits that we will all
live to regret. Let me review this
situation.
Simply put, the mine workers and
the bituminous coal operators agreed
decades ago to establish a health plan
that would be paid for by all who
mined coal in the eastern United
States. As long as coal was king this
agreement worked quite reasonably
well.
Unfortunately, the coal industry has
changed dramatically. Today the
eastern States coal industry is domi-
nated by two foreign-owned companies
and the number of miners has drasti-
cally declined. About 4 years ago, the
coal operators decided that they were
no longer going to live up to their
responsibility to pay for the health
benefit plan. And so they reduced
their contributions to the plan, and
the plan today faces insolvency. And
now the Congress is being blackmailed
into bailing this plan out by taxing
companies that have no current con-
nection with the bituminous coal in-
dustry, some out of the coal business
for 15 or 20 years.
Mr. Speaker, we should not do this.
It is wrong. It is as if we are a street
gang mugging an innocent passerby,
and justifying it by saying that our
family and friends are hungry. We
should stick to the original agreement
and force those companies who are
mining eastern coal to meet their
obligations. Now we can all be sympa-
thetic to the plight of the mine work-
ers, many of whom are elderly and in
ill health. But these benefits should
be paid by the coal companies, not by
everyone else. Why are we kowtowing
to these huge foreign owned coal com-
panies? Why are we raising taxes on
domestic energy companies to pad the
profits of these foreign profiteers? In
my opinion, it was their cutthroat
business practices that drove the do-
mestic coal companies out of business,
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and now we bail them out. We let
them escape their obligations and ship
their profits overseas. We should be
embarrassed this coal amendment has
been visited on this bill by the other
body.
Let me also warn my colleagues,
you have not heard the last of this
issue. We pay for this bailout by tax-
ing any company or its successor
which ever had any connection with
mining coal under the BCOA agree-
ment. We have no idea who all these
companies are. There will now be a
rush to track them down and tell
them that they will have to pay mil-
lions of dollars a year into this health
plan over which they have no control.
Some will be forced into bankruptcy,
others will be forced to lay off work-
ers. And they will blame you and me,
and they will be right. So plan today
what you will tell them. It won't be
easy.
Finally, I tell you that we are set-
ting precedent today that will come
back to haunt us. Today we are bail-
ing out the mine workers plan and
letting the mine operators have a
windfall. Who will be next? Will it be
the steel industry? The airlines? Tire
and rubber companies? Perhaps it will
be the auto industry? I tell you right
now that there is good reason to be-
lieve that the steel industry is already
making plans to get a similar bailout.
The Members should know that our
defined benefit pension plans, which
are guaranteed by the Pension Benefit
Guaranty Corporation, are under-
funded by over $40 billion. Some of
the largest companies in America have
deliberately chosen to underfund
their plans by billions of dollars.
And, when I raise this issue no one
wants to talk about it. The
underfunded companies refuse to
appear before the oversight subcom-
mittee. I am accused of frightening
people and undermining confidence in
our pension system. I do not want to
frighten anybody. But we must insist
that companies that make benefit
promises keep their promises.
At the same time the other body
was hatching this plan to bail out the
coal health plan, it balked at adopting
a proposal to make companies proper-
ly fund their pension plans. It seems
inconvenient to pressure companies to
keep their pension promises. There
are always a thousand excuses for
putting this responsibility off to a
later day. But the later day always
comes. For the coal industry it comes
today and we have chosen to rob Pe-
ter to pay Paul. Who will we hijack
when the time comes to bail out the
rest of our retirement system. Every
company that has ever sponsored a
pension plan or ever intends to should
ask that question. Because today we
are telling the world that if you play
by the rules and meet your responsibi-
lities you pay the penalty, and the
sharp operators who run and hide go
free.
Mr. Speaker, on balance this is a
good bill. It would be better if we had
stood our ground and held the coal
operators to their own promises. This
provision to make other companies
pay the coal industry's bills is just a
selfish regional request. The other
body has caved in to this special inter-
est bill by three or four key Senators.
We can all agree to protect the miners
benefits, but we should have agreed to
make the mine owners and operators
pay. I, for one, was willing to do so.
However, I am not willing to block
this entire bill for this one reason.
But, I believe that the coal provision
is a travesty of justice and an embar-
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raasment to the Congress. We should
never let ourselves be put in this cor-
ner again.
Mr. MOORHEAD. Mr. Speaker, I
yield myself 3 1/2 minutes for the
purpose of engaging in a colloquy with
the chairman of the subcommittee,
the gentleman from Indiana (Mr.
Sharp).
Mr. Speaker, would the gentleman
from Indiana join me in a discussion
of the transmission pricing provisions
in title VII?
Mr. SHARP. I would be pleased to.
If the gentleman will yield, let me ask
this question.
Does the gentleman share my opin-
ion that the guiding principle of the
bill's pricing provisions is the tradi-
tional Federal Power Act formulation
that rates and charges for transmis-
sion services should be just and rea-
sonable and not unduly discriminatory
or preferential?
Mr. MOORHEAD. Yes, I do. These
traditional standards are the central
features of the bill's pricing section.
They have served the country well
over the past 50-plus years, because
they provide FERC with guidance
respecting Congress' intent while
preserving the discretion FERC needs
to carry out Congress' goals in specific
cases over time. Specifically,
just-and-reasonable has been inter-
preted to preclude the collection of
excessive profits, sometimes called
monopoly rents and our inclusion of
the standard in the bill is intended to
continue that interpretation.
Mr. SHARP. Is it also the
gentleman's view that the bill does
not affect • and specifically does not
contradict or overturn - any prior
FERC decision, policy, or determina-
tion with respect to the pricing of
transmission services?
Mr. MOORHEAD. Indeed it k. I
would have been very concerned had
Congress unwisely gone down the road
of attempting to micromanaga the
normal development of agency policy.
That language was replaced not be-
cause of a rejection of the balancing
principle, but because of a recognition
that transmission pricing is a very
complex matter. Rather than estab-
lish a pricing prescription with roots
in a single FERC decision, we chose to
establish parameters and defer to the
Commission's discretion to work with-
in these parameters.
Mr. SHARP. I couldn't agree more
with the gentleman. I have to admit
that personally I am very much in
favor of recent FERC transmission
pricing policy, particularly the delicate
balance it achieved in the Northeast
Utilities decision. As the gentleman
knows, the House bill endorsed the
analytical framework FERC laid out
in that case, balancing the need to
compensate native load, the goal of
promoting the lowest reasonable
transmission rates, and preventing
the collection of monopoly rents.
Mr. MOORHEAD. I couldn't agree
more with the gentleman on the mer-
its of FERC's approach in the North-
east Utilities case. I am especially
sensitive to the challenge FERC faces
in protecting consumers when it is
asked to decide whether to allow com-
pensation for so-called opportunity
costs. I would have liked to have seen
the House provision on this balancing
test included in the bill approved by
the conferees. However, I am willing
to support this bill without it because
I am comfortable that dropping the
balancing test in no way affects, com-
promises, or overrules any FERC deci-
sion.
Mr. SHARP. I, too, believe it beat to
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leave to FERC the specific decisions
on opportunity costs and other issues.
I am comfortable with the combined
effect of the bill's inclusion of the
traditional rule that rates and charges
must be just and reasonable and not
unduly discriminatory or preferential,
and the limitation that compensation
be allowed only for the legitimate and
verifiable costs incurred by the party
providing transmission service.
Mr. MOORHEAD. I agree. In order
for any cost to be recoverable, it must
be legitimate; in other words, the
expense has to have been necessary.
The cost must be verifiable; in other
words, the cost cannot be speculative,
such as an unknown future economy
sale that is foregone. And the cost
must be economic; in other words, it
must be economically efficient for all
parties. Thus, the limitations in the
pricing provision are guidance to the
Commission to reject the recovery of
costs that are designed to frustrate
transmission access and competition.
I would also point out that the pric-
ing language referenced by my col-
league from Indiana requires FERC to
determine that an appropriate share,
if any of these costs should be collect-
ed from the party requesting trans-
mission services. For instance, in a
recent proceeding, the Commission
established that a party can collect
opportunity costs or embedded costs,
but not both. This appropriate share
language is consistent with that deci-
sion. Similarly, the provision requires
a cost allocation of upgrades to deter-
mine what share of upgrade costs are
assignable to the applicant and what
costs should be assigned to the
utility's native-load customers to re-
flect any system wide benefits. Finally,
the pricing provision specifically di-
rects FERC to measure these costs
against the benefits received by the
party providing transmission services.
In other words, FERC must ascertain
the net costs incurred in providing
service when setting or approving
rates and charges.
Mr. SHARP. Can I assume then
that the gentleman shares my appre-
ciation of the bill's requirement that
only those costs which are properly
allocable to the party seeking trans-
mission services should be included in
rates of charges?
Mr. MOORHEAD. The gentleman is
correct in that assumption.
Mr. SHARP. Mr. Speaker, I yield 1
minute to the gentleman from West
Virginia (Mr. Rahall).
(Mr. RAHALL asked and was given
permission to revise and extend his
remarks.)
Mr. RAHALL. Mr. Speaker, I rise in
support of the conference report on
H.R. 776.
In the view of this gentleman from
West Virginia, no other provision of
H.R. 776 is more important than the
one which guarantees health care for
over 120,000 retired coal miners.
With this legislation, we are ensur-
ing that retired coal miners and their
families are provided with health care
coverage, now and in the future.
The issue at hand involves the
growing deficit in the UMWA health
funds. This deficit threatens the con-
tinuity of benefits to both existing and
future retirees. The primary reason
for this deficit is due to thousands of
beneficiaries whose last coal industry
employers are no longer operating, or
no longer signatories to the current
national bituminous coal wage agree-
ment. As such, 75 percent of the
retirees served by the health funds
never worked for, or had any connec-
tion with, a currently contributing
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company.
It should be noted that the funds
are unique, and what would normally
be a matter solely for the private sec-
tor is not in this instance. There is a
Federal responsibility to these funds.
The concept for the funds dates back
to 1946 in an agreement between
then-UMW President John L. Lewis
and the Federal Government to re-
solve a long-running labor dispute. At
the time, President Truman had or-
dered the Interior Secretary to take
possession of all bituminous coal
mines in the country in an effort to
break a UMWA strike. Eventually,
Lewis and Secretary Julius Krug
reached an agreement that included
an industrywide, miner controlled
health plan.
The pending legislation contains a
new retired coal miner health care
program, and it does so without rais-
ing a new tax on the coal industry.
Because of my amendment to the
House version of the energy bill that
extends the Abandoned Mine Recla-
mation Program, an agreement was
reached on the health care package.
A previous proposal to assess a new
tax on the coal industry to finance the
health care program sparked a Presi-
dential veto.
The bill reauthorizes the Abandoned
Mine Reclamation Program - the coal
industry's version of Superfund -
through the year 2004 and allows
money from the program to be used to
finance a portion of the cost of provid-
ing health care to retired coal miners,
their families and widows.
I would note that West Virginia is a
major beneficiary of the legislation as
it contains a substantial portion of
abandoned coal mines left unre-
claimed, and has approximately 35,000
retired miners who are dependent on
the UMWA Health Program. Each
million dollars spent under the Aban-
doned Mine Reclamation Program for
projects in the construction industry
to restore old mined-out lands creates
24 direct and indirect jobs.
The energy bill also includes a bevy
of other provisions I originally
authored as part of the House version
which seek to enhance coal use while
providing for greater health, safety
and environmental protections for
coal miners and people who reside in
the coalfields.
Because of my amendments, coal-
field residents have a seat reserved at
the national energy table. The provi-
sions embrace the concept of energy
development in an environmentally
and socially responsible manner.
These provisions say let us mine
coal. At the same time, if that coal
mining causes damages to someone's
home, my amendment says that per-
son should be compensated. And
what of those who mine coal. They
deserve to see advances made in
health and safety technologies. My
legislation says that we should make
it a priority to reduce the causes of
black lung disease by devising new
and innovative mining equipment and
techniques.
Another provision in the bill I
authored is aimed at promoting the
remining of abandoned coal mine
lands, with the triple benefit of ob-
taining additional coal production,
reducing the need to mine on undis-
turbed lands and providing for needed
reclamation. I also gained approval of
a program aimed at using metallurgi-
cal grade coals located in McDowell,
Wyoming, and Raleigh Counties in
electric utility boilers. Under another
amendment, the path is clear for a
new industry in southern West Virgin-
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ia to be established that would extract
methane from coalbeds to meet energy
needs.
There are a number of provisions in
this conference report which originat-
ed in title Vm - coal, oil and gas title
- of the Interior Committee's version
of H.R. 776 (House Report 102-474,
part 8). These provisions are now
found in title 25 of the pending legis-
lation. All of them originated with
the Interior Committee except for
paragraph (2) of subsection (a) of
section 2504, subsection (e) of section
2504, section 2505, and 2513. In addi-
tion, I would note that subsection (b)
of section 2504, and section 2511,
represent substantial modifications
from the House position. Further-
more, section 2514 originated with the
Interior Committee's title 11.
An overview of title XXV follows.
OVERVIEW OF TITLE XXV - COAL, OIL,
AND GAS
SECTION 2601. HOT DRY ROCK GEOTHER-
MAL ENERGY
This section would require the Geological
Survey, in consultation with the Energy Depart-
ment, to establish a cooperative govern-
ment-private sector program to identify, select
end classify hot dry rock geothermal resources on
public and Forest Service lands in the United
States. In s 19S9 report, the Solar Energy Re-
search Institute projected thst given the proper
research and development incentives hot dry rock
could supply more then 2 qusds of electricity by
the year 2030 (a quad is equivalent to the energy
content of approximately 181 million barrels of
oil.) With essentially no air emissions, or other
liquid or solid wastes, and minimal land use
requirements, hot dry rock systems are environ-
mentally sustainable.
SECTION 2602. HOT DRY ROCK GEOTHER-
MAL ENERGY IN THE EASTERN UNITED
STATES
This section would require the Geological Sur-
vey, in collaboration with the Energy Depart-
ment, to convene a workshop of government and
private sector parties to discuss and evaluate the
potential of hot dry rock production in Eastern
United States. While the highest grade geother-
mal and hot dry rock deposits exist in the west-
ern portion of the United States, significant low
and middle grade hot dry rock deposits exist
throughout the eastern portion of the country,
such aa in southern New York State and north
central Pennsylvania.
SECTION 2603. COAL REMINING
The provisions of this section seek to make
coal available that otherwise would be bypassed
by providing incentives for industry to extract
and reprocess, in an environmentally sound man-
ner, coal that remains in abandoned mine lands
and refuse piles. Current Isw reclamation perfor-
mance standards were devised to address surface
coal mining on undisturbed lands; the unintend-
ed result is to discourage remining. Remitting
would also serve to mitigate the health, safety
and environmental threats posed to coalfield
residents from abandoned coal mine lands by
augmenting the work done under the Abandoned
Mine Reclamation Program. Under the bill, a
remining incentive would be provided by waiving,
under extremely limited circumstances, the Sur-
face Mining Control and Reclamation Act's
(SMCRA) prohibition on new permit issuance to
operators with unabated violations of the Act
where the violstion resulted from an unanticipat-
ed event or condition at a remining operation on
abandoned coal mine lands. The remining opera-
tor would still be fully responsible for compliance
with all of SMCRA's requirements st the
remining operation, including notices of viols-
tion, cessation orders. Densities end bond forfei-
ture. Further, the affected lands would remain
eligible for reclamation under the Abandoned
Mine Reclamation Program. The legislation
would also authorize the Secretary of the Interior
to undertake a rulmaking to establish environ-
mental protection performance and reclamation
standards, and a separate permit system, for
operations for the onsits reprocessing of aban-
doned coal refuse and operations for the removal
of coal refuse.
SECTION 2604. SURFACE COAL MINING ACT
IMPLEMENTATION
This section would provide for greater stability
in the surface mining set program by settling
controversies over subsidence protections and
valid existing rights. It would also reduce redun-
dancies between the Office of Surface Mining
(OSM) and Bureau of Mines research and
streamline a program aimed at extinguishing coal
fires.
Subsection (a) - Subsidence: At present, OSM's
regulations do not protect coalfield cUixena from
the types of damages thst can occur from land
subsidence caused by underground coal mining,
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either in the form of compensation for, or repair
of, damages to homes as well as replacement of
adversely affected water supplies. This subsec-
tion would require regulations to be promulgated
to require repair of, or compensation for, subsi-
dence damage to homes and the replacement of
adversely affected water supplies for domestic
use. This subsection also requires the Interior
Secretary to review the adequacy of existing re-
quirements relating to underground coal mine
subsidence and natural gas and petroleum pipe-
line safety.
Subsection (b) - Valid Existing Rights: SMCRA
prohibits surface coal mining operations in feder-
ally protected areas and within buffer xones
around homes, cemeteries and roads unless there
was a pre-existing right to mine in those areas,
known as valid existing rights. While OSM con-
tinually tries to define valid existing rights, the
vast majority of the states already have settled
the issue. OSM's attempts simply create uncer-
tainty and instability in the surface coal mining
program as well as jeopardizes the law's
protections. This subsection places a one-year
moratorium on OSM from finalizing a proposed
rule that would have reduced the Act's
protections and requires the agency to use the
test used by the majority of the states.
Subsection (c) • Research: In 1966 Abandoned
Mine Reclamation research was transferred from
OSM to the Bureau of Mines. Since that time,
OSM has maintained a research program ostensi-
bly to assist in the implementation of its regula-
tions. However, a great deal of this type research
is already being done by the Bureau of Mines
under its Environmental Technology research
program. This subsection would require OSM to
ensure that its research activities are not
duplicative of the Bureau of Mines.
Subsection (d) • Coal Fires: Provisions of this
subsection would modernize a 1964 law that
established a program for the control and extin-
guishment of outcrop and underground coal fires.
As a result of forest fires, coal refuse piles, coal
outcrops and coal seems often start burning.
These coal fires subsequently start new forest
fires. States are not authorized to use Aban-
doned Mine Reclamation Program funds to fight
coal fires unless they are on abandoned coal mine
lands. As such, coal fires other those at aban-
doned coal refuse piles would not qualify under
the Abandoned Mine Reclamation Program.
Meanwhile, due to the 1964 law's 'cap' on annual
appropriations of $600,000, adequate funding
levels are net available. This subsection lifts the
$600,000 cap on annual appropriations in the
1964 law, waives its eost-eharing requirement
and requires the Interior Secretary to enter Into
cooperative agreements with states that haws
approved abandoned mine reclamation programs
for the purpose of executing projects to control or
extinguish fires in coal formations.
Subsection (e) - Abandoned Mine Program
water supply projects: This subsection stakes a
technical correction to the Surface Mining Con-
trol and Reclamation Act of 1977 relating to the
eligibility of water supply projects under the
Abandoned Mine Reclamation Program. In 1990
amendments to the Act, Congress made it dear
that water supplies contaminated as a result of
past coal mining practices qualified as eligible
projects under the Abandoned Mine Reels mat ton
Program. In doing so. Congress maintained the
traditional August S, 1977, eligibility data that
was applicable to all types of reclamation |
However, in those i
wss msde to allow certain post- 1977 projects to
be eligible if (1) the site in question wss aban-
doned prior to the date a State received primacy
under tlie Act (in the case of many states thai
date is 1982), and (2) the site in question wse
abandoned as s result of the coal operator's sure-
ty having gone bankrupt prior to 1990. Compared
to the amount of sites that were abandoned prior
to 1977, there is s relatively email universe of
post- 1977 areas thst would be eligible under
these amendments. This subsection provides for
post- 1977 areas thst would be eligible under
these amendments. This subsection provides for
post- 1977 eligibility for qualified water supply
projects in the same manner and the eame extent
as any other project under the program.
SECTION 2606. FEDERAL LIGNITE
COAL ROYALTIES
Thia section would continue an administrative
reduction in the federal coal royally for lignite
coal in North Dakota for a 10-year period, and
subject to review, and additional 10-year period.
SECTION 2606. ACQUIRED FEDERAL LAND
MINERAL RECEIPTS MANAGEMENT
The purpose of this section is ts provide for
the more equitable and efficient disbursement of
the state share of mineral lease receipts from
eastern federal lands. Revenues collected by the
Interior Department from mineral lassos on fed-
eral lands are shared with the states. While
western public domain states n
on s monthly basis, this requirement <
spply to money collected fn
'acquired' federal lands primarily located in the
eastern states which are distributed snnuslr/.
The legislation would equalise the treatment of
mineral receipts from eastern acquired lands
with those from i
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SECTION 2507. RESERVED OIL AND GAS
This section would provide for the continua-
tion of stripper well operations once reserved oil
and gas rights vest with the VS. The federal
government, in acquiring lands for eastern Na-
tional Forest units, often purchased land with
'mineral reservations' as part of the deed of title.
Typically, under these arrangements, the original
owner retains title to the mineral estate for a
stated period of years and during that time may
lease the minerals to other individuals. Once the
mineral rights vest with the federal government,
the old leases expire despite the fact that an oil
and gas well is actually in place and in producing
status. This section would allow an individual
holding a lease for reserved oil and gas to which
ownership will vest or had vested to the federal
government after January 1, 1990, to be eligible
for a federal non -competitive lease issued under
the Mineral Leasing Act if a stripper well was in
operation on the lands prior to the time the Unit-
ed States gains ownership of the oil and gas.
SECTION 2508. CERTAIN OUTSTANDING OIL
AND GAS
The purpose of this section is to provide for
greater environmental safeguards on oil and gas
development in the Allegheny National Forest. At
present, the Forest Service has no regulations
governing oil and gas development activities on
Forest Service lands where the surface, but not
the minerals, are owned by the Federal Govern-
ment. The vast majority of the lands with active
outstanding oil and gas activities are in the Alle-
gheny National Forest in Pennsylvania. This
section would require that these oil and gas oper-
ators in the Allegheny National Forest provide
advance notice, and other information, prior to
the commencement of surface disturbing activi-
ties.
SECTION 2509. FEDERAL ONSHORE OIL
AND GAS LEASING
The Federal Onshore Oil and Gas Leasing
Reform Act of 1987 was enacted with the aim of
increasing the number of federal oil and gas
leases issued on a competitive, rather than
non-competitive, basis so as to reduce speculation
and promote development. However, the law has
a flaw in that it did not modify the lease term
provisions. Evidence exists that tracts offered
competitively with 6-year lease primary terms are
not receiving bids during lease sales and are
subsequently being sold as non-competitive leases
with 10-year primary terms, even though there is
competitive interest in the tracts. This section
would equalize all leases terms to a 10-year pri-
SECTION 2610. OIL PLACER CLAIMS
This section would cure a technical title prob-
lem for six old producing oil and gas placer
claims located prior to 1920.
SECTION 2511. OIL SHALE CLAIMS
This section would resolve a long-standing
dispute over the validity of oil shale claims locat-
ed over 72 years ago in Colorado, Utah and Wyo-
ming. While the Mineral Leasing Act of 1920
prohibited the location of claims for oil shale,
section 37 of the statute provided that valid oil
shale claims existing on the date of enactment
were eligible to receive patents if property main-
tained. Over the past 72 years there have been
numerous and conflicting administrative policies
and judicial decisions relating to the maintenance
requirements for oil shale claims, i.e., the discov-
ery standard and assessment work criteria. At
times, the Department of the Interior has sought
to invalidate claims on the basis of s lack of dis-
covery of s valuable mineral deposit or due to the
failure to perform annual assessment work.
However, during other periods the Department
has issued patents for oil shale claims. The net
effect of this history has been to establish s con-
fusing and uncertain framework on which to base
administrative decisions on various issues raised
by unpatented oil shale placer claims. Mean-
while, throughout this period, the holders of
these oil shale claims hsve taken little, to no
action, to actually develop the oil shale. This
section would settle these outstanding issues by
providing thst holders of valid unpatented oil
shsle clsims may receive a patent if that right
vested prior to enactment, or if that right did not
vest, obtain s patent limited to the oil shale only
or continue to maintain an unpatented oil shale
claim by paying a holding fee.
SECTION 2512. HEALTH, SAFETY AND MIN-
ING TECHNOLOGY RESEARCH
This section would establish a program to pro-
vide direction, and better define the objectives, of
the Bureau of Mines' Health, Safety and Mining
Technology Program in order to improve the
health and safety of the Nation 'a miners. Mining
continues to be one of the most dangerous occu-
pations in the country. Health issues such as
blsck lung disease, noise exposure and the carci-
nogenic effects of diesel exhaust have not been
satisfactorily resolved. Safety issues relating to
electrical, haulage and transport hazards as well
as roof and wall falls continue to plague the
Nation's miners. However, much of the Bureau
of Mines's health, safety and mining technology
research is haphazard in nature, and often fails
to address the most pressing mining health and
safety concerns. For instance, despite the widely
publicized allegations of tampering in the under-
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ground coal mining dust monitoring program, the
Bureau has dona little to develop new
tamper-resistant monitoring devices. This sec-
tion would require that five-year plans be devel-
oped to guide research and technology develop-
ment under the program, with input from indus-
try, labor, academia, mine safety regulatory ex-
perts and the Bureau itself.
SECTION 2513. ASSISTANCE TO SMALL
COAL OPERATORS
This section would modify the Small Operators
Assistance Program established under the Sur-
face Mining Control and Reclamation Act of 1977
by expanding the types of items that are neces-
sary to receive a mining permit that will be eligi-
ble for assistance under the program.
SECTION 2614. SURFACE MINING REGULA-
TIONS
This section amends the Surface Mining Con-
trol and Reclamation Act of 1977 to provide a
grants program to the Navajo, Hopi, Northern
Cheyenne and Crow tribes for the purpose of
establishing a tribal office of surface mining reg-
ulation.
SECTION 2615. AMENDMENT TO SURFACE
MINING ACT
This section would insure continued success in
mitigating health, safety and environmental
threats associated with abandoned coal mine
lands and provide a means to address the con-
cerns of abandoned coal miners. Title IV of the
Surface Mining Control and Reclamation Act of
1977 established an Abandoned Mine Reclama-
tion Fund, financed by a reclamation fee assessed
on every ton of mined coal, to provide for the
reclamation of previously mined and abandoned
mine lands. According to OSM, when the exist-
ing authority to collect the reclamation fee ex-
pires at the end of fiscal year 1995, approximate-
ly $1.6 billion worth of high-priority health and
safety threatening sites will remain unreclaimed.
In order to finance the reclamation of these re-
maining sites, this provision extends the fee col-
lection authority through the year 2004.
Other provisions of the Conference Report on
H.R. 776 that were included in the Interior
Committee's original coal, oil and gas title that
are now found in title 13 of H.R. 776 as reported
by the Conference Committee.
COALBED METHANE DEVELOPMENT
The program under this section is aimed at
mitigating impedimenta to the extraction and
utilization of pipeline-quality methane from
coalbeds. Conventional natural gas sources will
not be capable of meeting future demand without
supply shortages and dramatic price increases.
Vast deposits of unconventional sources of
pipeline- quality methane (estimates i
90 TcO, however, lay trapped within coalbeds A
major impediment to the development of coeJbed
methane is the legal quandary over its owner-
ship. Under the bill, certain coal states which do
not have statutes governing coeJbed methane
ownership and development would be given three
years to establish coalbed methane programs If
an affected state fails to adopt its own program,
a federal program would take effect in that stats.
METALLURGICAL COAL DEVELOPMENT
This section would establish a program to de-
velop techniques that will lead to the greater and
more efficient utilization of the Nation's vast
low-sulfur metallurgical coal resources. Demand
for metallurgical grade coal, traditionally used in
steelmaking, has declined due in part to more
stringent coke oven emission standards, Whils
often low in sulfur content, technical constraints
have served to impede the use of metallurgical
coals in electric utility boilers even though re-
cently enacted air quality requirements place a
premium on low-sulfur fuels. The legislation
seeks to address these constraints by establishing
a Department of Energy research program aimed
at developing techniques that will lead to the use
of metallurgical coal as a utility boiler fuel. The
program would also devise methods to enhance
metallurgical coal use in steelmaking and as a
source of coalbed methane.
UTILIZATION OF COAL WASTES
This section would establish a program to de-
velop techniques that will lead to the greater and
more efficient utilization of coal from mining and
processing wastes. Physical coal cleaning w used
extensively in the United States. Generally, only
the coarse coal fraction b cleaned since utiliza-
tion of the coal that remains in mining and pro-
cessing wastes (generally, coal 'fines') in utility
boilers is problematic Most of those coal fines
are simply discarded to ponds and it is sstimstsd
tliat more tlian 2 billion tons of coal fines have
been discarded in this fashion. The legislation
seeks to address impediments to the ues of coal
fines by authorizing the Department of Energy to
undertake demonstration projects to facilitate the
use of coal from mining and processing wastes as
s boiler fuel for the purpose of generating steam
to produce electricity.
Mr. SHARP. Mr. Speaker, I yield 1
1/2 minutes to the distinguished gen-
tlewoman from Tennessee (Mrs.
Lloyd), chairwoman of one of the sub-
committees that has a major provision
in this bill.
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Mrs. LLOYD. I thank the gentle-
man for yielding time to me.
I want to express my appreciation
to the gentleman from Indiana (Mr.
Sharp) and the gentleman from Mich-
igan (Mr. Dingell) for their leadership
in bringing this bill to the floor.
Mr. Speaker, I rise in support of
H.R. 776. Among the many provisions
of this bill are three titles related to
the Government's uranium enrich-
ment enterprise.
Our vote today will culminate six
years of my work in trying to establish
a Government corporation to take
over the enrichment enterprise from
the Department of Energy. This is by
no means a perfect solution, but it is
imperative that the enterprise be
given the flexibility to operate more
like a business. I am particularly
pleased that we were able to protect
the existing employees and I thank
the Committee on Education and
Labor for their contributions in that
A second critical provision allows
the newly formed corporation to mar-
ket commercial fuel converted from
Russian nuclear weapons. This is im-
portant in that the corporation will be
able to responsibly integrate this prod-
uct into the international market.
Finally, there are key provisions
related to marketing, pricing, and
contracting that, hopefully, will facili-
tate the change of the enrichment
enterprise to a business posture.
I urge my colleagues to support this
bill.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
California (Mr. Dannemeyer), a mem-
ber of the committee.
(Mr. DANNEMEYER asked and
was given permission to revise and
extend his remarks.)
Mr. DANNEMEYER. Mr. Speaker,
I rise in support of this conference
report.
There are two provisions that are
needed dealing with the transmission
of electrical power, and also dealing
with how we license nuclear power-
plants. They are constructive and I
think they will help the Nation move
down the road of licensing more nu-
clear powerplants and moving electri-
cal energy around the country more
expeditiously to help consumers.
I would like to say a few things
about what is not in this bill that
belongs in it if we claim it to be a
measure that will move the Nation to
energy independence, and quite can-
didly, it is a long way from that sta-
tus.
This Nation today has roughly 40
billion barrels of oil reserves. We are
using about 17 million barrels a day.
About half of that is imported, about
8 1/2 million barrels a day.
The negative trade balance with the
rest of the world is approximately
$100 billion. About half of that, $50
billion, is related to the purchase of
petroleum products just to run our
economic system.
This bill does not open up ANWR in
northeastern Alaska. It is estimated to
contain maybe 10 billion barrels of oil.
That is about one-fourth of our prov-
en reserves. It badly needs to be
opened up in order to reduce our de-
pendence on foreign oil sources.
Just this past week, the House
passed a Montana wilderness bill that
will lock up in wilderness status an
area that contains roughly 2 to 3 tril-
lion cubic feet of natural gas that is
badly needed for the energy base of
this country.
Previously, a bidder has paid about
half a billion dollars for a tract off the
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coast of North Carolina that contains
extensive natural gas reserves that we
can produce today. This legislation
does not contain any effort to go for-
ward with that.
If we opened up ANWR in north-
eastern Alaska, we could have addi-
tional production to reduce our depen-
dence on foreign oil sources.
We should also eliminate the exist-
ing law which prohibits exporting
Alaska oil abroad, such as to Japan.
Selling Alaska oil to Japan would
reduce our negative trade balance
with that country by about $14 billion
a year.
Mr. SHARP. Mr. Speaker, I yield 1
minute to the distinguished gentle-
man from Michigan (Mr. Conyers),
the chairman of the Committee on
Government Operations.
(Mr. CONYERS asked and was
given permission to revise and extend
his remarks.)
Mr. CONYERS. Mr. Speaker, I
thank the gentleman for yielding time
to me, and I rise in support of H.R.
776.
Mr. Speaker, I want to give particu-
lar accolades to the chairman of the
full committee.
Mr. Speaker, I strongly support the
conference report on H.R 776, the
Comprehensive National Energy Poli-
cy Act, and I ask unanimous consent
to revise and extend my remarks.
I commend both Mr. Dingell and
Senator Johnston for their leadership
in bringing about agreement on this
massive bill.
This bill will make the Federal Gov-
ernment a leader during the next
decade in conserving energy and de-
veloping alternative sources of energy.
It directs the Federal Government to
conserve energy in the operation of its
buildings and to help develop alterna-
tive sources of fuel through its pur-
chase of alternative fuel vehicles. It
also authorizes a large federally fund-
ed program in research and develop-
ment on energy conservation and
alternative sources of energy. The bill
authorizes more than $10 billion over
the next decade in these Federal ener-
gy conservation measures and Federal
research and development.
The future is now for energy con-
servation. It is vital for the develop-
ment of the U.S. economy that both
firms owned by minorities and women
and historically black colleges get
their fair share of the Federal con-
tracts that will implement this histor-
ic bill.
I would like to explain the provi-
sion in title XXX of the bill that not
less than 10 percent of each agency's
competitive contracts under this act,
where practicable, shall go to small
businesses owned by socially and eco-
nomically disadvantaged individuals
or women, to historically black colleg-
es and universities, or to colleges and
universities having a student body in
which more than 20 percent of the
students are Hispanic-Americans or
native Americans.
This provision originated in the
Committee on Government Opera-
tions, where I offered it as an amend-
ment to H.R. 776. During hearings on
H.R. 776 by subcommittees of the
Government Operations Committee,
we received testimony concluding that
the creation of minority business en-
terprise programs that benefit racial
minorities and women are an effective
remedy for past and existing racial
and gender discrimination in Govern-
ment contracting.
The amendment has broad bi-parti-
san support and was approved in the
committee by voice vote. It was then
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approved by the House in May. The
Senate bill had no comparable provi-
sion, and the conferees agreed to the
House provision with some minor
modifications. I would especially like
to thank Mr. McCandless for his help
both when the committee was consid-
ering the provision and during the
conference.
The bill gives Federal agencies flexi-
bility in deciding how to meet this
10-percent goal. The committee in-
tends that to facilitate the attainment
of this goal an agency may set aside
energy contracts for small disadvan-
tages businesses as long as they are
awarded competitively. For example,
the Defense Authorization Act con-
tains a similar provision, and in fiscal
year 1991 the Department of Defense
awarded $4.4 billion in prime con-
tracts to small disadvantaged firms
and historically black colleges and
universities. Of this amount, DOD
awarded $2.1 billion through its sec-
tion 8(A) contract with the Small
Business Administration; DOD award-
ed about $1.5 billion directly to small
disadvantaged businesses and another
$700 million was awarded directly
under contracts that were set aside
for small disadvantaged businesses.
The committee intends that Federal
agencies be creative in developing
methods for achieving this goal.
The goal in H.R. 776, like the com-
parable provision in the Defense Au-
thorization Act, applies to both Feder-
al contracts and subcontracts. For
example, if a Federal agency awards a
$10 million contract to purchase
energy-efficient heating and
air-conditioning equipment from a
manufacturer, then the goal for that
particular contract is $1 million even
if the recipient of the prime contract
then awards $5 million in subcon-
tracts to other firms to supply some of
the components for the equipment.
The Department of Defense reports,
for example, that in fiscal year 1991
its prime contractor awarded $1.5
billion in subcontracts to small disad-
vantaged businesses.
The committee views the 10-percent
goal as a floor, not a ceiling. For ex-
ample, the appropriation bill for the
superconducting super collider has an
identical goal of at least 10 percent.
In fiscal year 1991 about $34 million
in contracts and subcontracts for the
SSC was awarded to small disadvan-
taged businesses, which was 13 per-
cent of all contracts awarded that
year. Each agency should award the
maximum practicable number of con-
tracts under the Energy bill to
minority- and women-owned business-
es and to black, Hispanic, and native
American colleges, using this goal as a
standard measure of success.
I anticipate that during the next
Congress the Committee on Govern-
ment Operations will closely monitor
the performance of the Department of
Energy, the General Services Adminis-
tration, the Small Business Adminis-
tration, and other Federal agencies to
ensure that they comply with both the
letter and the intent of this amend-
ment.
In conclusion, Mr. Speaker, I urge
my colleagues to approve the confer-
ence report.
Mr. MOORHEAD. Mr. Speaker, I
yield such time as he may consume to
the gentleman from Ohio (Mr. Miller).
(Mr. MILLER of Ohio asked and
was given permission to revise and
extend his remarks.)
Mr. MILLER of Ohio. Mr. Speaker,
I thank the gentleman for yielding me
this time.
Mr. Speaker, I rise in support of the
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conference report on H.R. 776, the
Comprehensive National Energy Poli-
cy Act.
Mr. MOORHEAD. Mr. Speaker, I
yield 3 minutes to the gentleman from
Ohio (Mr. Oxley), a member of the
committee.
(Mr. OXLEY asked and was given
permission to revise and extend his
remarks.)
Mr. OXLEY. Mr. Speaker, the need
for a rational and comprehensive na-
tional energy policy has been evident
for years. But for years, we chose to
address improved energy efficiency
and failed to address energy
self-sufficiency. To alter that course
of action, President Bush made the
development of a comprehensive na-
tional energy strategy a high priority.
During the 2 years since the com-
pletion of the NES, Congress has been
working on energy legislation that
includes many of its key proposals,
and today is the culmination of that
effort.
This legislation lays the foundation
for our long-term energy security by
putting in place programs which im-
prove energy efficiency and conserva-
tion.
However, I am disappointed that
once again we missed the best oppor-
tunity we have had in years to provide
the energy security my constituents
and all Americans deserve.
The bill before us embodied a major
omission by not addressing the issue
of increased domestic production of oil
and gas and thereby leaves us vulner-
able to the control that foreign coun-
tries hold over our energy supplies.
By failing to include provisions for
increased domestic production, we
cannot say that we have done all we
could to secure America's energy fu-
ture.
Because it has become increasingly
more difficult to build consensus on
policies which balance programs that
will increase domestic supplies and
decrease demands, this bill represents
the best compromise we could craft to
move toward our goal of limiting our
dependence on foreign oil.
This bill is not perfect, it is not
comprehensive and is not necessarily
balanced. Nonetheless, I support the
legislation as a foundation upon which
we can build.
H.R 776 is the most wide ranging
energy legislation to emerge from
Congress in more than 10 years, and
I commend my colleagues for their
efforts in seeing it to completion.
Having said that, I would urge my
colleagues not to wait another 10
years to address the critical issues left
out of this bill.
One of the issues left out of this bill
that I would like to point out deals
with regional transmission groups.
We came very close to including lan-
guage in this bill that would have
sanctioned voluntary regional trans-
mission groups. During the consider-
ation of H.R 776, an unprecedented
negotiation process was underway
which included utilities, municipals,
co-op systems, IPPS, and environmen-
tal groups. Unfortunately, the clock
just ran out. I hope we will pursue
this concept next year.
Finally, Mr. Speaker, I would like to
discuss provisions in the legislation
which would require the Environ-
mental Protection Agency to promul-
gate high-level radioactive waste regu-
lations based upon and consistent
with the finding and recommenda-
tions of a study to be complete by the
National Academy of Sciences. These
provisions will go a long way toward
ensuring that the final standards for
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high-level waste disposal, which were
remanded to the agency by a Federal
court in 1987, will be based on sound
scientific and technical reasoning.
The process of setting realistic and
scientifically sound high-level waste
standards is remarkably complicated
because of the extraordinarily long
time frames that the regulations will
encompass. With that in mind, the
conferees determined that the EPA
needed guidance for this task.
The NAS study will provide a scien-
tific and technical basis upon which
the EPA will be able to rely in making
the many decisions that will be re-
quired in this process. By requiring
the regulations to be 'based upon and
consistent with' the recommendations
of NAS, the conferees intend that
EPA should address a number of is-
sues with respect to the scientific and
technical problems that have been
raised since the Federal court re-
manded the EPA's regulations in
1987.
By requiring the EPA to promul-
gate regulatory standards for protec-
tion of the public 'based upon and
consistent with the findings and
recommendations' of the NAS, the
conferees did not intend that the
agency would be deprived of its inde-
pendent regulatory judgment. If that
had been our desire, we would have
adopted a different provision. Rather,
it was our intent that the EPA treat
the NAS recommendations almost as
a 'rebuttable presumption' in the
rulemaking. Thus, if EPA deter-
mines, in the course of its rulemaking,
that substantial credible evidence
demonstrating that the recommenda-
tions and findings of the NAS are
inappropriate, the EPA should fully
document its reasons for rejecting the
NAS findings and recommendations,
and proceed to adopt the standards it
determines will best protect the
health and safety of the public. By
operating in this fashion, EPA main-
tains its independent regulatory judg-
ment.
In conclusion, Mr. Speaker, we have
been pursuing the goal of comprehen-
sive, balanced energy policy for years
and we should not stop just because
we are approving what is described as
an historic energy bill today.
Mr. Speaker, I would like to pay
special tribute to the gentleman from
New York (Mr. Lent), the ranking
member of our committee who is re-
tiring at the end of this session. He
has undergone a great effort on behalf
of the energy bill, has carried an aw-
ful lot of water for the Members on
our side as well as the administration.
We will all miss his great work in the
energy policy field, and we wish him
the best of luck.
Mr. SHARP. Mr. Speaker, I yield 1
minute to the gentleman from Okla-
homa (Mr. Synar), a member of the
conference committee and a key play-
er in this legislation.
(Mr. SYNAR asked and was given
permission to revise and extend his
remarks.)
Mr. SYNAR. Mr. Speaker, I rise in
support of the conference report on
H.R. 776, the national energy strategy
bill.
Mr. Speaker, this was a long and
difficult conference, and none of us
got everything we would have wanted
had we been writing the bill on our
own.
But that is the nature of legislating
on issues as complex and controversial
as energy policy.
On balance, it is a good compromise
bill and should be supported. My
friend and colleague Phil Sharp,
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chairman of the Energy and Power
Subcommittee, and our full committee
chairman, Mr. Dingell, are to be com-
mended for shepherding this compli-
cated proposal through the House and
through conference.
This long overdue strategy contains
some very important new initiatives.
The vast majority of our imported
oil is used in vehicles, and it was criti-
cal that any comprehensive strategy
include programs to address that
problem.
To that end, this bill includes a
good alternative fuels program, with a
series of incentives and mandates for
the switch to alternative fuels by U.S.
cars and trucks.
These alternative fuels include com-
pressed natural gas, methanol, etna-
nol, hydrogen, propane, and electrici-
ty; and the program applies to fleets
in metopolitan areas of 250,000 people
or more.
It includes programs to implement
mandates for Federal fleets beginning
in 1993, which gradually will increase
to require 75 percent of Federal fleets
to be alternatively-fueled by 1999.
It includes a mandatory program
for State fleets, beginning in 1995,
increasing gradually to 75 percent of
those fleets by the year 2000.
Notably, current State conversion
programs - such as the one underway
in my own State of Oklahoma - could
be substituted for the State program
required under the bill.
Private fleets would, at first, be
limited to companies which produce,
transport, store or sell alternative
fuels beginning in 1996.
Requirements for private fleets
other than those of fuel providers will
be determined by the outcome of a
rulemaking by the Secretary of Ener-
gy with a goal of new fleet purchase
requirements beginning in 1999.
The legislation includes important
new strategies for improving our
Nation's energy efficiency especially
for equipment and housing. The bill
contains new Federal efficiency pro-
grams including a requirement that
Federal agencies will have to incorpo-
rate energy conservation improve-
ments which pay for themselves in 10
years.
Moreover, the bill includes language
facilitating the use of energy perfor-
mance contracting under which pri-
vate industry would finance the in-
stallation of energy efficiency improve-
ments in Federal buildings.
This is a key program that can save
the Government almost $1 billion a
year in taxpayer dollars and make a
big contribution to environmental
quality.
H.R. 776 makes significant changes
in the 1935 Public Utility Holding
Company Act to allow much greater
entry into the electricity market by
independent power producers, to pro-
vide a new diversity of supply for
wholesale electricity.
Importantly for my own State, this
change should allow for more use of
natural gas, since it is the predomi-
nant choice of fuel for those power
producers.
The bill also provides for ways for
these new wholesale power producers
to market their power through access
to power lines of existing utility com-
panies.
In the area of natural gas pipelines,
unfortunately, many new procedural
efficiencies included in our original
bill were dropped as a result of sub-
stantial controversy over certain other
provisions in the natural gas title.
However, I am delighted the confer-
ees deleted the House-passed
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prorationing language which I vigor-
ously fought against, and also dropped
certain provisions which could have
had serious implications for imple-
mentation of FERC's recent order 636
concerning interstate natural gas
pipeline regulation.
Those provisions should have been
dropped, and they were.
I am pleased the conference report
still contains provisions, adopted by
the full House, which require
much-needed reform in FERC's oil
pipeline ratemaking methodology and
regulatory procedures.
I have worked many years to
achieve this kind of reform and, while
the provisions are not as strong as I
personally would have liked, even
these lesser reforms are critically
needed and I am delighted they were
approved.
I am also pleased the bill contains
provisions, similar in thrust to a pro-
posal I sponsored with Congressman
Jim Cooper of Tennessee, to initiate
an important new program to account
for voluntary reductions by industry
of gases that contribute to greenhouse
warming.
This program will allow for credit to
be given to those farsighted companies
that made early reductions, at such
time as the U.S. implements a manda-
tory program.
The bill also provides important
new authority for establishing inven-
tories of greenhouse gases and estab-
lishing the data base needed for any
future program.
In the hydro area, the conferees did
address certain longstanding problems
with FERC's regulation in this re-
spect, notably providing protection for
fishways and State and national
parks.
I am disappointed we could not
reach agreement on House provisions
to protect State-designated wild and
scenic rivers against FERC encroach-
ment in this area, but I remain hope-
ful Congress can address that issue
sensibly at some point in the future.
The bill also gives much-needed
structure and accountability to the
U.S. Department of Energy's
multibillion dollar Clean Coal Tech-
nology Program, including consider-
ation of environmental benefits and
cost effectiveness.
Finally, Mr. Speaker, I would hope
we are successful in getting the energy
tax provisions through the Congress
and signed into law this year.
Most important of these is alterna-
tive minimum tax relief for indepen-
dent producers, which is absolutely
essential if we are to maintain a via-
ble independent producing industry.
I have been a strong and vocal sup-
porter of changes in the treatment of
AMT for independents, and hope we
are finally successful in attaining that
goal.
Obviously, Mr. Speaker, the bill
includes many, many other provisions
- some good, and some which I person-
ally think are not so good.
But we have worked long and hard
to develop this comprehensive strategy
and it is worthy of support by the full
House.
I urge its adoption and hope the
President will sign the bill into law so
that we might finally begin to set the
Nation along a thoughtful and pro-
active course toward greater energy
security.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Arizona (Mr. Rhodes).
(Mr. RHODES asked and was given
permission to revise and extend his
remarks.)
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Mr. RHODES. Mr. Speaker, I thank
my colleague, the gentleman from
California (Mr. Moor head) for yielding
me this time.
Mr. Speaker, I am pleased to rise in
support of this Energy bill conference
report.
While it is true that the bill con-
tains several flawed provisions, on
balance it is a very good bill.
I am particularly pleased at several
provisions relating to nuclear power
that are included in this bill. I would
like to take just a moment to high-
light some of them.
The future of nuclear energy power
in this country as a credible portion of
our energy mix has been clouded by a
lot of things, many of which are ad-
dressed in this bill. It has been cloud-
ed by the future of developing a nucle-
ar waste repository, a high-level waste
repository. We have addressed some
of the concerns about getting such a
high level repository in place by the
first decade of the next century in this
bill.
We have also in the bill extended
the term of the nuclear waste negotia-
tor which hopefully will provide the
necessary time to locate a suitable site
for temporary storage of high level
waste for a monitored retrievable
storage site which is extremely impor-
tant considering the contractual obli-
gations that we have to the nuclear
utility industry in this country to
begin to accept their waste by 1997.
The licensing reform provision will
go a long way toward helping to revi-
talize the industry. Licensing provi-
sions have likewise been an impedi-
ment to further development of the
nuclear energy industry, and I think
that we have streamlined the licens-
ing procedure in a way that will cause
utilities in the country to feel confi-
dent that they can proceed through a
one-step licensing process through
construction and into production of
energy for the country.
Finally, is the uranium enrichment
title. While not perfect, I think it
represents a workable structure that
will lead ultimately to the removal of
the uranium enrichment business
from the Government and spin it off
into the private sector, and our col-
leagues, the gentlewoman from Ten-
nessee (Mrs. Lloyd) and the gentle-
man from Ohio (Mr. McEwen) partic-
ularly deserve congratulations for that
provision.
Mr. SHARP. Mr. Speaker, I yield
such time as he may consume to the
distinguished gentleman from New
York (Mr. Towns), another member of
the conference committee.
Mr. TOWNS. Mr. Speaker, I want
to join my colleagues in commending
the outstanding work and recognizing
the outstanding work that was done
by the gentleman from Michigan (Mr.
Dingell) of the full Committee on
Energy and Commerce and by the
subcommittee chair, the gentleman
from Indiana (Mr. Sharp), and, of
course, by the gentleman from New
York (Mr. Lent), and also the gentle-
man from California (Mr. Moorhead).
I am proud of the consensus that our
conference committee produced.
There will always be elements which
each of us feel could have been han-
dled differently. Personally, I would
have hoped that we could have had
stronger language in support of the
protection of Canadian gas imports,
prorationing and reliability in the
transmission provisions. In addition,
it is my fervent hope that the retail
wheeling provisions will not result in
FERC ordering mandatory transmis-
sion where there are presently volun-
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tary retail wheeling arrangements.
Despite these concerns, we must rec-
ognize that the final product is indeed
a compromise package which will
strengthen our national energy policy.
It is also one which addresses the
valid pension concerns of the Nation's
coal miners.
I know that there are those who
oppose the high-level waste standards
provisions in this conference report.
There are those who would argue that
by passing these provisions we will be
politicizing the standards setting pro-
cess for Yucca Mountain. Nothing
could be further from the truth.
The fact is that the foremost body
of scientific and technical minds in
the country, the National academy of
sciences, has expressed to EPA its
reservations and problems with the
approach taken by EPA in its first
attempt at drafting these standards in
1985. It is crucial at this juncture that
EP A's standard setting obligations not
be clouded by political proclamations.
Science must guide the process and
Congress knows no more qualified
body than the Academy of Sciences to
make these determinations. I would
hope the Senate will also ultimately
accept the standards provisions of this
bill and not succumb to the planned
filibuster of this important legislation.
Finally, let me say that I am hope-
ful that the strong consensus among
the entire electricity industry, which
was achieved in developing a regional
transmission proposal, will be the
basis for immediate action by the
Energy and Commerce Committee
next session. I am anxious to work
with my good friend, the gentleman
from Oklahoma (Mr. Synar), in mov-
ing the RTG proposal forward. Again,
I'd like to commend my colleagues on
a job well done.
Mr. MOORHEAD. Mr. Speaker, I
yield 6 minutes to the gentlewoman
from Nevada (Mrs. Vucanovich).
Mrs. VUCANOVICH. Mr. Speaker,
I rise in opposition to the report of the
committee of conference on H.R. 776
- the energy bill. While I am in agree-
ment with my fellow conferees on
most provisions, I am greatly dis-
tressed by the House conferees accep-
tance of the Senate substitute to sec-
tion 801 regarding Environmental
Protection Agency standards for dis-
posal of high-level nuclear waste.
Mr. Speaker, as a senior member of
the Interior Committee, I was a con-
feree on title Vm issues. I was there
when the deal was announced to the
public at the conference meeting on
the evening of September 30. The deal
allegedly was crafted the night before
in a secret meeting involving only full
committee chairmen, I am told. The
House conferees would recede from
the House position of directing the
EPA to reinstate the generally appli-
cable environmental regulations for
high-level radioactive waste, spent
nuclear fuel, and transuranic waste
and accept a Senate substitute which
is 180 degrees different than the in-
tent of this body. Just what the
House got in return for this complete
turnabout is unclear to me.
Because the Senate came to the
conference with no position on title
Vm issues, this substitute can hardly
be deemed a compromise. In fact, I
believe it exceeds the scope of the
conference, because the conferees
would direct the EPA to do rule-mak-
ing on radiation standards oiuy after
a National Academy of Sciences study
is completed - a study whose scope is
dictated in conference report to deny
the NAS from considering standards
akin to the old ones.
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I know the statement of bill manag-
ers suggests otherwise, but the confer-
ence report language clearly states the
EPA Administrator shall promulgate
standards consistent with the findings
and recommendations of the National
Academy of Sciences. I find little com-
fort in the view that the EPA will be
given broad discretion to decide just
what consistency means in this situa-
tion.
Seven other conferees joined with
me against this blatant disregard for
the position of the full House of Rep-
resentatives, and more importantly,
against the cavalier indifference for
the public's health and safety that
adoption of the amendment repre-
sents. The House position originated
in the Interior Committee markup of
last April. I am pleased to say that the
Energy and Environment Subcommit-
tee chairman voted against accepting
the Senate offer, as did six others and
I, but my full committee chairman
jumped ship and took several votes
with him, handing the vote to the
senior Senator from Louisiana.
The bill mangers say 'what could be
better than having the esteemed Na-
tional Academy of Sciences tell EPA
about the health effects of radiation
exposure?9 That may be all well and
good, but the NAS isn't given a free
rein to define the scope of their study.
Rather, the conferees would do that,
so the good science arguments just
don't hold water, Mr. Speaker.
I don't think that any one of us is
sufficiently knowledgeable to make
the important policy call about wheth-
er radiation dose standards should be
population based or individual based
to best protect the public. But the
conferees propose to make this call,
because the nuclear power lobby is
concerned that Yucca Mountain, NV,
might not qualify as a repository un-
less the rules are relaxed quite a fait
from the standards of 1987 which the
House would direct be reinstated.
Mr. Speaker, the nuclear waste
projects office of the State of Nevada
has written to me about the individu-
al versus population dose standard as
concerns release of carbon- 14 from a
repository. I quote:
In summary, while it may be attrac-
tive to use dose to the maximally ex-
posed individual to demonstrate com-
pliance with a regulation at a particu-
lar point in time, it does not reflect
the broader population consequences
of a repository which contains a mas-
sive inventory of radionuclides that
can be released slowly over a long
period of time. Cancer fatalities at-
tributable to release from a repository
are cumulative in the population over
many generations. A standard based
upon the maximally exposed individu-
al at a point in time does not reflect
the long term human health hazard of
a nuclear waste repository.
Furthermore, Mr. Speaker, the
conferees propose that Yucca Moun-
tain be perpetually watched over to
guard against human intrusion fay
future generations who might be un-
aware of the nuclear waste that is
proposed for burial there. This is a
big change from current law which
states that it is a disqualifying condi-
tion if a candidate site has the poten-
tial for hosting natural resources.
Future generations may inadvertently
penetrate the repository in their
search for minerals, oil and gas, gso-
thermal energy, and such. The con-
ferees charge the NAS with determin-
ing whether or not DOE can actually
remain vigilant for 10,000 years
against such intrusion. In other
words, the Nuclear Waste Policy Act
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must be changed, after Yucca Moun-
tain has been singled out for study,
because it might just be disqualified
under this existing standard, and we
have put too much money into this
program to begin again elsewhere.
Mr. Speaker, I don't believe that is
sufficient rationale to amend the Nu-
clear Waste Policy Act, especially
without the benefit of hearings on this
subject. My constituents have be-
lieved for 5 years that the 1987
amendments to the Nuclear Waste
Policy Act were done in a backroom
deal to insure that the other candi-
date sites at the time, in Texas and
Washington State, nor salt domes in
Louisiana, would become the site of
choice. The DOE testified at hearings
in 1987 that Yucca Mountain could
very easily meet the standards in
effect at that time, the very standards
the House wanted to be reinstated in
its section 801. How can it be that
these are too tough now?
Unless this body agrees to recommit
the conference report with instruc-
tions to the House conferees to dis-
agree to section 801, the other shoe
will have dropped on Nevada. The
country is watching us today to see if
we do the right thing. A 'no' vote on
the motion to recommit will surely
send my State into court to litigate
the constitutionality of allowing the
nongovernmental NAS to practically
make public policy decisions. A 'yes'
vote on the motion will tell our con-
ferees who abandoned the House posi-
tion that on matters of public health
and safety such as this is, politics as
usual is out.
If Yucca Mountain is to be further
studied for its suitability to host
high-level nuclear waste, it must be
done in a manner that instills public
confidence. My colleagues, section 801
of this conference report is about as
far from that goal as is possible. If you
believe nuclear power has a future in
this country I ask you to join with me
to restore the confidence of my con-
stituents - and yours - by voting to
recommit the conference report on
H.R. 776.
Mr. SHARP. Mr. Speaker, I yield 10
1/2 minutes to the distinguished gen-
tleman from Nevada (Mr. Bilbray) so
that he and other opponents of the
bill may speak.
Mr. BILBRAY. Mr. Speaker, I yield
such time as he may consume to my
friend, the gentleman from Oregon
(Mr. DeFazio).
Mr. DeFAZIO. Mr. Speaker, I thank
the gentleman for yielding.
Mr. Speaker, as a member of the
energy bill conference committee, I
want to commend the chairman, the
gentleman from Michigan (Mr.
Dingell), the subcommittee chairman,
the gentleman from Indiana (Mr.
Sharp), the chairman, the gentleman
from California (Mr. Miller), and the
other Members who worked so long
and hard against such great odds to
bring this bill to the floor. That said,
I have to rise in opposition to this
conference report.
I will tell you what this bill is not.
It is not a national energy strategy.
Instead, it is a grab bag of energy
related, special interest provisions
that will do little or nothing to make
the United States of America energy
independent by the year 2000, a goal
that I believe is achievable if only we
had the will.
There is no central vision - no uni-
fying purpose in this bill. If anything
it should be called the nuclear energy
bill, because its most notable provi-
sions seem to have been written by
and for the nuclear power industry.
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There are some good provisions in
this bill, but they are so far out-
weighed by the bad that I cannot in
good conscience support it.
Thanks to this bill, we'll have more
efficient showerheads and lightbulbs.
But we will also limit the ability of
communities to challenge new nuclear
powerplants in their midst.
Thanks to this bill, we will give a
gentle push to solar energy.
But crass political pressures will tip
the scales of scientific judgment in
favor of a nuclear waste site at Yucca
Mountain, NV, despite the questions
that have been raised so well by the
gentlewoman from Nevada (Mrs.
Vucanovich) and will be raised later in
this debate.
We will encourage greater use of
alternative fuels, but we'll spend more
than $200 million on nuclear power
research, money that would be much
better spent on conservation and re-
newable energy resources.
We will have whistleblower protec-
tion to uncover DOE contractor fraud
and abuse, but we will still totally
exempt those same contractors from
any fraud and abuse that is uncovered
by those whistleblowers, and the tax-
payers of America will foot the bill for
that fraud and abuse.
There is nothing in this bill requir-
ing tougher auto mileage standards.
Nothing to limit unwise oil drilling in
our sensitive coastal waters. Little or
nothing to not only encourage but
require greater reliance on the cheap-
est and cleanest energy resource -
conservation.
Mr. Speaker, there is so much work
left done in this bill • and there is so
much that is skewed for special inter-
ests, that I cannot support it.
We would be far better off waiting
until next year when we can work
with a Democratic administration to
craft a true national energy strategy
that puts America on the road toward
clean renewable energy resources, a
greater reliance on conservation, and
independence from unreliable foreign
oil sources.
I urge my colleagues to defeat this
conference report.
Mr. BILBRAY. Mr. Speaker, I yield
myself such time as I may consume.
Mr. Speaker, I supported the energy
bill when it came out of this House
and was probably the only member of
my delegation that did so because it
had preemption language in it that
preempted the State of Nevada from
issuing permits which we thought
were required for clean air, clean
water, and so forth.
Even though I thought those re-
quirements were oppressive, I felt the
energy bill as it came out of this
House was a decent bill that was
needed by the American public.
The bill that has returned to us is
an oppressive and bad bill.
The public may wonder why so few
Members are standing up here oppos-
ing the bill. One of the reasons is
that the rule, which I voted against
just a few minutes ago, did not pro-
vide any time for the opposition. The
gentleman from Indiana (Mr. Sharp)
and the gentleman from Michigan
(Mr. Dingell) did give me 10 minutes,
and the gentlewoman from Nevada
(Mrs. Vucanovich) was also given 6
minutes from her side. So we have 16
minutes out of a 2-hour debate for
those that are opposed to this particu-
lar bill.
Mr. Speaker, often I hear the mi-
nority party object to the oppression
of the majority. But I can say to my
minority friends, nothing is as oppres-
sive as a minority within the majority
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being oppressed, because at least you
have a peer group of followers over
there that will work with you to over-
come some of the oppression.
This bill is oppressive because of
what has happened in conference, as
the gentlewoman from Nevada (Mrs.
Vucanovich) has stated. The senior
Senator from Louisiana has repeated-
ly attempted to put into every piece of
legislation that has come back to the
House provisions that would strip the
EPA and the Nuclear Regulatory
Commission from control in setting
the standards for the Yucca Mountain
site. In this bill he has achieved that.
He has required that the EPA and
the NRC listen to the findings of the
National Academy of Sciences, and he
says in the bill they shall accept the
requirements. They also say that the
National Academy, 'will base their
standards upon doses to individual
members of the public from releases
to the accessible environment.' They
are precluded from using a population
base, which is what all the EPA stan-
dards throughout the country and
NRC standards are based upon.
What does this mean to the general
public? This means that over the next
10,000 years, and maybe people will
say what is 10,000 years, how does
that affect me, but this could be next
year or the year after. It is like the
100-year flood. We do not know if it
is going to be 100 years to the next
100-year flood. It could be next year
or the year after. This is just an aver-
age over the geological eons.
During this period more carbon- 14
can be emitted into the air that can
affect the general population than
could be allowed if the standards that
the EPA promulgated in 1985 were
allowed.
We in Nevada were willing to accept
the 1985 standards of the EPA. They
were struck down in 1987, not because
they were too strong, but because they
were too weak and environmental
groups filed suit and knocked them
out. But we in Nevada were willing to
accept the 1985 standards.
But that was too strong for the
senior Senator from Louisiana. He
wanted to make sure that no matter
what happens, no matter what hap-
pens that Yucca Mountain will quali-
fy, because of the billions of dollars
that is going to be poured in.
The senior geologist at the NRC just
a few years ago said that it was a
waste of the taxpayers' money to be
doing suitability studies at Yucca
Mountain, because in his opinion, and
this is George Trapp, the NRC senior
geologist, because in his opinion Yucca
Mountain will never qualify for a
permanent site.
Well, if the senior Senator from
Louisiana has his way, it will not mat-
ter, because they will fit the study of
the standards to meet whatever they
find there at Yucca Mountain.
What will this mean over the 10,000
years? That if the 4-rem level comes
out, you will have 3 million fatal can-
cers to the general population in that
area. That means southern Califor-
nia, central California, Utah, northern
Arizona, Nevada, and States all the
way downwind as far as Colorado and
maybe even beyond.
We in Nevada feel that the National
Academy of Sciences is neither a regu-
latory nor a standard setting body.
The NAS has no experience or exper-
tise in establishing standards to pro-
tect the public health and safety. The
NAS is not politically accountable. It
reduces the discretion of the NRC and
EPA to establish standards that those
agencies believe are necessary to pro-
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tect the public health and safety.
Mr. Speaker, this is a bad piece of
legislation. It is bad for the general
public. It is not only bad for Nevada,
but it undermines the NRC, it under-
mines the EPA, and it is a bad piece
of legislation. That is why we in Ne-
vada are sitting here opposing it.
Many Members have come up to me
and said:
You are right, this is unfair, it is a
bad piece of legislation, but we must
have an energy bill so you are going to
have to take it where you do not want
to take it.
Mr. Speaker, I yield such time as he
may consume to the gentleman from
Florida (Mr. Hutto).
(Mr. HUTTO asked and was given
permission to revise and extend his
remarks.)
Mr. HUTTO. Mr. Speaker, as
Florida's only conferee on this nation-
al energy bill, I am extremely disap-
pointed that an agreement was not
reached on the Outer Continental
Shelf provisions in this legislation. I
wholeheartedly support the goal of a
comprehensive national energy policy;
however, I believe that our Nation's
offshore energy development should be
part of that policy.
The Florida delegation has fought
annually to obtain a lease sale morato-
rium in the eastern Gulf of Mexico
during the appropriations process.
Thankfully, the Interior Appropria-
tions Committee has been willing to
help us protect our coast each year. I
saw this comprehensive energy autho-
rization legislation as the proper place
to set this policy for the long term. I
was pleased to work with my colleague
Porter Goes, in getting the OCS provi-
sions in the energy bill in Merchant
Marine and Fisheries Committee. I
am discouraged that the administra-
tion and the other body were appar-
ently not interested in creating a
long-term offshore energy policy.
I, and the entire Florida delegation,
will now be forced to request that our
Appropriations Committee legislate
our energy policy each year. However,
let the Record show that we tried
hard to reach an agreement on this
critical issue through the correct au-
thorization process. Finally, I would
like to thank the Members of this
body who stood by our House OCS
policy to the very end. The people of
Florida and I are gratified by your
support. Together we will continue to
fight for coastal protection.
Mr. PETERSON of Florida. Mr.
Speaker, I rise today to express my
deep disappointment in the removal of
title XX, relating specifically to Outer
Continental Shelf (OCS) activities,
from the conference report on H.R.
776, the Comprehensive National
Energy Policy Act.
Mr. Speaker, as you know, in May
of this year the House overwhelmingly
voted for an energy bill that would
prohibit the issuance of new leases for
offshore oil and gas development off
Florida's entire gulf coast as well as
the entire Atlantic and Pacific coasts
and the Bristol Bay off the coast of
Alaska until the year 2002. The House
version reflects the wishes of the en-
tire Florida congressional delegation,
the office of the Governor, and the
wishes of a vast majority of the resi-
dents of Florida. In addition, the
House language is consistent with
congressional intent. Every year since
1988, the Congress has approved simi-
lar moratoria provisions as part of the
Department of Interior appropriations
bills.
Should a spill or blowout occur off
the coast of Florida, the environment
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tal and economic consequences would
be devastating. Florida's greatest
source of revenue comes from the
millions of tourists that travel from
all over the world to visit Florida's
beautiful beaches. The jobs that could
be lost in the event of a spill would be
seriously detrimental to my State.
With so much at stake, it is no won-
der that the entire Florida delegation
has joined together in support of pro-
tecting Florida's coasts from future
activities.
Mr. Speaker, it is unconscionable
that Florida's coast not be protected
until a final plan can be devised that
addresses both the sensitivities of
Florida's environment and its future
economy. Therefore, I join the rest of
the Florida delegation in expressing
my deep disappintment and regret
that Florida's concerns were ignored
during the negotiations to the energy
bill.
Mr. BILBRAY. Mr. Speaker, in
conclusion, I would like to point out
that the following groups are opposed
to this particular section of the bill
and urge Members to vote against the
inclusion of section 801, the Yucca
Mountain provision bill: the Friends
of the Earth, the Natural Resources
Defense Council, the Nuclear Informa-
tion and Research Service,
Greenpeace, Safe Energy Communi-
cations Council, the Sierra Club, the
Union of Concerned Scientists, and
the U.S. Public Interest Research
Group.
I urge my colleagues to vote against
this bill and let us come back with a
better bill next session.
The SPEAKER pro tempore (Mr.
Montgomery). The Chair advises that
the gentleman from Indiana (Mr.
Sharp) has 26 1/2 minutes remaining,
and the gentleman from California
(Mr. Moorhead) has 29 1/2 minutes
remaining.
Mr. MOORHEAD. Mr. Speaker, I
yield 3 minutes to the gentleman from
Wyoming (Mr. Thomas).
Mr. THOMAS of Wyoming. Mr.
Speaker, I rise in support of the ener-
gy bill. It is very difficult to reconcile
the broad interests of a country like
ours on an energy bill. We hear a lot
of people say, 'Gosh, let's get an ener-
gy bill.'
Well, we could have an energy bill
very quickly if we wrote it in Wyo-
ming; I suspect we would have an
energy bill very quickly if we wrote it
in Massachusetts. But when we seek
to reconcile the differences between
the producer aspect of the country
and those who are generally con-
sumers, we find some problems.
I think this bill is much better than
the one we dealt with in the House
Committee on Interior and Insular
Affairs. That one did not have any
Btu's in it at all. It was a bill de-
signed simply to impose more environ-
mental regulations and make it more
difficult for us to be self-supporting in
the area of energy production.
We talk a lot about jobs. Talk a lot
about General Motors. Some claim
there is as many as 400,000 workers
out of work in the oil business in this
country, more than any of these other
activities that we have talked about.
Fifty-two percent or more of our oil is
being imported. So I am delighted
that one of the provisions will be the
alternative minimum tax made per-
manent, allowing oil producers to
have the same kind of tax benefits
that others in business do for intangi-
ble drilling costs, for the preparation
of sites.
I think the nuclear licensing is ex-
actly what we need to do. Here is a
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fuel that certainly lends to clean air
and the clean global environment and
one we need to use.
Mill tailings, I am pleased that mill
tailings will be taken care of out of
here in costs that are raised by the
uranium users, and I think that is an
excellent portion.
I am delighted that the restrictions
that were placed by the House on
clean low-sulfur Western coal will be
removed so that we can, in fact, en-
courage the use of low-sulfur coal.
There are a couple of items that I
am not enthusiastic about. I support-
ed my colleague from Nevada in the
notion that Nevada and other States
ought to have the right to be heard in
this matter of locating a permanent
repository. I think that they ought to,
I think we ought to have the kind of
restrictions that were in initially and
not lower, and not lower the require-
ments for health standards.
Finally, I am disappointed at what
we did when we dealt with the ques-
tion of funding Union Health Care.
We are not talking about whether
these folks are going to get medical
care or not; we are talking about how
we are going to fund it. We ended up
taking it out of the abandoned land
mines fund. I am very sorry about
that. That is not what it is designed
for. We shifted the responsibility to
parties that were not a party to set-
ting up that medical program in the
first place, and there were alterna-
tives to funding it.
The people who signed the original
agreements ought to be funding it.
Instead of that, we are taking the
money from the abandoned lands
funds, which are generated in the
West, by the way, and much of it is
sent elsewhere to use for this issue.
By and large, however, I do want to
congratulate the leaders of these com-
mittees, the gentleman from Indiana
(Mr. Sharp), in particular, and the
gentleman from Michigan (Mr.
Dingell), and on our side, the gentle-
man from California (Mr. Moorhead),
and others.
I think this is a bill that we ought
to support, and I believe it cornea as
close to being a national energy policy
as we can devise in our diverse coun-
try.
Mr. SHARP. Mr. Speaker, I yield 2
minutes to the gentleman from Michi-
gan (Mr. Carr).
(Mr. CARR asked and was given
permission to revise and extend his
remarks.)
Mr. CARR. Mr. Speaker, I thank
the gentleman for yielding time to me.
Mr. Speaker, this is an important
piece of legislation in its entirety, but
States like Michigan and Indiana are
particularly interested in the foreign
investment section. We are interested
because the economies of our States
have suffered at the hands of foreign
competition and anything the Con-
gress does to enhance the ability of
U.S. companies to compete overseas
ought to meet with the favor of this
body. It is ironic that, under the Pub-
lic Utility Holding Company Act
(PUHCA) of 1935, a public utility can
invest in any foreign business - can,
banks, popcorn manufacturing - ex-
cept the one it knows best - the utility
business. The language in the bill
clearly rectifies that inequity and I
thank the gentleman for bringing it to
the House for approval.
I seek clarification for one aspect of
the bill from the gentleman. Lan-
guage in the conference report states
that a utility cannot invest in foreign
utility transmission and distribution
facilities
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* * * Unless and until the State
Commission having such jurisdiction
has certified to the Commission that
it has the authority and resources to
protect the ratepayers subject to its
jurisdiction and that it intends to
exercise its authority.
This language is clear to me in in-
tent and meaning but, having worked
for a public utility commission myself,
I know that commissions can make
such an investment hostage to some
other program near and dear to their
hearts but unrelated to the subject at
hand. So I ask the gentleman, is it
the intent of Congress that a commis-
sion can submit, revise, or withdraw
its certification based solely on the
jurisdiction language in the bill to the
exclusion of any other agenda unrelat-
ed to that jurisdiction?
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. CARR. I yield to the gentleman
from Indiana.
Mr. SHARP. Mr. Speaker, that is
the intent of this language.
Mr. CARR. Mr. Speaker, I thank
the gentleman and seek one further
clarification. Under current law, a
utility can seek a waiver of the Public
Utility Holding Company Act from the
Securities and Exchange Commission
(SEC) for foreign investments. Does
this language retain the SEC's au-
thority to grant such a PUHCA waiv-
er for foreign investment purposes as
well as a utility's right to seek it?
Mr. SHARP. If the gentleman will
continue to yield, it does. However, in
granting any such waiver, the SEC
should keep in mind the purposes,
policies, and standards under new
section 33 of the Public Utility Hold-
ing Company Act.
Mr. CARR. I thank the gentleman
and applaud his work on this legisla-
tion.
Mr. SHARP. Mr. Speaker, I yield 1
minute to the distinguished gentle-
man from Kentucky (Mr. Hubbard),
who has been very instrumental in
dealing with the uranium enrichment
issue.
Mr. MOORHEAD. Mr. Speaker, I
yield 1 minute to the gentleman from
Kentucky (Mr. Hubbard).
The SPEAKER pro tempore. The
gentleman from Kentucky (Mr.
Hubbard) -is recognized for 2 minutes.
Mr. HUBBARD. Mr. Speaker, I rise
today in support of the conference
report to accompany H.R. 776, the
National Energy Policy Act of 1992. 1
congratulate the House and Senate
conferees for their success in reaching
an agreement on the first comprehen-
sive national energy bill in over a
decade. This broad-based energy
strategy, which is designed to increase
energy efficiency in this country and
promote increased production from
renewable energy sources, is an impor-
tant step in assuring this Nation's
energy self-sufficiency.
I urge my colleagues to support the
conference report. This legislation
means a lot to our Nation and specifi-
cally to the citizens of the First Con-
gressional District of Kentucky - espe-
cially the uranium enrichment plant
located in West Paducah and operated
by Martin Marietta in a joint venture
with the U.S. Department of Energy.
This plant has 1,817 employees, as of
today.
H.R. 776 establishes a Government
corporation, known as the Uranium
Enrichment Corporation, to take over
the Energy Department's uranium
enrichment program with the goal
that the corporation could eventually
be sold to private investors. Such a
corporation would, I believe, aignifi-
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cantly improve the Nation's competi-
tive position and reduce the trade
deficit, assure long-term supply and
responsiveness to domestic enrich-
ment customers, meet our defense
needs and remove the threat of in-
creased taxes to support an inefficient
Government-controlled enterprise.
Since coming to Congress in 1974, 1
have seen the U.S. participation in
the world market for uranium enrich-
ment services drastically decrease to a
point today where our ability to com-
pete in world markets is seriously
threatened.
The loss of civilian enrichment mar-
kets will have seriously harmful ef-
fects on our Nation's trade imbalance,
overall energy program and hopes for
energy independence. Most impor-
tantly, our national security is threat-
ened with the loss of a viable source of
domestic supply of enriched uranium.
I believe the best way to meet our
needs is through the establishment of
the uranium enrichment enterprise as
a Government-owned corporation.
Again, I urge my colleagues to vote
yes on the conference report to accom-
pany H.R. 776. It is a good bill and
will go a long way toward reducing
our dependence on nonrenewable
foreign energy sources and assuring
our Nation's energy independence.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Florida (Mr. Bilirakis).
Mr. BILIRAKIS. Mr. Speaker, I
thank the gentleman for yielding time
to me
Mr. Speaker, I rise today with a
deep conflict of emotions regarding
the conference report.
I am particularly pleased with the
fact that the legislation contains a
number of important provisions, such
as water and energy efficiency stan-
dards and nuclear licensing reforms -
measures I have long supported • but
I feel that the conferees' actions in
stripping long-term offshore drilling
provisions from this legislation has
tied my hands, and leads me toward a
regretful and reluctant opposition.
It is the depth of my commitment to
these offshore oil drilling preclusions
that forces me to this position.
Earlier this week, I noted that an
offshore rig that had been spewing oil
into the Gulf of Mexico for almost 2
days caught fire Thursday as workers
tried to cap it. The well spewed 42
gallons of crude a minute when it
blew out at the wellhead Tuesday, and
the oil formed a slick that by Wednes-
day afternoon reached a fragile chain
of barrier islands some 65 miles south
of New Orleans.
These are the dangers of air and
water pollution and the potential of
extensive environmental damage that
have led my Florida colleagues and
myself to oppose offshore oil drilling in
our State's waters.
In fact, year by year, the Florida
delegation has been successful in pre-
venting such drilling; and the
House-passed version of this bill rep-
resented our beet hope of securing
long-term protections.
My regret is only deepened, Mr.
Speaker, because I believe that
energy-saving appliance standards for
a broad spectrum of electric motors,
lighting, and industrial equipment,
and plumbing fixtures included in this
legislation will be of inestimable value
to our Nation.
I was particularly pleased to work
with a number of my colleagues in
crafting the energy efficiency stan-
dards included in this conference re-
port - and it is indeed fortunate that
we can advance the energy interests
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of our Nation is a dramatic manner
simply by making the most efficient
use possible of our energy resouces.
Hand in hand with such conversa-
tion measures goes energy efficiency;
substantial energy savings can be
made through these simple conserva-
tion means.
Indeed, we need to protect and con-
serve our Nation's natural resources
for the generations to come, and I
can't help but think that we have
missed a great opportunity in this
regard with the loss of the
legislation's offshore drilling provi-
sions.
Mr. SHARP. Mr. Speaker, I yield 1
minute to the distinguished gentle-
man from Connecticut (Mr.
Gejdenson).
Mr. GEJDENSON asked and was
given permission to revise and extend
his remarks.)
Mr. GEJDENSON. Mr. Speaker, I
would like to take a moment and
thank Chairmen Dingell, Miller, and
their staff for all the hard work in
putting together this comprehensive
package.
I want to mention a few provisions
in the bill which are important to me
and the residents of my district.
Earlier in the year, we in eastern
Connecticut became aware of hydro-
power siting problems at Yantic Falls
in Norwich, and discovered there are
many examples across the country
where State and local natural areas
were subject to eminent domain, re-
gardless of intended State and local
plans for the property.
I appreciate the work of the Com-
mittees on Interior and Energy and
Commerce to develop language in the
bill to address the needs of State and
local governments. This language will
allow areas owned by State and local
governments that are used for park,
wildlife, or recreation purposes to be
protected from condemnation, and
require FERC to conduct a public
hearing in affected areas, as well as
allow for special consideration in the
FERC hearing process.
The provision on whistleblower
protection is also of importance to
eastern Connecticut, an area with
four nuclear powerplants. Increased
protection will now be available to
employees at nuclear powerplants and
DOE contractor facilities. Further-
more, health and safety risks raised
by employees will now be investigated
independent of the Department of
Labor's investigation and resolution of
a potential worker's discrimination
case.
Mr. MOORHEAD. Mr. Speaker, I
yield 3 minutes to the gentleman from
Texas (Mr. Fields).
(Mr. FIELDS asked and was given
permission to revise and extend his
remarks.)
Mr. FIELDS. Mr. Speaker, I rise in
support of the conference report for
H.R. 776, the Comprehensive Energy
Policy Act.
As a representative from Houston,
the energy capital of the world, I am
pleased to be able to support this bill.
The need for a comprehensive energy
policy is long overdue. I could cite
statistics all day that show the dire
condition of our Nation's energy in-
dustry. However, due to the short-
ness of time, I will just relate a few,
very telling, numbers.
In the last decade, the U.S. energy
industry has lost over 450,000 employ-
ees. In the last year alone, the indus-
try lost 50,000 jobs.
Foreign exploration and develop-
ment expenditures for 18 U.S. compa-
nies have increased from 20 percent in
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1985 to 60 percent in 1990.
From 1987-91, our foreign energy
dependence increased from 27 percent
to 46 percent of our total energy
needs.
The United States spends about
$120 billion a day to buy imported oil.
It is the single largest component of
the Nation's trade deficit. In 1991, it
was nearly one-half of the total trade
deficit.
When the House passed its version
of H.R. 776 I was unable to support
the bill because, not only was the bill
lacking in production incentives, it
also contained numerous provisions
that were very harmful to current
production. Fortunately, many of
those provisions such as restrictions
on natural gas prorationing, Outer
Continental Shelf moratoria, and
alternative fuel fleet requirements for
fuel providers, were dropped or
amended during conference.
I am very pleased that the bill con-
tains the following: provisions that
will promote energy efficiency in many
sectors; incentives for increasing the
use of alternative fuels in many differ-
ent types of fleets; incentives for in-
creased use of natural gas; alternative
minimum tax relief for independent
producers of domestic energy resourc-
es; nuclear licensing reform; oil pipe-
line regulatory reform; incentives for
the development and use of renewable
fuels; establishment of research and
development programs for many ener-
gy technologies; and onshore oil and
gas leasing reform.
Unfortunately, today, we are not
opening the Arctic National Wildlife
Reserve • because of Canadian cari-
bou.
I am also very pleased that the
Ways and Means conferees persuaded
their Senate colleagues to drop a very
objectionable provision contained in
the tax section of the bill. This provi-
sion would have removed tax-exempt
bonds issued to finance
Government-owned, high-speed inter-
city rail facilities from the Federal cap
on the volume of State bonds. Had
this been left in the bill, it could have
allowed the Texas high-speed rail
project to find a loophole to receive
public financing.
Texas TGV, the franchise holder for
the rail project, pledged in the begin-
ning that they would only use private
funds to finance the project. They
have run into difficulty raising those
funds and have voiced a desire to see
this exemption enacted so that they
could find a way to get public money.
There is no data showing that there is
a need for this rail project. The Tex-
ans most affected by this proposed
project, those who live along the pro-
jected route, are vehemently opposed
to it, feeling it is both unnecessary
and premature.
The deletion of this bond exemption
from the energy bill is very important
to many people in Texas and I am
glad that Congress has closed this
possible loophole for Texas TGV. In
conclusion, I would like to reiterate
my support for this conference report
and, although I feel we still need more
incentives to develop our domestic
resources, I urge my colleagues to
support this step in addressing the
energy crisis in America.
Mr. SHARP. Mr. Speaker, I yield 1
minute to the distinguished gentle-
man from Maryland (Mr. McMillen),
who was very active on the Subcom-
mittee on Energy and Power of the
Committee on Energy and Commerce.
(Mr. McMILLEN of Maryland asked
and was given permission to revise
and extend his remarks.)
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Mr. McMILLEN of Maryland. I rise
in support of the conference report for
H.R. 776. As a member of the Energy
and Power Subcommittee, I have
worked closely on the electricity provi-
sion in H.R. 776 and am pleased with
the compromise reached by the con-
ference committee.
The conference report imposes a
strict ban on federally mandated retail
wheeling, and has safeguards against
sham transactions.
This legislation preserves State
authority over the construction of
new transmission facilities and re-
quires FERC to modify a wheeling
order if a utility is unable to obtain a
permit from the State or needed prop-
erty rights.
As compared to the House bill,
there is increased discretion for FERC
to determine when wheeling should be
mandated and the conference commit-
tee eliminated the House provision
which would have required a utility to
go open access because of a merger or
market-based pricing situation.
The native load provisions in this
legislation I believe are superior to the
House bill. The House provisions
were loosely modeled after the 'NU'
case. However, in subsequent FERC
action, I believe that the 'NU' three
tier test has proven ineffective at
truly protecting native load consumers
and should not be the yardstick by
which FERC makes pricing determi-
nations.
The conference report permits re-
covery of all cost incurred in providing
transmission services to a third party,
including legitimate, verifiable eco-
nomic costs, and enlargement of facili-
ties costs.
These native load provisions are
absolutely essential for protecting the
interests of utility ratepayers. While
the implementation of these provi-
sions will be shaped by FERC, I be-
lieve that through this legislation we
have made a clear mandate that H.R.
776 not be used as a mechanism for
reallocating the wealth in a time of
strained capacity, but rather as a
means for preventing anticompetitive
behavior.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Illinois (Mr. Hastert).
(Mr. HASTERT asked and was
given permission to revise and extend
his remarks.)
Mr. MICHEL. Mr. Speaker, will the
gentleman yield?
Mr. HASTERT. I yield to the minor-
ity leader, the gentleman from Illinois
(Mr. Michel).
Mr. MICHEL. Mr. Speaker, I want
to compliment the gentleman from
Illinois (Mr. Hastert) on the thrust of
what I know will be his statement,
and associate myself with his remarks.
Mr. HASTERT. Mr. Speaker, I rise
in support of the conference report for
H.R. 776, The Comprehensive Nation-
al Energy Policy Act.
I want to commend Chairman John
Dingell, Chairman Sharp, Norm Lent,
and Carlos Moorhead for the hard
work that the Energy and Commerce
Committee put into this visionary bill.
It should be noted that the impetus
for this bill and much of its provisions
came from the President's national
energy strategy. I am also pleased to
see that many of the provisions of
H.R. 1543, sponsored by House Repub-
licans, were included in this bill.
This bill reaches into every aspect of
the way this country generates, dis-
tributes, uses, develops, and research-
es energy. It is a bill to guide our
Nation's energy policy into the 21st
century, stressing conservation and
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alternatives to our traditional energy
and fuel sources.
I would like to comment on one
aspect of this monumental bill, which
provides for the off-site disposal of
thorium mill tailings stored in the
center of West Chicago, IL, a city in
my district.
Thorium mill tailings, like uranium
mill tailings, are the byproduct of the
extraction of thorium from mined ore.
The West Chicago Rare Earth Facility
was operated from 1931 to 1973 when
the present owner, Kerr-McGee Chem-
ical Corp., ceased activities. The pri-
mary activity at the facility has been
associated with the processing of ores
containing radioactive thorium, radi-
um uranium, rare earths, and heavy
metals such as lead. The site is char-
acterized by large piles of thorium mill
tailings. In addition, radioactive
waste materials are now located in the
residential community adjacent to the
site.
About 71 percent of the approxi-
mately 550,000 tons of waste to be
disposed of from site operations were
generated pursuant to Federal con-
tracts. Cost sharing between the site
owner and the Federal Government,
the primary customer of this product,
provides an equitable approach to
financing the reclamation of this site.
The justifications for a Federal contri-
bution to the thorium site cleanup are
identical to those for uranium mill
tailings - namely, that the Federal
Government intended to pay costs
associated with the production of
materials for Federal programs.
The legislation provides for a Feder-
al contribution of up to $40 million for
the removal of the thorium mill tail-
ings from West Chicago.
This bill represents a step toward
the eventual disposal of the thorium
in a manner that is more protective of
human health and safety.
This effort could not have been
done without the persistence of many.
I would like to thank Chairman Sharp
for his early understanding of the
importance of this issue and working
tirelessly toward its resolution. Let
me also thank Jay Rhodes for his
assistance on the Interior Committee
in keeping this proposal on track as it
left the Energy and Commerce Com-
mittee and throughout conference.
Mr. MICHEL. Mr. Speaker, at long
last, Congress is finally ready, I hope,
to complete final action on an energy
bill.
Well over a year and a half ago,
President Bush submitted his national
energy strategy proposal.
He developed this plan, not because
the public demanded it, but because
our Nation's future requires action.
As a nation, we are becoming in-
creasingly dependent on foreign sourc-
es for our energy needs.
We are subjecting ourselves to all
the dangers that dependence embod-
ies, including the cutoff of supplies
and skyrocketing prices.
The national energy strategy sub-
mitted by the President was designed
to substantially reduce that depen-
dence.
It did so through a balanced ap-
proach that stressed conservation, the
development of renewable sources of
energy, and the increased production
of our Nation's fossil fuels.
I am pleased to see that this confer-
ence report provides most, though not
all, of these necessary reforms.
It includes provisions designed to:
increase energy efficiency; streamline
nuclear plant licensing; promote com-
petition in the generation of electrici-
ty; stimulate the development of re-
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newable energy; promote the develop-
ment of clean coal technologies; and to
require the increased use of alterna-
tive fuels.
For those of us who believe that
ethanol represents a truly American
solution to our energy problem, the
conference report contains a number
of provisions designed to encourage
the greater use of ethanol.
Expansion of the ethanol tax credit
to cover less than 10-percent blends
will help to make a greater number of
gasoline blends derived from ethanol
more competitive.
The President recommended adop-
tion of this provision as part of his
ethanol action program announced
last week.
The alternative fuel section of the
conference report establishes a nation-
wide goal calling for 10 percent of our
motor transportation fuels to be de-
rived from nonpetroleum sources by
the year 2000 and 30 percent by the
year 2010.
These provisions have the potential
for expanding the use of ethanol by
several fold.
This will benefit our Nation's farm-
ers and encouraging expansion of our
domestic ethanol industry.
The final version of the bill falls
somewhat short as far as stimulating
increased production of oil and gas is
concerned, but it is considerably bet-
ter than the original House bill.
Overall, this is a good conference
agreement that substantially carries
out the President's energy strategy,
and I urge its adoption.
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. HASTERT. I yield to the gen-
tleman from Indiana.
Mr. SHARP. Mr. Speaker, I am sure
that many of our colleagues know
that there simply was no member of
our committee that was more atten-
tive to hearingB, more attentive to
markup sessions and the issues than
the gentleman from Illinois, and I
think he deserves a great deal of cred-
it.
Mr. HASTERT. I thank the gentle-
man from Indiana.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Texas (Mr. Archer).
(Mr. ARCHER asked and was given
permission to revise and extend his
remarks.)
Mr. ARCHER. Mr. Speaker, when
we talk about energy security we talk
about the stability of sources of energy
that will continue to provide jobs in
this country and maintain our stan-
dard of living. I regret this bill fails in
doing a major job in that regard,
which the country I believe desperate-
ly needs.
Alternative fuels and conservation
can only do a small part of that job.
If we are to maintain the standard of
living on an increasing basis, we must
depend continuously over the next
generation for additional supplies of
hydrocarbon fuel. Otherwise we be-
come even more and more dependent
on what may become an uncertain
source of foreign oil.
But there is good in this bill, and
there is particularly help on the way
for the struggling energy industry in
the amendment that is introduced
and that passed in the Ways and
Means Committee and on the floor of
the House to reduce the negative
impact of the minimum tax on intan-
gible drillers, as well as taking the
minimum tax away from the depletion
allowance, which is also a negative.
For nearly a decade, the domestic
energy industry has struggled merely
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to survive. Countless businesses have
failed, and the infrastructure is sorely
maimed, as mentioned by my friend
earlier, the gentleman from Texas
(Mr. Fields).
In the midst of this, the alternative
minimum tax has stifled domestic oil
and gas exploration and driven those
activities overseas. That in turn has
rendered us more susceptible to the
vagaries of international conflict in
guarding our energy security
The AMT provisions in H.R. 776
will help ease those concerns by free-
ing our domestic independents to seek
and develop additional reserves here
at home.
Mr. SHARP. Mr. Speaker, I yield 2
minutes to the distinguished gentle-
man from Illinois (Mr. Bruce), a mem-
ber of the Committee on Energy and
Commerce who will be leaving us this
year, but who has made many, many
contributions to our committee activi-
ties.
Mr. BRUCE. Mr. Speaker, I would
first like to thank all the committees
that have worked so hard to make
this vital legislation possible. I partic-
ularly commend the chairmen of my
committee and subcommittee, Mr.
Dingell and Mr. Sharp as well as the
ranking minority members, Mssrs.
Lent and Moorhead for their efforts in
crafting this excellent legislation. I
would also like to thank the staff of
the Energy and Commerce Committee
and the staff of the Energy Subcom-
mittee for their tireless work on this
bill.
For the first time in the history of
this country we have the opportunity
to pass legislation that would finally
break our addiction to foreign energy
sources. We all felt the effects of our
oil dependency in the 1970's when we
had to stand in line for gasoline. We
felt it again in 1990 when oil prices
doubled as a result of the Persian
Gulf war. The national energy strate-
gy will allow our economy to function
independently of threats to our exter-
nal energy sources.
Specifically, the bill takes many
measures to encourage the use of
alternative fuels including ethanol,
and methanol. One of the problems
experienced in the alternative fuels
market has been a lack of demand
due to uncertainty about the future of
alternative fuels. This bill would cre-
ate a market for these fuels by requir-
ing Federal, State and some private
fleets buy increasing levels of alterna-
tively fueled vehicles. In addition to
these requirements, the bill also en-
courages research in, and development
of, alternative fuels. Ethanol in par-
ticular has been treated unfairly in
the past and I think it is extremely
important that we have demonstrated
Congress' support of this important
fuel.
Another significant measure taken
by this bill is to increase competition
in the electricity market. Increased
competition in the wholesale electrici-
ty market will mean lower prices for
consumers and industrial users alike.
Although I was concerned that certain
provisions in the House bill would
result in unfair costs to utilities and
their customers, I am glad to see that
the conferees have eliminated this
problem from the bill.
This legislation also secures our
energy security by promoting our
most abundant source of energy: Coal.
In order to maximize the use of coal
in this country, the clean coal technol-
ogy program has been extended for
another two rounds. In addition, this
legislation encourages the export of
clean coal technologies to developing
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nations. Not only will this be good for
the environment, this will expand our
foreign markets for coal and provide
our coal producers with tremendous
export opportunities. I worked hard
to include these provisions in the
House language and am pleased to see
them included in the final bill.
Establishing a Government-owned
corporation to take over the Energy
Department's uranium enrichment
program is also part of this legislation.
The corporation will also have exclu-
sive rights to commercialize a new
enrichment technology called AVLIS.
The goal of the corporation is to res-
urrect the crucial process of uranium
enrichment and eventually privatize
the industry.
If we want to make any progress
toward energy self-reliance, we must
pass the national energy strategy
before us today. This is landmark
legislation that will take us into the
21st century with a secure grip on our
energy security. I urge a 'yes' vote on
this bill.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Alaska (Mr. Young).
(Mr. YOUNG of Alaska asked and
was given permission to revise and
extend is remarks.)
Mr. YOUNG of Alaska. Mr. Speak-
er, I would like to suggest that on this
bill, especially the gentleman from
Michigan, (Mr. Dingell), chairman of
the committee, has done an excellent
job. Even so, I am not happy with the
legislation because I do not believe it
has the provisions that I think are
important to make a good energy bill.
The Alaska National Wildlife Range,
a small body of land that has 39 mil-
lion barrel of oil, is not in this legisla-
tion. It is not the fault of the House.
I believe it is the fault of the Senate.
They removed it when they should not
have. But that is the way things hap-
pen. Hopefully we can come back
next year and provide the Nation with
that needed oil without any environ-
mental damage, and I am confident
we can do that.
There is no buy back in here on the
Bristol Bay area which we in Alaska
are very interested in. It is offshore
and in the sale of 1992, and that is
the largest fishery in the United
States. It provides millions and bil-
lions of dollars, and yet there is a
potential of harm there. It should be
in the legislation. It is not. We will
have to address that next year.
There is one small Alaskan provi-
sion that I do strongly support, and
that again does not produce any ener-
gy, but it expedites the process of
three hydrosites. Chairman Dingell
and his staff worked very to see that
we could have that achieved.
I would say the nuclear part is not
really that bad, but the next part that
really affects Barbara Vucanovich's
area is bad, and unfortunately we lost
that, and that is another battle.
But the biggest harm is this whole
bill, if there is any harm in it at all, is
it does not really produce any new
energy whatsoever. What we have
done is just sort of spread it around
through conservation, and housing
standards, and water standards, and
all of these thingB.
We can conserve, and that is well
and good if we did not have an in-
crease in population, and in fact it
would work. But if you look at what
has happened in our country, we must
produce more energy, we must have
more hydrocarbons, we must have
more energy produced, and this body
and this House has not passed any
new energy legislation since 1973.
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That was the Alaska pipeline. From
that time on we have passed legisla-
tion to conserve, but not to produce,
and I think it is time we start produc-
ing energy, and I hope we can address
that next year.
Mr. Speaker, the Senate version of
the national energy bill contained
three site specific exemptions from
jurisdiction of the Federal Energy
Regulatory Commission in Alaska.
These exemptions covered three small
hydroelectric projects in three sepa-
rate and isolated parts of Alaska.
These exemptions were adopted by
the Senate based on testimony from
the Department and the Federal En-
ergy Regulatory Commission that the
purpose of FERC jurisdiction is to
ensure that projects which have an
effect on interstate commerce are
regulated and integrated into inter-
state system of power distributions.
This regulation and integration is
accomplished primarily through inter-
state power grids and distribution
systems.
In fact, the Department of Energy
and FERC testified in favor of a com-
plete exemption from FERC jurisdic-
tion for any project which generates
power of 5 megawatts or less. Based
on that testimony, the Senate adopted
these three exemptions for the Alaska
projects at the request of Senator
Murkowski.
In the conference committee, a com-
promise provision, section 2407, was
adopted. FERC jurisdiction is re-
tained, but the committee granted
authority of FERC to grant exemp-
tions for these three projects. This
exemption authority requires FERC to
act within 6 months on an application
for exemption. The application must
be for a project which generates no
more than 5 megawatts of installed
capacity and may include terms and
conditions which FERC finds neces-
sary to protect fish and wildlife values
following consultation with specifically
named fish and wildlife management
agencies.
Mr. Speaker, I want to personally
thank the distinguished chairman of
the House Energy and Commerce
Committee, Mr. Dingell, It was with
his help and agreement that this spe-
cial provision was adopted. He under-
stood the special nature of these three
projects and worked with me to come
up with this solution. I believe that
this provision will ensure that these
three projects will receive the expedit-
ed consideration that they deserve.
Let me briefly describe the projects
and the need and justification for the
special consideration provided under
this section.
Project ELS8-25.001, located near
Nondalton, AK, is a small run-of-the-
river hydroelectric project proposing
to be developed by the local rural
electric cooperative. Iliama-
Nondalton-Newhalen Electric Cooper-
ative, Inc. (INNEC). INNEC has been
attempting to develop this project for
many years. Section 2407 would pro-
vide for a reconsideration of the Fed-
eral Energy Regulatory Commission's
decision that the Tazimina River was
navigable and that a license was re-
quired. In the event, if upon reconsid-
eration, it is still determined that a
license is required, an expedited proce-
dure for authorizing this project is
required. FERC is to set on the
Tazimina project within 6 months
after an exemption application is
made.
This project is on lands owned by
Iliamna Natives, Ltd. (INL), with the
subsurface estate belonging to Bristol
Bay Native Corporation (BBNC).
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These lands were conveyed to INL
and BBNC pursuant to the provisions
of the Alaska Native Claims Settle-
ment Act. The Federal Government
had previously classified the subject
lands as suitable for power develop-
ment, and the respective native corpo-
rations selected these lands specifical-
ly for their power potential.
Section 2407 would allow for this
project to be developed in an expedit-
ed manner. The project is located
entirely upon private lands immedi-
ately within die boundaries of the
Lake Clark National Preserve. There
will be no direct impact to National
Park Service lands or resources.
Allowing this project to proceed will
provide residents of the native villages
of Iliamna, Newhalen, and Nondalton
with a long lasting efficient and clean
source of electricity. The project will
allow the electric cooperative to re-
duce its dependence upon diesel fuel,
on which INNEC is now completely
reliant. Allowing this project to pro-
ceed will reduce potential negative
environmental impacts associated
with the transportation and use of
expensive diesel fuel in this remote
area of Alaska. Moreover, because the
Tazimina project will rely on the
river's natural stream flow to produce
electricity, a dam will not even be
needed.
Preliminary Permit No. 10681-000
located at Juneau, AK. This project is
an application for ancillary hydroelec-
tric facilities to be constructed with a
dam which will be build for another
purpose, the creation of a tailings dam
pond. The actual impoundment will
be built with or without the hydro
facilities. That impoundment will be
approved as part of the ongoing
NEPA EIS process which governs the
opening of a mine at Juneau known
as the Alaska/Juneau mine. The EIS
for mine construction including the
dam itself has been prepared by BLM.
The vagaries of FERC law and pro-
cedure prevented the consolidation of
the EIS and a FERC licensing proce-
dure. FERC requires a separate pro-
cedure, a second EIS for all practical
purposes for the hydrolicense. This is
the case even as in this case where
the actual facilities are very minor
compared to the dam's actual con-
struction.
In this case, the only facilities which
must be built are the actual power
facilities and tailrace which empties
into Gastineau Channel which pro-
vides the basis for jurisdiction. All
dams in southeast Alaska are under
FERC jurisdiction because all streams
with hydro potential flow into the
ocean.
This exemption application process
will prevent a second multiyear per-
mitting process conducted by FERC
particularly since all of the same re-
source and fish and wildlife agencies
are consulting agencies as part of the
mine and dam construction EIS.
The application for exemption will
only deal with the addition of a pow-
erhouse and tailrace in place of energy
dis8ipator8 which will be built if the
exemption is not granted. The grant-
ing of the exemption would permit the
4.9 megawatts of power this facility
can generate to be utilized for power-
ing the mine and for auxiliary power
for the city and borough of Juneau.
This is far preferable to the use of
diesel fuel which will be utilized other-
wise. The only result of the failure to
grant the exemption will be the use of
fossil fuels in an environment in
which a dam has already been con-
structed by the mine for the tailings
pond.
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The State of Alaska favors the
granting of an exemption. So does the
city of Juneau. As I stated earlier, the
DOE and FERC testified in favor of a
general small hydroelectric exemption
of 5 megawatts or less at the hearing
on this matter before the Energy
Committee earlier this year. The size
of the hydroproject will be 4.9
megawatts which makes it a small
hydroproject under FERC definitions.
The safety and regulation of the pro-
ject is covered by the State's Alaska
Energy Authority which has safety
and regulatory authority in place.
Let me also draw the attention of
this body to the current EIS process
which has been performed on the
mine construction. The Bureau of
Land Management has conducted a
multiyear, exhaustive preparation of
an EIS under the National Environ-
mental Policy Act. That EIS has just
recently been completed. The EIS
covered all aspects of the mine and
dam construction and paid particular
attention to the environmental as-
pects of dam construction. The Fish
and Wildlife Service, National Marine
Fisheries Service, and State of Alaska
Department of Fish and Game were
all consulting agencies in this EIS and
their concerns and suggestions were
incorporated into the EIS. This recent
EIS should eliminate the need for any
further EIS and should provide fur-
ther justification for the granting of
an exemption.
Application No. UL89-08-000, this
project is an application of a renova-
tion of an existing project at Indian
River in Sitka, AK The existing dam
is owned and operated by Sheldon
Jackson College, founded in the early
1900's by Presbyterian missionary and
Alaska pioneer Sheldon Jackson to
provide education for Alaska's Native
population. The university still i
this purpose as Eskimos, Aleuts, and
Indians from throughout Alaska at-
tend Sheldon Jackson College every
year.
The project for which the exemption
may be applied is a renovation and
reconstruction of an existing project
which predates the passage of the
Federal Power Act. FERC bases its
jurisdiction over this project on its
current definition of navigability of
waters which flow into the Pacific
Ocean.
This finding of navigability and
requirement that a full fledged license
be sought all but kills the renovation
project because Sheldon Jackson Col-
lege simply cannot afford to finance
the expensive process of such an appli-
cation. This exemption process gives
new life to this process, and it is clear
that the committee intends that the
exemption be granted to Sheldon
Jackson so that this project can pro-
ceed.
HOUSE OF REPRESENTATIVES CONFER-
ENCE REPORT ON H.R. 776. COMPREHEN-
SIVE NATIONAL ENERGY POLICY ACT
(CONTINUED)
Mr. SHARP. Mr. Speaker, I yield 5
minutes to the distinguished gentle-
man from Michigan (Mr. Dingell),
chairman of the full committee, with-
out whose work on this, as everyone
knows, simply would not have been
possible. He is an extraordinary lead-
er of our committee, an extraordinary
champion of the House in dealing
with the Senate, and I think every-
body can be proud of the extraordi-
nary work he did on this legislation.
(Mr. DINGELL asked and was giv-
en permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, well
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over a year before Iraq invaded Ku-
wait, the event that once again fo-
cused our attention on our vulnerabil-
ity to disruptions in supply of energy,
I had warned that we were once again
becoming dangerously dependent on
Middle Eastern oil. In the last few
years of the 1930's, domestic produc-
tion declined steeply. The share of oil
we imported approached the levels of
the 1970's. Our efforts to conserve,
and to develop other sources of ener-
gy, had stalled.
One of the more difficult tasks the
Congress has tackled in the last few
decades has been energy policy. I
remember only too well the energy
policy debates of the 1970's, the diffi-
culty we had in balancing the inter-
ests of different regions, different
industries, and different interests - be
they the interests of consumers, small
business, labor, farmers, or others.
The writing of H.R. 776, the Energy
Policy Act of 1992, has been no less
difficult. But in the end, we have
produced a good product, one which
the Congress and the House can be
proud of, and I rise to urge adoption
of the conference report.
Mr. Speaker, early last week, I was
not optimistic that we could reach
agreement on this legislation. As late
as Wednesday, more than 17 major
issues were still unresolved. But the
conferees, in a marathon session last-
ing past midnight, reached agreement
on all of these difficult issues, and
they did so with great cooperation and
in good humor.
In large part, that is thanks to Sub-
committee Chairman Phil Sharp and
the ranking minority member of the
subcommittee, Carlos Moorhead, who
tirelessly guided this legislation
through a difficult path in the sub-
committee, the committee the House,
and in conference. Without their
expertise, good sense, and understand-
ing we would not be here today.
I also want to express my great
appreciation to Norm Lent, the rank-
ing minority member of this commit-
tee, and all of the members of the
Energy and Commerce Committee
who have worked hard in the develop-
ment of this legislation.
In addition, I want to commend the
chairmen and ranking members of the
dozen House committees who were
conferees on this legislation. Each of
the committees were extremely coop-
erative in helping to fashion this legis-
lation in a timely manner. I have
nothing but respect and appreciation
for the efforts of these members, their
committee colleagues, and their staff.
I want to particularly commend
Chairman Brown, Chairman Miller,
Chairman Roe, Chairman Conyers,
Chairman Ford, Chairman Fascell,
our late departed colleague Chairman
Jones, and his successor, Acting
Chairman Studds. Each has been
particularly helpful, especially in rec-
ognizing our difficult time constraints
and in seeking to resolve even more
difficult and important issues. In
short, a cumbersome and often criti-
cized process worked because each of
these gentleman and the other House
conferees wanted it to work and
agreed that the public interest re-
quired it.
I want also to commend the chair-
man of the conference, Senator
Johnston, and the other Senate mem-
bers. Senator Johnston is an old
friend, and a good and fair chairman.
He is an effective and strong negotia-
tor. The House met its match. In
this legislation, we all did well The
country will benefit, and I urge the
passage of the conference report.
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I won't take much time in trying to
explain the legislation because I would
rather defer to the chairman and
ranking minority member of the Ener-
gy and Power Subcommittee, Mr.
Sharp and Mr. Moor head. However, I
think it is safe to say that this is the
most comprehensive energy efficiency
bill ever considered by the Congress.
Mr. Speaker, there are a number of
specific portions of the legislation
which I believe deserve some com-
ment.
EFFICIENCY
Physically, approximately one-fifth
of this bill is devoted to measures
which will increase our Nation's abili-
ty and inclination to conserve energy.
The bill makes great strides in creat-
ing a more efficient national infra-
structure within the public and pri-
vate sectors by encouraging least cost
planning an more energy efficient
buildings. It will also increase the
availability and use of conservation
technology such as lightbulbs and
ahowerheads to the general public.
ELECTRICITY REFORM
I am pleased to report that the
conferees adopted an electricity title
as part of the conference report. It is
the result of long hours of thought
and work on the part of many and is
a product of which we can all be
proud. It carefully strikes a balance
between the concerns of many who
are affected by its provisions, namely
consumers, ratepayers, municipals,
industrials, utility companies, and
State and Federal regulators.
As my colleagues know, I have come
to the idea of reform to the Public
Utility Holding Company Act
(PUHCA) slowly. My father was an
author of the original act in 1935 and
much of the impetus for its creation
was the existence of questionable and
unfair business practices in the indus-
try. The need to construct careful
consumer protection at that time was
paramount.
The need for proper consumer pro-
tection in 1992 is still paramount. I
have said throughout this process that
if Congress is to now reform PUHCA
to bring the electric utility industry
into the 1990's then we must bring
consumer protection into the 1990's
as well.
I feel that the bill we have before us
does that and does that well. I have
specific concerns about self-dealing.
The bill as written bans affiliate
transactions unless there is an affir-
mative decision by the state before the
transaction occurs that five conditions
are met. The determination must
find that the transaction will benefit
consumers, is in the public interest
and does not violate state law. The
State must also find that an affiliated
exempt wholesale generator (EWG)
would not be receiving an unfair com-
petitive advantage from its parent
company and that the state has suffi-
cient access to the books and records
of the relevant company and its affili-
ate.
The legislation also includes a provi-
sion which will allow our domestic
electric companies to take advantage
of new opportunities to compete inter-
nationally by investing in utility pro-
jects abroad. The provision includes
protective firewalls in the form of
determinations by the State and the
Securities and Exchange Commission
(SEC) that the foreign investments
will not put the ratepayers9 invest-
ments at risk. In addition, the confer-
ence agreement gives States a role in
determining whether these
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4619
tions should go forward.
Ultimately, as a result of this provi-
sion we should see a more competitive
industry, lower costs and reliable ser-
vice to electricity customers.
However, I want to caution all that
our committee will be watching care-
fully over the implementation of this
title.
ADDITIONAL FEDERAL POWER ACT
PROVISIONS
Mr. Speaker, the legislation includes
four extensions of time under section
13 of the Federal Power Act for licens-
ees to commence construction. These
extensions are similar to the types
that have been granted in action by
our committee on previous occasions,
including those under the Intermodal
Transportation Efficiency Act of 1991.
The act requires that the licensee
prosecute such construction in good
faith and with due diligence.
In a February 21, 1992, letter, the
Federal Energy Regulatory Commis-
sion (FERC) indicated that the FERC
staff finds that there is an increasing
number of licensees that have failed
to commence construction within the
4-year period permitted under section
13. The letter indicated that this fail-
ure is 'usually ascribed to difficulties
in financing the project.' FERC staff
suggested that it may be appropriate
to increase the period in the law from
2 years to 6 years in light of the 'ap-
parent need for more time to obtain
project financing.'
This approach was not a part of
either the House or Senate bill. It is
an issue, however, that our committee
raised several years ago in corre-
spondence with FERC. At that time,
former Chairman Hesse declined to
support such a recommendation. The
FERC staff analysis during that time
showed that during the 10-year period
from 1980 through 1989, 50 percent of
the licensed projects failed to com-
mence construction within the initial
2-year period allowed them under the
law and 85 percent of that group re-
quested an extension of time pursuant
to section 13. FERC also said that 90
percent of those requests were grant-
ed in whole or in part, while 15 per-
cent of those obtaining an extension
failed to commence construction, and
7 percent were denied an extension or
voluntarily surrendered their license.
Thus FERC said a change in the law
was not required.
In its recent letter, FERC provided
an updated analysis as follows:
2. Updated Analysis. Staff has reviewed Com-
mission data to update the 1989 analysis. Table
1 attached to this enclosure analyzes licenses
issued between fiscal years 1980 through 1987,
whose 4-year, maximum commencement of con-
struction period has expired. A review of Table
1 shows that, of the 462 licenses issued between
fiscal years 1980 through 1987. 68 percent (55
percent in 1989) of the subject projects failed to
start construction by the initial two-year dead-
line; 82 percent (85 percent in 1989) of those
projects involved a request to extend the deadline
by the additional two years permitted under
Section 13; 92 percent (98 percent in 1989) of
those requests were granted in whole or in part;
and 61 percent (15 percent in 1989) of those
projects failed to start construction by the ex-
tended deadline. The foregoing updated data are
comparable to the 1989 data, with the exception
of the final category of projects, those that re-
ceived an extension, but failed to commence
construction by the extended deadline. This
category of projects increased from 15 percent (38
of the 255 projects granted extensions) in the
1989 analysis to 51 percent (102 of the 199
projects granted extensions) in the updated
analysis. However, the 1989 study analyzed
licenses issued in the 10-year period ending in
1989, and therefore included projects whose
four-year commencement of construction period
had not passed.
Following this analysis the FERC
staff said:
This history of case-by-case legislation makes
recommending generic legislation to replace it
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problematic. Staffs 1989 suggested amendment
of Section 13 to authorize an additional 2-year
period would appear to be inadequate to avoid
most special legislation. Authorizing an addition-
al four years would be more in line with the past
case-by-case legislative extensions, but it would
double the maximum period currently permitted
by Section 13, and would therefore appear to
undercut the policies underlying Section 13, to
require prompt development of hydro resources
and to prevent 'site banking,' i.e., delaying devel-
opment until a need for the project's power mate-
rializes. This dilution of policy could be particu-
larly costly, since the amendment to authorize
additional extensions of the commencement of
construction period would apply to all projects,
while, as noted, an extension of the current
four-year period would appear to be unnecessary
for over 90 percent of the licensed projects.
Moreover, extending the commencement of
construction period for a project does not guaran-
tee that it will be developed. For example, the
Jennings Randolph Project, which, as noted, was
the subject of a two-year legislative extension of
the commencement of construction period, was
not built, and the license was ultimately surren-
dered.
Yet, in view of the increasing number of li-
censed projects for which construction is not
started within the four-year period currently
permitted, and the potentially corresponding
increase in the number of requests for special
legislation to extend the start of construction
period. Congress may wish to amend Section 13
to permit an additional two years, for a total of
six years, to commence construction. This pro-
posal would avoid at least some requests for spe-
cial legislation, and would reflect the increasingly
complex project financing processes, while still
requiring projects to be commenced within a time
certain, as contemplated by Section 13 of the
FPA.
As I indicated this was not a matter
for consideration in the conference;
thus, it was not possible to address it
at this time. Our committee, however,
believes it is an important issue and
we want to learn more. We are con-
cerned about the apparent prolifera-
tion of statutory extensions, the lack
of information from FERC, and the
problem of site banking. That is why
the bill requires a report by FERC
about what happened regarding the
extensions in the bill and other exten-
sions previously granted by statute.
We expect that report to be thorough.
SECTION 21 OF THE FEDERAL POWER ACT
The provisions of the conference
report include amendments to section
21 of the Federal Power Act regarding
condemnation of land related to a li-
censed project where the licensee is
unable to acquire by contract or
pledge the property. This issue arose
from a situation that occurred in
Norwich, CT, that was brought to the
attention of this committee by Repre-
sentative Sam Gejdenson of Connecti-
cut. In correspondence with FERC,
our committee was surprised to learn
that FERC paid no attention to this
provision and had no real knowledge
about the extent to which the provi-
sion was used. That is troubling. We
think it is important for FERC to be
better informed. It is relevant to any
licensing procedure.
As our colleagues know, when the
House passed H.R. 776 we included
provisions amending section 21 at the
urging of Representative Gejdenson.
The action of the conferees is to adopt
a modified version of the House provi-
sion which we think is an improve-
ment over the House provision. It
will require greater FERC involve-
ment in these condemnation matters.
FISIIWAYS
Mr. Speaker, while I am aware that
there has been a long dispute between
the executive branch agencies of the
Interior and Commerce Departments
and FERC over the provisions of sec-
tion 18 of the Federal Power Act, it
was not the intention of our com-
mittee to resolve that dispute as part
of this legislation. Indeed, until the
matter was considered in the full
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committee, we had not intended to
include any provision regarding this
issue in H.R. 776. However, FERC
forced our hand.
First, the agency promulgated a
rule after 70 years interpreting the
term 'fishway/ The rule was an ab-
surdity because it only dealt with fish
movement in one direction. It did not
recognize that fish travel up and
down stream. As a result of the
FERC action, there was an uproar
and FERC had to revisit the issue last
November in Order-533A. However,
that order is also defective. It again
presumed to limit the scope of the
section 18 fishway prescription by
administrative action at FERC.
As noted by the Commerce Depart-
ment, the effective operation of a
fishway is invariably dependant upon
flow conditions outside of the actual
physical structure. For example, flow
conditions within the structure are
dependant upon flow conditions up-
stream and effective guidance of fish
into the fishway is dependant upon
flows downstream of the structure. In
the past, FERC has interfered with
the expertise of the fishery agencies
and tried to impose its own will on
how and what a fishway should be
composed of. FERC has tried to dis-
tinguish between the fishway facilities
proper and other project facilities.
FERC tries to distinguish between
hydraulic and physical conditions
within the upstream and downstream
of the project and other factors.
Clearly, for a fishway to work, all of
these factors must be compatible and
function effectively.
In a July 21, 1992, letter to the
committee, the Commerce Depart-
ment (DOC) discussed this issue as
follows:
This issue arises where an applicant seeks (1)
a new license upon the expiration of an original
license, (2) an original license for an existing
unlicensed hydropower project, and (3) an origi-
nal license for a new hydropower project propos-
ing to incorporate existing structures such as
diversion dams for irrigation or municipal water
supply projects.
DOC believes that an applicant is responsible
for mitigating the impacts of its project on fishery
resources. A baseline determination is necessary
to measure those impacts. As with a new project,
the baseline from which project impacts are mea-
sured for the types of projects listed above, is the
carrying capacity of the relevant fishery habitat
without the project. After formulating this base-
line determination for a project, the resource
agency determines the level of project impact that
must be mitigated as a condition of the particular
license under consideration. Thus, the level of
mitigation required varies on a case-by-case basis.
FERC considers that the existing environmen-
tal conditions of a project are the baseline upon
which to judge the need for mitigation, regardless
of whether the project has ever been licensed or
not. For example, in the EA for the existing,
unlicensed Yelm Project, FERC described the
no-action alternative thus:
'No action, denial of a licensee, would keep
(the applicant) from producing electrical power at
the site. Under the no-action alternative, the
project would continue to operate until another
entity takes the facility over for non-power use.
No changes to the environment would occur with
continued operation of the project.'
We understand FERC's position to be that
mitigation must only be viewed in the context of
the existing fish and wildlife resources as they
may be limited by the continued operation of the
existing project, and not the potential fish and
wildlife resources that could occur if project oper-
ation was significantly modified. In FERC Order
613, FERC. stated:
'Enhancement may in many cases constitute a
reduction of the negative impacts attributable to
the project since its construction. However, this
evaluation and consideration of the appropriate-
ness of requiring enhancement measures is done
in the context of today's environment and in
relation to today 'a needs and problems, not in the
context of the world as it existed 50 years, ago.'
Such a position places fish and wildlife mitiga-
tion and enhancement on an uneven footing with
other aspects of hydropower production. For
example, at the time the project owner aubmitted
a license application for the Cushman Project
(FERC No. 460), water flow downstream of the
project was only 3 cfs. Tlie rest of the 602.6 cfs
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mean annual flow was diverted out of the water-
shed for power generation purposes. Under
FERC policy, mitigation and enhancement mea-
sures for the benefit of the limited fish resources
still present alter decimation by the flow regime
and presence of the dams, must be weighed
against the power benefits accruing from the
operational regime that decimated the runa.
FERC's baseline policy affects the information
that project applicants provide. In a November 1,
1988, memorandum to the agencies, the City of
Centralis contended that FERC regulations only
required the City to submit a license application
that is 'commensurate with the scope of the pro-
posed project.' In this instance, with the 'pro-
posed project' consisted of the continued opera-
tion of the existing, unlicensed Yelm Project
(FERC No. 10703). The City stated its position
was 'consistent with guidance received from the
FERC Staff.'
The committee's action regarding
this matter and the final conference
agreement are all designed to return
the situation back to where it was
prior to FERC's unfortunate embark-
ing on this adventure of attempting to
define the term Tishway.'
I point out that the fishery agencies
believe that Congress intended that
they - not FERC - have the authority
to decide when and under what condi-
tions fishways should be a part of a
license, assuming FERC decides to
issue the license. Indeed, they cite
precedent. They raise the test 'is it
absolutely necessary in order to ac-
complish safe and timely movement of
fish past the site' to prescribe a
fishway and as part of the test they
convinced the FERC that screens
were part of a fishway because they
were necessary to guide fish to the
downstream fish passage facility at
the precedent setting Scottsmill pro-
ject in Virginia.
In addition, a November 7, 1991,
letter from the Commerce Depart-
ment states:
NOAA flahway prescriptions can typically
include stream flows, project shutdown periods,
and other non -structural measures needed to
ensure protection of migrating anadromous fishes
at hydropower projects. For example, at the
White River Fa I la Project in Oregon (FERC No.
7270), NOAA prescribed flows over a water fall at
the project location under section 18, where low-
er flows could result in 28 percent mortality to
juvenile salmon. Athough FERC disagrees with
this prescription, we eventually readied a formal
settlement with the applicant, which is now
awaiting Commission approval,
e e e e e
The letter staUw that a broad fishway defini-
tion may lead to fishway prescriptions that could
'• • • intrude into the Commission's balancing of
all elements of the public interest with regard to
the project, and may even conaitute a de facto
veto of a project.' NMFS haa no interest in veto-
ing hydropower projects. We do believe, ss did
Congress in enacting the Electric Consumer's
Protection Act (ECPA), that obligations to protect
natural resources, including compliance with
fiidi way prescriptions, are potential costs of doing
business for hydropowor developers. ECPA
dictates that such costs be supported by s pro-
spective project. If a hydropower project is not
economical with fishways for one applicant today,
it may still be economical with fishways for
another applicant or at some later date.
Nothing in the FPA directs inclusion of DOI or
DOC fishway proscriptions in the Commission's
balancing process pursuant to section 10(a). The
prescriptions are mandatory and not sulgeet to
balancing. FERC previously raised this unsuc-
cessful argument with respect to mandatory
conditions for Federal reservation* under section
4(e) in the Supreme Court's Eacondido case.
This is the situation prior to
FERC's two orders defining fishways.
It should apply with enactment of this
conference agreement.
Plainly stated, the language of H.R.
776 vacates the absurd definition of
FERC. It makes it clear that when a
new definition is promulgated it must
be done with the concurrence of the
Secretaries of Commerce and Interior,
in recognition of their statutory pre-
scription authority under the Federal
Power Act. In short, FERC can no
longer unilaterally prescribe regula-
tions.
Parenthetically, I should point out
that it is somewhat disturbing that
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after so many years that the fishery
agencies themselves have not pre-
scribed regulations on their own ini-
tiative to give guidance to license
applicants and others in utilizing this
section of the law. If they had done
so, perhaps this dispute would never
have arisen.
GEOTHBRMAL HEAT PUMPS
The conferees adopted this provi-
sion of the House bill with some modi-
fications to reflect concerns expressed
by the Association of Metropolitan
Water Agencies in a September 10,
1992, letter to the Committee on En-
ergy and Commerce. The letter states:
The geothormal heat pumps, which would be
installed in residences, transfer heat to water
supply distribution systems by drawing water
directly from the distribution line, passing it
through a coil or other medium where heat is
added to Uie water, and then returning the
heated water to the distribution systems. The
heated water returned to the distribution system
in not subject to treatment and has the strong
potential of adversely impacting the quality of
water people connected to the system drink.
Heat pumps which draw water from and return
it to the distribution system cause problems in
two specific areas: (1) areas associated with any
connection to distribution systems such as cross
connections and direct contamination problems,
and (2) areas associated with the temperature
changes caused by the waste heat. Because of
these potential problems which can adversely
impact public health the Uniform Plumbing Code
and most other plumbing codes have never al-
lowed auch connections but rather require that
potable water used for cooling systems be wasted
through an air gap to a drainage system.
Temperature changes in the distribution sys-
tem and in the lines connecting it to a heat pump
can impact the growth of microorganisms and the
effectiveness of disinfectant residuals cause
problems with compliance with the Total Coli-
form rule. Temperature changes can also impact
the solubility of various elements or chemicals in
water effecting both corrosion of materials and
corrosion control efforts leading to problems with
Lead and Copper rule compliance.
The changes are designed to ensure
that public health is not adversely
affected.
ELECTRIC VEHICLES
The bill includes new provisions to
encourage development of electric
motor vehicles. This technology dif-
fers significantly from current auto-
motive internal combustion technolo-
gy. Until a breakthrough occurs in
the development of more efficient
batteries, electric vehicles may com-
pare unfavorably, to some extent, with
internal combustion vehicles in terms
of range, acceleration, ability to carry
passengers and goods, comfort - in-
cluding air conditioning and heat -
and cost. The vehicle safety charac-
teristics are changed by the replace-
ment of the engine by the battery
mass in the middle. Also, use of light
weight, usually more expensive, mate-
rials introduces safety and cost consid-
erations which are of concern to our
committee and should be a concern to
this industry and the National High-
way Traffic Safety Administration
(NHTSA).
The incentives in this bill for early
users of this technology will be impor-
tant to accomplish a smooth introduc-
tion into the contemplated numbers of
electric vehicles that are hoped to be
available in the future. It is my in-
tent and that of all our conferees that
this technology be developed in the
best manner possible to address these
unfavorable problems which are im-
portant. We expect the Secretary of
Energy to work dosely with NHTSA
regarding the safety issue. Also, I do
not believe that the American con-
sumer will be quick to adopt this tech-
nology if we haven't addressed the
comfort concerns that I have just
mentioned.
I believe this is a good program and
one that deserves careful attention
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and prompt development, but I also
believe caution must be the watch-
word.
ALTERNATIVE FUELS AND ALTERNATIVE
FUELED VEHICLES
When Congress enacted the Clean
Air Act Amendments of 1990, we in-
cluded a fleet program applicable to
22 urban areas with the opportunity
for States to opt in in regard to other
areas. In the development of that
legislation, there was great concern
that the program be fuel neutral and
that we not impose mandates on the
fuels industry or on the manufac-
turers of motor vehicles, and just as
importantly that we recognize that
fleets in this country serve a very
important economic purpose. There
are thousands of fleets, many of them
are small, operating in one or two
urban areas or regions, and many of
them are quite large or national in
scope, such as the United Parcel Ser-
vice and Federal Express.
During the recent difficult period in
which foreign manufacturers captured
a significant portion of the U.S. motor
vehicle auto market, the fleet opera-
tors have been one of the most faith-
ful customers of the U.S. auto indus-
try. One of the reasons for this is
that the domestic auto industry is
capable of producing vehicles with the
variety in configurations which are
required by fleet operators to maxi-
mize the functional effectiveness of
their motor fleets. For example, the
following is a table of 1991 model year
purchases by fleets:
1991 • MODEL YEAR PURCHASES BY
FLEETS
Fleets purchased more than 10,000 automobiles
in each of: 12 subcompact model lines, 16 com-
pact model lines, 16 intermediate model lines, 7
standard model lines, and 5 luxury model lines.
Fleets purchased more than 10,000 light
trucks/vans in each of: 7 class 1-3 truck model
lines, 2 sport/utility model lines, and 6 van model
lines.
Fleets purchased (including rental): 600,000+
subcompacts, 643,000+ compacts, 764,000+ in-
termediates, 206,000+ standards, 226,000+ luxu-
ry. 230,000+ class 1-3 trucks, 86,000
sport/utility, and 21 1,000 vans.
In an August 26, 1992, letter to the
South Coast Air Quality Management
District, the National Association of
Fleet Administrators (NAFA), Inc.
made the following important com-
ments about fleet requirements:
We agree that it would be very helpful to iden-
tify the characteristics of vehicle sizes, models
snd types which would be in greatest fleet de-
mand as alternative fueled vehicles.
Unfortunately, at this time there is no clear
data on this topic. However, NAFA is very will-
ing to assist and cooperate with vehicle manufac-
turers and others in an effort to obtain more
accurate information which matches fleet needs
with alternative-fueled vehicles. Vehicle selection
for fleets is driven by two factors: utility of a
vehicle for the organization's needs and financial
considerations. NAFA's annual surveys indicate
that selection of a vehicle typically includes such
employer-related evaluations as: initial cost, job
suitability, repair record, economy of operation,
depreciation/resale value, serviceability, safety
record, warranty program, order/delivery time,
country where manufactured, company im-
age/prestige, driver preference, administrative
ease, insurance costs, and fringe benefit value.
Fleets are extremely diverse. Vehicles may be
needed to transport executives in a suitable man-
ner, carry sales personnel with samples or das-
plays, facilitate repair personnel with parts and
equipment, doliver products or packages, serve
law enforcement needs, install telephone or cable
television service, provide taxi-type services . . .
and much more. As a result, each well-managed
fleet spends great effort selecting a vehicle or
vehicles which most closely match the essential
utility needs of the employer. We have enclosed
a copy of the mid-year 1992 model year analysis
of fleet vehicle acquisitions as an indication of
the variety of models, sizes, and manufacturers
chosen by fleets in the 'real world' this year. As
you will note, in the current year, fleets are or-
dering 105 difforont car models and 43 different
light truck models; in the first six months of the
1992 modol year, fleets ordered more than 10,000
ears of some 36 car models. In light of i
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diversity, it b clear that no aingle vehicle or
email group of vehicles is likely to meet the needs
of all fleets.
The attractiveness of any alternative-fueled
vehicle to a given fleet will first hinge on the
same list of factors which are used for acquiring
any vehicle • including reliability, utility, driver
satisfaction, resale value, etc. For some fuels, a
vehicle which met these standards in the past
may not be suitable with an alternative fuel. For
example, if propane or CNG require that the
cargo space be compromised beyond utility needs,
only a larger vehicle would be suitable. Once a
potential vehicle has met those usual standards,
it will then be evaluated for fuel-related factors,
such as availability of alternative fuels across the
area where the vehicle travels, cost of new-fueled
vehicle, cost of fuel, range of the vehicle, impact
on maintenance, etc
Because so many factors must be evaluated by
a fleet before the suitability of an alternative-fuel
vehicle can be determined, we know of no source
which can indicate which models and fuels will
meet the needs of a great majority of fleets. The
challenge is especially great because California
fleet needs may be different than national averag-
es. In an effort to develop accurate, independent
research in this area, NAFA offered several years
ago to work with the California Energy Commis-
sion to conduct the first-ever, really detailed
analysis of SCAQMD-area fleet needs. Although
the study would hsve included fleets managed by
NAFA Members, it would have also included
fleets which do not participate in tlte Association,
such as taxi fleets and those with a small number
of vehicles. In cooperation with the CEC staff,
we proposed s study which would have surveyed
a wide range of fleets on a complex list of needs
and factors, with follow-up in -person analysis
with a representative sample of fleets to assure
reliability of data. Ultimately, the CEC deter-
mined that their limited funds were required for
higher priority projects than this study, and it
was shelved. To the best of our knowledge, no
organization or agency has made the substantial
effort needed to acquire accurate data on
real-world fleet needs for alternative-fueled vehi-
cles.
Ultimately, it appears, vehicle manufacturers
will have to accept the challenge of determining
which specific sizes, types and models of vehicles
will appeal to fleets. Fortunately, the manufac-
turers which concentrate on fleet sales already
know a lot about the needs of their own fleet
customers for current gasoline end diesel vehi-
cles. But even the manufacturers will have to do
substantial market research to determine how all
the changes required for alternative fuels will
impact fleet demand.
The introduction of a large number
of alternative fuel vehicles by the
automakers, as proposed in this legis-
lation and the Clean Air Act, will be
one of the most massive technological
changeovers that has ever occurred in
this industry. This changeover is in-
tended to occur with society operating
as usual in the pursuit of business
and social objectives, with minimal
dislocation of domestic business activi-
ty.
Even though some of the technology
is probably not radically different
than existing internal combustion en-
gine technology, there are enough dif-
ferences to make a smooth changeover
problematic. Just to give an example
of some of the concerns. In defining
the term 'alternative fuel' in the
Clean Air Act, Congress in referring to
various fuels said that it includes
'mixtures containing 85 percent or
more by volume of methanol, ethanol,
and other alcohols with gas or other
fuels.' Subsequently, it has been
learned that mixtures of alcohol and
gasoline in cold weather can have cold
start problems and even safety prob-
lems if volatility is not carefully con-
trolled. The latest data indicates that
an optimum mixture can be obtained
if the refiners have the option to re-
duce alcohol content to as low a level
as 70 percent. The legislation before
us today recognizes this problem and
provides an ability to go as low as 70
percent.
The materials only used up until
now in hand tool construction will
have to face the challenge of being
integrated into assembly production.
Automotive maintenance repair facili-
ties will have to be equipped with new
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tools. Mechanics will have to receive
training in how to deal with the new
technology. Adequate fuel supplies
will have to be available at convenient
locations at a competitive cost. All of
these are subject to unforeseen devel-
opments which could take a signifi-
cant amount of time to resolve.
With these thoughts in mind, the
conferees have developed a compre-
hensive alternative fuel fleet program
that compliments the fleet program
adopted under the Clean Air Act.
Most importantly, it is a program that
is designed to be consistent with and
not in conflict with the Clean Air Act.
That is expressly stated in the legisla-
tion. It is the intent of the conferees
that the Secretary of Energy carry out
the program precisely in this manner.
The legislation in the three titles
provides program for the purchase
and use of alternative fuel vehicles by
the Federal Government. That pro-
gram is important to help both the
fuel providers and the vehicle provid-
ers to develop the fuels and the vehi-
cles that will meet the needs of fleets.
Having the Federal Government as a
customer, the fuel providers and the
vehicle providers can hope to stimu-
late the support for this new technolo-
gy and this new fuel.
The bill also provides a program for
States to acquire alternative fuel vehi-
cles as they purchase vehicles for their
use in governmental functions. In
addition, it provides an opportunity
for the States to develop a program
suggested very strongly by our col-
league from Louisiana, Mr. Tauzin, to
encourage the use of conversions of
existing vehicles, as well as the pur-
chase of new vehicles in an effort to
spread out the demand for alterna-
tive fuel vehicles. In this regard, I
want to stress that the legislation
requires NHTSA, using the National
Traffic and Motor Vehicle Safety Act
of 1966, to develop standards for the
conversion of these vehicles, including
all of the equipment necessary for
such conversion and operation of such
vehicles. The conference agreement
also makes it very clear that no fleet
is required to acquire or to purchase
converted vehicles in order to meet
the requirements of this legislation.
Title V which is the key to this
alternative fuels program promotes
such alternative fuel use through a
balanced program of mandatory and
voluntary compliance with burden
sharing among vehicle manufacturers,
fuel providers, and fleets to establish
the infrastructure necessary to enable
alternative fuel use by the general
public. As I have already said, the
Federal and State fleet programs
place the Government as a market
leader in the purchase and use of
these fuels and vehicles. The
Government's role as a market leader
is appropriate due to fleets operations
characteristics. Federal and State
fleets are generally centrally fueled
and they operate within a defined
territory. The size of Government
fleets supports the development and
installation of centrally established
refueling facilities. The operational
range of these fleets is generally well
defined which will provide a good test
market for various types of fuels. The
homogeneous nature of the fleet vehi-
cle enables the vehicles manufacturers
to meet Government fleet purchase
requirements in a cost effective and
efficient manner.
Title V provides two rulemaking
opportunities. An early rulemaking
opportunity and a later one. The
legislation provides that if the Secre-
tary is unable to make affirmative
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findings in the first rulemaking by
December 15, 1996, no rule can be
promulgated. It does not preclude,
however, the Secretary adopting a
rule under the second rulemaking
procedure. In both cases, the confer-
ence agreement provides that the
Secretary under section 507(g)(4) may,
as part of the rulemaking, determine
that a vehicle operating only on refor-
mulated gasoline under the Clean Air
Act should be treated as an alterna-
tive fuel vehicle for purposes of this
title, for fleets, subject to part C of the
Clean Air Act. It is clearly the purpose
of the conferees that we not preclude
reformulated gasoline as authorized
under the Clean Air Act. As I have
stressed before, we are not trying to
change the Clean Air Act The Secre-
tary has the opportunity to decide as
part of each of he rulemakings wheth-
er or not reformulated gasoline is
allowed. Indeed, the statute does not
preclude the Secretary from adopting
such a rule at a later time.
In regards to the early rulemaking,
section 507(b) lists the findings that
must be made in order to come to an
affirmative decision to adopt a fleet
program under the early rulemaking.
The objective here is to make certain
that to the extent possible that if we
are to embark on a fleet program
earlier than the year 2000 under this
bill, there be sufficient fuels and vehi-
cles to meet the needs of the fleets. It
seeks to address the chicken-and-egg
problem.
Title V provides a statutory exemp-
tion from the private and municipal
fleet program for vehicles garaged at
a personal residence at night - that is,
sales and service vehicles • which gen-
erally do not report to the same office
daily and are used for personal as well
as business purposes. These vehicles
are not capable of being centrally
fueled, and PHH believes that most
corporate managers of fleet vehicles
taken home at night by the drivers
would discontinue their practice of
providing vehicles to employees in
favor of a program to reimburse driv-
ers for the business use of each
driver's personal car. The result of
driver reimbursement programs is
that many vehicles intended to be
affected by the alternative fuel pro-
gram would vanish, since the drivers'
personal vehicles are not covered by
the proposed legislation. Cor-
porate-managed fleet vehicles general-
ly are newer, more fuel efficient, and
subject to extensive maintenance pro-
grams. In contrast, individually
owned vehicles generally are older and
receive minimal maintenance, result-
ing in higher pollution and lower fuel
efficiency. The driver reimbursement
approach also means a significant loss
of domestic motor vehicle sales -
corporate-managed fleets are com-
prised of over 95 percent domestically
produced cars; the same statistic for
consumer-purchased vehicles is ap-
proximately 60 percent - thereby re-
ducing America's capacity to compete
in the global economy.
The conference agreement improves
on existing statutes in many ways. It
resolves many of the difficult issues
we have wrestled with for years. It
reforms the electric utility industry
and provides for transmission access
for exempt wholesale generators. It
addresses nuclear licensing reform
and related matters. It establishes a
new government corporation to oper-
ate the uranium enrichment enter-
prise. It streamlines regulation of oil
pipelines. It provides a new and addi-
tional alternative fuels program that
complements, and is consistent with,
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the program adopted in 1990 under
the Clean Air Act. It directs the Ener-
gy Information Administration to
establish a baseline inventory of
greenhouse gas emissions which will
help us better understand these mat-
ters as we implement the climate
agreement adopted last June. It sets
new efficiency standards for a wide
range of products. In short, it ad-
dresses both sides of the energy equa-
tion: supply and demand.
Mr. Speaker, I want to take a mo-
ment to single out for special atten-
tion the staff of the several commit-
tees in both the House and Senate,
who worked tirelessly - and several
times in the last month without sleep
- to produce this conference agree-
ment. At a time when it has become
fashionable in the media and out on
the campaign trail to trash the staff
of Congress and its size, it is worth
noting that a job of this monumental
size could not have been done without
the extraordinary dedication of the
staff.
In particular, I want to thank the
staff of the Energy and Commerce
Committee - the full committee, the
Subcommittee on Energy and Power,
and the minority - without whose
efforts we could not have concluded
this agreement. I ask unanimous
consent to include in the Record at
this point a list of those staff members
on our committee who deserve our
thanks and respect for the work they
did on this bill:
ENERGY AND COMMERCE
COMMITTEE STAFF
Charlotte Berry man.
Candace Butler.
Sharon Davis.
David Finnegan.
Dennis Fttxgtbboos.
Linda Good.
Shannon Ilartnetl.
Hans Hiemslra.
Jessica Hunter.
Cecilia Johnson.
Ray Kent.
Lass Kountoupes.
Michelle Mundt.
Martha Oliver.
John Orlando.
Florence Pickard.
Melodie Pickett.
Janet Potts.
Alan Roth.
Trudi Ssndmeier.
Joshua Soslsnd.
Carls Van't HofT.
Christopher Wslker.
Michsel Woo.
ENERGY AND POWER SUBCOMMITTEE
John Berner.
Lisa Burton.
Richard Counihan.
Paul Downs.
Shelley Fidler.
Judi Green waid.
Susan Miller.
Judith O'Brien.
Judith Quinn.
John Riggs.
Tom Rungs.
Sue Sheridan.
Wesley Wsrren.
ENERGY AND COMMERCE MINORITY
Len Cobura.
Freida Depe.
Margaret Durbin.
Jessica Laverty.
Darlene McMullen.
aiine-Whitney Powers.
Catherine Van Way.
I also want to single out for special
attention one particular staff member,
Michael Woo. Mr. Woo is among the
most talented and brilliant staffers on
Capitol Hill, and much of the credit
goes to him for laying the foundation
on which this conference report has
been built. Unfortunately, emergency
surgery prevented Mike from partici-
pating in the final stages of confer-
ence negotiations, but he has bean
here on the floor today to see his <
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lier work brought to fruition, and I
want to commend him and thank him
for his efforts.
Finally, I call attention to the fine
and hard work of the legislative coun-
sel, particularly Tim Brown, Pope
Barrow, Ira Forstatter, Jean Ann
Quinn, and their excellent support
staff. They worked many long, hard
hours and stayed with us many
nights. Without them, we could not
have achieved this success today.
I urge adoption of the conference
report.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Pennsylvania (Mr. Ginger).
(Mr. CLINGER asked and was given
permission to revise and extend his
remarks.)
Mr. CLINGER. Mr. Speaker, as a
member of the Energy conference, I
think we should pause for just a min-
ute to recognize that this is indeed an
historical moment. This comprehen-
sive bill provides a path for us to plan
ahead in order to meet our nation's
energy needs. This bill promotes
self-sufficiency by promoting domestic
energy. We have learned that we can
not continue to rely on foreign sources
to meet our energy needs as those
sources may or may not be there for
us in the future. It is by no means a
perfect bill, however, no bill this size
can be a perfect bill as it is a product
of compromises.
Mr. Dingell, Mr. Lent, Mr. Sharp,
and Mr. Moorhead among many oth-
ers as well as our Senate colleagues
and staff are to be commended and
congratulated for their laborious ef-
forts in reporting out this monumen-
tal piece of legislation. In addition,
President Bush should be recognized
for his able leadership during this
difficult and tortuous legislative pro-
President Bush sent up original
legislation in the beginning of this
session, and then worked closely with
Congress to ensure that the bill re-
mained on a steady and reasonable
course.
I would now like to discuss two
specific provisions of particular inter-
est contained in H.R. 776, and provide
background on both of these provi-
sions.
ENERGY PERFORMANCE CX)NTKACTS
I am particularly pleased that the
title I conferees, of which I was one,
were able to reach agreement on the
energy performance contracting provi-
sion of the bill. This is an important
provision that will save millions of
dollars for American taxpayers. What
we have heard over and over in hear-
ings before the Government Opera-
tions Committee, from both govern-
ment and private sector witnesses, is
that due to budgetary constraints
there is not enough up front capital
being put into energy conservation by
the Federal Government so that
long-term savings can be achieved.
Federal energy conservation not only
reduces pollution and preserves scarce
nonrenewable resources, but it is esti-
mated to save up to a billion dollars a
year. This is no small sum. Yet the
Federal Government has been slow to
act because of this lack of up-front
funding. Energy performance con-
tracting is used by thousands of State
and local governments; however, until
now Federal procurement regulations
have hampered its use by Federal
agencies.
The conference agreement provides
authority for each Federal agency to
award and implement energy perfor-
mance contracts to improve the ener-
gy efficiency of Federal buildings.
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Under this provision, a Federal agency
can enter into a multiyear contract
with a qualified energy service compa-
ny for a guaranteed reduction in ener-
gy costs through the installation and
maintenance of energy efficient equip-
ment and systems. The cost savings
would be guaranteed to exceed the
payments to the contractor.
The provision provides for the Sec-
retary of Energy to develop by rule
multiyear procurement procedures
and methods tailored to performance
contracting. The conferees in develop-
ing this language felt that procure-
ment regulations could not be waived
without having some substitute proce-
dures but recognized that current
proceduresjustdonot work. It is like
forcing a square peg into a round
hole. Therefore, the Secretary was
given wide latitude to substitute spe-
cial regulations to facilitate energy
performance contracting. For exam-
ple, the submission of cost and pricing
data and compliance with cost ac-
counting standards are problem areas
and would expect that the Secretary
will somehow address these issues in
rulemaking.
But given that the whole program
relies upon these procedures, it is the
expectation of the conferees that these
regulations will be issued expe-
ditiously. We can not stand for one
agency pointing the finger at another
when trying to explain why there are
no regulations to implement the provi-
sion.
It is my hope that this provision will
be used to cut through some of the
bureaucratic red tape so that these
contracts can be successfully used as
they are by thousands of State and
local governments. This is a win-win
proposition because we can end up
saving the taxpayer millions and will
have a way to meet the Federal
Government's energy savings goals.
OUTSTANDING OIL AND GAS RIGHTS
Prior to the conference, myself and
16 other Members of the House ax-
pressed serious concerns to the Ad-
ministration about a House provision
which would impose expensive new
burdens on the independent oil and
gas industry. This House provision
required onerous additional regulation
of outstanding oil and gas rights in
national forests. The U.S. Forest
Service has no property interest in the
minerals under these lands. The
rights are privately owned and the
Forest Service chose not to acquire
the mineral leases, but just the sur-
face land. It was determined that
such an imposition would likely con-
stitute a taking, and without much
doubt such a provision would be ex-
tensively litigated at a high cost to the
Federal Government and industry.
The original provision raised many
of the basic issues which Congress
continues to wrestle with, including
regulating the rights of private land-
owners. In addition, there was not
sufficient evidence that there was
even a problem to begin with nor
sufficient evidence to support the
need for additional Federal legislation.
This is often where Congress gets into
trouble in doing legislative overkill.
This bill is supposed to promote
energy production - and yet this
House provision had the potential to
seriously jeopardize domestic oil and
gas production. Subsequently, the
conferees dropped the original House
provision, and substituted instead a
provision to codify a court decision
known as Minard Run only for the
Allegheny Forest. It is interesting to
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note that the Allegheny Forest is a
multiple use forest, in which recre-
ational, environmental, and economic
needs now coexist in a harmonious
fashion, and it is known to be one of
the best managed and balanced forests
in the United States.
The provision adopted by the con-
ferees in H.R. 776 provides that
60-day advance notification of activi-
ties be furnished to the U.S. Forest
Service prior to commencement of
proposed activities, including a soil
erosion and sedimentation control
plan. The Secretary of Agriculture
shall promulgate regulations within 90
days of enactment based on the
court's decision as outlined specifically
in H.R. 776.
I commend the conferees, especially
Senators Johnston and Wallop, for
supporting a provision that is entirely
consistent with the court's decision.
However, as the entire Allegheny For-
est resides within my district, I do
find it immensely troubling that in a
large bill that should be addressing
broad, public policy issues to enhance
our nation's energy needs, we find
ourselves legislating on a narrow,
specific interest that has no relevance
to achieving this goal.
Mr. MOORHEAD. Mr. Speaker, I
yield 2 minutes to the gentleman from
Kentucky (Mr. Rogers).
(Mr. ROGERS asked and was given
permission to revise and extend his
remarks.)
Mr ROGERS. Mr. Speaker, I rise in
support of H.R. 776, the national en-
ergy strategy conference report.
I especially want to commend the
hard work of the Committee on Ener-
gy and Commerce. Chairman Dingell,
ranking member Lent, Chairman
Sharp, and ranking member
Moorhead have done an outstanding
job on an issue that is critically impor-
tant to the economic security of the
Nation.
Before I highlight some of the key
provisions in this measure, I want to
note one overwhelming theme that
runs through this conference report -
a commitment to reduce the U.S.
dependence on imported oil.
To meet that challenge, it means we
must develop our own energy resourc-
es here at home, and we must make a
strong commitment to science and
technology. This conference report
goes a long way to advance these ener-
gy security goals and protect consum-
ers.
I am especially pleased that the
provisions in this conference report
will ensure that coal-fired electricity
will continue to play a major role in
meeting our growing energy demands.
This year, 135,000 miners will pro-
duce 1,029,000,000 tons of coal. Coal
power sustains the economy at
one-half the cost of oil generation and
at two-thirds the cost of natural gas.
Mining's impact on the national econ-
omy yields 1.1 million jobs, $27 billion
in personal income, and over $30 bil-
lion in sales.
The conference agreement before us
delivers strong incentives for the U.S.
coal industry by authorizing a number
of projects to use coal more cleanly
and efficiently through a new round
of clean coal technology projects.
These technologies will save money
and enable the United States to ob-
tain real reductions in carbon dioxide
emissions.
In addition, the conference report
makes a strong commitment to impor-
tant research and development pro-
grams that reduce our- dependence of
imported oil through the use of coal.
The agreement strengthens a number
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of R&D programs to demonstrate: The
refining of coal to produce electricity,
coal liquefaction, alternative transpor-
tation fuels, and other nonfuel uses of
coal; the conversion of coal to coke
and other carbon products to produce
chemicals needed in manufacturing;
the underground gasification of coal
deposits to extract hard-to-mine coal;
and power generation from the com-
bustion of solid waste mixed with coal.
These activities, coupled with pro-
grams to increase coal exports to de-
veloping nations, will help secure our
economic job base in coal mines.
This conference report will also
ensure that the commitment to envi-
ronmental protection is not ignored.
Most importantly for the people of
Kentucky, this measure reauthorizes
the Abandoned Mine Reclamation
Program through the year 2004. This
is truly one of the most successful
pay-as-you-goenvironmentalprograms
ever signed into law. This program,
generally referred to as AML, imposes
a fee on domestically produced coal for
the cleanup of abandoned coal mines
sites. It is the superfund of the coal
industry, and the program works.
Reauthorization of this program
will go a long way in closing the $1.6
billion tab for abandoned coal mine
sites that must be reclaimed. That
means the people of Appalachia will
have a cleaner environment, economic
security, and a better quality of life.
Finally, Mr. Speaker, this confer-
ence report contains a critically im-
portant provision that protects
Kentucky's 15,000 retired United
Mine Worker coal miners from losing
any health benefits.
This was an especially contentious
issue that divided the coal industry.
But, the agreement before the House
today will ensure that Kentucky's
UMWA retirees will have the health
benefits promised to them and their
families. Moreover, this measure
ensures that it will not put nonunion
coal companies out of work by taxing
them to pay for benefits they never
promised. It is a good compromise
that protects people.
In all, this conference report guar-
antees that coal will be a dominant
reliable energy resource for the Na-
tion and for the world. It is a critical
step in reducing our strategic depen-
dence on imported energy while creat-
ing new jobs and keeping billions of
energy dollars at home. I urge my
colleagues to adopt this agreement.
Mr. SHARP. Mr. Speaker, I yield 3
minutes to the distinguished gentle-
man from Massachusetts (Mr.
Markey).
Mr. MARKEY. Mr. Speaker, I thank
the chairman of the subcommittee,
and I want to compliment him for his
excellent work. I want to compliment
his staff. They have done a marvelous
job over the last 2 years in construct-
ing this legislation.
The same thing is true for a full
committee staff, led by Dave
Finnegan, Michael Woo, and Lisa
Kountoupes. They have done an excel-
lent job in constructing this bill today.
I want also to thank Jessica
Laverty, Cathy VanWay, Rick
Counihan, Sue Sheridan, Shelley
Fidler, Jack Riggs, Tom Runze, John
Berner, Paul Downs, Judi Greenwald,
Wesley Warren, and Dan Adamaon.
This is in many ways historic legis-
lation. The PUHCA transmission
trade-off, which is going to be the
major revolution in the electrical gen-
eration industry, since 1935, is a pub-
lic policy and political work of art. It
could only have happened because of
the cooperation of both sides of the
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aisle.
They are all to be congratulated,
Mr. Moorhead especially, on that leg-
islation.
I would like particularly to thank
David Nemtzow.
David worked for 2 years on that
particular issue. I think he helped to
develop a working context in which a
nonideological approach to this issue
was taken.
I want to publicly thank him for
that as well as Rick Counihan, for his
work on the energy efficiency issues.
I think that the product which is
being produced by many, working
with other staffers, including Dave, is
excellent. I would also like to mention
Sue for her work.
I am going down the list and regret-
ting it already.
Shelley did good work. Everyone
did very good work on this issue.
Mr. Speaker, all of the committee
cooperated, from George Brown,
George Miller, Phil Sharp, John
Dingell; they all deserve the compli-
ments of the House.
This is a good bill for America. We
are really changing the energy direc-
tion of America, not as much as some
would like, but believe me it is a fun-
damental change and it does deserve
the overwhelming support of all the
Members.
Mr. SHARP. Mr. Speaker, will the
gentleman yield?
Mr. MARKEY. I yield to the gentle-
man from Indiana.
Mr. SHARP. I thank the gentleman
for yielding.
Mr. Speaker, the gentleman from
Massachusetts (Mr. Markey) played
an integral role in advocating some of
the key provisions in the energy effi-
ciency section and the central proposi-
tions on transmission access and the
PUCHA reform transmission
section and deserves a great deal of
credit for the success of this legisla-
tion.
Mr. MARKEY. I thank the architect
of the legislation very much for his
compliment.
Mr. MOORHEAD. Mr. Speaker, I
yield 1 minute to the gentleman from
Pennsylvania, (Mr. Santorum).
Mr. SANTORUM. I thank the gen-
tleman for yielding time to me.
Mr. Speaker, I rise to engage in a
colloquy with the chairman of the
subcommittee, the gentleman from
Indiana, (Mr. Sharp).
Mr. Speaker, I would like to ask my
colleague, the gentleman from Indiana
two questions. This bill, H.R. 776,
directs the Secretary of Energy to
make a determination, through
rulemaking, whether to set minimum
efficiency standards for electrical dis-
tribution transformers. Is it true that
in doing so the Secretary has to deter-
mine whether such standards are
technologically feasible and economi-
cally justified?
Mr. SHARP. Mr. Speaker, if the
gentleman will yield, the gentleman
from Pennsylvania, is correct.
Mr. SANTORUM. Is it also true
that when determining whether such
a standard is economically justified
the Secretary must consider: the eco-
nomic impact on manufacturers and
consumers; the savings in operating
costs over the life of the transformer
compared to any additional cost due
to the standard; and the impact of
any lessening of competition that is
likely to result from the standard.
Mr. SHARP. That is correct.
Mr. SANTORUM. I thank the gen-
tleman from Indiana. I want to make
certain that in our desire to produce
a bill which promotes energy efficiency
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that we do not mandate the use of
processes, technologies or products
which, although tested and proven to
be more energy efficient in ideal cir-
cumstances, in actual use of under
different circumstances are actually
less efficient or involve costs dispro-
portionate to the potential energy
savings.
Mr. SHARP. Mr. Speaker, I yield
such time as he may consume to the
distinguished gentleman from North
Carolina (Mr. Price).
(Mr. PRICE asked and was given
permission to revise and extend his
remarks.)
Mr. PRICE. Mr. Speaker, I thank
the gentleman for yielding time to me.
Mr. Speaker, I stand in strong sup-
port of this conference report, but
with some grave reservations about
the provisions that were dropped per-
taining to the Outer Continental
Shelf.
Mr. Speaker, I rise in support of the
conference report on H.R. 776, the
Comprehensive National Energy Poli-
cy Act.
Today, Mr. Speaker, we have before
us one of the most important bills of
the 102d Congress. The House and
Senate have been working diligently
since the Congress convened last year
to craft a national energy policy, and
with the passage of the conference
report, our Nation will at last have a
strategy for meeting its long-term
energy needs.
I am particularly pleased with the
progressive nature of this legislation.
H.R. 776 combines efficient use of our
energy resources with full utilization
of alternative and renewable energy
technologies. The result is a compre-
hensive, wide-ranging bill which will
enable us to limit our dependence on
foreign and domestically produced oil.
I am particularly pleased with the
inclusion of provisions coauthored by
Representative Tim Valentine and
myself, which will establish 10 lighting
education centers nationwide to pro-
mote the use of energy efficient light-
ing, and I plan to give the conference
report my support. I would, however,
like to point out one of the major
shortcomings of the bill which is sig-
nificant to my home State of North
Carolina.
For the last several years, North
Carolinians have been battling Mobil
Oil's plans to drill off our Outer
Banks. With the leadership of our
distinguished colleague, the late Rep-
resentative Walter Jones, the North
Carolina delegation has worked
through the appropriations process to
provide temporary protection from
drilling and exploration for the North
Carolina coast until more environ-
mental impact studies could be com-
pleted.
The original House version of H.R.
776 would have placed a 10-year mor-
atorium on oil and gas development of
most of the U.S. Outer Continental
Shelf, extending protection to the
entire Atlantic Coast - much of which
the President excluded from his 1990
moratorium order. In addition, based
on the findings of a scientific review
panel, H.R. 776 directed the Interior
Department to reclaim the Mobile
leases off the North Carolina coast in
exchange for credit toward royalty or
other payments.
These provisions, unfortunately,
were removed in conference when the
administration, apparently motivated
by political concerns, threatened to
score them as a government taking.
Such scoring would have broken the
spending limits of the 1990 budget
agreement. Although the Congrosoio-
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nal Budget Office reviewed the provi-
sions and found them to be
budget-neutral, the administration
refused to budge, even threatening a
sequester if the bill were passed with
the Mobile buy-back language. So
although the fiscal year 1993 Interior
appropriations bill will provide tempo-
rary protection for the North Carolina
coast once more • and for that reason
I can vote for this conference report -
a long-term solution remains elusive.
I am deeply disappointed by the
administration's position which dem-
onstrates once again the President's
lack of commitment to protection of
the environment and our fragile coast-
al resources.
Mr. SHARP. Mr. Speaker, I yield
myself 30 seconds.
Mr. Speaker, in response to a state-
ment made earlier by the gentleman
from Nevada in which he said the
National Academy of Sciences was
'precluded from considering collective
dose to the general population,' in
their study of the waste standard, I
would like to quote from the state-
ment of managers that will accompa-
ny this legislation which I think will
be of comfort to some of our col-
leagues on this issue. That statement
of managers will say:
The conferees do not intend for the
National Academy of Sciences, in
making its recommendations, to estab-
lish specific standards for protection
of the public but rather to provide
expert scientific guidance on the is-
sues involved in establishing those
standards.
For example, the study could in-
clude an estimate of the collective
dose to the general population.
Mr. MOOREHEAD. Mr. Speaker, I
yield 2 minutes to the gentlewoman
from Maryland (Mrs. Morella).
(Mrs. MORELLA asked and was
given permission to revise and extend
her remarks.)
Mrs. MORELLA. I thank the gen-
tleman for yielding the time to me.
Mr. Speaker, I rise in support of the
comprehensive National Energy Policy
Act. I am distressed that the conferees
dropped the 10-year moratorium on
off-shore oil and gas drilling on almost
every United States coast except areas
in the Gulf of Mexico off Louisiana
and Texas.
I want to congratulate the confer-
ees, however, for supporting the re-
search and development package,
which aims to reduce our dependence
on imported oil by focusing on the
development of technologies to im-
prove energy efficiency, and to foster
use of renewable energy sources and
alternative fuels. Besides improving
energy security, these provisions will
assure that the United States remains
internationally competitive. Increased
research and development will also
lead to a reduction in the emissions of
greenhouse gases, cleaner air, and
savings for consumers because there
will be less need to build new trans-
mission and generation plants.
I am pleased that the 5-year diesel
emission initiative, which I sponsored,
is a provision in the National Energy
Policy Act. Cleaner diesel emissions
are a key to a cleaner environment,
and this research will assure that the
technologies are developed to meet
emissions requirements.
Many people have worked hard on
this bill. I want to recognize the
chairman of the Science, Space, and
Technology Committee and the rank-
ing member, the gentleman from
Pennsylvania for their leadership in
bringing this bill to the floor.
I also want to thank the chairman
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of the Environment Subcommittee,
the gentleman from New York, who
will be leaving the House after 26
years of service to his constituents
and the Nation, as well as the ranking
member, the gentleman from Pennsyl-
vania.
Mr. Speaker, I urge a yes vote on
this conference report. Our children's
and grandchildren's world will be
different thanks to this legislation.
Mr. MOORHEAD. Mr. Speaker, I
yield myself such time as I may con-
sume.
Mr. Speaker, for the past 18 years I
have sat either next to or very close to
our departing ranking Member, the
gentleman from New York (Mr. Lent).
Norman Lent has been an out-
standing Member of this Congress and
an outstanding member of this com-
mittee. I do not know of anybody who
could have better handled the job that
he has had than Norm Lent has. At
times he has had to display great
courage, but he strongly believed in
projects that may not have been too
popular every place else, but he fought
for what he felt was the best interests
of his State and of the Nation.
I think our Congress owes a great
debt of gratitude, as do the people of
the United States, for the work, the
sacrifice, and the dedication that has
been made by Norm Lent as the rank-
ing member of the Committee on En-
ergy and Commerce.
I wish to join those others who have
said over the past week or two how
wonderful the job has been that he
has performed. I know we are all
going to miss his wife, Barbara, too.
She has been a real part of his service
in the Congress.
Most of us know her. She has done
a beautiful job in working with him
and helping him as his helpmate.
We are going to miss those two. I
am sure we are going to see a lot of
them in the future. It is always sad
to lose friends as you see them go, but
we wish them the very, very best as
the years go by.
Mr. Speaker, I yield 2 minutes to
the gentleman from Florida (Mr.
Goss).
Mr. GOSS asked and was given
permission to revise and extend his
remarks.)
Mr. GOSS. Mr. Speaker, I rise in
opposition to the conference report,
but I want to commend the gentleman
from Florida (Mr. Hutto) for his fine
and steadfast work on the conference
committee.
The oil and gas elements are the
central question in our national ener-
gy strategy and the main frame of the
oil and gas element, relative to the
foreign dependency issue is the OCS
title, which has now been deleted in
conference. The House approach to
OCS activity was carefully deliberated
and fairly resolved to create a work-
able forum for conflict resolution over
the next decade. Now our official
policy will be to ignore the OCS con-
troversy rather than resolve it fairly.
Well, ignoring it just will not work.
We had a serious rig fire and spill off
Timbalire Island just last Thursday on
the coast of Louisiana.
On the other hand, to be fair, oil
interests do have OCS rights that
must be addressed and compensated.
There are obviously some very promis-
ing breakthroughs in this bill, notably
in the area of nuclear energy, but to
pat ourselves on the back for a com-
prehensive energy bill without the
OCS title, in my view is one-handed
applause at best.
Mr. Speaker, and further, as the
marathon race to adjournment coatin-
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uee, we must fully consider the
so-called Comprehensive National
Energy Policy Act. For those of us
interested in truth in labeling, this is
indeed a misnomer, since this confer-
ence report is far from comprehensive.
In fact, earlier this week the conferees
stripped from the bill one of its major
provisions - the title that addressed
outer continental shelf oil and gas
activities • title XXIV. In my view, this
is like drawing a map without includ-
ing the major roads along the way
from where we are to where we need
to go. What the conferees gave us was
energy legislation that completely
ignores the very basis of our current
energy policy. It didn't have to be
this way.
The House, after much hard work
and negotiation delivered an energy
bill that tackled the OCS issue head
on. Our bill included a moratorium
until the year 2002 on leasing and
preleasing activities off the entire
Atlantic and Pacific coasts, the entire
Florida coast and in Bristol Bay, AK.
The reason? After years of stopgap
measures, uncertainty, and a piece-
meal policy of balancing competing
interests, we finally agreed that a
consistent approach was needed. Our
language offered time • time to study
the risks associated with OCS activi-
ties as well as the various alterna-
tives. Time to develop a sound, last-
ing, and equitable policy.
In addition to providing a future
leasing ban in the eastern Gulf of
Mexico, and a drilling ban in the sen-
sitive waters surrounding the Florida
Keys, title XXIV of the House bill also
offered cancellation and buyback lan-
guage for leases that were purchased
off the southern tip of Florida before
President Bush placed these highly
sensitive waters off limits to oil pro-
duction. This was done in the interest
of fairness to those oil companies and
investors that had purchased leases
but were subsequently not allowed to
develop oil and gas drilling activities.
It's fairly obvious why title XXIV went
bump in the night and we have an
energy bill before us today that fails
to address one of the primary energy
challenges we face.
We certainly wouldn't need a detec-
tive to help us figure out who killed
these provisions. We have much more
than a few fingerprints of the special
interests groups that had a hand in
this caper. There is clear evidence
that it was more like a stranglehold
by these interests that did title XXIV
in. It's rather ironic that the same
week the proponents of offshore oil
drilling won their battle, all the while
claiming that OCS activities are safer
than ever, a major blowout occurred
on an oil rig off the coast of Louisi-
ana. Gallons and gallons of oil have
already spilled into the gulf as a result
- and the latest report stated that the
rig has caught fire. And still, the
special interest groups would like us
to believe that OCS activities pose no
risk to the marine environment, to
human health, or to the fragile
tourism-based economies of our coast-
al States.
Mr. Speaker, we had a change at
passing a piece of legislation which
would stand the test of time and truly
provide a comprehensive blueprint for
meeting our Nation's future energy
needs. Instead, today we vote on an-
other piece of feel-good legislation that
might influence a few votes but won't
do the job. I am disappointed for the
State of Florida, But, as we have done
in the past, our delegation will contin-
ue to fight for rational and long-term
OCS policies. But I am also disap-
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pointed for the entire Nation, which
will continue to wait for this Congress
to develop a truly comprehensive en-
ergy strategy that can carry us into
the next century.
Mr. SHARP. Mr. Speaker, I yield 3
minutes to the gentleman from Loui-
siana (Mr. Tauzin), a member of the
conference committee and a major
player in many of the issues in this
legislation.
(Mr. TAUZIN asked and was given
permission to revise and extend his
remarks.)
Mr. TAUZIN. Mr. Speaker, I want
to first of all thank my subcommittee
chairman, the gentleman from Indi-
ana (Mr. Sharp) for an incredibly
effective job of bringing this bill for-
ward, and the gentleman from Michi-
gan (Mr. Dingell), the chairman of the
full committee, for the extraordinary
effort he and all our staff made in
bringing this bill to fruition, and all
the Members of the House and the
Senate who contributed mightily to its
fruition.
Let me highlight a couple features
of the conference report that I think
deserves special attention. A few
years ago when Senator Bennett
Johnston and I raised the issue of
PUHCA reform, people wanted to
know what the heck we were talking
about. What the heck is PUHCA?
What did it do and what did it have to
do with America's energy future?
The bottom line is that in this bill,
of all the many titles, reform of the
electrical generation in America, a
process by which electrical energy is
generated and moved around the
country is probably the single most
important feature of this bill.
There are lots of good things about
it, lots of good things in energy con-
servation, lots of good features in
alternative fuels and lots of good fea-
tures across the board of the energy
spectrum; but probably the most im-
portant thing we do today is to ap-
prove some major reform of the struc-
turing of electrical generation and
transmission.
We have opened the door today to
competition. We have opened the
door today to independent power at
more efficient production ratios to
deliver energy to America across the
monopolistic grids we formally set up
since the 1930's.
We have opened the door in effect
to consumers getting cheaper electri-
cal power and having a better supply
of electrical energy for America. That
is probably the most important thing
we do in this bill, but there are other
things.
Let me commend, for example, the
features of the alternative fuels provi-
sions of the bill. The alternative fuels
provision of this bill builds on what
we did in the Clean Air Act and says
not only are we going to move Ameri-
ca to new and cleaner fuels because
our air requires it, but in this bill we
are going to do it because it makes
sense for the sake of America's energy
future. Using fuels produced in
America by Americans makes a lot
better sense than depending upon fuel
from foreign sources, sources we
sometimes have to fight on battle-
fields.
Now, I wish we had done a little
more in that regard in this bill. I
wish we had a proactive provision in
the bill dealing with more production
of oil and gas here at home.
But the features on electrical gener-
ation reform, the features on alterna-
tive fuels for America, are going to
increase incentives to drill for natural
gas in America. That is going to re-
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turn some prosperity. I hope, to the
natural gas fields of the southwest
that have been devastated for the past
decade. Perhaps it is going to bring
some reemployment. Perhaps next
year or the year alter when we gather
in Congress we will be celebrating the
return to work in America's energy
fields, rather than voting to send our
young men and women to battle again
to defend some energy fields some-
where else. That is how important
this comprehensive bill is. It is not
perfect. It is not a 10, but it is a good
8 or 9.
Mr. SHARP. Mr. Speaker, I yield
such time as he may consume to the
gentleman from North Carolina (Mr.
Lancaster).
(Mr. LANCASTER asked and was
given permission to revise and extend
his remarks.)
Mr. LANCASTER. Mr. Speaker, I
rise in reluctant support of the legisla-
tion.
I applaud the work of the commit-
tees of jurisdiction in the House on
the fine work that they did, in partic-
ular with regard to Outer Continental
Shelf issues. Their recognition of the
importance of a long-term moratorium
on leases for off-shore drilling and the
buy-back of existing leases was an
important part of the bill. Regrettably,
these provisions were not included in
the conference report because of the
strong opposition of the administra-
tion and of an important Member of
the other body. Were it not for the 1
year moratorium included in the Inte-
rior appropriations bill by my good
friend, Chairman Sid Yates, my posi-
tion on this conference report would
be different. However, with that mor-
atorium on development of existing
leases in place, we can return to fight
this battle another day. I believe that
the sound arguments made by those
of us who supported these Outer Con-
tinental Shelf initiatives will rule the
day next year.
Despite this unfortunate omission
from the legislation, there are ex-
tremely good initiatives included in
this bill which are to be applauded.
The provisions to encourage alterna-
tive fuel sources are especially impor-
tant. I represent a district where an
ethanol plant is on the drawing
boards. These provisions will signifi-
cantly move up the timetable for con-
struction of that plant. This will ben-
efit my district by giving another mar-
ket for corn grown in North Carolina,
as well as adding significant dollars to
the tax base of Duplin County and
providing employment for people from
a several county area.
A key to any successful energy poli-
cy has to be conservation of existing
energy sources. The energy efficiency
provisions of this bill are an important
step in that direction.
Likewise, any sensible energy bill
must include solar and renewable
energy incentives, which this bill does.
The bottom line is that this legisla-
tion when implemented will make this
country much less dependent on for-
eign energy sources through a number
of farsighted initiatives. I commend
my colleagues who played such an
important role in crafting this legisla-
tion.
Mr. SHARP. Mr. Speaker, I yield
such time as he may consume to the
gentleman from California (Mr.
Lehman).
(Mr. LEHMAN of California asked
and was given permission to revise
and extend his remarks.)
Mr. LEHMAN of California. Mr.
Speaker, I thank the distinguished
gentleman from Indiana (Mr. Sharp)
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and the ranking member for their
great work on this bill.
Mr. SHARP. Mr. Speaker, I yield 2
minutes to the distinguished gentle-
man from New York (Mr. Scheuer).
Mr. SCHEUER. Mr. Speaker, I
thank the gentleman for yielding me
this time. I wish again to congratu-
late him for his outstanding leader-
ship in bringing this bill to the floor
and in working with a baker's half
dozen of other committee chairmen
and subcommittee chairmen in craft-
ing what is a very elegant bill.
It is not perfect, but it is a major
step forward.
On this last day of the session as we
complete work on this bill designed to
promote energy conservation, energy
efficiency, alternative sources of ener-
gy, both at home and abroad, I think
it is important that we realize that
progress toward the goal of sustain-
able energy production and environ-
mental protection is critically jeopar-
dized by the explosive growth in the
world population.
There is no way that we can achieve
sustainable use of resources, there is
no way that we can make a major
effort, a successful effort, to reduce
the appalling scenes of tragedy and
starvation that we see on our televi-
sion tubes about the situation in So-
malia and Ethiopia if we do not make
major changes in the growth of world
population of about 100 million a year,
a billion a decade. Our efforts to
achieve attainability in energies, in
environmental protection, sustainable
environmental protection policies will
go for naught.
Mr. Speaker, I urge the next Con-
gress to address this situation.
Mr. SHARP. Mr. Speaker, I yield
such time as he may consume to the
gentleman from Florida (Mr. Smith).
(Mr. SMITH of Florida asked and
was given permission to revise and
extend his remarks.)
Mr. SMITH of Florida. Mr. Speaker,
I rise in opposition to the bill reluc-
tantly because of the provisions that
were dropped out.
Mr. Speaker, I rise in opposition to
the conference report on the energy
bill because it threatens the economy
and the ecology of the entire Florida
coast.
Back when President Bush was
trying to pretend that he was going to
be the environmental President, he
made a promise to protect Florida's
precious Outer Continental Shelf from
dangerous oil drilling. He promised to
support a long-term moratorium on
all oil drilling activities off the south-
ern Florida coast in the precious Flor-
ida Keys.
Yet, when the rubber met the road.
President Bush abandoned southern
Florida. He opposed including an oil
drilling moratorium in this bill and
opposed including of my provisions to
buy back the suicidal oil drilling leases
in the Florida Keys. When the Presi-
dent had the option of protecting this
unique ocean habitat, and indeed the
entire coast, from oil drilling and oil
spilling, President Bush sided with the
corporate special interests.
This shortsighted policy is not only
ecologically disastrous; it is also fiscal-
ly irresponsible. As the yearly morato-
rium is reissued in the Interior appro-
priations bill, the cost of actually buy-
ing back the lease continues to rise.
Each year that we postpone buying
those leases back from the oil compa-
nies, we are adding millions of dollars
to the price. Postponing the buyback
will not only cost us environmentally,
it will also cost us hard dollars.
Thus, I oppose this shortsighted bill.
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This November, I hope the residents
of south Florida remember this it is
President Bush who went back on his
word to be the environmental Presi-
dent and protect Florida's unique
cost.
Mr. SHARP. Mr. Speaker, I yield
such time as he may consume to the
gentleman from Florida (Mr. Fascell),
the distinguished chairman of the
Committee on Foreign Affairs.
(Mr. FASCELL asked and was given
permission to revise and extend his
remarks.)
Mr. FASCELL. Mr. Speaker I first
want to thank Chairman Miller and
Chairman Studds and the other
House conferees for their support on
the Outer Continental Shelf (OCS)
provisions of H.R. 776. It is unfortu-
nate that this legislation does not
address the issue of offshore oil and
gas development in Florida, as well as
other coastal waters.
I support the decision of the House
conferees to drop this title from the
bill because of the insufficient
protections the other body was offer-
ing for our Nation's coastline. In fact,
the annual Interior appropriations
moratoria are far stronger than what
the other body was willing to accept;
therefore, the House conferees made
the only logical decision. Yet, this
does not serve our Nation well be-
cause this issue will not go away and
this impasse does not allow a compre-
hensive, long-term policy to be devel-
oped.
In Florida, opposition to offshore oil
and gas development is not Liberal
versus Conservation, Democrat versus
Republican, or developer versus envi-
ronmentalist. It is a cry for the pro-
tection of our pristine and nationally
significant coast resources. Earlier
this year, our delegation unanimously
supported the provisions included in
the House version of H.R. 776. We
support the cancellation and buyback
of the 73 existing leases in the waters
adjacent the Everglades National
Park and the Florida Keys and a pro-
hibition on new leasing and preleasing
activity in Florida until the year 2002.
This particularly applies to the gulf
coast and, in particular, the Panhan-
dle area, which was a point of conten-
tion in the conference.
We unanimously supported these
provisions during the conference and
we appreciate the efforts of Florida's
sole conferee, Earl Hutto. Earl was all
alone, but he represented our position
and I, as a leader of this fight, want to
make sure he knows how much I ap-
preciate his efforts.
There was little opposition to these
provisions and, in fact, the oil compa-
nies supported the House's efforts to
fairly resolve this issue so they could
get their money back and they expect-
ed because there were no restrictions
on other existing leases in other areas
of Florida.
As I understand it, the conferees
were not far apart when the entire
OCS title was removed from the bill
because of the objections of the Office
of Management and Budget. Frankly,
I should be surprised that OMB and
the Department of the Interior would
oppose legislation to enact the
President's own policy, but they have
done nothing but drag their feet and
not followed through on the
President's directive. Simply put, the
promise made to Florida in 1990 was
not kept by the administration in
1992.
We will remember the day in 1990
when the President made his an-
nouncement; we will remember the
strong efforts to the House conferees;
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we will remember those who opposed
these provisions; and we will remem-
ber the day when the President's own
men torpedoed a deal which would
have finally resolved the issue of oil
drilling in Florida.
Mr. SHARP. Mr. Speaker, I yield
such time as he may consume to the
gentleman from Maryland (Mr.
Cardin).
(Mr. CARDIN asked and was given
permission to revise and extend his
remarks.)
Mr. CARDIN. Mr. Speaker, I rise in
support of this legislation.
Mr. Speaker, this Energy bill con-
ference agreement is a proud accom-
plishment for the 102d Congress. It
sets the Nation off in a new direction
on energy issues. Where in the past
we have always tried to expand pro-
duction in order to cut our depen-
dence on foreign energy sources, this
bill focuses on conservation. I wish
we could have done more, but a start
is often the greatest obstacle to
change.
In addition, this bill should breath
new life into alternative, renewable
energy programs in this Nation. Com-
bining conservation and alternative
sources - two, great untapped domes-
tic energy resources • we have a much
better chance of truly breaking our
dependence on Middle Eastern oil and
other foreign energy sources. That
dependence has caused the United
States far too much trouble over the
years.
I am particularly pleased with the
green tax package produced by the
Ways and Means Committee and in-
cluded in this conference agreement.
Tax legislation holds great promise for
dealing with environmental problems
• much can be done to encourage new
practices or programs through the
Tax Code, while taxes also provide a
fine means to add to the cost of prac-
tices that have hidden social costs.
This bill is a step toward a more
environmentally sound Tax Code. The
costs of CFCS are increased and a
number of positive programs have
been shaped, including:
New tax credits for investments in,
or production of renewable energy
that will better equalize Federal sup-
port of alternative and traditional
sources of energy;
Credits for the purchase of
clean-fueled vehicles and certain in-
vestments in refueling facilities that
will ease transition to new fuels in the
transportation sector; and
Exclusion of energy conservation
subsidies provided by public utilities
from the taxable income of homeown-
ers.
Another facet of the green tax pack-
age addresses an issue that has con-
cerned me for some time, but which
has proven difficult to address. Up to
this date the Tax Code has effectively
encouraged commuting in single occu-
pant cars rather than utilizing mass
transit systems. With this bill we
start to correct this historic disparity.
Employers will now be able to pro-
vide transit passes to workers, just as
parking spaces are provided today. In
the past, any pass of more than a de
minimus value would be considered
taxable income to an employee - while
a parking space, often costing hun-
dreds of dollars per month in an ur-
ban area, could be provided with no
tax consequence. Under this legisla-
tion employer-provided transit passes
will enjoy a similar, favorable tax
treatment. It is my hope that this
change will encourage private indus-
try to provide transit pass options to
workers and consider the true costs of
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employees driving to work each day.
Mr. Speaker, I am proud of this bill,
but I know it is only a start. Rather
than waiting for another crisis to
force action, I will continue working
toward accomplishing the goal of real
energy independence for this Nation.
Mr. MOORHEAD. Mr. Speaker, I
yield myself such time as I may con-
sume.
(Mr. MOORHEAD asked and was
given permission to revise and extend
his remarks, and to include extrane-
ous material.)
Mr. MOORHEAD. Mr. Speaker, I do
think we have a good piece of legisla-
tion here. It is the result of many
years of hard labor and of working
together on both sides of the aisle
with the Senate. I hope that we will
get a solid vote of approval for this
legislation.
TRANSMISSION PRICING
Mr. Speaker, few provisions in the
legislation before us received more
attention than those affecting trans-
mission pricing. Since its first itera-
tion in H.R. 2224. The transmission
pricing provision has gone through
multiple changes. But several things
have remained unchanged throughout
that process.
First, we have always intended to
remain within the traditional regula-
tory framework of just and reasonable
rates. This standard - which provides
for the lowest reasonable price while
ensuring adequate compensation - is
immutable and must be strictly ad-
hered to.
In determining just and reasonable
rates for transmission service, the
Federal Energy Regulatory Commis-
sion traditionally has used cost-based
ratemaking and has based rates on
the embedded costs of the utility's
transmission system. Embedded cost
rates include a component associated
with the fixed costs of the utility's
integrated transmission system and
the variable costs associated with
providing the service that is, opera-
tion, maintenance, line losses. In
addition, the Commission allows the
utility to include in rates the costs of
associated - ancillary - services such as
interconnection costs and back-up
power. In recent cases, however, the
Commission has indicated a willing-
ness to consider and approve other
forms of pricing, such as opportunity
cost pricing and incremental cost pric-
ing when these can be found to be just
and reasonable under sections 205 and
206 of the Federal Power Act.
The pricing language in existing
section 212(a) allows the Commission
to continue traditional embedded-cost
pricing, but also gives the Commission
flexibility to depart from traditional
pricing and to allow recovery of oppor-
tunity costs or incremental costs •
including enlargement of facilities - if
the Commission determines it would
result in just, reasonable, and not
unduly discriminatory or preferential
rates. New section 723 continues this
practice. The section allows the Com-
mission sufficient pricing flexibility to
promote economically efficient trans-
mission and generation of electricity,
at the same time that it ensures that
pricing does not result in the collec-
tion of monopoly rents. The conferees
also intend to allow the Commission
flexibility to determine the circum-
stances under which the costs of en-
largement of transmission facilities
may be recovered. The conferees do
not intend that the entire cost of
transmission system enlargement
should always be born by the request-
er of that enlargement. This issue
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was debated and specifically rejected
by the conferees.
Finally, a negative inference should
not be drawn from the fact that the
final version of the bill omits the lan-
guage from H.R. 776 proposing FPA
section 212(B)(2) - the so-called North-
east Utilities language. The conferees
do not intend for revised section 212
of the FPA to affect in any way exist-
ing Commission precedent applying
the just and reasonable ratemaking
standard to transmission pricing de-
terminations.
GOOD FAITH
Another provision in the electricity
title received a great deal of attention.
Section 721 provides that if ordered
transmission services require enlarge-
ment of transmission capacity and if
the transmitting utility has been un-
able, after making a good faith effort,
to obtain the necessary approvals,
then the utility is excused from the
requirement to enlarge capacity. This
section has raised the question of
what is good faith? specifically, the
concern is that a reluctant utility
might make a half-hearted attempt at
compliance, and then evade the re-
quirement to enlarge capacity by
pleading that they could not comply
with the Commission's order. Under
common law, a good-faith obligation
imposes a higher standard of perfor-
mance. Courts have recognized that
good faith reflects an honest intention
to abstain from taking any unconsci-
entious advantage of another, even
through technicalities of law. What
this means is that a utility has an
affirmative obligation to pursue con-
scientiously and aggressively the req-
uisite approvals that will allow it to
comply with the order of the Commis-
sion. This would include making all
appropriate filings and seeking review
or reconsideration of adverse rulingi
on the same basis as if the efforts to
enlarge transmission facilities where
the result of an independent and vol-
untary decision by the utility, rather
than a Commission-imposed require-
ment.
VOLUNTARY REPORTING OF GREEN-
HOUSE GAS REDUCTIONS
Among the most progressive policies
advanced in the engery bill is the
voluntary greehouse gas reduction
program. This program helps to join
our energy and environmental policies
to get the biggest bang for the buck,
which will benefit our economy and
our international competitiveness.
During consideration of H.R 776,
the House Energy and Power Subcom-
mittee adopted provisions to allow
voluntary reductions to be registered
for approval by the Federal Govern-
ment. I am delighted that this pro-
gram survived in the conference re-
port, albeit with less detail and more
discretion for the administration.
With proper implementation, this can
be a valuable environmental program
to help the United States meet its
international obligations under the
Rio Agreement. Our proposal fits per-
fectly with the joint implementation
provisions of the Rio Convention by
allowing volunteers to report reduc-
tions/fixations made other countries,
which can be very cost effective for all
concerned.
This program comes at an oppor-
tune time, as industries all across
America are investing millions of dol-
lars to comply with the Clean Air Act
Since the Clean Air Act does not di-
rectly control most greenhouse gases
• it does control chlorofluorocarboos
for other purposes - companies are
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free to choose compliance strategies
that have greenhouse benefits - but
they are equally free to choose plans
with greehouse penalities. This volun-
tary program will help industry help
itself by offering industry the incen-
tive to optimize compliance invest-
ments by using strategies that simul-
taneously address the clean air and
greenhouse problems. Those that
adopt such wise strategies will be
better positioned to compete in the
world.
I am encouraged that some Califor-
nia compenies are well positioned to
participate in this program. Two of
our utilities, the Los Angeles Depart-
ment of Water and Power and South-
ern California Edison, announced
programs to voluntarily cut their
greenhouse gas emissions, using the
menu of reduction options consistent
with section 1605 of H.R. 776. Anoth-
er California company, Copec, is an
environmental consulting firm and his
strongly supported this program, be-
cause it recently brokered an interna-
tional forest offset in Malaysia for
New England Electric Service. These
companies, among others, would be
entitled to make their case for the
Federal Government to approve their
reductions for inclusion in the green-
house gas data base.
As a Member of this conference, I
am proud that the core concepts of
the House provisions are represented
in the final agreement.
Mr. SHARP. Mr. Speaker, I yield
myself 1 minute.
Mr. Speaker, with this legislation,
we will demonstrate that we can beat
gridlock. We have surmounted parti-
san and regional divisions and we
have delivered legislation that looks to
the energy future of this great Nation.
It will protect jobs, the economy, and
the environment.
Ms. NORTON. Mr. Speaker, I wish
I could rise in support of this confer-
ence agreement that has been quite a
long time in the making. It is way
past time that the Federal Govern-
ment address our Nation's energy
policy on a long-term basis and set
this Nation on the path toward a
more energy conscious and efficient
future. Unfortunately, some critical
provisions have been cut along the
way, leaving this legislation far less
powerful than it should be.
The oil shortages of the 1970's, all
too briefly but for the first time in
modern American history, compelled a
focus on this country's extraordinary,
casual waste of irreplaceable natural
resources. More recently, the Persian
Gulf war did so, but only as a
subtheme of war, with the quick victo-
ry once again encouraging national
anthem on a major issue that sent us
to war in the first place. The Con-
gress has been working to develop
legislation setting forth a comprehen-
sive national energy policy so that
America can begin getting ready for
the next century. Regretfully, this
conference agreement, which would
implement many of the alternative
energy technologies and resources
that already have been employed by
some environmentally and
cost-conscious innovators for over two
decades, is fatally flawed. Specifically,
the 11th hour provision to exempt the
Department of Energy from complying
with existing radioactive waste stan-
dards as promulgated by the Environ-
mental Protection Agency undermines
both the letter and the spirit of a
national energy policy. Furthermore,
the conference agreement does not
contain the vital restrictions against
offshore drilling that were in the
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House bill.
I strongly believe that the Federal
Government should be in the fore-
front of setting an example in the
conservation and maximization of the
Nation's scarce energy resources.
This bill gives the Government an
easy out, which is bound to have a
detrimental effect in the long run.
When it comes to the our natural
resources, we must stop thinking and
acting with only present interests in
mind. It is the duty of Congress to
leave the legacy of a healthier and
cleaner nation. I regret that the com-
promises of the conference report may
subvert this goal and, therefore, I
decline to support the agreement.
Mr. SLATTERY. Mr. Speaker, I
wish to address a concern of many
small businesses across the country:
unfair competition from utilities.
Small businesses have been suffering
from unfair competitive advantages
enjoyed by gas and electric utilities.
These utilities have been able to draw
upon the financial resources of their
customer rate base in order to subsi-
dize artificially low and below-market
prices in the energy equipment sales,
repair, and installation markets.
In almost every instance where a
subsidy can be found, it has been de-
termined to be impermissible. Unfor-
tunately, finding these impermissible
subsidies usually requires a protracted
and expensive legal action either at
the State regulatory level or through
the courts. Utilities have the resourc-
es to engage in time consuming legal
procedures and can retain the best
counsel available. Small business
firms, many of which are family enter-
prises, cannot often hope to match the
financial resources utilities can devote
to legal actions and, thus, have little
chance for redress.
Recently, Kansas has addressed this
problem with remedial legislation
which would make it easier to audit
the accounts of utilities which com-
pete unfairly.
Today, I am also pleased to note the
steps taken by Representative Phil
Sharp and others in the Compre-
hensive National Energy Policy Act
with respect to this problem. I be-
lieve that the statutory language con-
tained in the measure will go a long
way toward resolving some of the
conflicts between utilities and small
business.
Regrettably, because final passage
has come so close to adjournment, a
detailed conference report which could
clarify the intent of the statutory
language is not possible. Thus, many
of those affected by the provisions
dealing with utility competition, espe-
cially utility regulatory commissions,
may still have questions about the
effect of the new law. I hope my com-
ments today will serve to illuminate
these provisions.
Utilities have played an enormously
important role in the history of our
Nation's development. It is they who
are responsible for the generation,
transmission, and distribution of ener-
gy to our industrial plants, commer-
cial establishments, and our homes.
The purpose of this new, comprehen-
sive legislation is, among other things
to encourage and improve energy
efficiency through various means,
including demand side management
(DSM) programs. DSM programs can
not only serve to promote energy effi-
ciency, but can also create and expand
markets for new and improved energy
equipment, products, and services. It
is the intent of the drafters, that such
new markets not be monopolized by
utilities, but that they be shared with
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the thousands of independent, small
private sector firms which have tradi-
tionally operated in such markets.
Within the context of DSM, the
primary objective of utilities should be
that of load management. Access to
the utility rate base for this purpose
should not serve as an excuse to du-
plicate the provisions of products and
services available in the private sec-
tor. Such actions are not only
anticompetitive and, thus, econo-
mically detrimental, but are
antiratepayer as well. Rather than
destroying the viability of existing
businesses by an unnecessary intru-
sion into this area, utilities should
confine their role to one of providing
timely and unbiased information to
their customers about energy efficient
products and services while assisting
their customers in financing the ac-
quisition of such products and servic-
es.
Utility commissions, in discharging
their responsibilities under this act,
must consider the economic impact of
utility DSM programs on small busi-
nesses and exercise their authority in
such fashion as to assure that no
unfair competitive advantage is con-
ferred upon utilities in the execution
of DSM programs.
Thus, it should now be clear that
State regulatory commissions do have
the power to exercise their authority
in remedying anticompetitive situa-
tions which develop out of utility DSM
programs. Complaints of such con-
duct by aggrieved businesses can, and
should, be addressed by State regula-
tory commissions.
The language of the act does permit
recourse to the rate base in order to
finance utility DSM programs. How-
ever, the provisions dealing with small
business protection indicate, by impli-
cation, that such recourse would not
be permissible unless any competitive
advantages conferred upon utility
affiliates or their subsidiary opera-
tions by virtue of such subsidies are
similarly made available to competing
small business firms in the private
sector.
The ultimate intent simply is to
provide a level playing field. If utilities
can subsidize their nonutility opera-
tions from the base rate, then compet-
ing private sector firms must be ac-
corded the same benefits allowed utili-
ties. For example, if a utility provides
its affiliates or subsidiary operations
with marketing information derived
from the utilities' customer base, or if
it provides lists of potential customers,
then access to such data must also be
made available to competing private
sector firms. This would also be the
case with respect to credit information
supplied to, or marketing advertise-
ments mailed by a utility on behalf of
its affiliates or subsidiary operations.
Utilities also must refrain from
entering into exclusive arrangements
with affiliates or subsidiaries for the
provision of products and services to
their customers. Such contracts must
be open to all and not be reserved as
the exclusive province of utility affili-
ates or subsidiaries. Commissions
should act to prevent any discrimina-
tion by utilities in favor of their affili-
ates, subsidiaries, or other entities in
which they hold an interest, or by
utilities among private sector firms.
The market must remain open to all
similarly situated firms.
Of course, utilities may choose not
to draw upon the rate base to finance
their nonutility ventures. In that
case, commissions must take proper
steps to keep the dealings between
utilities and their affiliates or subeid-
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iaries at arms length and require
precise accounting by utilities of their
transactions with affiliates.
The easiest way of meeting the pro-
visions of the Act in this area is to
utilize private sector firms in execut-
ing DSM programs to the fullest ex-
tent practicable. Small businesses and
utilities can work together in a mutu-
ally beneficial partnership to meet the
energy efficiency objectives envisioned
by this Act. In that event, utilities,
small businesses, and our Nation will
come to prosper.
Mr. POSHARD. Mr. Speaker, we
are on the verge of enacting legisla-
tion which will determine the Nation's
energy policy for the next century. It
is a far-reaching piece of legislation
which creates new requirements and
programs to increase U.S. energy effi-
ciency. I commend the conferees for
their dedication to the creation of a
final package which presents an envi-
ronmental and economic balance bene-
ficial to industry as well as the Ameri-
can public.
Incentives have been provided
bringing tax relief to independent oil
producers, enabling them to revitalize
America's oil industry and lessen our
dependence on foreign oil. This can
only be a boom to our economy in
southeastern Illinois and alter the
course of America's foreign policy in
the Middle East.
Also significant to my congressional
district is the inclusion of clean coal
technology provisions geared to re-
search and development of programs
which will permit the use of high
sulfur coal. With these provisions, it
will be possible to address environ-
mental concerns while enhancing a
coal mining industry which will lift
southern Illinois from its economic
depression. Mr. Speaker, this is legis-
lation which will have a favorable
impact on the American way of life for
years to come. I wholeheartedly sup-
port the bill and urge its passage.
Mr. SHAW. Mr. Speaker, I rise
today to express my deep disappoint-
ment that the proposed 10-year mora-
torium on oil and gas leasing on the
Outer Continental Shelf was dropped
during conference negotiations on this
energy bill. Members will recall that
this moratorium was included in the
House-passed version of this bill,
which I supported and was approved
by a 381-37 margin on May 27, 1992.
The moratorium on drilling is need-
ed to protect Florida's coasts. South
Florida's fragile ecosystem is irreplace-
able and unique to our hemisphere,
and given a relatively small spill
would devastate our environment and
economy. Mr. Speaker, oil and gas
drilling must not be allowed near
Florida's shores.
I have always argued forcefully for
measures that will help our economy
grow, and some may suggest that oil
and gas drilling promote such develop-
ment. For some economist in some
ivory tower, that may be so. As a
south Florida native and representa-
tive of thousands of people who either
live on our coast or simply enjoy its
beauty every day, however, I know
that the potential risks of drilling are
just too high. I am not willing to
wager our State's environmental rich-
es and economic future on the chance
that we will never experience even a
single spill.
What remains in this bill includes
many positive steps that will benefit
our country. Unfortunately, it's too
late to restore the House-passed mora-
torium this year, but I will work to
see that the 103d Congress enacts a
moratorium on oil and gas drilling off
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our coast.
Mr. SWETT. Mr. Speaker, I rise
today in strong support of the confer-
ence report for H.R. 776 - the Com-
prehensive National Energy Policy
Act.
This legislation will help us improve
our energy efficiency, lessen our de-
pendence on imported oil and reduce
the environmental damage caused by
energy use.
Mr. Speaker, energy is crucial to
our Nation's economic health. This
legislation contains provisions that
will help to strengthen America's
economy and preserve American jobs.
The United States devotes 10 percent
of its GNP to energy, yet much of this
money is currently being spent over-
seas. By the year 2010, this bill will
have helped to keep billions of dollars
here in this country - money that
would otherwise have gone to pay for
oil imports.
As a longstanding advocate of in-
creased energy efficiency in the Feder-
al Government, I am particularly
supporti ve of the provisions of this bill
that would require the Federal Gov-
ernment to become more energy effi-
cient. The Federal Government is the
Nation's largest energy consumer, yet
much of this energy is currently being
inefficiently utilized. The Comprehen-
sive National Energy Policy Act will
help the Federal Government to set
an example in energy efficiency.
I would also like to express my
strong support for the pulp and paper
provisions of this bill which were
adopted from legislation which I intro-
duced earlier. The pulp and paper
industry is the fourth largest industri-
al energy user in the United States.
The pulp and paper provisions of this
bill will help to make the pulp and
paper industry more energy-efficient
and more environmentally sound.
Finally, Mr. Speaker, I wish to
thank Chairman Dingell, Chairman
Sharp, Chairman Brown, Chairman
Scheuer, and all of the other conferees
for their tireless efforts in the confer-
ence committee. It was an exceptional
honor to be able to work with them in
bringing this conference report to the
floor.
I urge my colleagues to join me in
supporting this vital legislation which
will help put our Nation on a path
toward a more secure energy future.
Mr. SCHUMER. Mr. Speaker, I rise
today in strong support of this confer-
ence report and especially its restric-
tions on the export of bomb-grade
uranium, which are based on my bill,
H.R. 3527, the Bomb-Grade Uranium
Export Restriction Act.
I would like to thank the Interior
Committee chairman, Mr. Miller of
California, for his leadership on this
bill and for his commitment to retain-
ing my amendment in conference.
The importance of these export
restrictions, and the threat posed by
bomb-grade uranium, were under-
scored by our gulf war experience. A
mere 20 to 40 pounds is all that stood
between Saddam Hussein and, a nucle-
ar weapon, according to U.N. investi-
gators. We can only imagine how
differently the gulf war might have
gone if Saddam had obtained this
small cache of explosive material.
The lesson from Iraq should be
clear: bomb-grade uranium is not a
routine commodity that should be
shipped willy-nilly thousands of miles
around the world where it is vulnera-
ble to diversion or interception by
terrorists.
Nevertheless, the United States
remains the world's No. 1 exporter of
bomb-grade uranium, shipping more
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than 250 pounds overseas every year,
for use as fuel in research reactors.
According to Department of Energy
testimony, this amount would be suffi-
cient to produce between six and sev-
en nuclear weapons, if diverted for
such purposes.
Mr. Speaker, there is no doubt that
this material can be fabricated into a
nuclear weapon. Manhattan Project
physicist Luis Alvarez gave a chilling
assessment of the threat in his 1987
memoirs, stating:
With modern weapons-grade urani-
um, the background neutron rate is so
low that terrorist, if they had such
material, would have a good chance of
setting off a high-yield explosion sim-
ply by dropping one half of the mate-
rial onto the other half. Most people
seem unaware that if separated
(bomb-grade uranium) is at hand it's
a trivial job to set off a nuclear explo-
sion * * * even a high school kid could
make a bomb in short order.
Mr. Speaker, some have argued that
the danger of such exports can be
eliminated by applying stringent phys-
ical security measures. Certainly, such
measures can mitigate the threat in
the short term, but does anyone be-
lieve they are 100 percent foolproof?
Certainly, we have learned from the
Marine barracks episode in Lebanon
and from the Pan Am flight over
Lockerbie that physical protection
measures can be defeated.
Accordingly Mr. Speaker, this bill
codifies once and for all that
bomb-grade uranium is simply too
dangerous to continue indefinitely
shipping it overseas for nonmilitary
purposes.
This is not a new idea. As early as
1978 the United States recognized
that civilian commerce in bomb-grade
uranium should be phased out, and
instituted a policy of denying
bomb-grade exports to reactors ones
suitable alternatives were developed.
Throughout the 1980's, we devel-
oped alternative, non-weapons-usable
fuels at Argonne National Laboratory,
in an enormously successful program
known as the Reduced Enrichment
for Research and Test Reactors
(RERTR) Program. During that de-
cade, we managed to reduce
bomb-grade exports by 80 percent,
from 1,500 pounds annually to the
current level.
A few years ago, however, the prog-
ress stopped. Several overseas reac-
tors continue to require bomb-grade
exports. They cannot use the alterna-
tive fuels developed so far and require
more advanced fuels to convert. How-
ever, the Bush administration termi-
nated the fuel development program
in 1990, forcing the United States to
continue indefinitely exporting
bomb-grade uranium to these remain-
ing reactors.
In this day and age, continuing such
exports indefinitely without develop-
ing safer alternatives is reckless public
policy.
Accordingly, Mr. Speaker, the bill
now before us would jump-start the
alternate fuel program and put into
law what was, from 1978 to 1990, the
policy of both Democratic and Repub-
lican administrations - prohibiting the
NRC from licensing exports of
bomb-grade uranium fuel unless three
conditions are met:
First, the reactor cannot use alter-
native fuel;
Second, the reactor operator has
committed to use alternative fuel as
soon as it is developed; and
Third, the United States is actively
developing an alternative fuel for the
reactor.
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This bill gives administration offi-
cials a choice of how to end
bomb-grade exports. They can restart
the fuel development program and
phase out remaining bomb-grade ex-
ports gradually as alternatives are
developed. Or they can cut off the
bomb-grade exports immediately.
What they cannot do is continue the
present policy of exporting bomb-grade
uranium indefinitely without develop-
ing alternative fuels that will enable
an end to the bomb-grade exports.
Under these provisions, Mr. Speak-
er, the United States should be able to
phase out all exports of bomb-grade
uranium within 5 years, according to
recent program reports. Such a his-
toric step would go a long way toward
making the United States - and the
rest of the world - less vulnerable to
the next Saddam Hussein who comes
along.
This section of the energy bill also
requires a report from the NRC, to
document the whereabouts of previous
U.S. exports of bomb-grade uranium,
with particular focus on those we
have shipped to the European Com-
munity. There is serious question
about the disposition of these previous
exports, according to an April 6, 1992,
response from the NRC to an inquiry
from me and several colleagues. In-
credibly, while these previous exports
were licensed on the basis of specifi-
cally approved end uses, 'prior U.S.
consent is not required if the material
is transferred to different end uses1
within the Community, 'and move-
ments of nuclear materials within the
Community are not reported to the
United States.'
In other words, not only is the Unit-
ed States not asked permission when
our bomb-grade uranium exports are
diverted for unapproved end uses, we
are not even told it is happening.
This NRC study is the minimal first
step to regaining U.S. control over
these previous exports of atom-bomb
material.
I urge my colleagues to vote for this
conference report.
Mr. ANDREWS of Texas. Mr.
Speaker, I rise in support of the ener-
gy conference report. This report
contains tax incentives for the use of
clean-burning alternative fuel vehicles
that will clean up our air, reduce our
dependence on imported oil, and cre-
ate American jobs.
I first introduced an alternative fuel
incentive bill in 1988. The final provi-
sion in this report recognizes the in-
put and efforts of environmental ad-
vocates, business leaders, and academ-
ic analysts. It is rare that these
groups agree on anything, but this
particular provision has garnered
support from all parties affected.
Electric vehicles can eliminate 100
percent of the carbon monoxide, nitro-
gen oxide, and reactive hydrocarbons
that cause smog. Natural gas vehicles
can reduce these same emissions by
up to 99 percent, and natural gas is
cheaper than gasoline by 40 cents a
gallon. Over 90 percent of natural gas
consumed in the United States is
domestically produced, and existing
production will more than meet de-
mand for the foreseeable future.
Finally, alternative fuel technology
represents a real chance for American
car makers to leapfrog the Japanese
and capture the lead in emerging
markets. General Motors is 3 years
ahead of the nearest Japanese com-
petitor in making electric vehicles. All
three U.S. automakers are introduc-
ing vehicles now that can run on
methanol, natural gas, and ethanol.
These new vehicles should be pro-
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duced here in America by American
workers.
These alternative fuel provisions
show how government, industry, and
environmentalists can work together
to clean up the environment, create
jobs, and promote energy security.
This spirit of cooperation should be a
model for future policymaking.
Mr. MARKEY. Mr. Speaker, I would
like to make a statement on title II,
the natural gas provisions of H.R. 776.
While title II is short, there is a lot
in this bill for both natural gas con-
sumers and producers: Many of the
new powerplants under the new
PUHCA reforms will be natural gas
powered. So may many of the alter-
nate fuel vehicles encouraged by the
alternate fuel titles. Greater reliance
on clean burning, abundant, natural
gas will help our environmental, ener-
gy security, and oil import problems.
To maximize the benefits of natural
gas, we have over the last few years
legislated partial decontrol of wellhead
prices in the 1978 Natural Gas Policy
Act (NGPA); approved the Canadian
Free-Trade Agreement; and enacted
the complete decontrol of wellhead
prices beginning this coming January
1, 1993, under the Natural Gas Well-
head Decontrol Act.
Title II continues this course of
comprehensive congressional enact-
ments to ensure a broad policy of free
and competitive wellhead markets in
North America by, in effect, deregu-
lating Canadian natural gas imports
in section 201, and by restating and
broadening our national federal policy
in favor of vigorous competition in our
gas wellhead markets, in section 202.
This overall series of recent and
new enactments are critical because of
what has recently happened as Feder-
al regulation of wellhead markets has
eased, and the accompanying Federal
preemption of State pricing regulation
by a comprehensive scheme of Federal
price controls has started to phase
out. In particular, some producing
States have considered reoccupying
this important field of interstate com-
merce with a new type of regulation -
wellhead production regulation that
could be used to cut back output in
order to raise the general price level
of natural gas.
Such a replacement of harmful
Federal price lowering regulation and
market intervention with equally
harmful State price-raising regulation
and intervention, would be inimical to
a comprehensive national energy
strategy aimed at free market-based
growth of natural gas use. It would
hurt gas use both in new areas under
the other titles of the bill, and in the
traditional gas markets of our Nation.
Such intervention would send inaccu-
rate price signals to producers and
consumers, would impair economic
efficiency, and would be fundamental-
ly in conflict with a competitive well-
head market.
Some supporters of new producing
State initiatives have asserted there is
no evidence whatever that their aim is
to set up a State administered hori-
zontal price fixing cartel. We hope
that is true.
However, we are familiar with the
long history of economic waste and
reasonable market demand proration*
ing administered by the Texas Rail-
road Commission in the 1950's and
1960's. We have reviewed how that
scheme was indeed copied by OPEC
when it was formed - see generally,
'The Prize,' by Daniel Yergin. And w
have inquired into several official
statements regarding these new State
initiatives.
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The following letter from one State
official indicates the type of State
activity that most concerns us:
Stale of Oklahoma.
Office of the Secretary of Energy,
Oklahoma City, OK,
October 22. 1991.
Representative G rover Campbell
State Capitol Building,
Room 539-B,
Oklahoma City, OK.
Dear Representative Campbell:
I enclose a draft of a bill which is being pre-
pared for introduction in the 1992 legislative
session. As a member of the Energy, Environ-
ment, and Natural Resources Committee, I feel
you should be kept informed about proposed
legislation in the Held of Energy.
The subject of this legislation is seasonal
market demand proration of natural gas. As you
are no doubt aware, Oklahoma enacted the
nation's first market demand laws relating to
both oil and gas in 1913, when a condition of
severe over-supply had resulted in low Held pric-
es and widespread waste.
These laws were enforced and worked very well
until the mid- 1970's, when the first Arab embar-
go and punitive federal price controls on natural
gas resulted in a severe shortage of supply. Later,
when the shortage of gas had turned to surplus,
the Oklahoma Supreme Court held that the Cor-
poration Commission could not impose more
stringent production controls except after person-
al notice which is a practical impossibility.
Recent events have clearly demonstrated the
cost to Oklahoma and its citizens resulting from
an excess of natural gas supply. During the sum-
mer of 1991, gas field prices sank to the lowest
level in many years, below the cost of replace-
ment, simply because of oversupply in the Held.
Those who profit from the oversupply and
resulting depressed price are the gas traders, the
interstate pipe-lines, and the Eastern consumers.
Those who lose are the developers, the State, and
above all, the Oklahoma mineral owners. We
should never forget that natural gas, unlike an-
nual crops, is a nonrenewable resource. When
gas is sold at a distress price, the landowner
suffers a financial loss which can never be re-
couped.
This proposal would simply impose a seasonal
limitation on production from natural gas wells.
It is well known that the market for gas is sea-
sonal: high in the winter months; low in the
summer months. Pipe lines are rapidly develop-
ing storage facilities, specifically designed to
further extend the period of low field prices.
When there is an excess of supply over de-
mand, the simple solution is to reduce the over-
supply by storing gas in the ground. If every
producer were willing to cut production propor-
tionately during the summer period, no legisla-
tion would be necessary. However, we all know
that as a practical matter, such joint action, even
if it would mean higher prices immediately, sim-
ply will not occur.
This proposal would impose a daily gas produc-
tion limitation of 60% of well deliverability dur-
ing the winter 6 months' period and 26% of
deliverability during the summer 6 months' peri-
od. Wells producing casinghead gas and wells of
low capacity (under one million cu/ft/day) would
be exempt, because the impact of these wells on
the market is small. Production from super-wells
would be further limited to 26% of deliverability
over 10 million cu/ft/day year round. Overage or
underage could be made up only during a similar
seasonal period, to minimize manipulation. Fi-
nally, the present draft includes an automatic
sunset provision, under which the allowable re-
strictions would expire automatically at the end
of two years unless renewed by legislative act. If
for any reason the plan is not working, it can
simply be allowed to die.
No one state can unilaterally overcome the
distress prices resulting from seasonal oversup-
ply. No state would want to impose production
restrictions, and then see the market move to
another state with no improvement in field pric-
es. For this reason, the gas producing states of
the Southwest are in close cooperation in these
efforts to address the problem of oversupply and
low field prices. The Texas Railroad Commission
already has conducted hearings preparatory to
issuing an Order imposing seasonal market de-
mand proration on gas wells in that state. Simi-
lar initiatives are undor way in Kansas, Arkan-
sas, Louisiana and Colorado.
Oklahoma is fortunate in that all states recog-
nize the necessity for legislation here. This
means that Oklahoma no doubt will be the last to
actually impose binding production restrictions.
We will know whether other states will act before
final passage of the bill by Oklahoma legislature.
However, it is essential that Oklahoma move
forward in concert with the other states.
I would appreciate your careful attention to
this proposal. I would be glad to meet with you
to discuss the matter further if you desire. If
you share my conviction that this legislation
would be of significant benefit to Oklahoma, it*
economy, and especially its citizen-landowners.
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your joinder as a legislative sponsor would be
extremely valuable.
Very truly yours,
Charles Nesbitt,
Secretary of Energy.
I and my colleagues realize there is
a long history of legitimate State regu-
lation to further the goals of physical
conservation, to prevent unfair drain-
age among producers in a common
reservoir, to enforce well-spacing
rules, and so on. The Congress has
not intended, by its previously noted
enactments or by title II of this bill, to
preempt these State authorities.
But it is also clear that there is no
reference to such legitimate activities
in the above-noted letter explaining
the purpose, intent, and structure of
the proposed new State law. More-
over, the proposal described there was
subsequently toughened to shut in
more gas over longer periods of time.
We of course are not deciding the
lawfulness of that State enactment:
This is entirely a question for the
Federal courts, in the context of a
preemption challenge to this or other
State laws or regulation that substan-
tially and unreasonably interfere with
the broad Federal policy of wellhead
competition.
The intent of Congress, however,
will be a central question in any possi-
ble future disputes. Accordingly, we
here restate and extend our legislative
support for free national gas produc-
tion markets, in new section 202. We
strongly endorse the specific accompa-
nying statement of managers language
spelling out how the noted series of
recent Federal laws and rulings have
combined to prevent the States from
using their regulation of producers or
pipelines to restrict supplies and raise
prices. We believe section 202 is an
express statutory statement of the
general policy and purpose, and that
it correctly sums up where we have
come from and where we are going
both under sections 201 and 202 of
this bill and under the three previous-
ly noted Federal enactments.
For these reasons, we believe the
Federal courts can now draw the right
lines here: We think they can distin-
guish between regulation which has
the substantial purpose and effect of
raising prices - which is preempted -
and the many legitimate types of reg-
ulation - which are not preempted.
Indeed, the Federal courts have
engaged in similar types of
line-drawing for a century, under the
Federal antitrust laws: There, the
focus is on the difference between
reasonable restraints of trade, and
unreasonable ones. Analogous inqui-
ries into the geological justifications of
a challenged law or rule; its legislative
history or official explanations of it;
whether its likely purpose, structure,
and effect are more aimed at higher
market prices and across-the-board
shut-ins of gas, or instead vindicate
producer property rights against
drainage, and so on. These all would
be an essential part of a court's scru-
tiny.
By thus preserving and extending
our national policy of free trade and
free markets for natural gas, we be-
lieve title II is a significant part of our
new comprehensive national energy
policy.
As for section 201, we note it applies
for example to imports of Canadian
natural gas into the United States;
exports of natural gas to Canada from
the United States; and imports of
liquefied natural gas into the United
States.
While applications for import or
export approval still need to be made.
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imports or exports falling under new
section 3(bX3) are automatically ap-
proved, and by this act are 'deemed to
be consistent with the public interest/
The application process will still serve
the function of affording the Federal
Government a record of the foreign
commerce taking place.
This automatic approval, however,
is not intended to modify the authori-
ty of the FERC or jurisdictional State
commissions to review the prudence of
the purchased gas when a jurisdiction-
al utility seeks to include the cost of
such natural gas in rates subject to
the jurisdiction of the appropriate
State or Federal agency.
The public interest finding in this
new section of the Natural Gas Act
accordingly does not alter the authori-
ties of the FERC or State commissions
previously available with respect to
the prudence of natural gas purchas-
es.
In drafting new section 3(b)(2) of
the Natural Gas Act, we intended that
imported natural gas not be discrimi-
nated against on the basis of its na-
tional origin. As noted, this would be
inconsistent with our Federal policy of
vigorous price competition in a decon-
trolled market.
The conferees intend for the Feder-
al Energy Regulatory Corn-mission to
regulate such imported natural gas on
a basis comparable to its regulation of
domestic natural gas. Just as FERC
does not take sides in the market
competition between Oklahoma natu-
ral gas and Texas natural gas, it could
not take sides between domestic gas
and Canadian gas.
Hence, if FERC treats Canadian gas
differently - on the basis of the place
of its production, or in other respects
based on its national origin - or in
some manner gives preference to do-
mestic natural gas on the basis of its
national origin, such action would
violate new section 3(b)(2). Of course,
such action might also violate other
provisions of the Gas Act, and the
Canadian Free-Trade Agreement as
well.
Finally, as drafted, the new fast
track process would not be available
for LNG exports to, for example, Pa-
cific rim nations other than Canada.
Current law on LNG exports would
remain unchanged.
Mr. VENTO. Mr. Speaker, I rise in
support of this conference report, and
ask unanimous consent to revise and
extend my remarks.
As one of the Interior Committee's
conferees on this bill, I want to speak
briefly about two sections of the con-
ference report: Section 2401r dealing
with the authority of the Forest Ser-
vice and Bureau of Land Management
regarding rights-of-way associated
with electrical facilities, and section
2402, to clarify the restrictions on the
licensing of hydropower projects in
units of the National Park System.
Both of these provisions, in slightly
different form, were approved for
inclusion in the bill by the Interior
Committee, and adopted by the House
as part of the amendment offered by
Chairman Miller. In my opinion they
definitely improve the bill, and I am
pleased that we were able to retain
them in conference.
Section 2401 is an amendment to
section 501 of the Federal Land Policy
and Management Act of 1976
(FLPMA), which provides the basic
authorization for the grant, issuance,
or renewal of right-of-way on Federal
lands managed by the Interior
Department's Bureau of Land Man-
agement (BLM) and the Agriculture
Department's Forest Service. A simi-
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lar amendment to this part of FLPMA
was included in a bill, H.R. 3593 of
the 100th Congress, favorably report-
ed by the Interior Committee in 1988
but on which action was not complet-
ed. The purpose of this section is to
overturn an erroneous judicial reading
of this part of FLPMA and thus to
reiterate and clarify that BLM and
the Forest Service, and land managing
agencies, are to implement section 501
of FLPMA in cases involving
rights-of-way - called special-use per-
mits by the Forest Service - related to
new federally licensed projects for
generation, transmission, or distribu-
tion of electrical energy.
As noted in the Interior
Committee's report on the 1988 bill,
House Report 100-950, part 1, while
both BLM and the Forest Service
have issued manuals to provide direc-
tion for their consideration of
rights-of-way for such purposes, and
for the requisite coordination with the
Federal Energy Regulatory Commis-
sion (FERC), historically FERC gener-
ally ignored most attempts by the land
managing agencies to impose neces-
sary conditions on such rights-of-way,
and in fact advised the committee
during consideration of the 1988 bill
that a FERC licensee does not need to
obtain such a right- of-way, despite
the clear language of FLPMA and
despite the fact that neither the BLM
nor the Forest Service had ever re-
fused to issue such a right-of-way.
After the Interior Committee's fa-
vorable reporting of the 1988 bill, a
review by the General Accounting
Office (GAO) resulted in a July 1989
GAO report concluding that BLM and
the Forest Service did have the au-
thority and responsibility for issuing
rights-of-way or special-use permits
for FERC-licensed projects that in-
volved lands managed by those agen-
cies. At the request of the chairman
of the Committee on Energy and Com-
merce, FERC then reconsidered its
position, reexamined the language and
legislative history of FLPMA, and in a
February 15, 1990, order in a pending
case stated its 'revised opinion that
BLM has authority under FLPMA to
require right-of-way permits for li-
censed hydropower projects using
BLM land.'
This sound decision by FERC was
reversed by a decision of the U.S.
Court of Appeals for the Ninth Cir-
cuit, State of California v. FERC, 92
C.D.O.S. 2905 (April 3, 1992). In the
opinion of the conferees, that court's
decision misread the plain language
and legislative history of FLPMA, and
should be overturned, which will be
the effect of section 2401. At the same
time, section 2401 would not require a
new right-of-way or similar authoriza-
tion from the Forest Service or BLM
for continued operation - including
continued operation pursuant to sec-
tion 15 of the Federal Power Act - for
a project licensed under part I of the
Federal Power Act - or exempted from
such part - prior to enactment unless
FERC determines that there will be a
use of additional public or national
forest lands not already subject to a
reservation under section 24 of the
Federal Power Act.
Section 2402 restricts the ability of
the Federal Energy Regulatory Com-
mission (FERC) to license hydroelec-
tric power projects within units of the
National Park System, it provides
that FERC cannot issue an original
license under part I of the Federal
Power Act - or an exemption from
that part - for a new hydroelectric
power project located within the
boundaries of any unit of the National
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Park System if the project would have
a direct adverse effect on any Federal
lands within such a unit. The section
specifies that it is not to be construed
as repealing any provision of law - or
affecting any existing treaty - that
authorizes a hydroelectric power pro-
ject.
This provision has its genesis in
legislation - H.R. 1173, 100th Congress
- which was reported by the Interior
Committee - H. Rept. 100-185 - and
passed the House in 1987 but on
which action was not completed by
the Senate.
Section 2402 builds upon existing
protections afforded units of the Na-
tional Park System. Existing law ban-
ning dams in such units refers only to
national parks and national monu-
ments language that some might read
as leaving open the question of its
applicability to units of the National
Park System with other nomencla-
ture. Section 2402 eliminates this
possible ambiguity. It does not turn
back the clock on existing projects but
will provide additional protections for
National Park System units from new
hydropower projects or modifications
of existing projects that have a direct
adverse impact on these important
conservation lands.
Mr. WILLIAMS. Mr. Speaker, I rise
in support of the conference report on
H.R. 776, the Comprehensive National
Energy Policy Act. The bill contains
several provisions affecting matters
within the jurisdiction of the Subcom-
mittee on Labor-Management Rela-
tions which I chair.
There are important provisions in
H.R. 776 addressing the concerns of
working men and women as well as
the general public in this energy bill.
A compromise was reached provid-
ing for the first time meaningful pro-
tection for whistleblowers in the nu-
clear industry. Obstacles have been
removed that had discouraged employ-
ees from bringing to the attention of
the public information about potential
health and safety problems. These
provisions will protect not only em-
ployees and the public but will also
help build confidence in the industry.
The whistleblower reforms include
extending from 30 days to 180 days
the time for filing a complaint. A new
burden of proof is established that
makes it more realistic for an employ-
ee to prevail in a case of retaliation.
Interim relief would be available to an
employee when an employer is appeal-
ing an adverse decision. This estab-
lishes the important principle that
employees who initially prevail on the
merits are entitled to appropriate
relief during an appeals process that
can continue for years.
The uranium enrichment titles
assure that basic labor standards will
apply. Transition provisions assure
that existing labor relationships are
preserved and that collective bargain-
ing agreements which were the sub-
ject of a strike during consideration of
this bill are preserved for a transition
period. These provisions assure that
worker concerns have been addressed
in the restructuring of the uranium
enrichment industry.
Although I am pleased that a na-
tionwide coal tax was not used as the
primary financing mechanism for the
new system for providing health bene-
fit of thousands of retired coal miners,
I believe that serious problems still
exist with financing provisions adopt-
ed by the conference committee. The
existing United Mine Workers of
America (UMW) health care trusts are
in very precarious financial condition
and something needs to be done im-
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mediately to restore their fiscal sound-
ness. With so many millions of Ameri-
cans uninsured, we have a special
responsibility to make sure those who
have coverage, don't lose it. But we
also must assure that the burden of
paying for those benefits is fairly allo-
cated.
In allocating the burden, the most
difficult problem is determining who
should contribute to fund health bene-
fits for retirees whose former employ-
ers were no longer in existence or in
the coal business.
As you know, the Senate Finance
Committee initially considered financ-
ing a substantial portion of the re-
forms by imposing a premium charge
on all bituminous coal produced on an
hours-worked basis. That placed an
unfair burden on Western State coal
producers including those in my own
State of Montana, most of whom had
never been signatories to UMW con-
tracts. Ultimately, the Finance Com-
mittee adopted a differential rate
structure which attempted to match
burden with benefit more fairly. Un-
der the structure eastern producers
paid higher rate than western ones.
I am pleased that the Senate and
now the conference committee has
abandoned an industry wide financing
mechanism entirely. But serious ineq-
uities still exist with the system
adopted by the Senate and agreed to
by the conferees. In particular, more
attention will have to be paid next
year to the feasibility and fairness of
collecting premiums from, for exam-
ple, companies in bankruptcy, compa-
nies who have been out of the coal
business for many years, and compa-
nies which have assumed responsibili-
ty for the health benefits of their own
employees.
Although the burden of funding the
new health benefit program for coal
miners is much more fairly allocated
than initially proposed, I expect that
we will have many requests to revisit
these provisions in the future. In the
meantime, however, retired miners
can now be reassured that an immedi-
ate fiscal crisis has been averted and
their benefits will be paid. I urge
support for the conference report.
Mr. JOHNSTON of Florida. Mr.
Speaker, I am outraged that there is
a serious omission in this conference
report on this so-called comprehensive
energy bill. When the House passed
H.R. 776, title XX of the bill addressed
a key concern among coastal States:
What is the environmental impact of
oil and gas exploration, development,
and production on our coasts.
This House-passed key provisions in
H.R. 776 establishing interagency
environmental review panels to assess
the potential impact of oil and gas
activity in each of the planning areas
and to make recommendations to the
Secretary of Interior. This provision
was adopted on the basis of a National
Academy of Sciences report in 1989
and findings by an interagency task
force stating that the Department of
the Interior did not have the informa-
tion necessary to make informed deci-
sions about the suitability of leasing
off the coast of Florida and other
coastal areas. The report also indicat-
ed that the 73 leases off the Florida
Keys are dangerously close to national
treasures, such as the Everglades
National Park, Biscayne National
Park, 3 national wildlife refuges, a
national monument, and a national
marine sanctuary. Even the adminis-
tration has recognized that these leas-
es should be suspended and undergo
the process by which they may be
canceled.
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It is outrageous that we are here
today to vote on a comprehensive
energy package that ignores key con-
cerns of our coastal States. Mr. Speak-
er, I recognize that we have energy
needs and this bill encompasses nu-
merous provisions promoting energy
efficiency, nuclear energy, and alter-
native fuels, which I favor. However,
I cannot in good conscience vote for
this conference report. It is clear to
me that Florida's interests and con-
cerns and those of other coastal States
have been ignored. I urge my col-
leagues to vote against this conference
report.
Mrs. ROUKEMA. Mr. Speaker, the
conference report now before us in-
cludes a complex and rather revolu-
tionary provision intended to continue
the health care coverage for approxi-
mately 120,000 retired coal miners
and beneficiaries.
First, I believe that all parties rec-
ognize that the provisions of the Coal
Industry Retiree Health Benefits Act
address a rather unique situation and
are not intended to serve as a prece-
dent involving the retiree health bene-
fit plans in other industries.
The provisions relate to the ERISA
multiemployer health benefit plans
created in collective bargaining negoti-
ations between the United Mine
Workers of America (UMW) and the
Bituminous Coal Operators Associa-
tion (BCOA). Under the so-called 1950
and 1974 plans, in many cases the last
employer of a beneficiary is no longer
in business, or no longer has a con-
tractual responsibility to provide cov-
erage. Also, the form and manner of
contributions to the plans have re-
cently been renegotiated. As a result,
mounting deficits in the plans threat-
en to curtail the flow of benefits. In
general, the bill makes provision for
the continuation of health care cover-
age to the existing beneficiary popula-
tion by allocating financial responsibil-
ity to certain operators.
The essence of the bill is that those
companies which employed the retir-
ees in question, and thereby benefited
from their services, will be assigned
responsibility for providing the health
care benefits promised in their various
collective bargaining agreements.
This is accomplished through a broad
ranging formulation designed to allo-
cate the greatest number of beneficia-
ries in the plans to a prior responsible
operator. Funding transfers would
also be required from a related
multiemployer pension plan and from
interest payments to the federal aban-
doned mine land fund.
I would observe that this detailed
formulation was crafted in the Senate
and without the benefit of hearings
and consideration by our Committee
on Education and Labor which has
jurisdiction over ERISA multi-employ-
er health and pension benefit plans.
Unlike the features of the
Multiemployer Pension Plan Amend-
ments Act of 1980 (MEPPA) which
received careful consideration and
debate in all committees of jurisdic-
tion in both Houses, the mechanisms
in this bill have not been thoroughly
scrutinized or its effects determined to
be totally workable or fair in applica-
tion.
While it is important that the prom-
ise of continued health benefits to
retired coal miners be honored, it is
equally important that the means to
accomplish this objective be workable,
fair, and constitutional. In this con-
nection, it is clear that the Senate
provisions on which we act today will
again have to be reviewed from this
perspective.
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Mr. SCHULZE. Mr. Speaker, I rise
in support of the conference report on
H.R. 776. While this measure leaves
many questions on American energy
policy unresolved, it does take impor-
tant steps forward in spurring the use
of noncarbon based alternative energy
resources, especially nuclear power.
As the specter of Three-Mile Island
diminishes, and nuclear power contin-
ues to be produced safely and effi-
ciently, the American people are again
realizing that a strong, safe, and effi-
cient nuclear industry is vital for our
future energy needs and U.S. competi-
tiveness.
In this measure are important nu-
clear licensing reforms and provisions
to ensure the Federal uranium pro-
duction sites are cleaned up. One
provision in particular, will provide
consumers with millions of dollars in
savings and ensure nuclear plants are
taken out of service and refurbished
in a timely and safe manner. My legis-
lation, H.R 2012, the Nuclear Decom-
missioning Reserve Fund Act, was
incorporated into this measure.
How many times have we passed
legislation that has had the endorse-
ment of the Consumer Federation of
America, the Sierra Club, and the
Edison Electric Institute? Not often -
if ever.
I am proud to have introduced this
measure and grateful that the confer-
ees decided to incorporate our House
provisions in the conference report. It
is important for our consumers, for
the environment, and for the nuclear
power industry.
Generally owners of nuclear power-
plants must decommission, or close
down and dismantle such plants at
the end of their useful lives. Decom-
missioning involves major expenditure
because of residual radiation and gen-
erally occurs many years alter a plant
first becomes operable. A utility com-
pany which owns a nuclear
powerplant usually collects a portion
of the estimated future cost of decom-
missioning the plant each year from
customers as a cost of service.
Section 463(a) of the Internal Reve-
nue Code of 1986 allows a utility to
deduct contributions to a qualified
nuclear decommissioning reserve fund
subject to certain limitations. A quali-
fied fund is a segregated fund to be
used exclusively for the payment of
nuclear decommissioning costs and
other related expenses.
The qualified fund constitutes a
separate taxable entity and is subject
to tax at the maximum corporate
income tax rate - currently 34 per-
cent.
The assets of a qualified fund, like
those of a tax-exempt black lung dis-
ability trust fund, may be invested
only in Federal, State or local govern-
ment obligations or certain bank or
credit union deposits.
Although establishment of a quali-
fied fund for decommissioning costs
carries certain tax advantages for
utilities, the current investment re-
strictions so limit the investment
alternatives as to make an election
under 468(a) of limited value.
Utilities which establish such a fund
generally limit their investments to
tax-exempt securities due to the fact
that the maximum corporate income
tax rate is applied to the taxable in-
come of the fund. As a result, the
U.S. Treasury is denied significant tax
revenue from the qualified funds.
The current investment limitations,
although well-suited to a tax-exempt
black lung trust, are inappropriate
when applied to a taxable entity such
as a qualified nuclear decommis*
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sioning trust fund.
My legislation, incorporated into
H.R. 776, would correct these prob-
lems and make establishment of a
qualified fund more attractive by low-
ering the tax rate on income of such a
fund from 34 to 22 percent through
1995, and to 20 percent thereafter. It
would also eliminate the investment
restrictions on fund investments.
These modifications would encourage
utility companies with qualified funds
to invest in taxable securities such as
U.S. Treasury obligations rather than
tax-exempt securities, thus increasing
the rate of return for future decom-
missioning costs.
Customers would see reduced costs
saving millions of dollars annually.
Most importantly, by lifting invest-
ment restrictions and lowering the tax
rate, the funds will grow much faster
than under current law, thus ensur-
ing that out-moded nuclear plants will
be taken out of service in a safe, time-
ly and efficient manner.
After some years of trying, it is
gratifying that the conferees have
wisely accepted my proposal. I thank
them, our bill cosponsors, and Chair-
man Rostenkowski for his support.
The incorporation of the Nuclear
Decommissioning Reserve Fund Act
into the conference report is clearly
good Government at its best.
Mr. MARLENEE. Mr. Speaker, I
rise in opposition to this bill. This is
not an energy bill.
Neither the Senate nor the House
version of the Comprehensive Nation-
al Energy Policy Act adequately ad-
dresses the need to revitalize domestic
oil and gas production.
Certainly, in order to have a sub-
stantially positive impact on domestic
drilling activity, tax incentives should
not be limited solely to those opera-
tors who meet the narrow definition
of 'independent producers' under the
Internal Revenue Code, but should be
broadened to give real tax incentives
to our struggling domestic oil and gas
industry.
Language approved by the Senate
Committee to open a portion of the
coastal plain of the Arctic National
Wildlife Refuge to exploration and
production in an environmentally
responsible manner, fell victim to a
filibuster. Moreover, vast tracts on
the Outer Continental Shelf along our
Atlantic, Pacific and gulf coasts con-
tinue to be placed off limits to further
exploration and production for many
years by both the House and the Sen-
ate.
At a time when the United States is
becoming dependent upon overseas
suppliers for more than one-half of its
petroleum needs, the Nation contin-
ues to be deprived of the oil and gas
resources of its most promising off-
shore frontier areas.
This is the same general trend that
is being taken on our onshore public
lands, including many in my own
State of Montana, and I cannot en-
dorse any bill that steers our Nation
down this dangerous course. What
the Strident preservationists are try-
ing to do off our coasts they are also
doing on our public lands.
For example, on the Rocky Moun-
tain Front of Montana, the land grab-
bers have worked to cut off use of
more than 3 billion dollars worth of
oil and gas resources. This is uncon
scionable in a nation facing huge
shortages in domestic energy supplier
We cannot afford this lock-it-all- uj
mentality. It is wrong for Aniens
and someday we will pay dearly tw
giving up our energy independent
Mr. SCHEUER. Mr. Speaker, u«
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bill before us today will not solve all of
America's energy problems, but in
certain respects it is a big step for-
ward. With this bill, the Congress has
produced an energy policy that is
dramatically superior to the hopelessly
inadequate national energy strategy
offered to us by President Bush last
year.
The President's proposal did little
to meet the urgent need to improve
energy efficiency and step up the de-
velopment and use of clean, renewable
energy technologies. This bill, in con-
trast, mandates increased efforts in
energy efficiency and renewable ener-
gy, including much needed initiatives
in research, development, and demon-
stration of new technologies.
It will help lay the groundwork for
greater energy efficiency in buildings,
industry, and transportation.
It will expedite the development and
economical use of solar, wind, and
other renewable energy technologies.
It will hasten the day when electric
vehicles and other alternative-fueled
vehicles take their place as the basis
for a leaner, cleaner, and greener
transportation system.
Mr. Speaker, as chairman of the
Environment Subcommittee of the
Committee on Science, Space, and
Technology, I am proud of our contri-
bution to the R&D titles in this bill.
With continuing support, the Ener-
gy Policy Act of 1992 will foster a
transition to sustainable energy tech-
nologies, enhancing our economic
competitiveness while protecting our
environment in the years and decades
to come.
Mr. SISISKY. Mr. Speaker, I would
briefly like to express my concern
regarding a consequence of the Coal
Industry Retirement Health Benefit
Act, which is contained in the energy
bill we will vote on today. The
so-called reach back provision, which
assigns retired mine workers of com-
panies no longer in business to compa-
nies currently operating in competi-
tive markets, poses a significant finan-
cial burden to companies involved in
the export of coal. While this is an
unintended development of the legisla-
tion, I feel it is extremely important
that this be recognized.
Energy coal producers can pass the
costs of this provision onto utilities
and ultimately, consumers. However,
the coal export market is extremely
competitive, and exporters of metal-
lurgical coal must absorb the costs or
lose market shares to our strongest
competitors in Australia, Indonesia,
and Poland. In addition, this will af-
fect the railroads who transport this
coal as well as the operation of ports
on the east coast who ship it.
At present, U.S. coal producers
export over 4.7 billion dollars' worth
of coal, over 112 million tons a year.
The State of Virginia alone produced
42 million tons in 1991. This provides
a great deal of jobs throughout the
region. Most of the coal produced in
Virginia is coking coal used in
steelmaking. Ironically, the majority
of this coal is exported due to the
decline of the U.S. steel industry. I
feel it is important that these export-
ers be assisted in offsetting some of
the costs of this measure by providing
partial relief through an export tax
credit.
While a tax credit was not included
in this important legislation, it is my
hope that in the future, some form of
relief will be available. If not, we risk
the prospect of increasing the already
substantial economic displacement in
the United States coal industry. Mr.
Speaker, I would hope my colleagues
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will recognize this problem and con-
sider action in the next Congress to
correct it.
Mr. FORD of Michigan. Mr. Speak-
er; I rise to explain to my colleagues
the provisions of the conference report
relating to nuclear whistleblowers. I
would like to applaud the tenacity of
Chairman Dingell, the chairman of
the Energy Subcommittee, Mr. Sharp,
and Chairman Miller in fighting to
preserve the House position. The
result of their work is a vastly im-
proved administrative procedure to
protect the right of employees in the
nuclear industry to resist unsafe prac-
tices and bring them to the attention
of the Government, the public, and
their fellow employees.
Employees will have 180 days, rath-
er than 60, to file complaints of retali-
ation, which will give them time to
gather evidence of the wrong done to
them, take that evidence to an attor-
ney or the Labor Department and file
a complaint before their rights are cut
off.
I am very pleased to report that the
conference agreement breaks new
ground in the protection of
whistleblowers by combining a less
onerous burden of proof for employees
with interim relief that will ensure
that successful complainants will not
have to wait years for reinstatement
and back pay after prevailing in their
administrative hearing. No nuclear
whistleblower will ever again have to
endure the hardship suffered by Ms.
Carolyn Larry, an employee in my
State of Michigan, who won her case
at the administrative law judge level
but had to wait almost 5 years before
the Secretary of Labor issued a final
decision ordering relief.
The conference agreement creates a
new paragraphs (3) in section 210(b)
of the Energy Reorganization Act of
1974. Paragraphs (3)(A) and (3KB)
impose a limitation on the investiga-
tive authority of the Secretary of La-
bor in whistleblower cases. If the
complainant does not make a prima
facie showing that protected activity
contributed to the unfavorable person-
nel action alleged in the complaint,
the Secretary must dismiss the com-
plaint and cease the investigation.
And if the employer demonstrates by
clear and convincing evidence that it
would have taken the same unfavor-
able personnel action in the absence of
such behavior, the Secretary must
cease the prosecution of the com-
plaint. The complainant is free, as
under current law, to pursue the case
before the administrative law judge if
the Secretary dismisses the complaint.
At the administrative law judge
hearing and in the subsequent appeal,
the complainant's burden of proof will
be governed by new section 210(b)(3)
(C) and (D). Once the complainant
makes a prima facie showing that
protected activity contributed to the
unfavorable personnel action alleged
in the complaint, a violation is estab-
lished unless the employer establishes
by clear and convincing evidence that
it would have taken the same unfa-
vorable personnel action in the ab-
sence of such behavior.
The conferees intend to replace the
complainant's burden of proof enunci-
ated in Mt. Healthy v. Doyle, 429
U.S. 274 (1977), in order to facilitate
relief for employees who have been
retaliated against for exercising their
rights under section 210.
To remedy the long delays in ob-
taining relief for complainants with
meritorious cases, the conference
agreement amends section
210(b)(2)(A) of the Energy Reorganiza-
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tion Act to require the Secretary to
order interim relief for any complain-
ant who prevails at the hearing level.
Once an Administrative Law Judge
determines that the complaint has
merit, the Secretary must, without
delay, order the employer to abate the
violation and reinstate the complain-
ant to his or her former position to-
gether with the compensation, includ-
ing pack pay, terms, conditions, and
privileges of his or her employment.
No award of compensatory damages
may issue, except as a final order of
the Secretary.
Mr. STUDDS. Mr. Speaker, I rise in
support of the energy bill conference
report, and in particular support of
my provision regarding fishways at
licensed hydroelectric power projects
which was adopted by the Energy and
Commerce Committee.
My committee has long been con-
cerned with the blatant disregard the
Federal Energy Regulatory Commis-
sion has demonstrated toward the
Nation's fisheries resources and the
responsibilities of the Federal and
State fish and wildlife agencies in
hydropower licensing. The Energy
and Commerce Committee attempted
to address this problem in the 19S6
Electric Consumers Protection Act,
but the situation is still far from satis-
factory. In many parts of the country,
hydropower projects with inadequate
fishways continue to pose a serious
threat to our fishery resources.
For that reason, I and many others
were particularly troubled by FERC's
recent efforts, through rulemaking, to
limit the exclusive authority of the
Secretaries of Commerce and Interior
to prescribe fishways as a requirement
of hydropower licensing. It was a
result of that rulemaking that I of-
fered an amendment to the energy bill
to vacate FERC's improper rule and
clarify once again the exclusive au-
thority of the natural resource agen-
cies to prescribe fishways and protect
our fisheries.
The conference report reflects this
amendment. Specifically, it reinstates
the status quo that existed prior to
FERC's rule and requires that any
future attempts by FERC to define
fishways must be done with the con-
currence of the Secretaries of Com-
merce and Interior. The provision
does not require FERC to adopt new
fish way regulations however, nor does
it preclude the existing authority of
the resource agencies to issue their
own regulations pursuant to section
18 of the Federal Power Act.
The intent of the provision is to
ensure the safe and timely passage of
fish at licensed hydropower projects.
Fishway structures and operations
may serve a variety of resource objec-
tives and plans, which this provision
does not intend to limit, such as pas-
sage for healthy existing populations;
passage for depleted populations as
part of a restoration program; or pas-
sage as a means of access to
underutilized habitat areas.
Further, the phrase 'project opera-
tions and measures' is intended to
give full effect to the accomplishment
of safe and timely passage offish. For
example, an appropriate fishway
might consist of a spill over a spillway,
controls on timing of project opera-
tions or on project features such as
gate openings; project shutdown as an
alternative to the construction of a
fish screen or where fish screen is not
practicable; the safe passage flow over
a barrier such as a waterfall in a pro-
ject area; or the physical transport of
fish around an impediment to passage.
Mr. Speaker, I am pleased that this
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fishways provision has been included
in the conference report, and I hope
that as a result our fisheries resources
will be given the treatment and pro-
tection they need and deserve.
Mr. HUGHES. Mr. Speaker, I rise
in support of H.R. 776, the Compre-
hensive National Energy Policy Act.
While there are many provisions in
this bill pertaining to a broad range of
issues, I will limit my remarks to Out-
er Continental Shelf development,*
global warming and alternative fuels.
Overall, I am pleased that this
legislation promotes the implemen-
tation of several conservation mea-
sures with an eye on reducing our
dependence on oil. It is clear that oil
production is not a panacea to our
Nation's energy ills.
Indeed, we must balance our need
for adequate energy resources with
our desire to protect our global envi-
ronment. I believe that H.R. 776 goes
a long way toward this goal.
As the leading Nation in oil con-
sumption and C02 production, it is
our responsibility to cooperate with
the international community to stabi-
lize C02 production without adversely
impacting a Nation's ability to devel-
op. Accordingly, I am pleased that the
bill authorizes $50 million to help
support international efforts to reduce
greenhouse gas emissions. Clearly,
our domestic and international poli-
cies must be coordinated to promote a
comprehensive, long-range view that
addresses the environmental degrada-
tion of the planet.
Despite these advances, I am disap-
pointed that the entire OCS title has
been eliminated from the energy bill.
Among the provisions in the
House-passed version of the energy
bill were: a 10-year moratorium on
the issuance of new leases for oil and
gas production in most areas of the
Outer Continental Shelf; establish-
ment of scientific panels to assess
potential impact of oil and gas devel-
opment in each moratorium area; and
a program under which States would
receive block grants, funded from a
portion of Federal OCS leasing reve-
nues, for environmental protection
and remediation activities in the
coastal zone.
These provisions provided neces-
sary advances in the way we address
offshore development. Consequently,
their elimination leaves a gaping hole
in our comprehensive national energy
policy and could place at risk superla-
tive natural resources for what could
be an inconsequential amount of oil.
Mr. Speaker, the development of
America's alternative fuel resources is
the best means by which we can di-
minish our reliance on oil and all the
difficulties and hazards associated
with its use. The alternative fuels
section of H.R. 776 is a forward look-
ing approach, which can begin to yield
results today. At the same time, a
10-percent alternative fuel use goal by
the year 2000 is reasonable and at-
tainable.
I am pleased that the Federal fleet
will be among the first to participate
in this exciting program. Combined
with the mandates for private fleets
and commercial demonstration pro-
grams, we can surely expect to reap
innumerable benefits from the enact-
ment of these vital provisions of H.R.
776.
I believe that any legislation to
implement a comprehensive national
energy policy must incorporate conser-
vation measures and encourage the
use of alternative energy sources to
meet our energy needs. H.R. 776 is a
step in the right direction and I urge
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my colleagues support for its passage.
Mr. ANDREWS of Texas. Mr.
Speaker, one energy conservation
provision in H.R. 776, the
Compreshensive National Energy
Policy Act of 1992, will go far in pro-
moting greater energy conservation by
individuals and businesses. By grant-
ing a preferred tax status to rebates
paid by utilities for conservation in-
stallations and modifications, this bill
will promote the efficient use of ener-
gy-
When considering rebate programs,
it is necessary to analyze fully the
effect of the program on the ultimate
consumption of primary energy. Be-
cause regates can significantly affect
the fuel choice decisions of consumers,
public service commissions and other
local regulatory authorities should
ensure that promotional programs
that actually increase energy con-
sumption, consumer energy bills and
environmental degradation are not
granted this favorable tax treatment
as a result of their inclusion with
other true conservation measures.
Environmental groups such as the
Natural Resources Defense Council
and Friends of the Earth and conser-
vation groups such as the Energy
Conservation Coalition, the American
Council for an Energy-Efficient Econ-
omy and the Alliance to Save Energy,
have all endorsed this provision as
promoting responsible energy conser-
vation. They are, however, promo-
tional programs that may decrease
energy efficiency, harm the environ-
ment and increase consumer energy
costs. Certainly, State regulatory
commissions and local governing au-
thorities should carefully scrutinize
rebate programs and give utilities
guidance as to what constitutes a true
conservation program.
Mr. de LUGO. Mr. Speaker, I rise in
support of the conference report on
H.R. 776.
This conference report is the out-
growth of considerable effort on the
part of the House and Senate, and I
commend my colleagues in both
Chambers for the extraordinary de-
gree of cooperation that resulted in
our completing this conference on
time.
In particular, I want to commend
the chairman of the conference com-
mittee on which I was privileged to
serve, Senator Bennett Johnston Jr. I
also want to recognize the leadership
of Chairmen Miller and Dingell on
this important matter.
Mr. Speaker, title XXVH of H.R.
776 would address a number of special
energy-related problems faced in the
insular areas for which our Nation
has special responsibilities, and which
are outlined in House of Representa-
tives Report 102-474, part 8.
For the most part, H.R. 776 would
followup on issues which the Insular
and International Affairs Subcommit-
tee on the House Committee on Inte-
rior and Insular Affairs - which I am
privileged to chair - has been working
on for some time.
A few other issues are based on
more recent consultation with repre-
sentatives of the insular areas, but
also relate to longstanding needs.
Among the pressing insular needs
addressed, Mr. Speaker, is the need to
provide electricity throughout the
trust territory that we have commit-
ted to the United Nations to develop,
Palau.
Some 45 years after the United
States assumed this responsibility,
electricity is still not available to
many people in these western Pacific
islands.
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Fortunately, the conference report
on H.R. 776 recognizes the importance
of ensuring adequate electric service
throughout the islands, as did the
House bill. It would require the Sec-
retary of the Interior to submit to the
Congress - within 3 months of enact-
ment of H.R. 776 - a plan to meet
Palau's electric needs, including all of
the infrastructure and financing
needs of its power system.
Mr. Speaker, this conference report
includes a number of other important
provisions that are essential, not only
to the provision of energy in the insu-
lar areas, but to the health and
well-being of the people in these areas
as well.
For example, PCB's brought into
Micronesia and the Marshall Islands
in power distribution equipment by
the Federal Government during its
period of United States trusteeship
responsibility for the islands should be
cleaned up by the Federal Govern-
ment.
H.R. 776 recognizes and facilitates
this.
Also, since the insular areas have
an abundance of alternate, renewable
energy resources, these resources
should be developed in order to break
these islands' almost total reliance on
costly, imported energy.
H.R. 776 recognizes this and would
assist insular governments in develop-
ing these valuable resources by autho-
rizing an annual appropriation of up
to $2 million for such programs.
And because of the unique vulnera-
bilities of the insular areas to any
disruption in our Nation's energy
supplies, title XIV of H.R. 776 requires
the Secretary of Energy to submit to
Congress a study outlining how these
areas would gain access to vital energy
supplies in times of a national energy
crisis.
Finally, recognizing that any ship-
ment to or storage of nuclear waste
on any of these islands would have
far-reaching and life-threatening con-
sequences to the people of these rela-
tively small land masses, H.R. 776
prohibits this.
On that note, Mr. Speaker, I must
express my sincere regrets that the
Abercrombie amendment which would
have stiffened considerably the cir-
cumstances under which plutonium
may be shipped through U.S. territori-
al waters did not survive. This is an
issue, however, which I am certain the
honorable gentleman from Hawaii will
not let die, and I look forward to
working with him on this in the 103d
Congress.
I urge my colleagues to pass this
conference report.
Mr. MARKEY. Mr. Speaker, I am a
strong supporter of the conference
report on H.R. 776, the Energy Policy
Act of 1992. Overall, this landmark
legislation promises great gains for
consumers and the environment with
its profound changes in our national
energy policy.
Despite my overall support for this
bill, I am very troubled by one of the
amendments to the Public Utility
Holding Company Act of 1935
(PUHCA). One provision in title VII of
H.R. 776, section 715, would allow
utility companies to invest heavily in
foreign utility companies • but unfor-
tunately without adequate regulatory
oversight. I strongly oppose this pro-
vision because I am very concerned
that utilities will make unwise invest-
ments in foreign utility systems with
great potential risk to their asset base,
and in turn to their ratepayers - resi-
dential, commercial, and industrial.
I state these strong reservations
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despite my endorsement of PUHCA
reform. We must keep in mind that
PUHCA reform will greatly increase
the investment opportunities for utili-
ty companies - with potential risks
and potential benefits. On the 'do-
mestic front' the potential beneficia-
ries and the potential victims of these
investments include the utilities' do-
mestic ratepayers. But on the inter-
national front the potential beneficia-
ries are foreign ratepayers and the
potential victims are domestic ones.
In other words, individuals and busi-
nesses in the United States may find
their electric and gas rates increasing
while they subsidize rates overseas.
Furthermore, the foreign utility
section was not included in either the
House or the Senate versions of the
energy bill. In fact, it was not the
subject of hearings in either body. It
appeared during the conference com-
mittee and has barely been analyzed
and debated by Congress or others.
It is a major change in how utility
companies are allowed to invest their
money, a change that is premature
and, I believe, ill-advised.
As chairman of the Telecommuni-
cations and Finance Subcommittee of
the House Energy and Commerce
Committee I oversee the U.S. Securi-
ties and Exchange Commission (SEC).
I know that in many areas of its au-
thority the SEC does an admirable job
of regulating securities markets and
enforcing the securities laws. But the
SEC does not do a good job in per-
forming its responsibilities under
PUHCA In fact, their record on con-
sumer protection under PUHCA is
quite poor.
That is why I plan to conduct very
close and careful oversight of the
SEC '8 enforcement of utilities' foreign
investments in the 103d Congress and
beyond. PUHCA reform will ease the
burdens placed on the Commission
and its staff • that is why next year
during debate on reauthorizing the
SEC I will make sure that they rede-
ploy their resources to ensuring that
utilities do not make unwise and risky
foreign investments. Their financial
exposure in the international arena is
potentially enormous with commensu-
rate risk to investors and to
ratepayers.
As we consider the conference re-
port to H.R. 776 it is valuable to re-
view this important issue. We must
keep in mind that for almost six de-
cades PUHCA has required electric
utilities to think about one thing only:
the welfare of their customers. This
amendment will radically change that
world.
In the last few years, the court of
appeals has reversed the SEC twice
regarding PUHCA oversight because
of legal error or failure to order a fair
hearing. With one minor exception,
the SEC has not ordered a fair hear-
ing to review a holding company appli-
cation in 15 years.
The registered holding companies
are the largest electric utility systems.
The nine electric systems cover 20
States in total. This provision would
allow the largest companies to take
the largest risks with the least review.
That makes no sense.
HR 776 already changes our electric
industry in ways we can only specu-
late about. Those changes to PUHCA
would authorize utilities to create
wholesale generators anywhere in the
country, with little review. The for-
eign utility amendment would chance
the electric industry even more draV
matically. Today, utility activities are \^
located primarily in a single state or
geographic area. Yet most state corn-
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missions already are outmatched. If
each of those utilities in turn invested
in, or were affiliated with, foreign
utilities, the task would become much
greater. It will be difficult for state
commissions, already short on staff
and other resources, to trace and
allocate costs when some of the cost
centers are located in a different con-
tinent.
Our Nation '8 electric utilities face
many grave challenges. Acid rain
emissions and nuclear waste disposal
alone are straining the resources of
our top managerial talent. After
much procrastination, utilities have
only just begun to tap the extraordi-
nary benefits of demand-side manage-
ment techniques such as conservation
and load management. Alternative
technologies such as solar, biomass,
wind, and geothermal energy remain
under exploited. With changes in
smallscale technologies, we now have
opportunities never available before to
create competition. We need competi-
tion - fair competition - to make our
domestic electric industry more effi-
cient.
These are new challenges for not
only our utilities but our State regula-
tors as well. State commissions re-
main the lone bulwark protecting
captive consumers from monopoly
power. Any new complexity in the
industry's structure puts additional
pressure on them. Today the state
regulators must keep tabs on a large
utility whose interests already can lie
in other industries in other geographic
locations. Under the PUHCA changes
in H.R. 776, this job will grow expo-
nentially as utilities and others are
free to roam the country in search of
new electric markets. Yet we have
provided no financial assistance and
no technical assistance to these State
commissions, whose resources are
strained already by budget cuts.
It is one thing to permit a utility to
play in its own backyard, acquiring
neighboring utilities or related lines of
business. It is quite another thing to
extend that backyard over the entire
planet. How does a State commission
in New Jersey, for instance, monitor
its utilities' activities in Argentina?
This provision would invite utilities
to shift valuable resources and man-
agement - paid for by captive retail
ratepayers - from monopoly markets
to competitive markets. Utility ex-
pansion into new markets raises the
same problems as does utility diversifi-
cation in general: risk of failure, di-
versification of utility profits from
measures which would strengthen the
utility's financial condition, reduced
utility maintenance, the draining of
top management from the core utility,
and cross-subsidization.
Some may argue that utilities have
plenty of expertise, and should have a
chance to send that expertise abroad.
But a monopoly utility cannot argue,
simultaneously, that first, it has ser-
vice territories of exclusive domain,
and second, that it is retaining its best
resources and management for the
local utility business. Managers can-
not be in two places at the same time.
If the utility has excess resources, it
can best serve the public by transfer-
ring this capacity to a new company
and spinning off that company to its
shareholders. There is no public in-
terest reason why the utility need
retain control of the new company, or
why the utility's captive customers
need be at risk should that new com-
pany fail.
We are trying to do too much at
once. We are inviting utility empire
building when we should be insisting
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on consumer protection. I will contin-
ue to oversee the SEC's role and re-
sponsibilities in this area to ensure
that domestic ratepayers are not
harmed and are not put at risk.
Mr. SCHEUER. Mr. Speaker, as
this Congress concludes with the pas-
sage of legislation designed to promote
energy conservation and the use of
sustainable energy sources both at
home and abroad, it is imperative that
we realize that our progress toward
the goal of environmental protection
is jeopardized by the rapid increases
in global population. Population
growth has long been recognized as
one of the greatest threats both to the
environment and to the quality of
human life in developing countries.
The strain on natural resources im-
posed by rapid increases in population
and the resulting adverse impact on
human life are apparent today in
many areas of the world. In Indone-
sia, for example, the doubling of
Jakarta's population in the 20 years
from 1970 to 1990 and the accompa-
nying increases in sewage and indus-
trial waste pouring into coastal waters
have resulted in dramatic declines in
the numbers of fish caught by local
fishermen and have rendered the
remaining fish inedible. In Africa, the
famines in Ethiopia and, now, Somalia
present the most familiar and appall-
ing examples of the intense human
suffering caused at least in part by
the stress of rapid population growth
on delicate ecosystems. Deforestation
and desertification are but two of the
devastating consequences of an
overstressed and fragile environment.
In recent years, moreover, it has
become apparent that the impacts of
population growth are not confined to
local environmental degradation and
suffering. The phenomena of defores-
tation, loss of biodiversity, and climate
change, which are increasingly recog-
nized as global as well as local envi-
ronmental threats, are driven by in-
creases in both population and per
capita consumption. In fact, scientific
analyses estimate that population
growth has already been responsible
for nearly two-thirds of the increase
in carbon dioxide emissions and for up
to 80 percent of recent losses in tropi-
cal forests.
The necessity of action to address
the environmental threat posed by
rapid population growth has also been
recognized for many years. The Dec-
laration on the Human Environment
adopted at the first major internation-
al conference on the environment,
held in Stockholm in 1972, observed
that population growth continuously
presents problems on the preservation
of the environment and recommended
that demographic policies which re-
spected human rights be instituted in
areas whose high rates of population
growth posed an environmental
threat. More recently, a 1992 report
by the World Resources Institute on
environmental technologies noted the
threat to environmental sustainability
posed by population growth and pro-
claimed the development of new con-
traceptive technologies to be an envi-
ronmentally critical opportunity.
EFFORTS TO rROMCITE FAMILY PLANNING
The most immediate and logical
means to decrease population growth
while respecting human rights is to
make family planning services univer-
sally accessible, and the goal of doing
so enjoys widespread support within
the international community. Ensur-
ing that all couples are empowered to
choose the timing and spacing of their
children's births is one of the objec-
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tives adopted by the 1990 World Sum-
mit for Children in its list of feasible,
affordable goals for achievement by
the year 2000. Even the agenda adopt-
ed at the recent U.N. Conference on
Environment and Development, which
many in the international community
felt paid too little attention to the
urgency of the population growth
problem, recommended that countries
should institute measures to ensure
that women and men have the same
right to decide freely and responsibly
on the number and spacing of their
children and have access to the infor-
mation, education and means, as ap-
propriate, to enable them to exercise
this right. The efficacy of family plan-
ning efforts in improving human wel-
fare is emphasized in the recent
UNICEF State of the World's Chil-
dren 1992 report's declaration that:
The responsible planning of births is
one of the most effective and least
expensive ways of improving the qual-
ity of life on earth - both now and in
the future - and that one of the great-
est mistakes of our times is the failure
to realise that potential.
In the 40 years since the institution
of the first national family planning
program in India, and the establish-
ment of the International Planned
Parenthood Federation in 1952, ap-
proximately 70 governments have
either established their own national
family planning programs or have
provided indirect or direct support to
substantial nongovernmental family
planning programs in their countries.
The drive to ensure universal avail-
ability of family planning services has
been successful in that by 1990, 95
percent of the developing world popu-
lation was living in countries which
offered some form of family planning
support.
CONTRACEPTIVE DEVELOPMENT
FAILURES
Despite the achievements of inter-
national and national family planning
programs, however, considerable tech-
nological and logistical obstacles still
thwart efforts to ensure that all wom-
en have access to family planning
services which meet their needs. Con-
traceptive technology has made few
gains since the early 1960's, when the
pill and the IUD were introduced. Of
the nine contraceptive methods listed
by the Office of Technology Assess-
ment in 1980 as highly likely to be
available before 1990, only four are
currently available in the United
States. Many groups, especially
breast-feeding mothers, those unable
or unwilling to take oral contracep-
tives because of health risks, and peo-
ple who lack access to the trained
medical professionals needed for some
methods, are not served well by any of
the existing family planning options.
Moreover, none of the contraceptive
methods in use is completely reliable.
Experts estimate that as recently as
1987, over 1 million pregnancies oc-
curred in the United States alone due
to contraceptive failure. The lack of
acceptable options for family planning
is noted in a 1990 report by the Na-
tional Research Council and the Insti-
tute of Medicine:
Every method in use today has
drawbacks, and, collectively, current
methods leave major gaps in the abili-
ty of people to control fertility safely,
effectively, and in culturally accept-
able ways throughout their reproduc-
tive life cycle.
Unfortunately, the prospects for
improving the selection of family plan-
ning options are limited severely in
the United States by a combination of
deterrents including lack of govern-
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ment support of research, difficulty in
obtaining regulatory approval of new
contraceptives, and concerns about
product liability. Most large U.S.
pharmaceutical companies have aban-
doned their contraceptive develop-
ment programs due to
these factors; only one, Ortho Phar-
maceutical Corp., remains active in
the field. As industry and private
foundation support for contraceptive
development research declined
throughout the 1980's, though, Feder-
al funding remained relatively con-
stant instead of moving to fill the gap
created by loss of non-Federal sup-
port. Moreover, during the period
from 1970 to 1986, the United States
provided only $3.2 million in funds to
the Human Reproduction Programme,
which is the main contraceptive devel-
opment program of the World Health
Organization. During the same period,
Sweden contributed $73 million to the
program; Norway donated $26 million;
and the United Kingdom gave $24
million.
OBSTACLES TO ACCESSIBILITY OF
EXISTING CONTRACEPTION
In addition to the obstacles to fami-
ly planning posed by the lack of at-
tractive contraceptive options, there
are also significant logistical, financial,
and political difficulties in ensuring
the universal accessibility of the exist-
ing family planning methods. Experts
estimate that 130 million women liv-
ing in developing countries would like
to control the number
and spacing of their pregnancies but
are not currently practicing contra-
ception. The result of the lack of
knowledge about or access to family
planning services, observes the
UNICEF report, is that (approxi-
mately) one pregnancy in three in the
developing world this year will be not
only unplanned but un-
wanted.
Since the worldwide number of
couples of childbearing age will in-
crease throughout the 1990's by about
18 million annually, the next few
years are a critical time for promoting
family planning. Current expenditures
for family planning in the developing
world have been estimated at $4.6
billion, and 50 percent of married
couples practice contraception. The
Population Crisis Committee esti-
mates that funding for family plan-
ning in developing countries will need
to rise to $10.5 billion by the year
2000 in order to achieve global popula-
tion stabilization at a level slightly
less than double the current world
population of 5.4 billion. An equitable
U.S. share of this funding is estimated
at $1.2 billion annually by the year
2000. Primarily because of political
pressure from the antiabortion move-
ment, however, the administration is
reluctant to increase funding for in-
ternational family planning assistance
programs and refuses to resume U.S.
support of such major international
organizations as the United Nations
Fund for Population Activities and
the International Planned Parenthood
Federation. Such concerns, together
with U.S. reluctance to address the
overconsumption which produces the
greatest environmental impact from
developed world populations, also
played a large part in stifling discus-
sion of population issues at the recent-
ly concluded UNCED meeting.
As the United States continues the
third decade of the environmental
movement, and as we in public service
continue to debate environmental
policy in both legislation and interna-
tional agreements, it must be recog-
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nized that in the long run, population
stabilization is the sine qua non of
environmentalprotection. Incremental
gains in energy and water conserva-
tion, control of air pollution, and re-
duction of solid and hazardous wastes*
will all eventually come to nought if
we continue to stress the earth's nat-
ural resources through relentless pop-
ulation expansion. If our goal is to
ensure that these resources are sus-
tained in order to provide even the
possibility of a civilized worldwide
standard of living, with enough food,
water, and energy for everyone, we
simply must begin now to make the
goal of global population stabilization
a priority and incorporate it into our
health research, education efforts,
international aid, and environmental
laws and treaties.
The conscience of the world commu-
nity must be pricked to reverse this
tide of events. The family of U.N.
agencies must act in concert to bring
this message to the developing world
so that equilibrium may be achieved
between food production and popula-
tion.
WHO should expand its family plan-
ning program activities and efforts to
improve material and child health
UNESCO should expand its education
efforts to encompass the human di-
mension of environmental protection.
UNED must redouble its efforts
throughout the world on environmen-
tal protection.
FAO must revitalize its efforts to
promote increased efficiency of food
production in an environmentally
sustainable manner.
The World Bank and the regional
development banks must become truly
committed to funding projects which
promote literacy, maternal and child
health, family planning technologies
based upon energy efficiency, and
resource conservation and other envi-
ronmentally sustainable technologies.
The OECD nations should exert their
moral responsibility to make funds
available to developing nations to
further their efforts in family plan-
ning and environmental protection.
For OECD nations, it is a clear cut
case of pay me now, or pay me later,
for surely there is a tremendous global
cost associated with the developed
world's failure to assist developing
countries with their urgent need to
act on these pressing issues.
Mr. HARRIS. Mr. Speaker, I rise
today in strong support of House Res-
olution 776, the National Energy Poli-
cy Act. I would like to congratulate
both Chairman John Dingell and our
subcommittee chairman, Phil Sharp,
for their hard work on this omnibus
legislation. Today, we will vote on one
of the most important pieces of legis-
lation of the 102d Congress.
As a member of the Energy and
Power Subcommittee, I have been
involved in the development of this
legislation from its inception. I be-
lieve it is time to move this country
toward a sensible energy policy and
secure energy future. This legislation
will accomplish both of these goals.
The comprehensive package will
encourage the efficient use of all
forms of energy, including coal, fossil
fuels, nuclear, and renewable energy.
The efficient use of energy will not
only help our economy, but also lower
our dependence on imported oil. This,
in turn, will lower our trade deficit.
My home district in Alabama is
fortunate to have many natural ener-
gy resources such as coal, natural gas
and hydro power. This legislation will
encourage better use of all of these
fuels.
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I believe we have reached a consen-
sus on a national policy that will help
our economy and our environment. If
we can lower our costs of production,
American-made products will be more
competitive in the global marketplace.
This bill will help companies toward
that goal by lowering the cost of ener-
gy-
Another important provision in this
bill will amend the Public Utilities
Holding Companies Act to encourage
the development of independent power
producers. These new electricity pro-
ducers will compete directly to lower
the cost of electricity.
The issues involving nuclear energy
have also been a concern of mine.
The bill today contains an important
provision that ensures that the site
characterization study at Yucca
Mountain will continue on schedule.
This study will determine whether
Yucca Mountain is a suitable site for
disposal of high level nuclear waste.
The disposal of this waste is an impor-
tant issue to resolve. In addition, this
conference report contains a new li-
censing procedure for nuclear power-
plants.
I urge my colleagues to support this
omnibus bill. The time to act is now.
Mr. DORGAN of North Dakota. Mr.
Speaker, I am voting for this energy
bill because I think it's an important
step toward energy efficiency and
energy independence in this country.
It establishes the basic elements of a
long-awaited national energy policy,
and such policy is overdue.
This conference agreement provides
tax incentives for independent natural
gas producers to invest in new produc-
tion, and it includes tax incentives,
technical assistance and market incen-
tives for the growth of clean alterna-
tives fuels such as ethanol and com-
pressed natural gas. Similar incen-
tives and assistance are provided for
wind, solar and geothermal energy.
I fought for these incentives for
alternative energy in the Ways and
Means Committee because I feel
strongly that our Government must
get behind these energy sources and
bring them into the mainstream of
this Nation's energy program. This
kind of legislation is vital to American
interests if we are going to move away
from our excessive dependence on
foreign oil.
The conference agreement also pro-
vides access for new electrical power
generators, including those powered
by wind energy, to freely sell their
power into electric utility grids. At
the same time, it protects private
utilities and cooperatives from an
unfair environment in which a new
energy supplier could move into an
established area and pick off the best
retail customers with discounted
rates. In this respect, the bill provides
balance and fairness while encourag-
ing new competition and efficiency in
electrical power.
However, I am very concerned
about some provisions in the bill, and
I hope that the next Congress will
address them quickly. First, the
reachback provision requiring coal
operators that are not members of the
Bituminous Coal Operators Associa-
tion (BCOA) to help bail out the
BCOA'8 health benefits fund for re-
tired coal miners is patently unfair.
This provision will result in a wind-
fall for a few big coal companies that
intentionally under-funded their own
benefits program. Although we all
share the ultimate goal of guarantee
ing the solvency of this fund for re-
tired coal miners, the reachback provi-
sion simply asks the wrong parties to
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4675
pay for it.
Second. I am concerned about the
omission of a moratorium on offshore
oil and gas leasing. Congress has
placed short-term moratoriums on
further drilling in the most environ-
mentally sensitive areas, but those
moratoriums will soon run out. Con-
gress must make responsible judg-
ments soon about where further
off-shore drilling should be allowed, if
at all.
Despite these problems, however, I
feel that this legislation generally
moves in the right direction to ad-
dress this country's energy problems.
I urge my colleagues to support this
bill establishing a sound national en-
ergy policy.
Mrs. KENNELLY. Mr. Speaker, I
rise to associate myself with the com-
ments of the chairman of the Ways
and Means Committee, Dan
Rostenkowski, regarding the coal
health benefits provision of the Com-
prehensive National Energy Act of
1992, specifically his observation that
the House conferees were prevented
from undertaking good faith negotia-
tions on the enumerable problems
associated with the Senate version. I
support his interest in reconsidering
this provision in the very near future,
specifically before they take effect on
October 1, 1993.
One of the major issues that should
be addressed is the impact this provi-
sion will have on the export coal in-
dustry. Significant additional costs
imposed on coal destined for export
will result in fewer exports and lower
employment in the U.S. coal and
transportation sectors. The adoption
of a metallurgical coal tax credit or
other similar relief will go a long way
toward preserving jobs in this impor-
tant industrial sector.
Mr. LEWIS of Florida. Mr. Speaker,
I rise in reluctant opposition to H.R.
776, the National Energy Strategy
Act.
While there are many programs
here that I support, such as energy
efficiency and alternative fuels, I can-
not support the conferees' decision to
strip out language forbidding oil drill-
ing off of Florida for the next decade.
It is important to realize that this is
not a simple case of the language
being in one House and not the other.
Similar language was in both bills -
but was dropped because it was too
controversial.
Mr. Speaker, this is a sorry excuse,
no matter what the underlying rea-
son. This body is supposed to make
the difficult decisions. If this ban is
too controversial to place in this bill,
when will it ever get passed?
For those of us who have worked
for a drilling ban, this is a cruel blow.
To come so close, but yet be so far.
Let's defeat this bill, send it back to
the conference committee, and put the
oil drilling title back in the bill. Flo-
ridians, and all coastal citizens de-
serve no less.
Mr. MOORHEAD. Mr. Speaker, I
yield back the balance of my time.
Mr. SHARP. Mr. Speaker, I move
the previous question on the confer-
ence report.
The previous question was ordered.
MOTION TO RECOMMIT OFFERED BY
MRS. VUCANOVICH
Mrs. VUCANOVICH. Mr. SPEAK-
ER, I offer a motion to recommit.
The SPEAKER pro tempore. Is the
gentlewoman opposed to the confer-
ence report?
Mrs. VUCANOVICH. I am, Mr.
SPEAKER.
The SPEAKER pro tempore. The
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4676
Clerk will report the motion to recom-
mit.
The Clerk read as follows:
Mrs. Vucanovich moves to recommit the con-
ference report on the bill H.R. 776 to the commit-
tee of conference with instructions to the manag-
ers on the part of the House to disagree to sec-
tion 801 (relating to EPA standards for nuclear
waste disposal) in the conference substitute
recommended by the committee of conference.
The SPEAKER pro tempore. With-
out objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The
question is on the motion to recom-
mit.
The question was taken; and the
SPEAKER pro tempore announced
that the noes appeared to have it.
Mrs. VUCANOVICH. Mr. Speaker,
I object to the vote on the ground that
a quorum is not present and make the
point of order that a quorum is not
present.
The SPEAKER pro tempore. Evi-
dently a quorum is not present.
The Sergeant at Arms will notify
absent Members.
The SPEAKER pro tempore. The
Chair announces that this will be a
15-minute vote, and the next vote on
the conference report will be a
5-minute vote.
The vote was taken by electronic
device, and there were - yeas 102,
nays 323, not voting 7, as follows:
(ROLL NO. 473)
YEAS- 102
Allard
Atkins
Barrett
Bilbray
Bryant
Allen
AuCoin
Bentley
Bilirakis
Burton
Andre ws(ME)
Ballanger
Barman
CaapoelKCA) CampbelKCO)
Conyers Cox(CA)
da la Gana DoFazio
Dickinson Doolittle
Byron
ColemanfrX)
Crane
DoLay
Dornan(CA)
Dreier
Fawell
Gcren
Oilman
Hansen
Johnston
Klug
LaRooco
Marlenee
McNulty
MillertOH)
Myers
Olver
Pallone
Rangel
Ros-Lehtinen
Schaefer
Schrooder
Sikorski
Smith(OR)
Staggers
Thomas(CA)
Vucanovich
Watora
Wolpe
Abercrorobie
Anderson
Annunzio
Archer
Bacchus
Ba toman
Bereuter
Bliley
Borski
Brooks
Brown
Bustamants
Cardin
Chapman
Coble
CollinsCMI)
Cooper
Cox<IL>
Cunningham
Davis
Derrick
Dixon
Dorgan(ND)
Durbin
Early
EdwardsiOK)
Engel
Espy
Feighan
FoglieiU
Evans
Fish
Cilchrest
Coss
Ireland
JonU
Kostmayer
Levine<CA)
McDermott
Mfumc
Moody
Nagle
Orton
Pax on
Richardson
Sanders
Scheuer
Schulze
Skaggs
Smith(TX)
Stallings
Thomss(WY)
Walsh
Wax man
Yates
NAYS -323
Ackerman
Andre ws(NJ)
Anthony
Armey
Baker
Boilenson
Bevill
Boshner
Boucher
Broomrield
Bruce
Callahan
Carper
Clay
Coleman(MO)
Ewing
Gekas
Gillmor
Hammerschmidt
Kapiur
Lantos
LswisiCA)
McEwen
Michel
Murphy
Obey
OwensOJD
Ramstad
Riggs
Savage
Setoff
Shaw
Skeen
Snows
Vsnto
Washington
Weber
YoungCAK)
AndrewsfTX)
Applegsto
Aspin
Barton
BlackwaU
Brewster
Bunning
Camp
Carr
Cltngar
CoUinanU
Condit
Coyne
Dannemeyer
Do Laura
Dicks
Donnelly
Downey
Dwysr
Eckart
EdwardsfTX)
English
Fascell
Fields
FonKMD
Cramer
Derosa
DeUums
DingsU
Dooley
Duncan
Dymalr/
EdwardeiCA)
Erdrekh
Fazio
Flake
FordCTN)
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Frank(MA)
Gallegly
Gejdenson
Gingrich
Goodling
G randy
Gunderson
Hamilton
Haaiort
Hayes(LA)
Henry
Hoagland
Hollo way
Horton
Hubbard
Hutto
Jacobs
Johnson(CT)
Jones
Kennedy
Kfeczka
Kopetski
Lagomarsino
Leach
Lent
Lewia(GA)
Uoyd
Lowey(NY)
Man ton
Martinez
Mazzoli
McCollum
McDade
McMillan(NC)
Meyers
Mineta
Molinari
Moorhead
Morrison
Natcher
Nichols
Oakar
Ortiz
Packard
Pastor
PayneCVA)
Penny
Peterson(MN)
Pickle
Price
Rahall
Reed
Ridge
Roberts
Rogers
Rotten kowski
Rowland
Franks(CT)
Gallo
Gephardt
Glickroan
Gordon
Green
Hall(OH)
Hancock
Hatcher
Hefley
Herger
Hobson
Hopkins
Houghton
Huckaby
Hyde
Jefferson
Johnson(SD)
Kanjorski
Kennedy
Kolbe
Kyi
Lancaster
Lehroan(CA)
Levin(MI)
Lightfbot
Long
Luken
Markey
Matsui
McCandless
McCrery
McGrath
MilleriCA)
Mink
Mollohan
Moran
Mrazek
Neal(MA)
Nowak
Oberstar
Owens(NY)
PanetU
Patterson
Pease
Perkins
Petri
Porter
Pursell
Ravenel
Regula
Rinaldo
Roe
Rohrabacher
Roth
Roybal
Frost
Gaydos
Gibbons
Gonzalez
Gradison
Guarini
Hall(TX)
Harris
Hayes(IL)
Hefner
Hertel
Hochbrueckner
Horn
Hoyer
Hughes
Inhofe
Jenkins
Johnson(TX)
Kasich
Kildee
Kolter
LaFalce
Lauglilin
Lehroan(FL)
Lewis(FL)
Livingston
Lowery(CA)
Machtley
Martin
Mavroules
McCloskey
McCurdy
McHugh
McMillen(MD)
MillerCWA)
Moakley
Montgomery
Morella
Murtha
Neal(NC)
Nussle
Olin
Ox ley
Parker
Payne<NJ)
Pelosi
Peterson(FL)
Pickett
Poshard
Quillen
Ray
Rhodes
Ritter
Roemer
Rose
Roukema
Russo
Sabo
Sarpalius
Schumer
Sharp
Sisisky
Slaughter
Smith(NJ)
Spence
Stenholm
Sundquist
Synar
Tauzin
Thomas(GA)
Torricelli
Trailer
Valentine
Visclosky
Weldon
Williams
Wolf
Yatron
Zimmer
Sangmeister
Sawyer
Sensenbrenner
Shays
Skelton
Smith(FL)
Solan
Spratt
Stokes
Swett
Tallon
TayloHMS)
Thornton
Towns
Unsoeld
Vender
Volkmer
Wheat
Wilson
Wyden
Young(FL)
Santorum
Sax ton
Serrano
Shuster
Slattery
Smith(IA)
Solomon
Stark
Stump
Swift
Tanner
TaylortNC)
Torres
Traficant
Upton
Jagt
Walker
Whitten
Wise
Wylie
ZelifT
NOT VOTING - 7
Boxer Chandler
Hunter Lipinski
Barnard
Clement
Stearns
Messrs. HEFLEY, HOYER,
BLILEY, WALKER, PACKARD, RAY,
RUSSO, WHITTEN, and
CUNNINGHAM changed their vote
from 'yea* to 'nay.'
Messrs. BOEHLERT, GILMAN, and
JAMES, Mrs. SCHROEDER, Messrs.
LEVINE of California, KLUG, SAND-
ERS, BERMAN, STUDDS,
GILLMOR, OBEY, LANTOS, WALSH,
WASHINGTON, AuCOIN, COX of
California, de la GARZA, YATES,
CONYERS, and RANGEL, Ms.
SNOWE, Messrs. JOHNSTON of Flor-
ida, EVANS, McDERMOTT, and
VENTO, Mrs. BYRON, and Mr.
MFUME changed their vote from
'nay' to 'yea.'
So the motion to recommit was re-
jected.
The result of the vote was an-
nounced as above recorded.
The SPEAKER pro tempore (Mr.
Montgomery). The question is on the
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4678
conference report.
Goodling
Gordon
Gradison
The question was taken; and the
G randy
Green
Guarini
Speaker pro tempore announced that
Gundereon
Hamilton
Hall(OH)
Hansen
HaU<TX>
Harris
the ayes appeared to have it.
Hastert
Hatcher
HayesdU
Mr SHARP Mr Speaker, on that I
Hsyes(LA)
Hefner
Henry
demand the yeas and :
nays.
Herger
Hertel
Hoegland
The yeas and nays were ordered.
The SPEAKER pro tempore. This
Hobeon
Holloway
Horton
Hochbrueckner
Hopkins Horn
Houghton Hover
will be a 5-minute vote.
Hubbard
Hucksby
Hughes
The vote was taken by electronic
Hutto
Hyde
Inhofe
device, and there were - veas 363.
Jacobs
Jefferson
Jenkins
nays 60, not voting 9,
as follows:
Johnson(CT)
Jones
JohnsonOD)
Kanjorski
JohnsosXTX)
Kapiur
Kasich
Kennedy
Kenneuy
(ROLL NO. 474)
Kildee
Kleczka
Mug
YEAS -383
Kolbe
Roller
Kopetski
Abercrombie
Ackerman
Alexander
Kyi
UFeJee
Lagomarsins
Anderson
Andrewe(NJ)
AndreweCTX)
Lancaster
Lantos
LaRooos
Annunzio
Anthony
Applegate
Laughlin
Leach
LehmanCGA)
Archer
Aepin
Atkins
Lehman(FL)
Lent
Levin<MI)
AuCoin
Baker
Ballanger
Levine<CA)
Lewie(CA)
LewMGA)
Barrett
Barton
Beteman
Lightfoot
Livingston
Uoyd
Beileneon
Bennett
Bentley
Lowery<CA)
Lowey(NY)
Luken
Bereuier
Berman
Bevill
Machtley
Man ton
Marksy
Black wall
Bliley
Boehlert
Martin
Martinez
Matsui
Boehner
Bonior
Boraki
Mavroules
Mazzoli
McCandlsss
Boucher
Breweter
Brooks
McCloskey
McCrery
McCurey
Broomfield
Browder
Brown
McDade
McDarmoU
McEwea
Bruce
Bryant
Bunning
McGrath
McHugh
McMiHanOiQ
Buetamante
Byron
Callahan
McMillen(MD)
McNulty
CampbelKCO) Cardin
Carper
Meyers
Mfume
Michel
Carr
Chapman
Clay
MillertCA)
Miller(OH)
MilleriWA)
dinger
Coble
Coleman(MO)
MineU
Mink
Moakley
CoJemanCTX)
CollinedU
ColliiwCMI)
Molinari
Mollohan
Montgomery
Combest
Condit
Conyers
Moody
Moorhead
Moran
Cooper
Coetello
Coughlin
Morella
Morrison
Mrazek
Cox(ID
Coyne
Cramer
Murphy
Murtha
Myers
Dannemeyer
Darden
Davis
Nagle
Natcher
Neal(MA)
de la Garza
DaLauro
Doll urns
Neal(NC)
Nichols
Nowak
Derrick
Dickinson
Dicks
Nussle
Oakar
Otin
Dingell
Dixon
Donnelly
Olver
Ortiz
Orton
Dooley
Dorgan(ND)
Downey
OwemKNY)
OweneOiT)
Oxley
Duncan
Durbin
Dwyer
PanetU
Parker
Pastor
Dymally
Early
Eckart
Patterson
Pazon
Payne(NJ)
EdwanMCA)
EdwanMOK)
EdwardsfTX)
Psyne(VA)
Pesss
Pelosi
Emereon
Engel
English
Perkins
PetersonOIN)
Pickett
Erdreich
Eapy
Evans
Pickle
Porter
Pbshard
Swing
Fawell
Fazio
Price
Pursoll
Quilleo
Feighan
Fields
Fish
Rahall
Rsmstad
Range!
Flake
FoglietU
Ford(MI)
Ravenel
Ray
Reed
Ford(TN)
Frank(MA)
FranMCD
Regula
Rhodes
Richards*.
Free*
Gallegr/
Gsllo
Rigge
Rinaldo
Ritler
Gaydos
Gejdeneon
Gephardt
Roberts
Ros
Rogers
Geren
Gilchreet
Gillmor
Rose
RostenkowsU
ftnnkeme
Gilman
Glickman
Gonzales
Rowland
Russo
SsJbs
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4679
Sanders
Sangmeiater
Santorum
Sarpaliua
Savage
Sawyer
Sax ton
Schaefer
Scheuer
SchilT
Schroeder
Schulze
Schumer
Serrano
Sharp
Shaya
Sisisky
Skaggs
Skeen
Skelton
Slattery
Slaughter
Smith(IA)
Smith(NJ)
Smith(OR)
Smith(TX)
Snowe
Solan
S pence
Spratt
Staggera
SUllinga
Stenholm
Stokea
Studda
Sundquist
Swett
Swift
Synar
TaJlon
Tanner
Tauzin
TayloHMS)
TayloHNC)
Thomas(CA)
ThomaaXGA)
Thomaa(WY)
Thornton
Torrea
Torricelli
Towns
Traficant
Traxler
Unsoeld
Upton
Valentine
Vender
Jagt
Vento
Visclosky
Volkroer
Walsh
Waters
Weldon
Wheat
Whitten
William*
Wilson
Wise
Wolf
Wolpe
Wyden
Wylie
Yatea
Yatron
YoungCAK)
ZelifT
Zimmer
NAYS -60
Allard
Allen
Andrews(ME)
Armey
Bacchus
Bilbray
Bilirakia
Burton
Camp
CampbelKCA) Cox(CA)
Crane
Cunningham
DeFazio
DeLsy
Doolittle
Dornan(CA)
Dreier
Faacell
Cekas
Gibbons
Gingrich
Coas
Hammerschmidt
Hancock
Hefley
Ireland
Jamea
Johnston
Jontz
Koatmayer
Lewis(FL)
Long
Marienea
McCollum
ObersUr
Obey
Packard
Pallone
Penny
Petoraon(FL)
Petri
Ridge
Roemer
Rohrsbacher
Roa-Lehtinen
Roth
Sensenbrenner
Shaw
Shuster
Sikorski
Smith(FL)
Solomon
Stark
Stump
Vucanovich
Walker
Washington
Weber
Young<FL)
NOT VOTING
; -9
Barnard
Boxer
Chandler
Clement
Hunter
Lipinski
Roybal
Stearns
Wazman
Mr. ROHRABACKERand Mr. SOL-
OMON changed their vote from 'yea'
to 'nay*.
So the conference report was agreed
to.
The result of the vote was an-
nounced as above recorded.
A motion to reconsider was laid on
the table.
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4680
CONGRESSIONAL RECORD
(SENATE)
OctoUr S, 1992
P«g»S17MS
CONCERNS REGARDING ENERGY BILL.
Mr. GRAHAM. Mr. President, the
purpose of my remarks this morning
is to address some concerns about the
pending energy bill that we will be
considering later in the morning. I
am going to be talking about three
issues, two of them now, and one later
during the general debate on the ener-
gy bill. At this point, I would like to
talk about the question of, have we
properly diagnosed the problem and,
second, the specific applications of
that diagnosis to the use of our Outer
Continental Shelf resources.
I am afraid that the history of re-
cent congresses could include a chap-
ter on a series of failed legislative ini-
tiatives, which had appropriate public
goals, but which fell short of their re-
alization. There are a variety of ex-
planations for that, but I believe re-
current is the theme of failed diagno-
ses. That is, before legislating, the
Congress did an inadequate job of un-
derstanding what the priority problem
was and addressing itself to that reso-
lution.
I would put it in the category of
failed legislation because of misdiagno-
sis and enactments such as the 1986
tax bill. The 1986 tax bill defined the
problem as being an overly complex
Internal Revenue Code, and the objec-
tive was simplification.
Mr. President, that would be analo-
gous to someone having a serious
blood disease which had manifested
itself by a skin rash and defining the
problem as the skin rash and dealing
with that. The problem, of course, was
a hemorrhaging Federal deficit, up
until 1986, which has now cascaded to
a $4 trillion national debt The failure
to Hjttgnoaft the problem and dealing
with that deficit rather than simplifi-
cation has contributed substantially to
the recession in which we are current-
ly mired and to our failure to deal
with the deficit. In 1987, we passed a
catastrophic health care bill that da-
fined the problem as being older
Americans needing the gaps in Medi-
care coverage. What we failed to rec-
ognize was that 60 to 70 percent of
older Americans had already provided,
on their own initiative or by their
previous employment, for many of
those gaps in coverage.
The real problem was long-term
care that was not being made avail-
able to older Americans and which the
catastrophic health care bill did not
advance. Again, the failure to proper-
ly diagnose led to a bill which, within
a matter of months, became the sub-
ject of great disappointment, acorn,
and finally repeal.
And then I add, as the third exam-
ple, the 1989 efforts to deal with the
problems of the saving? and loan in-
dustry. The diagnosis was that the
problems were inadequate regulation
and, therefore, the solution was a
mountain of new regulation applied to
both the savingi and loan industry
and the commercial banks. That, I
submit, was not the problem. The
problem was an insurance fund, de-
posit insurance fund, which had been
systematically underfunded and which
was not based on serious insurance
standards, such as applying premiums
based on the degree of risk which
individual institutions placed against
the fund.
Again, by that misdiagnosis and
misprescription, we have loaded up
the regulations on our financial insti-
tutions to the point that they have
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4681
been virtually squeezed from their
ability to serve as an appropriate in-
termediary; that is, the institution
that takes all of our deposits and then
targets them toward job-creating busi-
nesses. And, again, this has contrib-
uted significantly, in my judgment, to
the current economic recession.
I cite those three examples of fail-
ures of appropriate diagnosis, which
led not only to the failure to solve the
basic problem, but also to an exacer-
bation, to unintended negative conse-
quences.
I am concerned that we are about to
make another of those errors. This
energy bill starts with a definition of
the problem as being the fact that we
are importing too much petroleum
from outside the United States. I
might agree with that statement. We
are importing too much petroleum
from outside the United States. I do
not agree, however, that that is the
fundamental problem to which we
should be addressing ourselves in a
national strategic energy policy.
The fundamental problem is that
we are using too much petroleum
from whatever source. Here are the
facts: The United States today is con-
suming a little over 6 billion barrels
per year of petroleum. Approximately
half of that is imported; half of it is
domestic. The United States has, by
the best estimates, approximately 75
to 80 billion barrels of petroleum with-
in its domestic boundaries. It does
not take much of a mathematician to
calculate that, if we continue at the
current rate of consumption, that is,
approximately 3 billion barrels a year
of domestic petroleum, within approxi-
mately 25 years we are going to have
totally depleted our domestic reserves
and resources.
If we do as some would suggest, to
become totally energy independent
now, that is, instead of using 3 billion
barrels, use 6 billion plus per year
from our domestic reserves, we will
cut in half the number of years to 12
to 14 years as the remaining time in
which there will be petroleum left in
the United States.
The problem is the excessive use of
petroleum in our society and the ur-
gency of effective action to reduce
that use of petroleum. I say, Mr.
President, that this is not a fanciful
goal. Our major industrial competi-
tors, such as Japan and much of Eu-
rope, use half the petroleum per capi-
ta, half the petroleum per unit of
production, as we do in the United
States of America.
That has to be our goal, the dra-
matic reduction in the use of petro-
leum. One area in which this is being
illustrated - and the legislation has to
do with the use of Outer Continental
Shelf resources, a part of that 75 to
80 billion barrels of remaining petro-
leum • the way in which this legisla-
tion deals with that issue is not to
deal with it at all.
There had been legislation adopted
both in the Senate and in the House
that would have directed new national
policies in the use of our Outer Conti-
nental Shelf. In the conference com-
mittee it was all dropped. So what we
have in this national strategic energy
bill is the status quo. And what is the
status quo?
The status quo is an energy policy
relative to our Outer Continental
Shelf, which essentially says that the
primary criteria for its development
will be its energy potential. It encour-
ages a rapid evaluation and extraction
of our OCS potential. We now have
many thousands and thousands of
acres which have been leased and
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which are subject to drilling and re-
covery of the resource. It is a glaring
example of what has been described as
the drain-America- first policy, taking
these resources as our first line rather
than as our ultimate reserve of do-
mestic petroleum resources.
The example of what is happening
in my State of Florida is illustrative of
what has happened elsewhere in the
United States.
Beginning approximately 10 or 15
years ago, there was an escalation of
the granting of leases off the coast of
Florida. Many of these leases have
subsequently been found to be envi-
ronmentally inappropriate and create
significant dangers to not only natural
resources but also the economy.
Recognizing that fact, President
Bush, in 1990, ordered the Depart-
ment of the Interior to ban further
leasing in the area off southwest Flor-
ida and the Florida Keys, and also ban
drilling until the year 2000. He also
ordered that there begin the process
of buying back 73 existing leases
which were considered to be in an
inappropriate location.
To quote the President:
Today I am announcing my support for a
moratorium on oil and gaa laaaing and develop-
ment in (the aale area) off the coaet of Florida
until after the year 2000. The combined effect of
these decisions is that the southwest coast of
Florida will be off limits to oil and gas leasing
and development until the year 2000. 1 am asking
the Secretary of the Interior to begin a process
that may lead to the buyback and cancellation of
(the 73) existing leases off southwest Florida.
That was the President recognizing
that the current policy is not working.
Efforts were made, particularly in
the House of Representatives, to place
that philosophy that the current sys-
tem is not working into statute. Un-
fortunately that codification of the
President's promise was dropped, and
it was dropped in large part because
of the pressure from the White House
where Representatives of the adminis-
tration, particularly in the Depart-
ment of Energy, threatened that there
would be a Presidential veto if lan-
guage which codified the President's
statements of 1990 were adopted in
this final conference report.
I think that indicates, Mr. Presi-
dent, that there is a desire to acceler-
ate the pace of draining America first
in spite of the statements to the con-
trary.
Mr. President, while the issue of
Outer Continental Shelf use has been
left unaddressed in this legislation, it
cannot be left unaddressed from the
national agenda. We must deal with
the questions of the appropriate re-
serve of our Outer Continental Shelf
resources so that they will be retained
as America's ultimate reservoir of
domestic petroleum. We must also
change the current law which encour-
ages the expeditious development of
Outer Continental Shelf resources to
a more balanced approach that takes
into effect other economic interests
and the protection of natural resourc-
es. We must also allow the States
that are affected to have a more effec-
tive role. And, we must avoid what is
happening now, that is leases being
granted subject to subsequent envi-
ronmental and safety studies, but
which the possessor of the lease con-
siders to be a property interest and, if
it is found to be inappropriate to drill
because of environmental, safety, or
other considerations, he then demands
huge ransom from the Federal Gov-
ernment for its cancellation.
Even more egregious has been a
proposal from the Department of En-
ergy that the States ought to have to
repay for that cancellation, the States
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which got none of the money when
the leasee were originally granted,
which in many instances fought vigor-
ously against the grant of leases for
exactly the inappropriate economic
and environmental consequences that
they foresaw when the original pro-
posal was made. Those, Mr. Presi-
dent, are outrageous suggestions.
I believe, Mr. President, that we are
going along a path of misdiagnosis of
the problem which is going to lead to
an acceleration of our depletion of
domestic petroleum resources, and
that we will, in this Chamber, live to
see the day when the issue of energy
independence as it relates to petro-
leum is no longer a relevant national
goal, because we will have depleted
our domestic petroleum.
There were provisions which were
also deleted in this bill that, in my
judgment, would have focused our
attention on some things that ought
to be done to reduce our dependence
on petroleum.
Sixty percent of that 6 billion bar-
rels of petroleum is used for transpor-
tation. Approximately 3 1/2 to 4 bil-
lion are used in areas of transporta-
tion. So clearly if we are going to
reduce our dependence on petroleum,
that must be the point of attack.
There had been an original proposal
to continue a process that has been
underway for almost 20 years, led, in
fact, by our distinguished colleague
from Nevada, to increase efficiency of
automobiles, one of the clearest ways
in which we could contribute to the
reduction of our dependence on petro-
leum. There was also, in this legisla-
tion, proposals that would have accel-
erated the development of high-speed
rail systems as an alternative both to
the automobile and short-range com-
mercial aircraft.
A high-speed rail system such as
that which is utilized in Japan and
France will transport a person be-
tween Washington and New York or
other equivalent distances at four to
five times less use of energy than the
shuttle aircraft which are providing
that service today and do so with a
speed, efficiency and safety which
would be very appropriate to the mix
of transportation for our Nation. That
provision to enhance the development
of high-speed rail was also dropped
from this energy bill.
So, Mr. President, my basic concern
is that we have a bill which misdiag-
noses the problem, misprescribes
against the problem, in the area of
Outer Continental Shelf drilling, will
do nothing about the current egre-
gious standards that are bad energy
policy, bad economic policy, bad envi-
ronmental policy, and that we have
not advanced in a sufficiently, aggres-
sively, urgent way, those steps that
are available to us to reduce our de-
pendence on petroleum. And thus we
have almost assured that these young
pages in front of us today, and our
children and grandchildren, are going
to live in an America which will be
totally bereft of its petroleum resourc-
es.
Those, Mr. President, are, I think,
reasons sufficient for this Congress to
say, let us start anew in our quest for
a strategic energy policy, let us not
accept what is available to us today.
As I close, I will say there will be
some other items that I will discuss
later on that I hope might be made
available.
Mr. REED. Mr. President, will the
Senator yield?
Mr. GRAHAM. Yes.
Mr. REED. Will the Senator from
Florida now wish to take the 10 min-
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utes, and I will yield to him?
Mr. GRAHAM. I say to my friend
from Nevada, I would prefer if I could
wait until the debate is open to use
the time to discuss the final issue that
I want to discuss, and that is the
question of changes in our Nation's
nuclear policy both as it relates to
licensing; but particularly to the issue
of the disposal of high-level nuclear
waste, another area which I fear this
bill will achieve a different and nega-
tive intention from that which its
designers have in mind.
I look forward to the opportunity to
discuss that issue later in the debate.
Mr. President, I ask unanimous
consent to print in the Record items
which related to this legislation, par-
ticularly its impact on Outer Conti-
nental Shelf drilling.
There being no objection, the mate-
rial was ordered to be printed in the
Record, as follows:
STATEMENT BY THE PRESIDENT
Tuesday, June 26, 1990.
I have often stated my belief that development
of oil end gee on the outer continental ehelf
(OCS) ehould occur in en environmentally eound
I have received the report of the interagency
OCS Teak Force on Leaaing and Development off
the coeete of Florida and California, and have
accepted ita recommendation that further etepe to
protect the environment are needed.
Today, I am announcing my aupport for a
moratorium on oil and gee leaaing and develop-
ment in SeJe Area 116, Part II, ofT the coaet of
Florida, SeJe Area 91 ofT the coaet of northern
California, Sale Area 119 ofT the coaet of central
California, and the veet majority of Sale Area 96
off the coaet of southern California, until alter
the year 2000.
The combined effect of theee deciaione b that
the coaet of southwest Florida and more than 99
peixMtofUieCelifwTuacoeetwillbe^umiuito
oil and gee leaaing and development until after
the year 2000.
Only theee areaa which are in cloae proximity
to existing oil and gae development in Federal
mpriaing lees then lft of the
trade off the California coaet, may be available
before then. Theee areaa, concentrated hi the
Santa Maria Beein and the Santa Barbara Cam-
net, will not be available for leaaing in any i
until 1996 -and then only if the further I
for which I am calling in rasp oust to the i
of the National Academy of Sciences aatiefac
sddress concerne related to these tracts.
I am aleo approving a proposal that would
establiah a National Marine Sanctuary hi
California's Monterey Bey and provide fbra per-
manent ban on oil and gae development in the
sanctuary, and I am asking the Secretary ef the
Interior to begin a process that may lead to the
buyback and cancellation of existing leasee fat
Sale Arse 116, Part II. of aouthweat Florida.
In addition, I am directing the Secretary ef the
Interior to delay leaaing and development in
eeveral other areaa where questions have beau
raissd shout the resource potential and the envi-
ronmental implication of development. For Sals
Area 182 off the coasta of Washington and Ore-
gon, I am accepting the recommendation ef the
Secretary that further leasing and i
activity be deferred until a series of env
tal studies are completed, and directing that ne
such activity take place until after the year 9000.
I am also cancelling Lease Sale 96, in the
Georges Bank area of the North Atlantic, and
directing that no leaaing and development activi-
ty take place in this area until after the year
2000. Thie will allow time for additional i
to determine the resource potential of the I
and address the environmental and
concerns which heve bean raised.
Finally, I am today directing the Secretary to
take eeveral steps to improve the OCS program
and respond to several of the concorna s« pressed
by the Task Force. My goal ie to create a mush
more carefully targeted OCS program • one that
is responsive to Iocs! concerns, to environmental
concerns, and to the need to develop prudently
our nation 'a domestic energy resources. Al-
though I have today taken these strong st spa ts
protect our environment, I continue to believe
that there ere significant oflehore areaa where
we can and must go forward with resource navel
While I believe that cleaner OCS |
ultimately be more effective,
rscosnizs that tha OCS pfoevembeviteJeource
of fuel for our growing economy. My desire is Is
achieve a balance between the need to provide
energy for the American people and the need Is
protect unique and sensitive <
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FACTSHEET - PRESIDENTIAL DECISION
CONCERNINGOILANDGASDEVELOPMENT
ON THE OUTER CONTINENTAL SHELF
June 28. 1900.
The President today announced a eeriea of
decisions related to oil and ges development on
the outer continental ahelf (OCS). The President
believes that these decisions strike a needed bal-
ance between development of the Nation's impor-
tant domestic energy resources and protection of
the environment in sensitive areas.
DECISIONS BY THE PRESIDENT ON
THREE PENDING SALES DECISION FOR
CALIFORNIA SALES
Cancel all sales scheduled for 1990, 1991 and
1992 offshore California, including Sale 91 off
t of northern California and Sale 96 off
t of southern California.
Conduct additional oceanographicand socioeco-
nomic studies as recommended by the National
Academy of Sciences in a review conducted for
the interagency Task Force on Leasing and De-
velopment of the OCS (the Task Force). These
studies should take 3 to 4 years.
Exclude more than 99 percent of the tracts
(including all of the Sale 91 area and all of the
Sale 96 area south of the Santa Barbara Chan-
nel) off California from consideration for any
lease sale until after the year 2000. The Interior
Department has identified 67 tracts ofT the coast
of southern California within the Sale 96 area
that have high resource potential. These tracts
are located in the Santa Maria Basin and Santa
Barbara Channel, where oil and gas production is
currently underway. They comprise approxi-
mately 0.7 percent of all of the tracta off Califor-
nia, or 0.67 percent of the 74 million total acres
off California that could be leased and 1.63 per-
cent of the 30.6 million acres in the Southern
California Planning Area. These tracts will not
be available for leasing consideration until after
January 1, 1996 and completion of the additional
studies. They will then be available only if devel-
opment appears viable based on the guiding prin-
ciples outlined below and the results of the stud-
ies.
DECISION FOR FLORIDA
Cancel Sale 1 16, Part II, and exclude the area
from consideration for any lease sale until after
the year 2000. Any development after the year
2000 would be pursued only if it appears viable
based on the guiding principles outlined below
and the results of additional studies.
Conduct additional oceenographic, ecological
and socioeconomic etudiee as recommended by
the National Academy of Sciences in its review.
These etudiee should be completed within 6 to 6
Begin cancellation of existing leases off Florida
and initiate discussions with the State of Florida
for its participation in a joint federal-state
buy-back of the looses.
GUIDING PRINCIPLES
The President's decisions were based on the
following principles:
(1) Adequate Information and Analysis. - Ade-
quate scientific and technical information regard-
ing the resource potential of each area considered
for leasing and the environmental, social and
economic effects of oil and gas activity must be
available and eubjected to rigorous scrutiny be-
fore decisions are made. No new leasing ehould
take place without euch information and analy-
sis.
(2) Environmental Sensitivity. • Certain arses
off our coasts represent unique natural resourc-
es. In those areas even the email risks posed by
oil and gas development msy be too great. In
other areas where science and experience and
new recovery technologies show development mey
be safe, development will be considered.
(3) Resource Potential. - Priority for develop-
ment should be given to those areas with the
greatest resource potential. Given the inexact
nature of resource estimation, particularly off-
shore, priority ehould be given to those areas
where earlier development has proven the exis-
tence of economically recoverable reserves.
(4) Energy Requirements. - The requirements
of our nation's economy for energy and the over-
all costs and benefits of various sources of energy
must be considered in deciding whether to devel-
op oil and gas offshore. The level of petroleum
imports, which has been eteadily increasing, is a
critical factor in this assessment.
(5) National Security Requirements. - External
events, such as supply disruptions, might require
a reevaluation of the OCS program. All decisions
regarding OCS development are eubject to a na-
tional security exemption. If the President deter-
mines that national security requires develop-
ment in the areas of thess three lesse sales or in
other areas, he has the sbility to direct the Inte-
rior Department to open the areas for develop-
ment.
The need to develop adequate information, par-
ticularly needed to meet the inadequaciea identi-
fied by the National Academy of Science, b an
essential factor in calling for further etudiee and
cancellation of the pending ssles. The Sale 1 16
area off southwest Florida, which contains our
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nation's only mangrove-coral reef ecosystem and
is s gateway for the precious Everglades, deserves
special protection. The presence of successful
drilling operations and known resources off cer-
tain areas of southern California merits allowing
continued development, assuming scientific and
environmental uncertainties can be resolved.
OTHER ACTIONS BY THE PRESIDENT
The President has also directed certain other
actions affecting offshore oil and gas develop-
ment.
SALE 119AND MONTEREY BAYSANCTUARY
The Task Force consideration of development
ofT northern and southern California has been
accompanied by strong concern about the pros-
pect of development off central California and
Sale 119. Sale 119, originally scheduled for
March 1991, covers an area stretching from San
Francisco southward to the northern tip of
Monterey Bay. This area includes unique coastal
and marine resources and a portion of the area of
the Monterey Bay National Marine Sanctuary
proposed by the National Oceanic and Atmo-
spheric Administration (NOAA) (the proposed
sanctuary would cover approximately 2,200
square miles). NOAA has also proposed regula-
tions to prohibit all oil and gas exploration and
dsvelopment activities within the sanctuary.
This area contains nationally significant, envi-
ronmentally sensitive resources, including ths
largest breeding ground for marine mammals in
the lower 48 states. The President hss directed
Interior Secretary Manual Lujan and NOAA
Administrator John Knauss to take the following
actions:
Cancel Sale 1 19 and adopt the sanctuary pro-
posed by NOAA.
Permanently prohibit all oil and gas explora-
tion and development within the sanctuary.
Allow no development in the Sale 119 area
outside the sanctuary until after the year 2000.
At that time the guiding principles outlined
above will be applied to determine the viability of
development in the area.
SALE 96 IN NORTH ATLANTIC
Sale 96 has been proposed for the Georges
Bank area of the North Atlantic Planning Area,
which stretches northward from Rhode Island to
Canada. The President hss directed Interior Sec-
retary Lujan to:
Cancel Sale 96 and exclude it from the
1992-1997 five-year plan.
Conduct additional studies, including studies
designed to determine the resource potential of
the North Atlantic area and to i
ronmental, scientific and technical considerations
of development in the area.
Consult with the governors of the states whose
residents would be affected by future develop
ment of oil and gas in the North Atlantic
These actions ensure that no sale will be con-
sidered in the North Atlantic Planning Area until
after the year 2000, and then onr/ if studies
show that development is warranted because ef
resource potential and is environmentally sale.
OCS DEVELOPMENT OFF WASHINGTON
AND OREGON
The President hss accepted the recommends-
tion of Interior Secretary Lujan to conduct a
series of additional environmental studies of the
effects of oil and gas development off Washington
and Oregon, including the Sale 132 area, before
any environmental impact statement would be
completed. These etudies are expected to take 6
to 7 years. No sale will be considered off Wash-
ington and Oregon until after the year 2000 and
then only if studies show that development can
be pursued in an environmentally safe manner.
GENERAL OCS DECISIONS
The President also decided that:
Air quality controls for oil and gas development
offshore California should be substantially the
same ss those applied onshore.
Immediate steps should be taken to improve
the ability of industry and the federal govern-
ment to respond to oil spills offshore, regardless
of thsir source.
Federal agencies should develop a plan to re-
duce the possibility of oil spills offshore from
whatever source, including and especially from
tanker traffic. This plan should include moving
tanker routes further sway from sensitive areas
near the Florida Keys and the Everglades.
RESTRUCTURING THE OCS PROGRAM
The President determined that providing the
necessary balance between developing domestic
energy resources and protecting the environment
requires certain revisions to the OCS program.
Ths program must be:
Targeted more carefully toward areas with
truly promising resource potential;
Buttressed by information adequate to ensure
that oil and gas development proceeds in an envi-
ronmsntslly sound manner; and
Sensitive to the concerns and nseds of local
areas affected by offshore development.
Accordingly, the President directed Interior
Secretary Lujan to take three actions to improve
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the overall OCS |
Improve Um information needed to make deci-
sions on OCS development by conducting the
atudiea identified by the National Academy of
8ciencea and itudiea to explore new technologies
for alleviating the riake of oil apilla from OCS
platforms and new oil and gas drilling technolo-
gbs, euch ae euheea completion technology.
Target propceed aale areas in future OCS
five year plans to give highest priority to areas
with high resource potential and low environ-
mental risk. This will result in offering much
smaller and more carefully selected blocks of
Prepare a legislative initiative that will provide
coastal communities directly affected by OCS
development with a greater share of the financial
benefits of new development and with a larger
voice in decision-making. Currently, states re-
ceive 100 percent of revenues from leases within
three miles of shore. Revenues from losses be-
tween three and six miles of shore are divided 78
percent to the federal government and 27 percent
to the states. Revenues from leases six miles or
further offshore go 100 percent to the federal
government. Coastal communities directly aflect-
ed by development are not presently guaranteed
any of those revenues.
BACKGROUND ON SALES
SALE 01
The Sale 01 area contains approximately 1.1
million acres and lies offshore Mendocino and
Humboldt Counties in northern California, pri-
marily in two areas off Eureka and from south of
Caps Mendocino to south of Point Arena. It b
within the Northern California Planning Area,
which stretches from the California/Oregon bor-
der to the Sonoma/Mendocino County lines.
There b currently no oil and gas production
within thb planning area. The Minerals Man-
agement Service (which b responsible for the
OCS program within the Interior Department)
estimates that there ere between 210 million and
1.64 billion barreb of crude oil and approximately
2.6 trillion cubic feet of natural gee in the North-
ern California Planning Area and between 20
million end 820 million barreb of oil end approx-
imately 1.0 trillion cubic feet of natural gee in
the Sole 01 area. Congress impceed s moratori-
um prohibiting leasing in the Northern Califor-
nia Planning Area ae pert of the Interior
Department's FY 1000 expropriations bill.
SALE 06
The Sale 06 area contains approximately 6.7
acres and lies offshore southern Califor-
nia from the northern border of Sen Lub Obbpo
County to the United States/Mexico border. It b
within the Southern California Planning Area,
which extends from the northern border of San
Lub Obbpo County to the United States/Mexico
border. Oil and gee production b currently tak-
ing place in the Southern California Planning
Area in the Santa Maria Baein, the Santa Barba-
ra Channel and offshore Long Beach. There ere
186 active federal leases in the area, producing
approximately 00,000 barreb of crude oil end 06
million cubic feet of natural gee daily from 17
producing pbtforme in federal waters. One plat-
form in federal waters b used exclusively for
processing and four other pbtforme ere under
construction or completed hut not yet producing.
In addition, there ere 10 pbtforme and four arti-
ficial blends in the area supporting production
facilities within state waters, which extend three
mibe from the chore. The Minerals Management
Service eetimatee that there are between 610
million and 2.28 billion barreb of crude oil and
approximately 8.01 trillion cubic feet of natural
gas in the Southern California Planning Area
and between 200 million and 060 million barreb
of oil and approximately 1.1 trillion cubic feet of
natural gas in the Sole 06 i
SALE 116, PART H
The area of Sale 1 16, Part II contains approxi-
mately 14 million seres, lying south of 26 degrees
north latitude oft the eouthwest Florida coast off
Collier, Monroe and Dade Countiee. Thb area b
within the southesstern portion of the Esstern
Gulf of Mexico Planning Area. (In 1068 the East-
srn Gulf of Mexico wee divided for leasing pur-
poses into two parte along the 26 degrees north
btitude line.) There b no oil and gas production
within the esb area, although 78 active leases
ere held within the area by ten oil and gas com-
panies. The Minerab Management Service eeti-
matee that there are between 440 million and
1.72 billion barreb of crude oil and approximately
1.66 trillion cubic feet of natural gas in the Eaet-
srn Gulf of Mexico Planning Area and between
270 million and 1.06 billion barreb of oil and
approximately 1 10 billion cubic feet of natural
gas in the Sab 116, Part II i
BACKGROUND ON THE OCS TASK FORCE
In hb February 0, 1060 budget m assign to
Congress, the President indefinitely postponed
three OCS lecss sales echeduled for FY 1000 -
Sab 01 off the coast of northern California, Sale
06 off the coast of southern California and Sab
1 16, Part II off the coest of southwestern Florida
• pending a study of the sales by a Cabinet-level
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task force charged with reviewing end resolving
environments] concerns over adverse impacts of
the sales. The Task Force wss nsmed on March
21, 1989. It consisted of Interior Secretary
Manuel Lujan as Chairman, Energy Secretary
James Wstkins, Administrstor John Knauas of
the National Oceanic and Atmospheric Adminis-
tration (NOAA), Administrator William Reilly of
the Environmental Protection Agency, and Direc-
tor of the Office of management and Budget
Richard Darman. Ths Task Force conducted nine
public workshops in Florida and California, heard
from over 1,000 witnesses, took ten field trips to
sites in the two states, received briefings from
various federal agencies, met twice with members
of Congress, and solicited and received over
1 1,000 written public comments.
Ths Tssk Fores also commissioned a technical
review from the National Academy of Sciences
regarding the environmental and other informa-
tion available on which decisions could be made.
The National Academy of Sciences determined
that adequate ecological, oceanographic or socio-
economic information waa not available to some
extent for each of the three aale areas.
The Tssk Fores found that:
The southwest Florida shelf comprises subtidal
and nesrshore habitats that are unique within
the VS. continental margin and provide refuge
to a number of rare and endangered species;
The incremental risks of an oil spill sssoristed
with the Sale 91 area off northern California are
greater than those associated with the other two
sales.
Information concerning the onshore socioeco-
nomic effects of oil and gas development b partic-
ularly lacking for Sale 1 16, Part II off Florida
and Sale 91.
Additional studies in response to the report of
the National Academy of Sciences are needed
before the Secretary of the Interior makes lessing
decisions in any of the three i
BACKGROUND ON THE OCS PROGRAM
Management of oil and gas found in federal
waters offshore (which generally begin three
miles from a state's coast and can extend out 200
to 300 miles) b vested in the Department of the
Interior under the Outer Continental Shelf
Landa Act of 1953, ss amended. The Act direcU
the Interior Department to:
Make OCS resources available to meet the
nation 'a energy needs;
Protect human, marine and coastal environ-
ments;
Ensure that states and local governments have
timer/ seesss to information and opportunities to
partidpete in OCS
decisionmaking; and
Obtain for the federal government a fair and
equitable return on resources while pisssrving
and maintaining free enterprise competition.
These responsibilities within the Interior De-
partment are adminbtered by the Minerals Man-
agement Service (MMS), created in 1982 to over-
see the orderly development of offshore snergy
and mineral resources whtte safeguarding Ike
environment. The current director of Ike MMS
b Barry Williamson.
The MMS makes resources evailable by lessing
federal acreage offshore to private nom panics,
which explore for and can develop and produce
commercial depoaita, subject to continuing review
and permitting procedures. Environmental stan-
dards are established by the MMS in regulatlone
and Isass stipulations and enforced through re-
view of companies' exploration development and
production plane (including drilling permite that
must be obtained) before operatione can begin en
lessss, and an offshore facility inspection pro-
gram, under which inspectors review safety, oper-
ational and environmental activities an offshore
plstforms. Inspectors currently oversee 3,800
platforms in the Gulf of Mexico end 22 plstforms
off California.
Oil and gas lease sales are conducted in a com-
petitive sealed bid process. Sales are scheduled
in five-year planning cycles (ths first of which
wss in 1978) developed by the Secretary ef the
Interior with public review and comment on the
draft plan. Efforts are made to address commrns
raised during thb review process, which normally
takaa two years. After the adoption of a plan,
extensivs prs-lesss activities are conducted before
any sales occur. These activities include the
preparation of an environmental impact state-
ment for each aale, with opportunities for public
review end comment, and submission of ssle
proposab to the governors of the effected states
before final decisions are made. Hmss steps
generally take an additional two or more years.
The total OCS area covers 1.4 billion acres,
and b composed of over 260,000 treats. Since
1964 over 1 18,000 (or approximator/ 46 percent)
of ths tracts have been offered for loses; 10,116
(3.9 percent) have been baaed; 4,111 (1.6 per-
cent) hsvs been drilled; and slightry more than
1,260 (approximately .06 percent) ere occupied by
pbtforms. Production from the OCS nrngr—
since 1964 totab over 8.6 billion barreb of crisis
oil and condensate and 88 trillion cubic feet ef
natural gas. Sines its creation.
Management Service has been
overseeing the production ef mm
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lion barrels of crude oil end condense te end over
26.6 trillion cubic feel of natural gas and for
Venerating over $90 billion in revenues from
lease sales and lease rental payments for the
United States Treasury.
The OGS accounts for a significant portion of
existing United States oil and gas resources.
Table 1 shows: the quantities of proven oil and
\ that have been discovered and are
recoverable within the United
States as a whole and the OCS separately (Col-
umn A); the quantities of undiscovered oil and
mm resources estimated to be economically recov-
erable using dialing technologies within the
United States as a whole and the OCS separately
(Column B).
» TABLE DATA UNAVAILABLE •••
The Secretary of Energy,
Washington, DC,
September ft, 1992.
Hon. Bennett Johnston, Chairman,
Committee on Energy and Natural Resources
U A Senate, Washington, DC.
Dear Mr. Chairman:
Three years ago the Bueh Administration em-
barked upon the most comprehensive effort in
over 20 years to craft a National Energy Strate-
gy. For the last 1ft months we have worked dili-
gently with the Congress to translate key provi-
sions of the Strategy into legislation. We are
now within striking distance of reaching our
common goal of sound, comprehensive energy
legislation.
As the Conference Committee prepares to rec-
oncile differences in the House and Senate ener-
gy bills, I thought It prudent to provide s compre-
hensive summary of our views on various provi-
sions of the two bilk.
Of particular concern, the Office of Manage-
ment and Budget has ad vised ma that the legisla-
tion, as pssssd by both Houses of Congress, con-
tains provisions that will substantially increase
direct spending and reduce receipts. The prelimi-
nary eatimated net PAYGO cost of the House bill
is $1.6 billion and the Senate bill b $2.9 billion
for the period 1993-1997. In addition, the Senate
bill creates new axsmptions from sequestration
for the Bonneville Power Administration and
certain fund transfers to the Bureau of Reclama-
tion and the Corps of Engineers. It also exempts
certain spending of these agencies from the ap-
propriations pro rase and reclassifiee discretionsry
spending to the mandatory category. If I
provisions ere included in the enacted legislation
and not offset, the Presidsnt's senior advisors
would recommend that he veto the bill.
Assuming the Administrations problems are
resolved, it strongly supports the prompt enact-
ment of balanced and comprehensive national
energy legislation to provide for economic growth
and increased energy security, while protecting
the environment. We believe that essential ele-
menta of a balanced and comprehensive bill in-
clude provisions that:
Encourage increased cost-effective in Federal,
State, industrial, commercial, and residential
uses;
Permanently provide much-needed Alternative
Minimum Tax relief for independent oil and gss
producers;
Proportionately extend the current tax exemp-
tion for ethanol/gasolins blende to blends of less
than 10% ethanol;
Promote the development and use of domestic
renewable resources and of alternative transpor-
tation fuels;
Amend the Public Utility Holding Company Act
(PUHCA) to increase competition in electricity
generation;
Expedite licensing procedures for construction
of interstate natural gss pipelines;
Reform the nuclear powerplant licensing pro-
cess and restructure the uranium enrichment
enterprise;
Support the environmentally compatible use of
our Notion's abundant coal resources; end
Enhance mass transit snd vsnpool use by in-
creasing the tax-free limit on employer- provided
benefita and limit employer exclusions of parking
banefita from gross income.
We are concerned, however, that the signifi-
cant progress msde to date in achieving these
objectivee not be jeopardized by provisions con-
tained in a Anal bill that the Administration will
be unable to eupport. I would note that, as indi-
cated in the enclosed eummary, wo have a consid-
erable number of concerns. We believe that soms
of these can be eddreeaed by reasonable compro-
mise, while others ere eimpry contrary to the
national interest snd should be stricken.
In addition to the PAYGO problems, if the
energy legislation presented to the President
contains the following provisions, the Presidsnt's
senior sdvisors would recommend thst he veto
the bill:
Expansion of Federal limitations on State rsgu-
Istory suthority over the production of natural
gss (the House prorationing amendment);
Long-term moratoria and other provisions
concerning oil end gss exploration and produc-
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lion on the Outer Continental Shelf (OCS) that
go beyond the President's 1090 decision to defer
leasing in environmentally sensitive areas. Par-
ticularly objectionable are OCS lease cancellation
and buyback provisions that could result in Fed-
eral spending of as much as $1.6 billion in FY
1992/19993;
Onerous regulatory requirements in the House
bill that severely limit development and retention
of non-polluting and renewable hydroelectric
resources. These provisions would circumvent
the Electric Consumers Protection Act, which
requires balancing of all beneficial uses of the
Nation's rivers;
Counterproductive expansion of the Strategic
Petroleum Reserve drawdown authority to in-
clude mitigation of petroleum price increases and
a costly and unnecessary creation of a 60 million
barrel refined petroleum product reserve, ss pro-
posed in the House bill;
Radioactive waste provisions in the House bill
that require reinstatement of EPA standards for
disposal of high-level waste and permit State
low-level waste regulation that is more stringent
than NRC regulation. Theee provisions consti-
tute burdensome, costly, and unnecessary regula-
tion that will hamper civilian nuclear power
activities, including medical and scientific appli-
cations; and
Provisions that could be vulnerable to chal-
lenge ss inconsistent with our international obli-
gations under the General Agreement on Tariffs
and Trade (GATT), or other laws or treaties
agreed upon or in force.
SCORING FOR PURPOSES OF PAYGO
Several provisions of the Senate and House
bills increase direct spending or decrease receipts;
therefore, both bills are subject to the
Pey-A*-You-Go requirement of the Omnibus
Budget Reconciliation Act (OBRA) of 1990. A
budget point of order applies in both the House
and the Senate against any bill that is not offset
under CBO scoring. If, contrary to the
Administration's recommendation, the Congress
waives any such point of order that applies
against this legislation, the effects of enactment
would be included in a look back pay-as-you-go
sequester report at the end of the congreesionsl
OMB's preliminary scoring estimates of the
bills ss written ere presented in the table below.
OMB is still reviewing the budget impacts of the
Coal Industry Retiree Health Benefit Act, which
was amended to the Senate bill. Final scoring of
enected legislation may deviate from these pre-
liminary cetimstos
If legislation b enacted, final OMB
estimates would be published within five
nt, ss required by OBRA.
days of
••• TABLE DATA UNAVAILABLE <
As we have to data, we will work closely with
the Conferees to resolve issues on which we dis-
agree and to assure passags of a bill that the
President will be able to sign into law before the
end of this Congress. I look forward to working
with you to complete successfully the develop
ment of a sound, comprehensive energy bill.
Sincerely,
James D. Wstkins,
Admiral, VS. Navy (Retired).
Office of Management and Budget,
Washington. DC,
September SO. 1992.
Hon. Malcolm Wallop,
VS. Senate, Wsshington, DC.
Dear Senator Wallop:
It b my understanding that during the course
of discussions on ths Senate-House Conference
meeting on H.R. 776 thb evening the following
proposal on Outer Continental Shelf moratoria
and leass buy-back was msds:
1. a drilling ban would be in piece from the
dste of snsctmsnt until October 1, 1997 on all
lessee in existence on the dste of enactment and
2. the Secretary of Interior would be directed
to enter into negotiations to establish written
lease cancellation and compensation egisewsnls
to the lessses.
Whils we hsve not been provided with the test
of such an offer it appears similar to a House
Staff Counter-Offer dated September 26, 1992
which has been provided to us.
Our preliminary determination b that the first
of these provisions could lead a court to decide
that the owners of the losses involved have Buf-
fered s takings of their property interests under
the Fifth Amendment of the Constitution. The
second could be interpreted to provide the Secre-
tary of Interior the budgetary resources to enter
into such sn sgreement. Therefore, we believe
these proposals still raise serious PAYGO issues
pursuant to the Budget Enforcement Act of 1990
and their enactment would trigger s sequester ss
provided in that Act, unless these provisions are
offset.
Sincerely,
Psul Gilman,
Assoebts Director,
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Natural Resources,
Energy and Science.
Department of the Interior,
Office of the Secretary,
Washington, DC.,
r2ft, 1992.
Hon. J. Bennett Johnston,
Committee on Energy and Natural Resources,
VS. Senate,
Washington, DC.
Dear Mr. Chairman:
We understand that the Conference Committee
on H JL 776, 'The Comprehensive National Ener-
gy Policy Act/ has been considering various al-
ternatives to the provisions of H.R. 776 relating
to the cancellation and buyback of certain Outer
Continental Shelf oil and gas leases. We are
pleased the conference has chosen to focus on the
many problems inherent in these provisions.
We have reviewed the proposals on this issue
that have been exchanged by the House and Sen-
ate staffs and continue to have serious concerns.
For example, the Administration believes enact-
ment of a five-year drilling ban, as provided in
subparagraph (A) of the current House proposal,
significantly raises the risk that a court would
decide that the owners of the leases involved
have suffered a taking of their property interests
under the Fifth Amendment of the Constitution.
In addition, we think thet subparagraph (B)
grants the Secretary of the Interior contract
authority to compensate the lessees for cancella-
tion of their leases, thus incurring mandatory
spending. Therefore, we believe that these pro-
possle still raise serious PAYGO issues pursuant
to the Budget Enforcement Act of 1990 and their
enactment would trigger a sequester as provided
in that debt.
The Office of Management and budget has
advised that it has no objection to the presenta-
tion of this letter from the standpoint of the
Administration's programs.
Sincerely,
Assistant Secretary.
(From the Miami Herald, Oct. 7, 1992)
CLINTON IS RIGHT ON TRADE
Democratic presidential nominee Bill Clinton
was under considerable pressure to take a quick,
simple position on the proposed North American
Free Trade Agreement. Instead, after weeks of
deliberation, he give the treaty a solid, if nu-
anced, endorsement
Good for him. Now perhaps the trade debate
can rise out of the partisan mire into which it
has been sinking for two years.
Mr. Clinton is known to favor free trade. He's
also known to favor winning elections. He might
have given himself a better shot at winning thie
one if he had demagogued the trade issue the
way House Majority Leader Richard Gephardt
had done. He could have tried to argue, like Mr.
Gephardt and some labor leaders, that Americans
can somehow protect their statue quo from a
changing world economy simply by closing the
borders to more foreign goods.
Instead, Mr. Clinton stuck to principles - not
only to the principle of free trade, but to another,
equally important one: that those who benefit
from change should also pay for it. He argues, in
brief, that Americans should not expect to receive
the considerable rewards of expanded commerce
while piling its cost onto a small group of dis-
placed workers and farmers, or onto an already
victimised environment.
He offers this alternative: A nation that will
benefit handsomely from wider markets and
cheaper consumer goods should use some of the
proceed! to retrain workers whose jobs are lost in
the process such retraining, he adds, should be
part of an overall national training policy. He
favors aid to farmers who would be forced to
change crops. And he would negotiate supple-
mental agreements with the Canadians and Mexi-
cans to ensure decent working conditions and
safeguard to the environment.
None of those is an unreasonable impediment
to the treaty. True, Mr. Clinton's call for inter-
national commissions on labor and the environ-
ment would have to be negotiated with Mexico
City. But Mexican President Carlos Salinas de
Gortari repeatedly has issued that his govern-
ment is am committed to thoss issues tm anyone.
There's no reason to believe thst an acceptable
accommodation would be unreachable.
Unlike ideologues on either side, Mr. Clinton
took care to weight, publicly, the costs and bene-
fits of freer trade, and to strike a balance. If thst
helps to provoke s more temperate debate on the
issue's subtler points, all the better.
DRILLED BETWEEN THE EYES
The energy bill just psssod by Congress leaves
ths 10-year ban on oil-drilling off ths Everglades
and ths Keys intact. That's the good nsws.
Ths bad news is that the White House foiled
congressions) attempts to begin buying back the
area's 73 lessee. Energy Secretary James
Watkins told Congress thst ths president would
veto efforts to expend the ban to North Florida
waters and the Atlantic, or to implement a
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buy-beck plan.
The House included these end other progree-
•ive measure* on exploration in the Outer Conti-
nental Shelf in it* bill anyhow. The Senate was
more cautious. In the end, facing the veto
threat, a conference committee dropped all the
leasing provisions.
This means that the moratorium on lease ex-
ploration below the 26th parallel is still in effect
- but on|y at the whim of the executive branch.
President Bush imposed the ban in 1990, promis-
ing then to pursue 'cancellation of the leases.'
Florida has sought to have Congress codify the
ban and proceed with buy-back or cancellation
plans, knowing that a presidential ban could
dissipate at will. The quest for a permanent
solution was prescient, given that the president
is now backing away form his commitment to
deal permanently with the leases.
Meanwhile, the buy-back cost escalates every
year. The leases sold for $100 million. Now
their estimated worth is $600 million to $1.6
billion. This isn't an easily resolved issue. The
lease sale profits are supposed to be spent, in
part, for conservation in the states most affected
by leases.
Yet that $100 million, even if used to buy Ev-
erglades and Keys lands for conservation, could-
n't bogin to equal the damage to Florida's coast
from one drilling accident Witness the oil rig
explosion off Louisiana this week, causing an
uncontrollable gusher into coastal waters.
To be mire, drilling accidents are few these
days. Yet exploration itself causes pollution from
chemicals, and a disruption of the marine ecosys-
tem could damage Florida's fisheries. Florida
thought that Mr. Bush, who loves fishing in the
Keys, got the message in 1990. Florida thought
wrong.
ENERGY EFFICIENCY ACT - CONFERENCE
REPORT
The PRESIDING OFFICER (Mr.
Kohl). There will now be 2 hours of
debate prior to the vote on the motion
to invoke cloture on the conference
report accompanying H.R. 776, which
the clerk will report
The assistant legislative clerk read
as follows:
The committee of conference on the disagree-
ing votes of the two House on the Amendment of
the Senate to the bill (Hit 776) to provide for
improved energy efficiency, having met, after full
and free conference, have agreed to i
and do recommend to their respective Houses
this report, signed by s majority of the conferees.
The Senate will proceed to the consideration of
(The conference report is printed in the House
proceedings of the Record of October 6, 1992J
The PRESIDING OFFICER Who
yields time?
Mr. RED) addressed the Chair.
The PRESIDING OFFICER The
Chair recognizes the Senator from
Nevada.
Mr. REID. Mr. President, I yield
myself 20 minutes.
Mr. President, when historians fi-
nally get around to chronicling the
debate that is taking place in the Sen-
ate today, they will no doubt index it
under 'energy, national policy.' Tech-
nically, they will be correct. However,
there is a much larger debate taking
place today which has to do with fair-
ness and the treatment of a small mi-
nority of American citizens, by their
brothers in the majority.
In a democratic body like Congress,
like the Senate it is a truism that
might makes right. The majority al-
most always get that it wants - even
when what it wants is unfair to the
minority. That is the case we face
here today. In the name of the needs
of the majority, the citizens of Nevada
are being stripped of the protection
that the environmental laws of this
Nation guarantee to all of its citizens.
A special law is being written for the
people of my State - a law that pro-
vides them with less protection from
the dangers of radioactive poison than
is afforded to other Americans. That
is wrong. I know it is wrong. You
know it is wrong. The Members of
this body know it is wrong. The spon-
sors of this legislation know it is
wrong.
If it is so patently wrong; some
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might ask How can it happen?' The
answer is very simple. Nuclear power-
plants produce nuclear waste which
must be stored somewhere until it is
no longer a threat to human life. No
one - 1 repeat, Mr. President - no one
wants this poisonous waste stored
near them. So a decision has been
made by the majority of the other 49
States in the Union to force the peo-
ple of Nevada to accept this poison
against their will. Simply put, the
majority prevails.
But this is not enough for the pro-
ponents of nuclear power. The people
of Nevada have gone to the courts to
protect our rights, in the hope that
the laws which protect other people's
public health will also protect us. We
look for a little fairness. We are still
looking for fairness. According to
former Supreme Court Justice Potter
Stewart, 'Fairness is what justice
really is.'
What is the response of the Con-
gress? Do they wish us well and sup-
port our day in court? No; they do
not. Instead, the Congress embarks
on a new legislative assault on the
people of Nevada. They concoct the
legislation pending final approval in
the Senate today, legislation which
purposely strips the people of Nevada
from the protection afforded them
under the environmental laws of this
Nation. They argue that, It is too
hard to meet the requirements of
these laws.' They say it will 'cost the
nuclear power industry too much
money to comply.' Instead of backing
our efforts to protect the people of the
state of Nevada, they take the ex-
traordinary step of proposing to direct
the environmental regulators to write
special laws that apply only to Neva-
da.
The aim of this legislation's spon-
sors is to weaken, by Government fiat,
the legal protection afforded to the
people of Nevada under Federal envi-
ronmental laws. Why? For the same
old tired reason. Nuclear waste is
building up at nuclear powerplants all
over the country . The people who live
near these powerplants want it moved
yesterday. They do not want it moved
now, they want it moved yesterday.
Once again, the majority in Congress
acts to trample the rights of the mi-
nority - the citizens of the sovereign
State of Nevada.
My personal battles on this issue go
back a long way, a decade. In 1982,
there was crafted a nuclear waste bill
that had broad bipartisan support in
both Houses of Congress. It had taken
a long time to develop that. However,
during the next 5 years, the Reagan
administration did its best to ignore
the mandates laid down in that legis-
lation for objectively, scientifically
choosing the most suitable site for a
permanent nuclear waste dump. Qy
1987, fear was rampant that the
dump might end up in some Member's
State or district, so much so that a
so-called screw Nevada bill was forced
through Congress to effectively dictate
that the site be located in Nevada. I
personally filibustered that legislation
and held it up for 5 or 6 weeks.
I offered an amendment that would
have made health and safety the high-
est considerations in siting the geolog-
ic repository. That amendment was
defeated.
Even this travesty against fairness
was not enough. Back we come this
year with new efforts to strip public
health and safety protections that
environmental laws provide the people
of Nevada. My colleague, Senator
Bryan from Nevada, and I have
fought these efforts for a long time -
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on this particular issue for months.
We have had some victories, hut the
energy bill strips Nevada of very im-
portant protections for the public
health and safety of the people of
Nevada. That is why we asked you,
Mr. President, and our colleagues to
vote with us against cloture on this
energy bill.
Some have called this legislation
good energy policy. I disagree. No
matter what benefits this bill provides
our national energy programs, it suf-
fers the fatal flaw of running rough-
shod over the rights of a minority for
no better reason than that is what the
majority can do when it wishes. I tell
my colleagues that this is nothing for
which we as a body should be proud.
In fact, it threatens the very fiber of
our democratic society. Because you
see, Mr. President, tomorrow it could
be your State.
Mr. President, I share the views of
President Franklin Roosevelt when he
said:
The nMMMnt * mere numerical superiority of
sither States or voters in this country proceeds to
ignore the needs end deeiroe of the minority, end
for their own eelfieh purpose or advancement,
hamper or oppress that minority, or debar them
in any way from equal privileges and equal rights
• that moment will mark the failure of our con-
stitutional system.
This, Mr. President, is the begin-
ning.
Democracy, you see, fails, we have
been told, from within, not from with-
out. And when democracy gets too
cumbersome, it is at that time that
people start coming up with short
cuts, like term limitations. It is too
cumbersome to have an elective pro-
cess. We will set some arbitrary stan-
dard just to knock people out of office;
or it is too cumbersome to go through
the procedures of law that affect ev-
eryone. If one State will not comply,
we will pass the majority and run <
that minority. That is what Franklm
Roosevelt was talking about.
With the actions of the sponsors of
this legislation, the provisions about
which we speak, we are taking a giant
step in that direction.
I would like to discuss now some
specific problems with this language
in the energy bill that I am concerned
about.
This bill contains dreadful provi-
sions affecting the State of Nevada
which are an offense to the people of
my State. The inclusion of these pro-
visions make it impossible for me to
support this legislation. That is too
bad. These provisions are wrong be-
cause they include not only bad policy
decisions but also utilize bad scientific
judgment.
These provisions go beyond the
scope of the original legislation. Nei-
ther the House nor Senate bills con-
tained language requiring new Nucle-
ar Waste Policy Act regulations. I
want to be very clear on this point.
Requiring the Nuclear Regulatory
Commission to promulgate new regu-
lations on high-level radioactive waste
was never part of either bill. Why
then have the energy conferees chosen
to go beyond their charge?
They are responding to the intense
pressure of the nuclear lobby to mows
forward on the Yucca Mountain pro-
ject. The conference report specifical-
ly states, 'the repository at the Yucca
Mountain site.' Not the proposed re-
pository at Yucca Mountain.
Mr. President, the decade-long site
characterization program has just
started at Yucca Mountain. In fact
the Department of Energy itself has
indicated more studies are needed
before the DOE can actually recom-
mend building a repository at Yucca
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Mountain. It is foolhardy to say that
Yucca Mountain is the right place to
store nuclear waste for the next
10,000 years, with the meager amount
of scientific research that has been
completed to date. This proposed
legislation will short-circuit the site
characterization work.
These provisions will apply oiuy to
the Yucca Mountain site. Why should
Yucca Mountain, the proposed reposi-
tory for both civilian and defense
wastes, be subject to less stringent
regulations than other facilities? Envi-
ronmental regulations such as the
Clean Water Act, Resource Conserva-
tion and Recovery Act, and the Safe
Drinking Water Act apply national
standards.
Why do we have one drinking regu-
lation for Nevada residents and an-
other for people in other States?
We do not. We have the same stan-
dard. And we should have the same
standard for nuclear waste. The rea-
son we do not is because the nuclear
lobby thinks Yucca Mountain will be
disqualified under the present regula-
tions, and they cannot let that hap-
pen.
It does not take a scientist to under-
stand the provisions which lie at the
heart of this matter. Our Nation's
environmental law has for decades
been based on population exposure,
not individual exposure. That is,
what would happen to an entire popu-
lation not to a specific individual.
The present EPA regulations were
remanded to the Agency in 1987, and
have gone through at least three revi-
sions. All parties have been involved
in this process. Why do we now aban-
don this process and require the EPA
to follow the binding recommenda-
tions and findings of the National
Academy of Sciences, as set forth in
this repugnant amendment that is in
this conference report?
Mr. President, the Nuclear Waste
Policy Act of 1982 clearly outlined the
responsibility for the siting; licensing,
operation, and closure of a geological
repository. Even after it was amend-
ed in 1987, the act still holds that the
Department of Energy is to select the
site, after careful and complete char-
acterization. That selection is to be
forwarded to the Nuclear Regulatory
Commission for licensing consider-
ation - two steps. The guidelines for
licensing were to rest with the NRC
and the level of protection needed for
the facility were to rest with the Envi-
ronmental Protection Agency.
It is both bad policy and bad science
to change the rules after a process has
started, especially when health and
safety of the public is at stake.
The provisions in this bill require
the National Academy of Sciences to
return binding findingB and recom-
mendations to the Environmental
Protection Agency and the Nuclear
Regulatory Commission. While the
National Academy of Sciences is a
learned body, it is not a regulatory
body. In addition, the Academy is not
politically accountable for its actions.
Mr. Stephen Merrill, the executive
director of the National Research
Council, clearly stated that fact in his
September 30, 1992, letter to the En-
ergy and Natural Resources Commit-
tee staff, when he wrote:
This is to advise you thst the Academy is
prepared to conduct the study as described al-
though we would not assume a standard-setting
role that is properly the responsibility of govern-
ment officials.
That iB what they are being man-
dated to do. He says they are going to
do something they cannot do.
My point is further supported by
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Acting Chairman, Kenneth C. Rogers,
of the Nuclear Regulatory Commis-
sion, in an October 2, 1992, letter to
Senator Bob Graham, when he wrote:
As we currently understand this legislation,
NRC's actions would be required ultimately to be
consistent with Academy recommendations for
dealing with human intrusions into the reposito-
ry-
The National Academy of Sciences
was nowhere given the responsibility
in the Nuclear Waste Policy Act to
undertake that task. Why should the
National Academy of Sciences be dic-
tating binding recommendations and
findings to the EPA and NRC?
Mr. President, another change to
the rules is the provision that the
Department of Energy will keep con-
trol of the site forever. This concept is
based on bad science. The whole idea
behind geological disposal is that both
natural and engineered barriers will
protect the public. By changing the
rules and requiring the DOE to con-
trol site, the radioactive waste will
now be isolated from the environment
by engineered barriers and institution-
al control only. It ib not logical to
expect DOE watchdogs to be guarding
the site in the next millennium.
Finally, Mr. President, it is bad
science to subscribe to the false con-
clusion that we need Yucca Mountain
now. The capacity to store nuclear
waste at the nuclear power plants in
dry-cask storage is adequate for a
generation to come.
My point has been strongly support-
ed by an August 24, 1992, letter to
Gov. Bob Miller from Chairman Ivan
Selin of the Nuclear Regulatory Com-
mission. In the letter Chairman Selin
wrote:
If necessary, spent fuel can be stored safety and
without significant environmental impacts for at
least 30 years beyond the licensed period of life
for operation (which may include the term of a
revised or renewed license) of any reactor in Us
spent fuel storage basin or at either oasttainsV-
pendent spent fuel storage installations OSFSIa).
Further, the letter states:
NRC staff safety reviews of topical reports en
dry storage designs and dry storage installations
at four reactor sites, as well as the EA (Environ-
mental Assessment) for Part 72, support the
finding that storage of spent fuel in such installa-
tions for a period of up to 70 years does not sig-
nificantly affect the environment
We have had testimony before Sena-
tor Graham's subcommittee that they
can store on-site for 100 years. Sci-
ence is in agreement that in fact that
is the case.
Other countries, such as Sweden,
Germany, France, and Canada, are
taking their time and carefully evalu-
ating where and how best to store nu-
clear waste. Some of these nations
will not even be selecting a site in the
next 20 years. Taking the time to
answer all questions concerning the
safe and permanent disposal of nucle-
ar waste is something our Nation can
afford to do also. Hopefully, a new
administration will look at other
countries and be more fair than the
ones during the last decade to Neva-
da.
Also this bill is loaded with new tax-
es, over $5 billion of taxes. The Presi-
dent should react as he has to other
tax measures during the past few
months and veto this bill.
In conclusion, both bad policy and
bad science are evident in this provi-
sion, this legislation. It is sad that the
Nation is stuffing this offensive and
oppressive regulatory scheme down
Nevadans' throats. Finally, it is bad
that the nuclear body is pushing so
hard to speed up this flawed process
Bad, Mr. President: Bad, bad, had.
It is not going to get better, and I am
concerned that Congress is going to
lurch forward and adopt this confer-
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ence report. It would be a tradegy
and a travesty. I urge my colleagues
to vote against cloture.
I reserve the remainder of my time
for Senator Bryan and for me.
The PRESIDING OFFICER. Who
yields time?
Mr. JOHNSTON. Mr. President, I
yield myself 10 minutes.
Mr. President, I am uncomfortable
opposing my friends from Nevada. We
just made common cause on the ques-
tion of nuclear testing in Nevada.
Both of us. I, because I was anxious
to have testing for the purpose of
safety in Nevada; my friends from
Nevada, I think, not only because of
safety but because of jobs.
It is curious that my friends from
Nevada want to continue nuclear
testing in Nevada where there are 600
holes in the ground which are, in
effect, many nuclear repositories con-
taining everything from cesium- 137,
strontium-90 - all of the long-lived
nuclear isotopes, and they are not
sealed off at all from the environment.
So we start with that curiosity, that
this argument is really not grounded
on science but more on emotion.
I want to make 5 points, which I
think are very important. The first is
that this was absolutely necessary to
be in this bill in the conference com-
mittee. There was a provision in the
House bill, fixing radionuclides at a
previously withdrawn EPA standard.
So the House bill legislatively fixed
the standard for radionuclides. The
Senate had no
such language. So, in conference
committee, we had to deal with this
issue.
It was not an issue about which my
friends from Nevada had no notice.
We had discussed it personally and
informally, the question of
radionuclides and the question of
what I call the caveman test. That is,
whether or not you can assume that
civilization continues and people
would know the location of the site so
as to keep human intrusion away.
My friends were aware of that. We
spread it on the Congressional Record
in a colloquy among us. So they were
on full notice as to the question of
radionuclides. My colleagues will
recall they had mounted a filibuster
against this bill in its consideration on
the Senate floor and, in accordance
with my agreement not to press the
question of preemption. The House
bill had preempted the right of the
State of Nevada to issue water per-
mits, air permits, and other permits
because of the record of Nevada in
delaying those permits. The Record
shows that these permits have been
delayed by litigation, by delay for peri-
ods of years when those same permits,
if they were for a gold mine or for
other purposes, would be issued
promptly in a period of up to 3
months at most.
So the House had put in language
to preempt the State of Nevada. My
friends from Nevada had said they
were no longer going to delay. I indi-
cated I was willing to accept that, and
our compromise was that I would take
that language out, or would attempt
to, and eventually did, in the confer-
ence committee in response for which
they would do away with the filibus-
ter.
But I made very clear that this
issue of radionuclides was not includ-
ed in our agreement and had to be
addressed in the conference committee
and, in fact, was addressed in the
conference committee.
Now, is it a matter of importance?
Mr. President, this is a $3.2 billion
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problem. If, in fact, we had adopted
the language of the House, then it
would have put in place a release limit
for carbon 14. Carbon 14, by the way,
is ubiquitous everywhere in life. It is
generated in the atmosphere. The
regular carbon 12 atoms are hit by
solar radiation, turned into carbon 14.
It is everywhere. It is how we do
carbon dating. The caveman, not too
long ago, discovered up in the Alps,
who was 5,000 years old, they found
out how old he was by carbon 14 dat-
ing. So carbon 14 is ubiquitous.
Previously, the EPA had come up
with a standard for release limits on a
lot of things, including carbon 14.
That was back in 1985. They set that
limit at that which they considered to
be achievable, not that which had
anything to do with human health.
The assumption was at that time
that the repository was going to be
located below the level of saturated
rock. Water absorbs carbon 14. So
they set the release limits for carbon
14 at such minuscule amounts that it
ended up being one-millionth of back-
ground radiation; one-millionth of
background radiation. We are bom-
barded by radiation all the time from
solar radiation, some from rocks, from
granite, from radon, from other sourc-
es, but it was one-millionth of back-
ground radiation or 1/6400 of the
radiation which occurs naturally in
the body.
So, obviously, it did not have any-
thing to do with human health be-
cause it set that limit so low as to
have no relationship to human health.
Lo and behold, the Congress came
along and sited the repository at Yuc-
ca Mountain, which is in dry rock so
that we can no longer count on the
absorption of the carbon 14 in the wet
rock. So then the question came, how
would you comply with the carbon 14
standard? According to the Depart-
ment of Energy, it would take $3.2
billion to comply.
In a letter of October 7, 1992, from
John W. Bartlett, Director of the Of-
fice of Civilian Radioactive Waste
Management, he says, among other
things:
One means to comply with the existing stan-
dard - -
That is the carbon 14 standard.
• - avan though public health would not be en-
dangered, would be to uee specially d aligned
waate caniaiera to contain the carbon 14. As
stated in a technical report on the subject trans-
mitted by DOE to EPA on August 12. 1902, DOB
estimates that the specially designed carbon 14
caniatere would cost a total of $6.4 billion. In
contrast, the estimated cost of canisters to meet
all other requirements is $2.2 billion.
Thus, use of caniatere to comply with the
existing EPA carbon 14 standard would cost the
nuclear waate program an additional $3.2 billion
without any health benefite.
Mr. President, I ask unanimous
consent that this letter be printed in
the Record.
There being no objection, the letter
was ordered to be printed in the Re-
cord, as follows:
Department of Energy,
Washington, DC,
October 7, 19S2.
Hon. J. Bennett Johnston,
Chairman,
Committee on Energy and Natural Resources,
VS. Senate,
Washington, DC.
Dear Mr. Chairman:
Thia is in reply to your inquiry concerning the
•fleet of existing Environmental Protection Agen-
cy (EPA) nuclear waate disposal standards on the
cost of wssts canisters for disposal in a |nr1tnthl
repository st the Yucca Mountain site. Of specif-
ic concern is the potential additional cost of can-
iaters in order to prevent release of carbon- 14 in
excess of EPA requirements.
Ths existing EPA stsndsrds are based on ex-
pectation that the repository would be below the
water table so that any released nuclide would be
transported to the environment by groundwater.
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At Yucca Mountain, the proposed repository
would bo above the water table eo that nuclides
such so carbon- 14 would migrate to the snviron-
The existing EPA disposal standards for
carbon- 14 are technically achievable for a reposi-
tory beneath the water table, but at Yucca Moun-
tain the eaibon-ldeoiild be releaaad to exceed the
standard. Calculations have shown that relaaee of
the entire inventory of carbon- 14 in a repository
at Yucca Mountain would sacssd the standard
but would not endanger public health.
One mesne to comply with the existing stan-
dard, oven though public health would not be
endangered, would bo to use specially designed
waste canisters to contain the carbon- 14. As
stated in a technical report on this subject trans-
mitted by DOE to EPA on August 12, 1092, DOE
estimates that the specially-designed carbon- 14
canisters would cost a total of $6.4 billion. In
contrast, the estimated total cost of canisters to
asset all other requirements is $2.2 billion.
Thus, uss of canisters to comply with the exist-
ing EPA carbon- 14 standard would cost the nu-
clear waste program an additional $3.2 billion
dollars without any health benefit. The Depart-
ment strongry believes that this is an unwarrant-
ed expenditure. Rather than incurring unwar-
ranted costs to comply with an inappropriate
standard, the standard should be revised.
Pleass let me know if you have further ques-
tions on this subject.
Sincerely,
John W. Bsrtlett,
Director, Office of Civilian
Radioactive Waste Msnsgement.
Mr. JOHNSTON. Mr. President,
this is an issue as to which my friends
from Nevada were on notice, an issue
that we had to deal with in the con-
ference, and a $3.2 billion problem
which has no relationship to health or
safety. None. And no one I know of
has ever argued that it does.
Now, how did we fix the problem?
In the conference, Mr. President, we
had long conversations about how to
deal with this issue, and we said, look,
this ought to be a matter of science,
for the scientists to deal with in the
first instance and for EPA to deal
with in the next instance. So we
came up with a very simple solution.
The National Academy of Sciences,
the most distinguished scientific group
in the world, is to make the scientific
determinations and EPA is to make
the policy determinations after a
study by the National Academy of
Sciences.
I forget to say, Mr. President, that
those standards on radionuclides were
later withdrawn by the court and
remanded to EPA back in 1987 where
they have remained, and EPA has not
come up with a new standard. So
there is no standard now applicable to
radionuclide release from Yucca
Mountain or the Waste Isolation Pilot
Plant or other nuclear waste facilities.
No standard is now applicable.
The question is, how do we get a
standard? What, pray tell, Mr. Presi-
dent, could be more reasonable than
to have the National Academy of Sci-
ences do a study and to have EPA
come up with a standard based upon
and consistent with that?
Mr. President, we are told the argu-
ment is that the National Academy of
Sciences is going to set the standard.
That is not so. That is not what is
intended. That is not what the report
of the managers says. That is not
what the language clearly says.
In fact, Stephen A. Merrill, execu-
tive director of the National Research
Council, which is the research arm of
the National Academy of Sciences,
says, among other things - they have
seen this language and they say:
This is to advise that the Academy is prepared
to conduct the study aa described, although we
would not sssums s standard-setting role. That
is properly the responsibility of Government
officials.
They do not see that as their role.
They see their role as scientific re-
search.
The EPA also says in a letter to
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Senator Graham, dated October 5,
1992, from Henry Habicht, a deputy
administrator of EPA, which says,
among other things:
• • • EPA believes that a scientific study by
the NAS could result in helpful input for im-
provement of the standards for the storage and
disposal of radioactive material.
The agency -
That is EPA
- takes note of the following language in the
statement of managers of the conference report
on H.R. 776:
'Under the provisions of section 801, the
authority and responsibility to establish the
standards would remain with the Administrator,
as is the case under existing law. The provisions
of section 801 are not intended to limit the
Administrator's discretion in the exercise of his
authority related to public health and safety
He goes on to say:
I assure you that, consistent with our impor-
tant statutory and regulatory responsibilities,
EPA will ensure that any standards for radioac-
tive materials that are ultimately issued will be
the subject of public comment and involvement
and will be fuuy protective of human health and
environment.
Mr. President, I ask unanimous
consent that that letter be printed in
the Record.
There being no objection, the letter
was ordered to be printed in the Re-
cord, as follows:
Environmental Protection Agency,
Washington, DC,
October 6, 1992.
Hon. Bob Graham, Chairman,
Subcommittee on Nuclear Regulation,
Committee on Public
Works and the Environment,
VS. Senate, Washington, DC.
Dear Senator Graham:
This responds to your request for the Environ-
mental Protection Agency's (EPA) views on sec-
tion 801 of the Conference Report on H.R. 776
regarding the Yucca Mountain nuclear waste
repository.
Section 801 directs the Administrator of EPA
to contract with the National Academy of Scienc-
es (NAS) for a study of reasonable public health
and safety standards for the storage and disposal
of radioactive materials at the proposed reposito-
ry at Yucca Mountain. It also requires the Ad-
ministrator to promulgate public health and safe-
ty standards applicable to Yucca Mountain thai
are 'based upon and consistent with the findings
and recommendations' of the NAS.
It appears that the intent of section S01 is to
provide for a review of the scientific foundation
of EPA'e draft standards for the disposal of ra-
dioactive materials. We recognise thai EPA'e
draft standards have been controversial and our
policy generally is to support open peer involve-
ment in important science decisions. As such,
EPA believes that a scientific study by the NAS
could result in helpful input for improvement of
standards for the storage and disposal of radioac-
tive material.
The Agency takes note of the following lan-
guage in the Statement of Managers of the Con-
ference Report on H.R. 776:
'Under the provisions of section SO 1, the au-
thority and responsibility to establish the stan-
dards would remain with the Administrator, as is
the case under existing law. The provieione of
section 801 are not intended to limit the
Administrator's discretion in the cxercem of his
authority related to public health and safety
I assure you that, consistent with our impor-
tant statutory and regulatory responsibilities,
EPA will ensure that any standards for radioac-
tive materials that are ultimately issued will be
the subject of public comment and involvement
and will be fully protective of human health and
the environment.
Sincerely,
F. Henry Habicht 0,
Deputy Administrator.
Mr. JOHNSTON. Mr. President, I
also have a letter from Phil Sharp,
who is chairman of the Subcommittee
on Energy and Power in the House of
Representatives, who states as follows:
As a conferee on this bill, I was unalterably
opposed to legislating s new, weaker standard for
waste disposal at Yucca Mountain I would not
have signed the conference report and nmnsgsd
it on the House floor had we done so.
Instead, we provided for a scientific review of
all relevant questions followed by a new
rulemaking by EPA before a new standard is
issued. Some opponents of the bill are arguing
that we do not allow the National Academy of
Sciences to review the collective doss issues.
This is categorically fame.
For a host of reasons, H JL 776 is the moat
environmentally sound comprehensive mnnjhill
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we have «ver considered. I hope you will see fit
thai it become* lew.
And he attaches to his letter ex-
cerpts from the statement of manag-
ers.
I ask unanimous consent that letter
be printed in the Record.
There being no objection, the letter
was ordered to be printed in the Re-
cord, as follows:
Houee of Representstives, Committee on Ener-
gy end Commerce, Subcommittee on Energy
end Power,
Washington, DC, October 7, 1992.
Ae you consider your vote on the cloture peti-
tion on H.R. 776, the Energy Policy Act, I hope
you will look et the actual language of the con-
ference report, end especially the Statement of
Managers, on the Yucca Mountain issue.
As s conferee on this bill, I was unalterably
opposed to legislating* new, weaker standard for
waste disposal at Yucca Mountain. I would not
have signed the conference report and managed
it on the House floor hsd we done so.
Instead, we provided for e scientific review of
all relevant questions, followed by s new
rulemaking by EPA before a new standard is
issued. Some opponents of the bill ere arguing
that we do not allow the National Academy of
Sciences to review the 'collective dose' issue.
This is categorically false.
I hope the attached excerpts from the State-
ment of Managers will be helpful to you.
For e host of reasons, H.R. 776 is the most
environmentally sound comprehensive energy bill
we have ever considered. I hope you will vote to
see that it becomes law.
Sincerely,
Phil Sharp,
Chairman.
EXCERPTS FROM THE STATEMENT OF
MANAGERS, SECTION 801 OF H.R. 776
Standards must protect the public health:
'The provisions . . . require the Administrator
to promulgate health-based standards for protec-
tion of the public from releasee of radioactive
materials from a repository et Yucca Mountain,
based upon and consistent with the findings and
recommendations of the National Academy of
Sciences.'
National Academy of Sciences hss discretion in
its study:
'In carrying out the study, the National Acade-
my of Sciences would not be precluded from
addressing additional questions or issues related
to the appropriate standards for radiation protec-
tion at Yucca Mountain beyond those that are
specified. For example, the study could include
an estimate of the collective does to the general
population. . . .'
The NAS study provides ectentific guidance:
'The Conferees do not intend for the National
Academy of Sciences, in making its recommenda-
tions, to establish specific standards for protec-
tion of the public but rather to provide expert
scientific guidance on the issues involved in ee-
tablishing those standards.'
The authority of the EPA and the NRC is
'The provisions of section 601 are not intended
to limit the Administrator's discretion in the
exercise of his authority related to public health
and safety issues As with the Administrstor,
the provisions of section 601 ere not intended to
limit the Commission's discretion in the exercise
of its authority related to public health and safe-
ty.'
Mr. JOHNSTON. Mr. President,
what we do ask the National Academy
of Sciences and the EPA is to come up
with a standard which defines health
and safety to an affected individual
and the effect comes up with a dose to
the individual.
Now, my friends from Nevada com-
plain that a dose to the individual is
not the way to do it; it ought to be a
release to the atmosphere, in general.
Mr. President, a health-based stan-
dard is one that is expressed in
millirems and provides for the maxi-
mum dose that is safe for an individu-
al. That is what we have asked them
to come up with. A performance or
objective release standard expressed in
curies prescribes the maximum
amount of radioactive material that
may be released to environment.
The two types of standards are op-
posite sides of the same coin. They
can be translated one from the other
like deutsche marks into dollars. The
dose levels to which the public would
be exposed from a given release can be
calculated from the release limit and
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vice versa.
Mr. President, this is the best way
to set a standard, do it scientifically
with the best scientific brains to make
the scientific determinations and then
leave it up to the policymakers to set
the policy based on the science. That
is the way it ought to be done in every
instance. That is the way we have
done it, Mr. President.
One final word which I will repeat.
If this cloture vote goes down, this bill
goes down, national energy policy goes
down, a bill that is supported by Pres-
ident Bush, by President to be
Clinton, by the majority leader, by the
minority leader, by the Speaker of the
House, by the minority leader of the
House. All of them support this bill
because it is badly needed. We cannot
let this bill go down simply because we
are asking that we set a standard
based on science and leave it to the
EPA to set the policy.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who
yields time?
Mr. BRYAN. Mr. President, I yield
myself 10 minutes.
The PRESIDING OFFICER. The
Chair recognizee the Senator from
Nevada (Mr. Bryan).
Mr. BRYAN. I thank the Chair.
Mr. President, no Member of this
body ought to be misled by the opposi-
tion that what has been done to Neva-
da is a legislative travesty of the first
magnitude. It changes a fundamental
rule of public health. In every single
enactment - the Clean Air Act, Clean
Water Act - you name it - the popula-
tion standard is a universally recog-
nized way of determining the poten-
tial impact on human health of toxic
agents, in this case radionuclides.
What was done to Nevada at the
last minute, without the benefit of a
hearing, no opportunity to be heard or
expert testimony received, is to
change this standard so that if a nu-
clear waste dump is ever located at
Yucca Mountain, only those of us in
Nevada will have a lower standard of
health and protection from radiation
than anyone else in the country.
We have been considering during
the course of this Congress the Waste
Isolation Pilot Plant (WIPP) in New
Mexico. That is a type of radioactive
material which is less dangerous and
yet it will have a higher standard
based upon the population standards
than Yucca Mountain, if ever built,
would have for the most dangerous
substance known to mankind.
Mr. JOHNSTON. Will the Senator
yield?
Mr. BRYAN. I will yield.
Mr. JOHNSTON. Is not the Senator
presuming that the National Academy
of Sciences and EPA will set a stan-
dard that is lower than that which
was contained in the so-called part B?
Mr. BRYAN. I would respond to the
Senator's question by saying that,
indeed, the legislation that the Sena-
tor from Louisiana added by way of
conference, for the first time, man-
dates that conclusion. All of the talk
that we will have this covered by col-
loquy, we have this covered by report
language, is a smokescreen, Mr. Presi-
dent.
Every constitutional lawyer, every
legislative analyst knows that if the
language of the statute is clear, report
language and colloquies on the floor
mean nothing.
Nevada is shafted in two ways by
this legislation.
First, in the conference report lan-
guage added by the distinguished Sen-
ator from Louisiana, it is mandated
that the standard to be applicable to
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Yucca Mountain shall be the individu-
al standard, not the population stan-
dard.
Second, the National Academy of
Sciences is empowered to make recom-
mendations in this conference, and
the Environmental Protection Agency,
which since the 1982 act has been
charged by law with establishing pub-
lic health and safety standards at
nuclear wastesites, is effectively muz-
zled. They are gutted. They have no
authority at all in the language of this
bill to do anything other than to fol-
low the mandatory language con-
tained.
So when the Senator says that the
EPA has no objection to it, if you read
the language of the letter that the
Senator has incorporated in the Re-
cord, October 5, 1992, the EPA does
not say that they agree to it at all. In
fact, the author of that letter, a gen-
tleman by the name of Mr. Habicht,
indicated in an analysis, a guidance
for risk characterization for risk man-
agers on February 26 of this year,
specifically makes reference to the
fact that the population risk standard
ought to be included, the same man.
I ask unanimous consent that that
report dated, or at least received Feb-
ruary 26 with a date stamp be made a
part of the Record.
There being no objection, the report
was ordered to be printed in the Re-
cord, as follows:
Environmental Protection Agency,
Washington, DC,
February 26, 1992.
MEMORANDUM
Subject: Guidance on Risk Characterization for
Risk Managers and Risk A—wore.
Prom: F. Henry Habicht II, Deputy Administra-
tor.
To: Aasiatant Administrators, Regional Adminis-
trators.
INTRODUCTION
This memorandum provides guidance lor man-
agers and assessors on describing risk assessment
results in EPA reports, presentations, and deci-
sion packages. The guidance addresses a problem
that affects public perception regarding the reli-
ability of EPA's scientific assessments and relat-
ed regulatory decisions. EPA has talented scien-
tists, and public confidence in the quality of our
scientific output will be enhanced by our visible
interaction with peer scientists and thorough
presentation of risk assessments and underlying
scientific data.
Specifically, although a great deal of careful
analysis and scientific judgment goes into the
development of EPA risk assessments, significant
information ia often omitted as the results of the
assessment are passed along in the
decision-making process. Often, when risk infor-
mation is presented to the ultimate
decision-maker and to the public, the results
have been boiled down to a point estimate of risk.
Such 'short hand' approaches to risk assessment
do not fully covey the range of information con-
sidered and used in developing the assessment.
In short, informative risk characterisation clari-
fies the scientific basis for EPA decisions, while
numbers alone do not give a true picture of the
Thia problem is not EPA's alone. Agency eon-
tractors, industry, environmental groups, and
other participants in the overall regulatory pro-
cess use similar 'short hand' approaches.
We must do everything we can to ensure that
critical information from each stage of the risk
■osessment is communicated from risk assessors
to their managers, from middle to upper manage-
ment, from EPA to the public, and from others to
EPA. The Risk Assessment Council considered
this problem over many months and reached
several conclusions: (1) We need to presents full
and complete picture of risk, including s state-
ment of confidence about data and methods used
to develop the assessment; (2) we need to provide
a basis for greater consistency and comparability
in risk assessments across Agency programs; and
(3) professional scientific judgment plays an im-
portant role in the overall statement of risk. The
Council also concluded that Agency-wide guid-
ance would be useful.
BACKGROUND
Principles emphasized during Risk Assessment
Council discussions are summarised below and
detailed in the attached Appendix.
FULL CHARACTERIZATION OF RISK
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EPA decisions sre based in part on risk assess-
ment, a technical analysis of scientific informa-
tion on existing and projected risks to human
health and the environment. As practiced at
EPA, the risk assessment process depends on
many different kinds of scientific data (e.g., expo-
sure, toxicity, epidemiology), all of which are
used to 'characterize' the expected risk to human
health or the environment. Informed use of
reliable scientific data from many different sourc-
es is a central feature of the risk assessment
Highly reliable data are available for many
aspects of an assessment. However, scientific
uncertainty is a fact of life for the risk assess-
ment process as s whole. As a result, agency
managers make decisions using scientific ■■ease
ments that are less certain than the ideal. The
issues, then, become when b scientific confidence
sufficient to use the assessment for
decision-making, and how should the sssessment
bs used? In order to make these decision, manag-
ers need to understand the strengths and the
limitations of the sssessment.
On this point, the guidance emphasizes that
informed EPA risk assessors and managers need
to be completely candid shout confidence and
uncertainties in describing risks and in explain-
ing regulatory decisions. Specifically, the
Agency's risk assessment guidelines call for full
and open discussion of uncertainties in the body
of each EPA risk assessment, including promi-
nent display of critical uncertainties in the risk
characterisation. Numerical risk estimates
should always bs accompanied by descriptive
information carefully selected to ensure en objec-
tive and balanced characterisation of risk in risk
sssessment reports and regulatory documents.
Scientists call for fully characterizing riek not
to question the validity of the sssessment, but to
fully inform others shout critics! information in
the sssessment. The emphasis on 'full' snd
'complete' characterisation does not refer to an
ideal sssessment in which risk is completely
defined by fully setisfsetory scientific data. Rath-
er, the concept of complete risk characterisation
means that information that is needed for in-
formed evaluation snd use of the sssessment is
carefully highlighted. Thus, even though risk
characterization details limitations in sn i
ment, s balanced discussion of reliable conclu-
sions and related uncertainties enhances, rather
than detracts, from the overall credibility of each
This guidance b not new. Rather, it re-states,
clarifies, and expands upon current risk ■■eons
ment concepts snd practices, and emphasizes
aspects of the process that are often in com plot or/
developed. It articulates principles thai have
long guided experienced risk assessors and
well-informed risk managers, who recognise that
risk b best described not ss s classification or
single number, but ss s composite of information
from many different sources, each with varying
degrees of scientific certainty.
COMPARABILITY AND CONSISTENCY
The Council's second finding, on the need for
greater comparability, arose for several reasons
One wss confusion • for example, many people
did not understand that a risk estimate of 10-6
for an 'average' individual should not be com-
pared to another 10-6 risk estimate for the 'meet
exposed individual'. Uss of such apparently
similar estimates without further explanation
leads to misunderstandings shout the relative
significance of risks snd the proteetiveness of
risk reduction actions. Another catalyst for
change wss the SAB's report. Reducing Risk:
Setting Priorities snd Strategies for Environmen-
tal Protection. In order to implement the SAB's
recommendation that we target our efforts to
achieve the groateet risk reduction, we need com-
mon measures of risk.
EPA's new^y revised Exposure Assessment
Guidelinee provide standard descriptors of expo-
cure snd risk. Uss of these terms in all Agency
risk assessments will promote consistency and
comparability. Use of several descriptors, rather
than a single descriptor, will enable us to present
s more complete picture of risk that cot responds
to the range of different exposure conditions
encountered by various populations exposed to
most environments! chemicals.
PROFESSIONAL JUDGMENT
The call for more extensive characterisation of
risk hss obvious limits. For example, the risk
characterization includes only the most signifi-
cant data and uncertainties from the sssessment
(those that define snd explain the main risk
conclusions) so that decision-makers and the
public are not overwhelmed by valid but second-
sry information.
The degree to which confidence and uncertain-
ty are addressed depends largely on the eeops of
t sssessment snd available resources. When
special circumstances (e^., lack of data, extreme-
ly complex situations, resource limitations, statu-
tory deadlines) preclude s full assessment, such
circumstances should be explained. For example,
sn emergency telephone inquiry does not require
s full written risk sssessment, but the caller
must be told that EPA comments sre based on a
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'back-of-the«envelope' calculation and, like other
preliminary or simple calculations, cannot be
regarded aa * risk assessment.
GUIDANCE PRINCIPLES
Guidance principles for developing, describing,
and using EPA risk assessments are sat forth in
the Appendix. Some of these principles focus on
differences between risk assessment and risk
management, with emphasis on differences in the
information content of each process. Other prin-
ciples describe information expected in EPA risk
assessments to the extent practicable, emphasiz-
ing that discussion of both data and confidence in
the data are essential features of a complete risk
assosament. Comments on each principle appear
in the Appendix; more detailed guidance is avail-
able in EPA'a risk assessment guidelines (e.g., 61
Federal Register 33992-34054, 24 September
1936).
Like EPA'a risk aaaessment guidelines, this
guidance sppliea to the development, evaluation,
and description of Agency risk assosament for use
in regulatory decision-making. Thia 'memoran-
dum does not give guidance on the use of com-
pleted risk assessments for risk msnsgement
decisions, nor does it address the use of
non-scientific considerations (e.g., economic or
societal factors) thst are considered along with
the risk aaaessment in risk msnsgement end
decision -making. While some aspects of this
guidance focus on cancer risk assessment, the
guidance sppliea generally to human health ef-
fecta (e.g., neurotoxicity, developmental toxicity)
and, with appropriate modifications, should be
used in all health risk assessments. Guidance
specifically for ecological risk assessment is un-
der development.
IMPLEMENTATION
Effective immediately, it will be Agency policy
for each EPA office to provide severs! kinds of
risk sssessment information in connection with
new Agency reports, presentstions, end decision
packages. In general, such information ahould be
presented ss carefully selected highlights from
the overall assessment. In this regard, common
sense regarding information needed to fully in-
form Agency decision -makers is the best guide for
determining the information to be highlighted in
deciaion packagea and briefings.
1. Regarding the interface between risk assess-
ment and risk msnsgement, risk assessment
information must be clearly presented, separate
from any non-scientific risk msnsgement consid-
erations. Discussion of risk msnsgement options
should follow, based on consideration of all rele-
vant factors, scientific and non-scientific
2. Regarding risk characterization, key scientif-
ic information on data and methods (e.g., use of
animal or human data for extrapolating from
high to low doses, use of pharmacokinetics data)
must be highlighted. We also expect s statement
of confidence in the assessment thst identifies all
major uncertainties along with comment on their
influence on the assessment, consistent with
guidance in the attached Appendix.
3. Regarding exposure and risk characteriza-
tion, it is Agency policy to present information on
the range of exposures derived from exposure
scenarios and on the use of multiple
risk-descriptors (i.e., central tendency, high end
of individual risk, populstion risk, important
subgroups, if known) consistent with terminology
in the attached Appendix and Agency guidelines.
This guidance applies to all Agency offices. It
sppliea to assessments generated by EPA staff
and to those generated by contractors for EPA'a
use. I believe adherence to this Agency-wide
guidance will improve understanding of Agency
risk assessments, lesd to more informed deci-
sions, and heighten the credibility of both assesa-
ments and decisions.
From this time forward, presentstions, reports,
snd decision packages from all Agency offices
should characterize risk and related uncertainties
as described here. Please be prepared to identify
and discuss with me any program-specific modifi-
cations that may be appropriate. However, we do
not expect risk sssessment documents thst are
close to completion to be rewritten. Although
this is internal guidance that applies directly to
assessments developed under EPA suspices, I
also encourage Agency ataff to use these princi-
ples as guidance in evaluating assessments sub-
mitted to EPA from other sources, snd in dis-
cussing these submissions with me and with the
Administrator.
This guidance is intended for both msnsge-
ment snd technical ataff. Please distribute this
document to those who develop or review asanas
ments and to your msnagers who use them to
implement Agency programs. Also, I encourage
you to discuss the principles outlined here with
your staff, particularly in briefings on particular
assessments. ' ,
In addition, I expect that the Risk Assessment
Council will endorse new guidance on
Agency-wide approaches to risk characterization
now being developed in the Risk Assessment
Forum for EPA's risk sssessment guidelines, snd
that the Agency and the Council will sugment
thst guidance as needed.
The Administrator and I believe that this effort
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is vary important. It furthers our goals of rigor
and candor in the preparation, presentation, and
use of EPA risk assessments. The tasks outlined
above may require extra effort from you, your
managers, and your technical staff, but they are
critical to full implementation of these principles.
We are most grateful for the hard work of your
representatives on the RAC and other staff in
pulling this document together. I appreciate
your cooperation in this important area of sci-
ence policy, and look forward to our discussions.
GUIDANCE FOR RISK ASSESSMENT (ENVI-
RONMENTAL PROTECTION AGENCY, RISK
ASSESSMENT COUNCIL,
NOVEMBER 1991)
SECTION 1. RISK ASSESSMENT - RISK
MANAGEMENT INTERFACE
Recognising that for many people the term riak
assessment has wide meaning, the National Re-
search Council's 1983 report on risk assessment
in the federal government (hereafter 'NRC
report') distinguished between risk assessment
and riak management.
Broader uses of the term (risk assessment)
than ours also embrace analysia of perceived
risks, comparisons of risks associated with differ-
ent regulatory atrategiee, and occasionally analy-
sis of the economic and social implications of
regulatory decisions • functions that we assign to
risk management (emphasis added). (1)
In 1984, EPA endorsed these distinctions be-
tween riak assessment and riak management for
Agency use (2), and later relied on them in devel-
oping riak assessment guidelines (3).
The distinction suggests that EPA participants
in the process can be grouped into two main
categories, each with somewhat different respon-
sibilities, based on their roles with respect to risk
assessment and risk management.
RISK ASSESSMENT
One group generates the risk ssssssment by
collecting, analyzing, and synthesizing scientific
data to produce the hazard identification,
doss response, end exposure ssssssment portion
of the risk ssssssment and to characterise riak.
This group relies in part on Agency risk nun
ment guidelines to address science policy issues
and scientific uncertainties.
Generally, this group includes scientists snd
statisticians in the Office of Research and Devel-
opment, the Office of Pesticides snd Toxic Sub-
stances and other program offices, the Carcino-
gen Riak Assessment Verification Endeavor
(CRAVE), and the R/D/R/C Workgroups.
Others use analyses produced by the first
group to generate site- or msdia-spsctfic exposure
assessments snd risk characterisations for use in
regulation development. These aeeessnrs rory on
existing databases (e.g., IRIS, ORD Health As-
sessment Documents, CRAVE and RflVRIC
Workgroup documents) to develop regulations)
and evaluate alternatives.
Generally, this group includes scientists snd
analysts in program offices, regional offices, snd
the Office of Research and Development.
RISK MANAGEMENT
A third group integrates the risk characterisa-
tion with other non-edenUfic considerations
specified in applicable statutss to make and justi-
fy regulatory decisions.
Generally, this group includes Agency manag-
ers and decision-makers.
Each group haa different responsibilities for
observing the distinction between risk ssssssment
snd risk management. At the same time, the risk
ssssssment pro case involves regular interaction
between each of the groups, with overlapping
responsibilities st various stages in the overall
The guidance to follow outlines principles spe-
cific for those who generate, review, use, and
integrate riak assessments for decision-making.
1. Riak assessors snd risk managers should be
sensitive to distinctions between risk ssssssment
snd risk management.
The major participanta in the risk assessment
process hsve msny shared responsibilities.
Where responsibilities differ, it to important that
participanta confine themselves to tasks in their
areas of responsibility snd not inadvertently
obscure differences between risk ssssssment snd
risk management.
Shared responsibilities of sssessors snd manag-
ers include initial decisions regarding the plan-
ning and conduct of an ssssssment, discussions
aa the ssssssment develops, decisions regarding
new data needed to complete an assessment snd
to sddress significant uncertainties. At critical
junctures in the sssessmsnt, su<
shspe the nature of, and schedule for, the i
ment.
For the generstors of the ssssssment, <
guishing between risk assessment snd risk seen-
agament means that scientific information is
sslscted, evaluated, snd presented without con-
sidering non-scientific factors including how the
scientific analysis might influence the regulatory
decision. Assessors are charged with (1) generat-
ing a credible, objective, realistic, and be Is need
analysis; (2) presenting information on hazard,
doss response, exposure snd risk; and (3) «
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ing confidence in each sssessment by clearly
delineating uncertaintiee And assumptions along
with the impacts of that* factor* (e.g., confidence
limits, uaa of eonsarvativa/ non-conservative as-
sumption*) on the overall assessment They do
not make decisions on the acceptability of any
riak level for protecting public health or selecting
procedures for reducing risks.
For user* of the assessments into regulatory
ihrisinn*. the distinction between riak mnw
ment and riak management means refraining
from influencing the riak description through
consideration of non-scientific factors • e.g., the
regulatory outcome - and from attempting to
shape the risk sssessment to avoid statutory
constraints, meet regulatory objectives, or serve
political purposes. Such management consider-
ations are often legitimate considerations for the
overall regulatory decisions (see next principle),
but they have no role in estimating or describing
risk.
However, decision-makers establish policy di-
reetione that determine the overall nature and
tone of Agency risk assessments and, ee appropri-
ate, provide policy guidance on difficult and con-
troversial risk sssessment issues. Matters auch
aa risk sssessment priorities, degree of conserva-
tism, and acceptability of particular riak levaie
are reserved for decieion-makers who are charged
with making dedakma regarding protection of
public health.
2. The riak sssessment product, thst is, the
risk characterisation, is only one of several kinds
of information uaed for regulatory
decision-making.
Riak characterisation, the laat atep in riak
assessment, is the starting point for riak manage-
ment considerations and the foundation for regu-
latory decision-making, but it is only one of eev-
eral important components in such decisions.
Each of the environmental lawe administered by
EPA calls for consideration of non-scientific fac-
tors at various stages in the regulatory process.
As authorised by different statutes,
decision-makers evaluate technical feasibility
(eg., treatability, detection limits), economic,
eocial, political, and legal factors aa part of the
analysis of whether or not to regulate and, if so,
to what extent. Thus, regulatory decisions are
usually based on a combination of the technical
analysis used to develop the risk sssessment end
information from other fielda.
For this reason, risk assessors and managers
should understand that the regulatory decision is
usually not determined solely by the outcome of
the risk assessment That is, the analysis of the
overall regulatory problem may not be the same
ss the picture presented by the risk analysts
alone. For example, a pesticide risk sssessment
may describe moderate riak to some populations
but, if the agricultural benefits of its use ere
important for the nation's food supply, the prod-
uct may be allowed to remain on the market with
certain restrictions on use to reduce possible
exposure. Similarly, sssessment efforts may
produce en RID for s particular chemical, but
other considerations may result in a regulatory
level that is more or less protective than the RID
itself.
For decision-makers, this mesne that societal
oonaiderationa (e.g., costs, benefits) thst, along
with the risk sssessment, shspe the regulatory
decision should be described ss fully aa the scien-
tific information set forth in the risk character-
isation. Information on data sources and analy-
ses, their strengths and limitations, confidence in
the sssessment, uncertaintisa, and alternative
analyses are as important here as they are for
the scientific components of the regulatory deci-
eion. Decision-makers should be able to expect,
for example, the same level of rigor from the
economic analysis aa they receive from the riak
analysis.
Decision-makers are not 'captivee of the num-
bers.' On the contrary, the quantitative and qual-
itative riak characterization is only one of many
important factors that must be considered in
reaching the final decision • a difficult and dis-
tinctly different teak from riak sssessment per se.
Risk management decisions involve numerous
assumptions and uncertainties regarding technol-
ogy, economics end social factors, which need to
be explicitly identified for the decision-makers
end the public.
SECTION 2. RISK CHARACTERIZATION
EPA risk sssessment principles end practices
draw on many sources. The environmental lawe
administered by EPA, the National Research
Council's 1983 report on risk sssessment (1), the
Agency's Risk Assessment Guidelines (3), and
various program -specific guidance (e.g., the Riak
t Guidance forSuparfund) are obvious
Twenty years of EPA experience in
developing, defending, and enforcing risk
sssessment-bssed regulation is another. Togeth-
er these various sources stress the importance of
a clear explanation of Agency processes for evalu-
ating hazard, doee response, exposure, and other
data that provide the scientific foundation for
characterizing risk.
This section focuses on two requirements for
full characterization of riak. First, the character-
ization must address qualitative and quantitative
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features of the — ossment. Second, it must iden-
tify any important uncertainties in the assess-
ment as part of a discussion on confidence in the
This emphasis on a full description of all ele-
ments of the assessment draws attention to the
importance of the qualitative aa well aa the quan-
titative dimension* of the assessment. The 1983
NRC report carefully distinguished qualitative
risk assessment from quantitative assessments,
preferring risk statements that are not strictly
numerical.
The term risk assessment is often given nar-
rower and broader meanings than we have adopt-
ed here. For some observers, the term is synony-
mous with quantitative risk ssscssmont snd em-
phasizes reliance on numerics! results. Our
broader definition includes quantification, but
also includes qualitative expressions of risk.
Quantitative estimates of risk are not alwaya
feasible, and they may be eschewed by agencies
for policy reasons. (Emphasis in original) (1)
More recently, en Ad Hoc Study Group (with
representatives from EPA, HHS, snd the private
sector) on Risk Presentation reinforced and ex-
panded upon thess principles by specifying sever-
al 'attributes' for risk characterisation.
1. The major componenta of risk (hazard iden-
tification, doss response, and exposure sssees-
ment) are presented in summary statements,
along with quantitative estimates of risk, to give
s combined and integrated view of the evidence.
2. The report clearly identifies key assump-
tions, their rationale, and the extent of scientific
consensus; the uncertainties thus accepted; and
the effect of reasonable alternative assumptions
on conclusions and estimates.
3. Ths report outlines specific ongoing or po-
tential research projects that would probably
clarify significantly the extent of uncertainty in
the risk estimation (4)
Particularly critical to full characterization of
riak b a frank and open discussion of the uncer-
tainty in the overall assessment and in each of ita
componenta. The uncertainly statement la im-
portant for several reasons.
Information from different sources carries
different kinds of uncertainty and knowledge of
these differences Is important when uncertainties
are combined for characterizing riak.
Decisions must be made on expending resourc-
ss to scquire additions! information to reduce the
uncertainties.
A clear and explicit statement of the implica-
tions and limitations of a risk sssessment re-
quires a dear and explicit statement of related
uncertainties.
Uncertainty snsJyeta gives the dedaion-maker
a better understanding of the implications and
limitations of the assessments.
A discussion of uncertainty requires comment
on such issues ss the quality and quantity of
available data, gape in the data base for specific
chemicals, incomplete understanding of general
biological phenomena, and scientific judgments or
science policy positions that were employed to
bridge information gaps.
In short, broad agreement exists on the impor-
tance of a full picture of risk, particularly includ-
ing a statement of confidence in the ssssssmint
and that ths uncertainties are within reasons,
This section discusses information content and
uncertainty aspects of risk characterization,
while Section 3 discusses various descriptors
used in risk characterization.
1. The risk assessment process calls for charac-
terizing riak aa a combination of qualitative in-
formation, quantitative information, and infor-
mation regarding uncertainties.
Risk sssessment is based on s series of ques-
tions that the assessor asks about the data and
the implications of the data for human risk.
Each queation calls for analyaie and interpreta-
tion of the available studies, selection of the data
that are most scientifically reliable and most
relevant to the problem at hand, and scientific
conclusions regarding the question presented. As
suggested below, because the questions snd anal-
yses are complex, a complete characterization
includes several different kinds of information,
carefully selected for reliability and relsvanos.
a. Hazard Identification • What do we know
about the capacity of an environmental sgent for
causing cancer (or other adverse effects) in labo-
ratory animate and in humane?
Hazard identification b a qualitative descrip-
tion based on factors such as the kind snd quali-
ty of data on humane or laboratory snimsb, the
availability of ancillary information fog-,
structure-activity analysis, genetic toxicity, phar-
macokinetics) from other studies, snd the
weight-of-ths evidence from sil of these data
sources. For example, to develop this description,
ths issues addressed include:
1. ths nature, reliability, and consistency of the
particular etudiss in humans and in laboratory
2. the available information on the i
bests for activity; and
3. experimental animal
relevance to human outcomes.
Thess issuss make dear that the task of haz-
ard identification b characterised by dasrrihinf
the full range of available information and ths
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of that information for human
health.
b, Dooe-Reeponse A— ass ment • What do wo
know about tho biologieal mechanisms and
do— response relationships underlying any ef-
fects observed in tho laboratory or epidemiology
studies providing data for tho aaMosment?
11m do— response atoe ommont examines quan-
titative ralationahipa batwaon exposure (or doee)
and aflbcta in the atudiea uaad to identify and
define aflbcta of concern. Thia information ia
later ueed along with 'real world' exposure infor-
mation (see below) to develop estimates of the
likelihood of adverse effects in populations poten-
tial*/at risk.
Methoda for establishing dose response rela-
tionships often depend on varioua assumptions
in lieu of a complete date base and the
1 can strongly influence the overall
nt. Thia relationship means that careful
attention to the choice of a high-to-low doee ex-
trapolation procedure ia very important. As a
result, an assessor who is characterizing a
doss response relationship considers several key
1. relationship between extrapolation models
selected and available information on biological
2. how appropriate data sets were selected from
those that show the range of possible potencies
both in laboratory animals and humane;
S. basis for selecting interspecies doee scaling
factors to account for scaling doses from experi-
ments] animals to humans; and
4. correspondence between the expected
route(s) of exposure end the exposure routefe)
utilised in the hazard studies, as well as the
interrelationships of potential effects from differ-
ent exposure routes.
EPA's Integrated Risk Information System
ORIS) is a primary source of this information.
IRIS includes date summaries representing Agen-
cy consensus on specific chemicals, based on s
careful review of the scientific issues listed above.
For specific risk assessments based on data in
IRIS and on other sources, risk assessors should
carefully review the information presented, em-
phasising confidence in the database and uncer-
tainties (see subsection d below). The IRIS state-
ment of confidence should be included ss part of
the risk characterization for hazard and
dose response information.
c Exposure Assessment - What do we know
about the paths, patterns, end magnitudes of
human exposure and numbers of persons likely
tobesxposed?
The exposure assessment
range of exposure parameters pertaining to the
'real world' environmental scenarios of people
who may be exposed to the agent under study.
The data considered for the exposure assessment
range from monitoring studies of chemical con-
centrations in environmental media, food, and
other msterisls to information on activity pat-
terns of different population subgroups. An as-
r who characterizes exposure should address
1. The basis for the values and input parame-
ters used for each exposure scenario. If based on
data, information on the quality, purpose, end
representativeness of tho database is nseded. If
based on sssumptions, the source end general
logic used to develop the assumption (e.g., moni-
toring, modeling, analogy, professional judgment)
should be described.
2. The major factor or factors (e.g., concentra-
tion, body uptake, duration/frequency of expo-
sure) thought to account for tho greatest uncer-
tainty in the exposure estimate, due either to
sensitivity or lack of data.
3. The link of the exposure information to the
risk descriptors discussed in Section 3 of this
Appendix. This issue includes the conservatism
or non -conservatism of the scenarios, ss indicated
by the choice of descriptors.
In summary, confidence in the information
ueed to characterize risk is variable, with the
result thst risk characterization requires s state-
ment regarding the aseessor's confidence in each
aspect of the assessment.
d. Risk Characterization • What do other as-
sessors, decision-makers, and the public need to
know about the primary conclusions end sssump-
tions, and shout ths balance between confidence
and uncertainty in the sssessment?
In the risk characterization, conclusions shout
hazard and doee response ere integrated with
those from the exposure ssssssment. In addition,
confidence shout these conclusions, including
information about tho uncertaintiss associated
with the final risk summary, is highlighted. As
summarized below, the characterization inte-
grates all of the preceding information to commu-
nicate the overall meaning of, end confidence in,
the hazard, exposure, and risk conclusions.
Generally, risk asssssments carry two cstego-
ries of uncertainty, and each merits consider-
ation. Measurement uncertainty refers to the
usual variance that accompanies scientific mea-
surements (such ss the range around an expo-
sure estimste) end reflects the accumulated vari-
ances around the individual msssured values
used to develop the estimste. A different kind of
uncertainty stems from data gaps • that is, infor-
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■nation needed to complete the date beee for the
assessment. Often, the date gap b broad, such ae
the absence of information on the effects of expo-
sure to a chemical on humans or on the biologi-
cal mechanism of action of an agent.
The degree to which confidence and uncertain-
ty in each of these areas is addressed depends
largely on the scope of the assessment and the
resources available. For example, the Agency
does not expect an assessment to evaluate and
■ssasi every conceivable exposure scenario for
every possible pollutant, to examine all suscepti-
ble populations potentially at risk, or to charac-
terise every possible environments] scenario to
determine the cause and effect relationships
between exposure to pollutants and adverse
health effects. Rather, the uncertainty analysis
should reflect the type and complexity of the risk
assessment, with the level of effort for analysis
and discussion of uncertainty corresponding to
the level of effort for the assessment. Some
sources of confidence and of uncertainty are
described below.
Often risk assessors and managers simplify
discussion of risk issues by speaking only of the
numerical components of an assessment. Thst is,
they refer to the weight-of-evidence, unit risk,
the risk-specific dose or the q • for cancer risk,
and the RfD/FfC for health effects other then
cancer, to the exclusion of other information
bearing on the risk case. However, since every
assessment carries uncertainties, s simplified
numerical presentation of riske is always incom-
plete and often misleading. For this reason, the
NRC (1) and EPA risk sssessment guidelines (2)
call for 'characterising' risk to include qualitative
information, a related numerical risk estimate
and a discussion of uncertainties, limitations, and
assumptions.
Qualitative information on methodology, alter-
native interpretations, and working assumptions
is an important component of risk characterisa-
tion. For example, specifying that animal atudies
rather than human studies were used in an ss-
sessment tells others that the risk estimate is
based on assumptions about human response to
s particular chemical rather than human data.
Information that human exposure estimates are
based on the subjects' presence in the vicinity of
s chemical accident rather than tissue measure-
ments defines known end unknown aspects of
the exposure component of the study.
Qualitative descriptions of this kind provide
crucial information that augments understanding
of numerical risk estimates. Uncertainties such
as these are expected in scientific studies and in
any risk sssessment based on these studies.
Such uncertainties do not reduce the validity of
the assessment. Rether, they are highlighted
along with other important risk sssessment con-
clusions to inform others fulr/ on the results of
the sssessment.
2. Well-balanced risk characterisation presents
information for other risk assessors, EPA
decision-makers, and the public regarding Use
strengths and limitations of the assessments.
The risk sssessment process calls for identify-
ing and highlighting significant risk conclusions
and related uncertainties partly to sssure full
communication among risk assessors and pertry
to sssure thst decision-makers are fulr/ in-
formed. Issues are identified by acknowledging
noteworthy qualitative and quantitative factors
thst make a difference in the overall ssssssment
of hazard and risk, and hence in the ultimate
regulatory decision.
The key word is 'noteworthy': information that
significantly influences the analysis is retained •
thst is, noted - in all future presentations of the
risk assessment end in the related decision.
Uncertainties and assumptions thst strongly
influence confidence in the risk estimate require
special attention.
As discussed earlier, two major sources of un-
certsinty are variability in the factors upon
which estimates are based and the existence of
fundamental data gaps. This distinction is rele-
vant for some aspects of the risk characterisa-
tion. For example, the central tendency and high
end individual exposure estimates are intended to
capture the variability in exposure, lifestyles, and
other factors that lead to a distribution of risk
acroes a population. Key considerations underly-
ing these risk estimates should be fulr/ described.
In contrast, scientific assumptions are used to
bridge knowledge gaps such ss the use of scaling
or extrapolation factors and the use of s particu-
lar upper confidence limit around a dose response
estimate. Such assumptions need to be discussed
separately, along with the implications of using
alternative assumptions.
For users of tho sssessment and others who
re|y on the assessment, numerical estimates)
should nover be separated from the description
information that is integral to risk characterisa-
tion. All documents snd presentations should
include both; in short reports, this information b
abbreviated but never omitted.
For decision-makers, a complete characterisa-
tion (key descriptive elements along with numeri-
cal estimates) should be retained in all discus-
sions snd papers relating to an assessment used
in decision-making. Fully visible information
assures thst important features of the aesess-
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t are immediately available at each level of
decieion -making for evaluating whether risks are
acceptable or unreasonable. In short, differences
in assumptions and uncertainties, coupled with
non-scientific considerations called for in various
environmental statutes, can clearly lead to differ-
ent risk management decisions in cases with
ostensibly identical quantitative risks; i-e., the
'number* alone does not determine the decision.
Consideration of alternative approaches in-
volves examining selected plausible options for
addressing a given uncertainty. The key words
are 'selected' and 'plausible;' listing all options,
regardless of their merits would be superfluous.
Generators of the assessment should outline the
strength* and weaknesses of each alternative
approach and as appropriate, estimates of central
tendency and variability (e.g., mean, percentiles,
range, variance.)
Describing the option chosen involves several
1. A rationale for the choice.
2. Effects of option selected on the assessment.
3. Comparison with other plausible options.
4. Potential impacts of new research (on-going,
potential near-term and/or long-term studies).
For users of the assessment, giving attention to
uncertainties in all decisions end discussions
involving the assessment, end preserving the
statement of confidence in all presentations is
important. For decision-makers, understanding
the effect of the uncertainties on the overall
sssessment end explaining the influence of the
uncertainties on the regulatory decision.
SECTION 3. EXPOSURE ASSESSMENT AND
RISK DESCRIPTORS
The results of risk sssessment are usually
communicated to the risk mensger in the risk
characterization portion of the sssessment. This
communication is often accomplished through
risk descriptors which convey information end
answer questions about risk, each descriptor
providing different information and insights.
Exposure sssessment plsys s key role in develop-
ing theee risk descriptors, since each descriptor
b based in part on the exposure distribution
within the population of interest. The Risk As-
sessment Council (RAO hss been discussing the
use of risk deacriptors from time to time over the
pest two years.
The recent RAC efforts have laid the founda-
tion for the discussion to follow. First, ss s re-
sult of s discussion psper on the comparability of
risk assessments across the Agency programs, the
RAC discussed how the program presentations of
risk led to ambiguity when risk assessments were
compared across programs. Because different
assessments presented different descriptors of
risk without always making dear what was being
described, the RAC discussed the advisability of
using separate descriptors for population risk,
individual risk, and identification of sensitive or
high exposed population segments. The RAC also
discussed the need for consistency across pro-
grams and the advisability of requiring risk as-
sessments to provide roughly comparable infor-
mation to risk managers and the public through
the use of a consistent set of risk descriptors.
The following guidance outlines the different
descriptors in a convenient order that should not
be construed sss hierarchy of importance. These
descriptors should be used to describe risk in s
variety of ways for s given sssessment, consistent
with the assessment's purpose, the data available,
and the information the risk manager needs.
Use of s range of descriptors instead of a stngie
descriptor enables Agency programs to present a
picture of risk that corresponds to the range of
different exposure conditions encountered for
most environmental chemicals. This analysis, in
turn, allows risk managers *to identify popula-
tions st greater and lesser risk and to shape
regulatory solutions accordingly.
EPA risk assessments will be expected to ad-
dress or provide descriptions of (1) individual
risk to include the central tendency and high end
portions of the risk distribution, (2) important
subgroups of the population such as highly ex-
posed or highly susceptible groups or individuals,
if known, end (3) population risk. Assessors may
also use additional descriptors of risk as needed
when theee add to the clarity of the presentation.
With the exception of assessments where particu-
lar descriptors clearly do not apply, some form of
these three types of descriptors should be rou-
tinely developed and presented for EPA risk
assessments. Furthermore, presenters of risk
sssessmsnt information should be prepared to
routinely answer questions by risk managers
concerning these descriptors.
It is essential that presenters not only commu-
nicate the results of the sssessment by address-
ing each of the descriptors where appropriate,
but they also communicste their confidence thet
these results portray a reasonable picture of the
actual or projected exposures. This task will
usually be accomplished by highlighting the key
sssumptions and parameters that have tho great-
est impact on the results, the basis or rationale
for choosing these sssumptions/ parameters, and
the consequences of choosing other assumptions.
In order for the risk assessor to successfully
develop and present the various risk descriptors.
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ths exposure ssssssment must provide exposure
end dose information in e form that can be com-
bined with exposure-response or dose-response
relationships to estimate risk. Although there
will be differences among individuals within a
population as to absorption, intake rates, suscep-
tibility, and other variables such that a high
exposure does not necessarily result in a high
dose or risk, a moderate or highly positive corre-
lation among exposure, dose, and risk is assumed
in the following discussion. Sines the generation
of all descriptors is not appropriate in all risk
assessments and the type of descriptor translates
fairly directly into the type of analysis that the
exposure assessor must perform, the exposure
assessor needs to be aware of the ultimate goals
of the assessment. The following sections discuss
what type of information is necessary.
1. Information about individual exposure and
risk is important to communicating the results of
a risk sssessment.
Individual risk descriptors are intended to
address questions dealing with risks borne by
individuals within a population. These questions
can take the form of:
Who are the people at the highest risk?
What risk levels ere they subjected to?
What are they doing, where do they live, etc.,
that might be putting them at this higher risk?
What is the average risk for individuals in the
population of interest?
The 'high end' of the risk distribution is, con-
ceptually, above the 90th percentile of the actual
(either measured or estimated) distribution. This
conceptual range is not meant to precisely define
the limits of this descriptor, but should be used
by the assessor ss a target range for characteris-
ing 'high end risk*. Bounding estimates and
worse esse scenarios * should not be termed
high end risk estimates.
* High end estimates focus on estimates of
the exposure or dose in the actual populations.
'Bounding estimates,' on the other hend, pur-
posely overestimate the exposure or dose in an
actual population for tho purpose of developing s
statement that the risk is 'not greater than. . .
.' A 'worst esse scenario' refers to s combination
of events and conditions such that, taken togeth-
er, produces the highest conceivable risk. Al-
though it is possible thst such an exposure, doss,
or sensitivity combination might occur in a given
population of interest, the probability of an indi-
vidual receiving this combination of events and
conditions is usually small, and often so small
that such a combination will not occur in a par-
ticular, actual population.
The high end risk descriptor is s plausible
estimate of the individual risk for those persons
st the upper end of the risk distribution. The
intent of this descriptor is to convey an sstimsts
of risk in the upper range of the distribution, but
to avoid estimates which are beyond the true
distribution. Conceptually, high end risk mosns
risks above about the 90th percentile of the popu-
lation distribution, but not higher than the indi-
vidual in the population who has the highest
risk.
This descriptor is intended to estimate the
risks thst are expected to occur in small but
definable 'high end' segments of the subject pop-
ulation. The individuals with thsss risks may be
members of s special population segment or indi-
viduals in the general population who are highly
exposed because of the inherent stochastic nature
of the factors which give rise to exposure. Where
no particular difference in sensitivity can be
identified within the population, the high end
risk will be related to the high end exposure or
doee.
In those fsw cases where the complete data on
ths population distributions of exposures and
doses ere available, high end exposure or doss
estimates can be represented by reporting expo-
sures or doses st selected percentiles of the dis-
tributions, such ss the 90th, 96th, or 98th per-
centile. High end exposures or doss, as appropri-
ate, can then be used to calculate high and risk
estimates.
In the majority of esses where ths complete
distributions are not available, several methods
help estimate s high end exposure or does. If
sufficient informstion shout ths variability in
lifestyles and other factors are available to simu-
late the distribution through the use of appropri-
ate modeling, e.g., Monte Carlo simulation, ths
estimate from tho simulated distribution amy be
used. As in ths method above, ths risk — tyusMr
should be told where in ths high end range ths
estimate is being msde by stating the percentile
or the .lumber of persons above this sstimsts.
The ssssssor and risk manager should be aware,
however, that unless s greet deal Is known about
exposures and doses st the high end of the distri-
bution, these estimates will involve eonsidenbls
uncertainty which the exposure ssssssor will
nsed to describe.
If only limited informstion on ths distribution
of the exposure or doss factors is available, ths
ssssssor should approach estimating ths high sod
by identifying the most sensitive parameters and
using maximum or near-maximum values for one
or s fsw of these variables, Issving others st their
mean values. * In doing this, ths exposure sssss-
sor needs to avoid combinations of psramstsr
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values that are inconsistent, e.g., low body weight
used in combination with high intake rates, and
must keep in mind the ultimate objective of being
within the distribution of actual expected expo-
sures and doses, and not beyond it.
* Maximising all variables will in virtually all
cases result in an estimate that is above the actu-
al values seen in the population. When the prin-
cipal parameters of the dose equation (e.g., con-
centration, intake rate, duration) are broken out
into subcomponents, it may be necessary to use
maximum values for more than two of these
subcomponent parameters, depending on a sensi-
tivity analysis
If almost no data are available on the ranges
for the various parameters, it will be difficult to
estimate exposures or doses in the high end with
much confidence, and to develop the high end
risk estimate. One method that has been used in
these cases is to start with a bounding estimate
and 'back off* the limits used until the combina-
tion of parameter values is, in the judgment of
the assessor, clearly within the distribution of
expected exposure, and still lies within the upper
10% of persons exposed. Obviously, this method
results in large uncertainty and requires explana-
tion.
The risk descriptor addressing central tendency
may be either the arithmetic mean risk (Average
Estimate) or the median risk (Median Estimate),
either of which should be clearly labeled. Where
both the arithmetic mean and the median are
available but they differ substantially, it is help-
ful to present both.
The Average Estimate, used to approximate the
arithmetic mean, can be derived by using average
values for all the exposure factors. It does not
necessarily represent a particular individual on
the distribution. The Average Estimate is not
very meaningful when exposure across a popula-
tion varies by several orders of magnitude or
when the population has been truncated, e.g., at
some prescribed distance from a point source.
Because of the skewness of typical exposure
profiles, the arithmetic mean is not necessarily a
good indicator of the midpoint (median, 60th
percentile) of a distribution. A Median Estimate,
e.g., geometric mean, is usually a valuable
descriptor for this type of distribution, since half
the population will be above and half below this
value.
2. Information about population exposure leads
to another important way to describo risk.
Population risk refers to an assessment of the
extent of harm for the population as a whole. In
theory, it can be calculated by summing the indi-
vidual risks for all individuals within the subject
population. This task, of course, requires a great
deal more information than is normally, if ever,
available.
Some questions addressed by descriptors of
population risk include:
How many cases of a particular health effect
might be probabilistically estimated in this popu-
lation for a specific time period?
For noncarcinogsns, what portion of the popu-
lation are within a specified range of some
benchmark level, e.g., exceed ancs of the RID (a
doss), the Ffc (a concentration), or other health
concern level?
For carcinogens, how many persons are above
a certain risk level such as 10-6 or a series of
risk levels such as 10-6, 10-4, etc?
Answering these questions require some
knowledge of the exposure frequency distribution
in tho population. In particular, addressing the
second and third questions may require graphing
the risk distribution. These questions can lead to
two different descriptors of population risk.
The first descriptor is the probabilistic number
of health effect cases estimated in the population
of interest over s specified time period.
This descriptor can be obtained either by (a)
summing the individual risks over all the individ-
uals in the population when such information is
available, or (b) through the use of a risk model
such as carcinogenic models or procedures which
assume s linear non-threshold response to expo-
sure. If risk varies linearly with exposure, know-
ing the mean risk snd the population sixe can
lead to an estimate of the extent of harm for the
population as a whole, excluding sensitive sub-
groups for which s different dose-response curve
needs to be used.
Obviously, the more information one has, the
more certain the estimate of this risk descriptor,
but inherent uncertainties in risk assessment
methodology place limitations on the accuracy of
the estimate. With the current state of the sci-
ence, explicit stops should be taken to assure that
this descriptor is not confused with an actuarial
prediction of cases in the population (which is a
statistical prediction based on a great deal of
empirical data). ,
Although estimating population risk by calcu-
lating a mean individual risk and multiplying by
the population sixe is sometimes appropriate for
carcinogen assessments using linear,
non-threshold models 3 , this is not appropriate
for non-carcinogenic effects or for other types of
cancer models. For non-linear cancer models, an
estimate of population risk must be calculated by
summing individual risks. For non-cancer ef-
fects, we generally have not developed the risk
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assessment techniques to the point of knowing
how to add risk probabilities, so e second
descriptor, below, is more eppropriete.
** Certain important cautions apply. There
cautions are more explicitly epelled out in the
Agency's Guidelines for Exposure Assessment,
tentatively scheduled to be published in late
1991.
Another descriptor of population risk is an
estimate of the percentage of the population, or
the number of persons, above a specified level of
risk or within a specified range of some
benchmark level, e.g., exceed ance of the RfD or
the RfC, LOAEL, or other specific level of inter-
est.
This descriptor must be obtained through mea-
auring or simulating the population distribution.
3. Information about the distribution of expo-
sure and risk for different subgroups of the popu-
lation are important components of a risk assess-
ment.
A risk manager might also ask questions about
the distribution of the risk burden among various
segments of the subject population such as the
following:
How do exposure and riak impact various sub-
groups?
What is the population riak of a particular
subgroup?
Questions about the distribution of exposure
and risk among such population segments re-
quire additional riek descriptors.
Highly exposed subgroups can be identified,
and where possible, characterized and the magni-
tude of risk quantified. This descriptor ie useful
when there ie (or ie expected to bo) e subgroup
experiencing significantly different exposures or
doses from that of the larger population.
These eubpopulatione may be identified by ags,
ess, life-style, economic factors, or other demo-
graphic variables. For example, toddlers who
play in contaminated soil and certain high fish
consumers represent eubpopulatione that may
have greater exposures to certain agents.
Highly susceptible subgroups can also be iden-
tified, and if possible, characterised and the mag-
nitude of riek quantified. This descriptor is use-
ful when the sensitivity or euseeptibllity to the
effect for specific subgroups is (or is expected to
be) significantly different from that of the larger
population. In order to calculate riek for these
subgroups, it will sometimes be necessary to use
a different dose response relationship.
For example, upon exposure to a chemical,
pregnant women, elderly people, children, and
people with certain illnesses may each be more
eeneitive than the population as a whole.
Generally, selection of the population s
is a matter of either a priori interest in the sub-
group, in which case the riek assessor and risk
manager can jointly agree on which subgroups to
highlight, or a matter of discovery of a sensitive
or highly exposed subgroup during the assess-
ment process. In either cess, ones identified, the
subgroup can be treated as a population in itself,
and characterized the same way as the large*
population using the descriptors for population
and individual riak.
4. Situation-specific information adds perspec-
tive on possible future events or regulatory op-
tions.
These postulated questions are normally de-
signed to answer 'what if questions, which are
either directed at low probability but poseibry
high consequence events or ere intended to ex-
amine candidate riek management options. Such
questions might take the following form:
What if a pesticide applicator applies this pesti-
cide without using protective equipment?
Whet if this site becomes residential in the
future?
Whet riak level will occur if we eet the stan-
dard at 100 ppb?
Ths assumptions mode in answering these
postulated questions should not be confused with
the assumptions mode in developing e baseline
estimate of exposure or with the adjustments in
parameter values made in performing a sensitivi-
ty analysis. The answers to these postulated
questions do not give information about how
likely the combination of values might be in the
actual population or about how many (if any)
persons might be subjected to the calculated ex-
posure or risk in the reel world.
A calculation of riak baaed on specific hypo-
thetical or actual combinations of factors postu-
lated within the exposure assessment can also be
useful as a riek descriptor. It is often valuable to
eak and answer specific questions of the 'what if
nature to add perspective to the risk i
The only information tho answers to
questions convey ie that if conditions A, B, and C
are assumed, then the resulting exposure or riak
will be X, Y, or Z, respectively. The values for X
Y, end Z are usually fairly atrsightforward to
calculate and can be expressed ss point estimstes
or ranges. Each aeeessment may have none, one,
or several of theee types of descriptors, Ths
answers do not directly give information about
how likely that combination of values might be in
ths actual population, so there ere some limits to
ths applicability of there descriptors.
Mr. BRYAN. So all of this talk that
Nevada is adequately protected is ab-
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solutety pure bunk. If, as the distin-
guished Senator from Louisiana main-
tains, the same standard could be
achieved because there is sufficient
discretion, why - why, I ask - was it
necessary to incorporate that specific,
restrictive statutory language?
I thought when I came to the Con-
gress there would certainly be dis-
agreement on where the site ought to
be located. I understand that nobody
wants the nuclear waste dump in
their State. I had hoped everyone
would agree that wherever it may be
ultimately located, if indeed it is ever
built, public health and safety stan-
dards ought to be maintained.
And as this chart points out, the
fundamental difference between the
current law, which calculates radia-
tion release limits based upon poten-
tial exposures to the general popula-
tion, is now effectively gutted in this
language and calculates radiation
release limits based upon potential
releases to a maximum exposed indi-
vidual.
Mr. JOHNSTON. Will the Senator
yield?
Mr. BRYAN. That is as fundamen-
tal in terms of public health policy as
night to day. There is no way to
smooth that over, and that is what is
involved.
I voted for the energy bill when it
came through. I would like to have
the opportunity to vote and support it
again. But this language was added
at the last minute without one bit of
testimony, one bit of opportunity to be
heard, and no scientific evidence to
support it.
Mr. JOHNSTON. Will the Senator
yield?
Mr. BRYAN. When my colleagues
says the National Academy of Sciences
can make recommendations I do not
have a problem with that. But the
language of the conference report
indicates not only do they make rec-
ommendations but their recommenda-
tions must be accepted by the Envi-
ronmental Protection Agency, thereby
gutting and muzzling that Agency. I
have had an opportunity to speak to
the Environmental Protection Agency
staff, and they strongly disagree with
this.
But you and I and our colleagues
know the rule. They are effectively
muzzled in this administration.
Mr. JOHNSTON. Would the Sena-
tor yield at that point?
Mr. BRYAN. I am happy to, on the
distinguished chairman's time.
Mr. JOHNSTON. Mr. President, I
yield myself 30 seconds.
Mr. President, the Senator has a
chart up there that says 'current and
proposed'. Is the Senator not aware
that there is no current release limit
applicable to radionuclides, that the
previous 1985 standard was with-
drawn by the court and remanded to
EPA? So there is no current appli-
cable release method.
Mr. BRYAN. But the current stan-
dard being developed by the EPA
clearly includes the population stan-
dard, and indeed the language in the
W1PP legislation which the chairman
supports was based upon the popula-
tion standard and that legislation
reinstates the exact standards. And
the Senator would deprive Nevada
with potentially more dangerous ra-
dioactive waste, a standard which he
endorses for New Mexico, which in my
view is indefensible as a matter of
policy.
Mr. JOHNSTON. When the Senator
says 'current' he means somebody told
him they were developing.
Mr. BRYAN. Not somebody 'told
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me.' As the distinguished chairman
knows, that standard was developed
with the population standard and
repromulgated by the WIPP legisla-
tion. As the Senator points out - -
Mr. JOHNSTON. If that standard
has been remanded now for 5 years, it
has not been out, and I am not aware
of any draft of it.
Mr. BRYAN. It was remanded not
because of the population standard,
but another provision irrelevant to
our discussion today. And indeed it is
the nuclear power industry that has
put the pressure on the Environmen-
tal Protection Agency not to produce
the new standard.
What we are talking about, my
friends, is public health versus cutting
a few corners, saving a few bucks, and
Nevadans are being asked that if this
site is developed to accept a lower
health standard so that the nuclear
power utilities - -
Mr. JOHNSTON. Mr. President, is
this on my time?
Mr. BRYAN. To save a few dollars.
The PRESIDING OFFICER It is on
the time of the Senator from Nevada.
Mr. JOHNSTON. Mr. President, I
yield myself 1 minute.
Mr. President, I do not know how
clearly we can express it in the lan-
guage of the statute, in the language
of the report. We dictate that EPA
come up with a standard. We put no
limits on the discretion of the EPA
other than that their standards shall
be consistent with and based upon
science as stated by the National
Academy of Sciences. I do not know
what better way to determine science
than on the best advice of the Nation-
al Academy of Sciences.
Mr. President, there is much to be
determined by the National Academy
of Sciences. What is the proper health
risk per milligram? Is there a
straight-line extrapolation?
Extrapolation between the studies
has been done on Hiroshima victims
and Nagasaki victims as it pertains to
low-level radiation. It is a very bag
scientific question that needs to be
resolved by the National Academy of
Sciences. Those are the kinds of deter-
minations that the National Academy
of Sciences should make. As the assis-
tant administrator of EPA says, they
make the policy and they have full
sway as to making that policy.
The National Academy of Sciences
makes recommendations as to science,
which is not setting of the standard.
The setting of the standard, the set-
ting of the policy is up to EPA, not to
the National Academy of Sciences.
Mr. President, I yield 2 minutes to
the distinguished Senator from Wyo-
ming.
PRIVILEGES OF THE FLOOR
Mr. WALLOP. Mr. President, I ask
unanimous consent that Jim Tate,
and Vaughn Baker, fellows assigned to
the Committee on Energy and Natu-
ral Resources, be granted privileges of
the floor during consideration of HJR.
776.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. WALLOP. Mr. President, I join
with my distinguished chairman in
claiming that there has been much
misrepresentation of what this legisla-
tion actually does.
I ask unanimous consent that let-
ters from Phil Sharp, chairman of the
Subcommittee on Energy and Power,
of the Committee on Energy and Com-
merce, and a letter from the U.S. En-
vironmental Protection Agency be put
in the Record in full
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4717
There being no objection, the mate-
rial was ordered to be printed in the
Record, as follows:
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Energy and Power,
Washington, DC, October 7, 1992.
As you consider your vote on the cloture peti-
tion on HR 776, the Energy Policy Act, I hope
you will look at the actual language of the con-
ference report, and especially the Statement of
Managers, on the Yucca Mountain issue.
As a conferee on this bill, I was unalterably
opposed to legislating a new, weaker standard for
waste disposal at Yucca Mountain. I would not
have signed the conference report and managed
H on the House floor had we done so.
Instead, we provided for a scientific review of
all relevant questions, followed by a new
rulemaking by EPA before a new standard is
issued. 8ome opponents of the bill are arguing
that we do not allow the National Academy of
Sciences to review the 'collective dose' issue.
This is categorically falso.
I hope the attached excerpts from the State-
ment of Managers will be helpful to you.
For a host of reasons, HR 776 is the most
environmentally sound comprehensive energy bill
we have ever considered. I hope you will vote to
sss that it becomes law.
Sincerely,
Phil Sharp,
Chairman.
EXCERPTS FROM THE STATEMENT OF
MANAGERS
SECTION 801 OF H.R. 776
Standards must protect the public health:
The provisions . . . require the Administrator
to promulgate health-based standards for protec-
tion of the public from releases of radioactive
■tftjurUU from « repository at Yucca Mountain,
based upon and consistent with the findings and
recommendations of the National Academy of
Sciences.
National Academy of Sciences has discretion in
its study:
In carrying out ths study, the National Acade-
my of Sciences would not be precluded from
addressing additional questions or issues related
to the appropriate standards for radiation protec-
tion at Yucca Mountain beyond those that are
specified. For example, the study could include
an estimate of the collective dose to the general
population . . .
The NAS study provides scientific guidance:
The Conferees do not intend for the National
Academy of Sciences, in making ita recommenda-
tions, to establish specific standards for protec-
tion of the public but rather than provide expert
scientific guidance on the issues involved in es-
tablishing those standards.
Ths authority of the EPA and the NRC is
The provisions of section 801 are not intended
to limit the Administrator'* discretion in the
exercise of his authority related to public health
and safety issues ... As with the Administrator,
the provisions of section 801 are not intended to
limit the Commission's discretion in the exercise
of its authority related to public health and safe-
ty.
Environmental Protection Agency,
Washington, DC,
October 6, 1992.
Hon. Bob Graham, Chairman, Subcommittee on
Nuclear Regulation, Committee on Public Works
and the Environment,
U.S. Senate,
Washington, DC.
Dear Senator Graham:
This responds to your request for the Environ-
mental Protection Agency's (EPA) views on sec-
tion 801 of the Conference Report on H.R 776
regarding the Yucca Mountain nuclear waste
repository.
Section 801 directs the Administrator of EPA
to eon tract with the National Academy of Scienc-
es (NAS) for s study of reasonsble public health
and safety standards for the storage and disposal
of radioactive materials st the proposed reposito-
ry st Yucca Mountain. It also requires ths Ad-
ministrator to promulgate public health and safe-
ty standards applicable to Yucca Mountain that
are 'based upon end consistent with the findings
and recommendations' of the NAS.
It appears that the intent of action 801 is to
provide for a review of the scientific foundstion
of EPA's draft standards for the disposal of ra-
dioactive materials. Ws recognize thst EPA's
draft standards have been controversial and our
policy generally is to support open peer involve-
ment in important science decisions. As such,
EPA believes thst s scientific study by the NAS
could result in helpful input for improvement of
standards for the storage end disposal of radioac-
tive material.
The Agency taken note of the following lan-
guage in the Statement of Managers of the Con-
ference Report on H.R. 776:
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Under the provisions of section 801, the au-
thority end responsibility to establish the stan-
dards would remain with the Administrator, es is
the case under existing law. The provisions of
section 801 are not intended to limit the
Administrator's discretion in the exercise of his
authority related to public health and safety
I assure you that, consistent with our impor-
tant statutory and regulatory responsibilities,
EPA will ensure that any standards for radioac-
tive materials that are ultimately issued will bo
the subject of public comment end involvement
and will be fulry protective of human health end
the environment.
Sincerery,
F. Henry Habicht II,
Deputy Administrator.
Mr. WALLOP. Let me read the
letter from Phil Sharp to my friends
from Nevada:
As you consider your vote on the cloture peti-
tion on HR 776, the Energy Policy Act, I hope
you will look at the actual language of the con-
ference report, end especially the Statement of
Managers, on the Yucca Mountain issue.
As a conferee on this bill, I was unalterably
opposed to legislating a new, weaker standard for
waste disposal at Yucca Mountain. 1 would not
have signed the conference report end managed
it on the House floor had we done so.
Instead, we provided for a scientific review of
all relevant questions, followed by a new
rulemaking by EPA before a new standard b
issued. Some opponents of the bill are arguing
that we do not allow the National Academy of
Sciences to review the 'collective dose' issue.
This is categorically falso.
I hope the attached excerpts from the State-
ment of Managers will be helpful to you.
For s host of reasons, HR 776 is the most
environmentally sound compreheneive energy bill
we have ever considsred. I hope you will vote to
sse that it becomes law.
Sincerely,
Phil Sharp,
Chairman.
Congressman Sharp'sletter includes
excerpts from the statement from the
managers on H.R. 776, Mr. President.
The letter to Senator Bob Graham,
chairman of the Subcommittee on
Nuclear Regulation is from the Envi-
ronmental Protection Agency.
Environmental Protection Agency,
Washington. DC,
Octobers, 1992.
Hon. Bob Graham, Subcommittee on Nuclear
Regulation, Committee on Public Works ami the
Environment, VS. Senate,
Washington, DC.
Dear Senator Graham:
Thia responds to your request for the Environ-
ments] Protection Agency's (EPA) views on sec-
tion 801 of the Conference Report on HJL 776
regarding the Yucca Mountain nuclear waste
repository.
Dear Senator Graham: Thia responds to your
request for the Environmental Protection
Agency's (EPA) visws on section 801 of the Con-
ference Report on H.R. 776 regarding the Yucca
Mountain nuclear waste repository.
Section 801 directs the Administrator of EPA
to contract with the National Academy of Scienc-
es (NAS) for a atudy of reasonable public health
and safety standards for the storage and disposal
of radioactive materials at the proposed reposito-
ry st Yucca Mountain. It also requires the Ad-
ministrator to promulgate public health and safe-
ty standards applicable to Yucca Mountain that
are 'based upon and consistent with the findings
and recommendations' of the NAS.
It appears that the intent of section 801 b to
provide for e review of the scientific foundation
of EPA'a draft standards for the disposal of ra-
dioactive materials. Ws recognize thet EPA'a
draft standards have been controversial and our
policy generally is to support open peer involve-
ment in important science decisions. As such,
EPA believes that a scientific study by the NAS
could result in helpful input for improvement of
standards for ths storage and disposal of radioac-
tive materiel.
The Agency takes note of the following lan-
guage in the Statement of Managers of the Con-
ference Report on H.R. 776:
'Under the provisions of section 801, the au-
thority and responsibility to establish the stan-
dards would remain with the Administrator, as b
the cess under ezbting lew. The provisions of
section 801 ere not intended to limit the
Adminbtrator'a discretion in the ecerebe of Ms
authority related to public health and safety
I assure you that, consistent with our impor-
tant statutory and regulatory rccponsibilitbs,
EPA will ensure thst any standards for radioac-
tive materiab that are ultimately issued will be
the subject of public comment and involvement
and will be fulry protective of human health and
the environment
F. Henry Habicht II,
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Deputy Administrator.
I would say, Mr. President, that the
EPA and Chairman Phil Sharp, who
is not known for a yielding view on
issues regarding nuclear power, have
made a statement that is worthy of
the Senate.
And for this reason, I would say to
my friend from Nevada that I am
confident that nobody is riding rough-
shod over the health or safety of Ne-
vadans; and for the other reasons that
are contained in this bill that it is the
first time the Nation has of being able
to look at comprehensive energy policy
legislation that is both environmental-
ly sound and great for America's ener-
gy future.
I hope that the Senate will vote for
cloture, and that at long last we can
send an energy policy strategy to the
President's desk. All Americans de-
serve it.
Mr. BRYAN. Mr. President, I yield
myself 2 minutes.
Mr. President, by way of response to
my friend from Wyoming, all of the
letters and proclamations in the
world, signed by our colleagues, can-
not change a single line of legislative
text. Congressman Sharp is dead
wrong. This is a fundamental change.
And the proof of that, as a Member of
this body I sat as an observer at the
conference, and a House conferee said
to the distinguished chairman of the
Senate Energy Committee, the Sena-
tor from Louisiana, will you include a
population standard in the legislative
text? The answer was no.
All of the report language does not
help one bit in terms of changing that
language, and although it is true in a
very narrow and technical sense, that
EPA promulgates the standards, the
ability to consider population health
risk is constrained.
That is the cleverness of these
words. EPA is bound by the NAS
study. We do not have an objection to
the NAS study. But EPA can go no
further in the first instance than the
NAS study and, second, may not con-
sider the population standard. That
is fundamentally wrong, Mr. Presi-
dent. I suggest to my colleagues that
what is sauce for the goose, is sauce
for the gander. The regulations that
would relate to WIPP include these
standards, which is the full range of
protection. Why is that not good
enough for Nevada?
I yield the floor.
Mr. JOHNSTON. Mr. President, did
the Senator from Nevada (Mr. Reid)
wish to speak?
Mr. REID. No.
Mr. JOHNSTON. Mr. President, as
I said earlier, under the unanimous-
consent agreement, there will be one
cloture vote, and if cloture fails on
this bill, the bill and all it represents
is dead.
Mr. President, this bill represents a
legislative miracle, because we have
been trying for many, many years to
get a comprehensive energy policy. It
has not been possible to do so, because
there never seems to be a balance that
could be struck. Some who say you
ought to have something that produc-
es energy would kill the energy effi-
ciency and energy conservation provi-
sions if they are all you have. And
contrariwise, if the legislation does not
contain the other balance, some who
would want something in terms of
energy efficiency and conservation,
would prevent the bill from getting off
of the ground.
I have been here now 20 years, Mr.
President. We have yet to come up
with a comprehensive energy policy.
This is it. This is it, Mr. President. It
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is the most environmentally sound bill
ever considered on energy. It contains
broad provisions for energy efficiency,
everything from standards for electric
motors to showerheads, to the use of
energy in Federal buildingB. For ex-
ample, we have provisions here that
you can contract to save energy in
Federal buildings and actually be paid
for it. Very innovative provisions. We
have least cost energy strategies so
that utilities will be encouraged to
conserve energy as opposed to building
new electric powerplants.
Those are very far-reaching provi-
sions, Mr. President, on energy effi-
ciency and conservation. We have
new standards for construction of
public buildingB and private buildingB.
We have renewable fuels. We have
clean coal provisions. We have the
solar energy lobby as part of the coali-
tion supporting this bill.
Mr. President, we have alternative
fuels, such as ethanol, natural gas,
electric cars, methanol; all of these
new fuels will be provided for in a
broad ranging program, including
mandatory Federal alternative fuels
programs. Starting next year, State
and local governments will be includ-
ed. Fuel providers will be included
and, in addition, we provide for
rulemaking with respect to private
fleets.
We expect, Mr. President, that by
the year 2000, there will be millions of
alternative fuel vehicles on the road,
mandated as a result of this legisla-
tion. It will solve the
chicken-and-the-egg proposition with
respect to alternative fuels. In the
past, we have not had the cars manu-
factured because there was not the
demand. There was not the demand
because there were not the cars.
There was not fueling because there
was no demand for the fuel, because
there were no cars.
We solve that chicken and the egg
by mandating the manufacture and
the use of these - not mandating man-
ufacturing, but the demand, by re-
quiring that the purchases be in grad-
ually increasing increments.
Mr. President, we provide for a
revolution in the generation of electric
power, what we call PUHCA reform,
Public Utility Holding Company Act
reform. It fundamentally changes our
electric power generation to a compet-
itive market from one which has been
a monopoly sole source market.
Mr. President, the way it has been,
the way it is now, unless we pass this
bill, is that if you are a public utility
and you want to build a new plant,
then your incentive is to build the
biggest, most expensive plant you can,
and you can put that in your rate
base and get a guaranteed rate of
return - no competition. No one else
is permitted to come in and compete
with you in your own territory. Con-
sequently, it is highly inefficient, and
the consumer gets it in the neck.
This provides for competition, Mr.
President, so that public utility com-
missions will be able to know what the
real cost of electric power is and insist
that the consumer gets that low cost
power.
We have uranium enrichment. We
are turning over the Department of
Energy's enterprise to a new
quasi-public corporation which also
will compete, not only to preserve the
5,000 American jobs, but hopefully to
expand in international markets. In
effect, that is a jobs program to pre-
serve the jobs we have in America
here today.
Mr. President, there are many other
provisions of this bill. Suffice it to say
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that it is the most balanced, the most
effective, the most comprehensive
energy bill ever considered by either
House of Congress. It is supported by
President-elect Clinton, and it is sup-
ported by President George Bush. It is
supported by the Secretary of Energy.
It is supported by my dear friend Sen-
ator Wallop on that side of the aisle,
who was the cosponsor in getting this
bill initially introduced. It is support-
ed on both sides of the aisle.
Mr. President, it would be a tragedy
if this legislation were not approved at
this late hour, because of a
miscomprehensive about a provision
which was overwhelmingly supported
in the conference committee. This
same issue of radionuclides was dealt
with on the House floor. That is, an
amendment to take out this provision
with respect to radionuclides was
defeated by a margin of over 3 to 1.
There were over 300 votes against
taking out this provision.
Mr. President, it is sound science.
It is sound policy. Cloture should be
invoked by an overwhelming margin,
and we ought to pass this bill and
send it to the President. The Ameri-
can people need it.
Mr. REID addressed the Chair.
The PRESIDING OFFICER. The
Chair recognizes the Senator from
Nevada (Mr. Reid).
Mr. REID. In responding to the
initial statement made by the manag-
er of this bill, I note that scientists say
that there is 1.2 million more curies of
radiation in the proposed nuclear
repository waste than in testing. That
is very logical, because in nuclear
testing versus nuclear waste, you have
a situation where when there is a
nuclear test, the materials are fused
into glass by temperatures exceeding
1 million degrees. So that is easy to
determine the difference between
nuclear testing and a nuclear reposito-
ry.
I also say, Mr. President, that it
seems to me that the one thing • I
mentioned this earlier - the President
should recognize is the fact that this
bill contains new taxes. That, in re-
cent weeks, has been a detriment to
getting other bills signed. I will be
interested to see what the President
and his advisers do on this matter.
Mr. JOHNSTON. Mr. President,
how much time remains?
The PRESIDING OFFICER. There
are 29 minutes for the Senator from
Louisiana; 32 minutes and 20 seconds
remain on the other side.
Mr. JOHNSTON. Mr. President, I
yield 2 minutes to the Senator from
New Mexico.
Mr. DOMENICI. Mr. President,
there are so many positive things in
this bill, along with a few that are not
so positive, that I can probably speak
for a couple of hours. But I am going
to settle for 2 minutes and just speak
on one portion of the bill, and that
has to do with the alternative mini-
mum tax which was imposed on those
who went out into the oil patch and
natural gas patch and took risks to
drill wells to try to find oil for this
country.
That alternative minimum tax put
on in 1986 became so punitive that
the resources that were going to go to
oil patch so that holes could be drilled,
rigs could be put to use, work men
and women in America put back to
work, and, yes, find American oil, that
tax got so onerous that there is no
capital flowing into oil patch United
States, Louisiana, New Mexico, Colo-
rado, Kansas, Wyoming, wherever it
is. It is dried up, because American
investors do not want to invest, take
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4722
a risk and then have the earnings
taxed punitively. While other would be
paying the average income tax, this
tax is as high as 50, 60 and in some
cases 67 percent. Absolutely, it is
ludicrous, counterproductive, antyobs,
anti-American oil production.
Finally, Mr. President, we have
arrived at common sense and changed
that so that at least those who want
to produce American oil have a rea-
sonable opportunity to get investors to
invest, take a risk, and that will in-
deed cause more rigB to go into the
field, more jobs in oil patch and, yes,
what we all want, more American oil
produced rather than less.
I commend the President for being
for this, the House leadership, and the
tax writing committee, the same here
and obviously the general conferees
who worked so hard to get this bill.
I thank the Senator from Louisiana
for the time and I yield the floor.
The PRESIDING OFFICER. Who
yield time?
Mr. BRYAN addressed the Chair.
The PRESIDING OFFICER. The
Senator from Nevada is recognized.
Mr. BRYAN. Mr. President, the
distinguished senior Senator from
Florida is to be here in just a moment.
Let me take just 1 minute to talk
about one other aspect of this. Not
only will this fundamentally alter the
public health and safety standards,
but this will change the fundamental
premise of the nuclear waste policy,
all without hearing, without testimo-
ny, and without an opportunity for
meaningful debate.
The original act contemplated that
the site itself, wherever it was to be
located within the engineered barriers
and natural geological barriers in
place, would be sufficiently safe for a
period of 10,000 years and therefore
would not require human monitoring
after the site was filled with the nu-
clear waste.
In this conference report, with the
provision that was added at the last
minute, the original act is reversed fay
180 degrees, and now we have a con-
cept in which the standard is so di-
minished, so lowered, that indeed
what is contemplated is monitoring on
an ongoing basis, if you will, a DOE
watch man at the site for a period of
10,000 years. This is an agency whose
monitoring track record at other
waste sites for only 40 years may very
well cost the American taxpayer $100
billion in a host of other sites.*
Mr. REID. I yield to the Senator
from Florida (Mr. Graham) 10 min-
utes.
The PRESIDING OFFICER (Mr.
Simon). The Senator from Florida is
recognized for 10 minutes.
Mr. GRAHAM. Mr. President, at
this time I would like to explain my
particularly strong opposition to sec-
tion 801 of this legislation. This sec-
tion would require the National Acad-
emy of Sciences (NAS) to conduct a
study on the appropriate regulatory
standards for a high-level nuclear
waste repository at Yucca Mountain,
NV. This section would then require
the Environmental Protection Agency
(EPA) and the Nuclear Regulatory
Commission (NRC) to rewrite the
environmental and standards and
licensing requirements for a repository
in a manner consistent with the find-
ings and recommendations of the
NAS.
I submit that this section is built
upon poor science. It is poor public
policy. It is a radical departure from
the current scientific and political
consensus regarding the technical and
procedural bases for this Nation's
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Nuclear Waste Program. It is funda-
mentally unfair to the present citizens
of the State of Nevada and to future
generations of Nevadans. The imple-
mentation of this approach will be
fraught with technical and legal chal-
lenges.
The manner in which this legisla-
tion was considered sends the message
that the procedures and standards for
the protection of the public health
and safety for nuclear waste disposal
are just items to be horse traded in
the political process. This proposal
emerged from a closed meeting, with
only a small group of Members of
Congress involved. It was adopted as
part of a compromise energy bill in
which the Members of Congress and
their constituents had many interests
other than nuclear waste disposal. No
hearings were conducted. There is no
record as to why these provisions were
adopted. No public comments were
considered. None of the Federal agen-
cies with expertise in these issues was
consulted.
In addition to undermining confi-
dence in the legislative process, this
legislation will fuel cynicism regarding
the integrity and independence of the
Federal agencies responsible for estab-
lishing and enforcing the standards
for the protection of the public health
and safety. This legislation compro-
mises the integrity and independence
of the Environmental Protection
Agency (EPA) and the Nuclear Regu-
latory Commission (NRC) by pressur-
ing those agencies to alter their public
health and safety standards to make
sure that Yucca Mountain will be
found suitable as the site of the repos-
itory. As the Queen said to Alice in
Wonderland, 'Sentence first - verdict
afterwards.'
Adoption of this legislation most
likely will have an effect that is the
opposite of what its proponents would
like to see. Rather than expedite the
process for finding a permanent dis-
posal site for high-level nuclear waste,
this hasty, ill-considered, radical, and
unfair restructuring of nuclear waste
policy is likely to create additional
extensive and enduring turmoil in the
program. I do not believe that the
Nuclear Waste Program will succeed
under the approach that the Congress
is adopting today.
THE PREMISE OF THIS APPROACH IS
FLAWED THE PROBLEMS WITH THE PRO-
GRAM ARE DUE TO DOE MISMANAGEMENT
The redirection of the nuclear waste
program in this section has arisen
because Congress is frustrated with
the pace and cost of the current pro-
gram. The costs of the program have
escalated tremendously since the Nu-
clear Waste Policy Act was enacted in
1982. Over the same period, the pace
of the program has slowed tremen-
dously. The cause of the rising costs
and lengthy delays is DOE's misman-
agement of the Nuclear Waste Pro-
gram. Instead of addressing this prob-
lem, however, this legislation seeks to
alter the public health and safety
standards that the program must
meet. This approach will do nothing
to solve the current problems with the
Nuclear Waste Program. Rather than
containing a cure for DOE's troubles,
this approach is just another symp-
tom.
Over the past decade the projected
cost of site characterization has
climbed from $60 million in 1982, to
over $1 billion in 1987, when the Nu-
clear Waste Policy Amendments Act
was enacted, to approximately $2
billion in 1991, to approximately $6
billion in 1992.
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Over this same period the accom-
plishments of the program have re-
mained at a minimal level. Over $1
billion has been spent on studying
Yucca Mountain. There is almost
nothing to show for this. Hardly any
progress has been made on either
surface or underground characteri-
zation of the site. DOE has been
conducting surface characterization
activities for just over a year and is
still over a year away from starting
underground characterization.
The lack of any progress in under-
ground characterization activities is
particularly dismaying. DOE support-
ed the 1987 amendments to the Nu-
clear Waste Policy Act in order to
expedite the start of underground
characterization and to save costs. In
1987 DOE told the Congress that it
would be ready to begin sinking the
exploratory shaft for underground
characterization activities in the
fourth quarter of 1988. DOE stated
that the 1987 amendments would
enable it to commence underground
characterization in 1988.
It is now October 1992. No shaft
has been dug. Costs have risen al-
most sixfold. The latest projected
date for sinking the exploratory shaft
is November 1993.
At the time of the passage of the
1987 amendments, DOE projected
that the date of operation of reposito-
ry would be 2003. This was 5 years
later than the 1998 date originally
projected in the Nuclear Waste Policy
Act of 1982. DOE now projects that
the repository will not be ready for
operation until 2010. Even this date is
optimistic. In reality, the program
could take an additional 10 to 25
years.
In sum, a lot of money has been
spent, but hardly anything has been
done.
DOE has been consistent in its re-
sponse to questions and criticisms
about the cost escalations and the
delays in the program. DOE's consis-
tent response has been to blame oth-
ers. For the delays in surface charac-
terization DOE has blamed Nevada.
For the delays in underground charac-
terization it has blamed Congress. For
sloppy management and worthless
technical work, it has blamed the
NRC. For the cost escalations and
schedule delays, it has lamed the envi-
ronmental laws, the EPA, and the
NRC.
The record shows, however, that
DOE management, rather than any of
these regulatory hoogeymen, is at
fault for the poor record of the pro-
gram.
First, DOE has blamed the State of
Nevada for the delay in the start of
surface characterization. In particu-
lar, DOE has claimed that the failure
of Nevada to issue environmental
permits more quickly has been the
cause of delay in the program. Since
1990 DOE has been advocating legisla-
tion to preempt Nevada's environmen-
tal permitting authority. Hence, in
April 1991, DOE stated that The
principal obstacle to • • • progress (in
the nuclear waste program) is cur-
rently the continuing inability of DOE
to undertake needed activities inci-
dent to characterizing a candidate site
for a potential geologic repository due
to the actions of the State of Nevada.'
(Nuclear Waste Disposal Issues: Hear-
ing Before the Senate Subcommittee
on Nuclear Regulation of the Commit-
tee on Environment and Public
Works, 102d Cong., 1st sees. 100
(statement of Hon. John Bartlett,
Director, Office of Civilian Radioactive
Waste Management).)
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The record shows, however, that
DOE was not ready to begin all but a
few surface characterization activities
until March 1991. It took until March
1991 for DOE to establish an ade-
quate quality assurance (QA) pro-
gram. An adequate QA program is
necessary in order to be able to use
the information obtained from charac-
terization activities in a licensing
proceeding.
According to both the Nuclear Reg-
ulatory Commission and the General
Accounting Office (GAO), only two
specified trenching activities by DOE
contractors could have been conducted
prior to March 1991. Even these activ-
ities could not have been conducted
until October 1990. Moreover, because
DOD's QA program had not been
accepted until March 1991, prior to
this date these contractor activities
could have been conducted only with-
out DOE coordination. (Nuclear
Waste: DOE's Repository Site Investi-
gations, a Long and Difficult Task,
U.S. General Accounting Office,
GAO/RCED-92-73.)
Thus, DOE was not yet ready to
conduct most of the activities for
which it has blamed Nevada for delay-
ing. It is DOE, rather than Nevada,
which is responsible for most of the
delay in commencing surface charac-
terization.
Second, DOE has blamed the NRC
and EPA for mistakes in its core sam-
pling program. Upon until 1987, DOE
has spent $48 million on drilling holes
at Yucca Mountain to obtain core
samples. These core samples were
contaminated with fluids during the
drilling process and so would be unus-
able in the licensing process for the
site. Additionally, the U.S. Geological
Survey, a DOE contractor responsible
for managing all core samples, lost
track of from where the samples had
been obtained. These samples also are
unusable in the licensing process.
DOE has blamed the mistakes in its
core sampling program on a changing
regulatory environment. In April
1991, Dr. Bartlett testified to the
Subcommittee on Nuclear Regulation
that the failure of the core sampling
program to meet quality assurance
requirements was because 'the regula-
tory requirements for the program,
including a measure of the quality
assurance requirements were not in
place until 3 years (after the passage
of the Nuclear Waste Policy Act of
1982). • • • So during all of that peri-
od, if you will, the program was not
operating with specific requirements
in terms of technical activities and
requirements.'
The record is to the contrary. The
NRC had issued draft quality assur-
ance guidelines in 1981. DOE knew or
should have known of these require-
ments. DOE ignored them. Accord-
ing to GAO, in 1988, a DOE quality
assurance audit team reviewing the
cores obtained from 1981 to 1983 con-
cluded that 'there had been a
projectwide failure to implement qual-
ity assurance requirements and to
understand the role of the quality
assurance program in licensing.' Addi-
tionally, according to GAO, from 1983
to 1986 DOE contractors had identi-
fied shortcomings in the core sampling
program, yet DOE chose to continue
its work despite these deficiencies.
DOE has now chosen not to use the
samples obtained during this period to
support its license application.
Thus, it is not the changing regula-
tory requirements of NRC, but rather
DOE's failure to follow the NRC's
requirements, that is responsible for
the rework in the core sampling pro-
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gram. Again, DOE has mialeadingly
blamed others for its own mistakes.
Third, DOE has blamed the Con-
gress for the delay in the start of the
construction of the exploratory shaft
facility (ESF). The ESF is necessary to
conduct undergroundcharacterization
activities. In 1987, DOE represented
to the Congress that it could start
constructing the ESF in late 1988.
The projected start of construction is
now November 1993.
DOE says that it is the fault of the
Congress that construction of this
facility will not commence this year.
On March 31, 1992, in testimony pre-
sented to the Senate Committee on
Energy and Natural Resources, DOE
stated that -
On* area in which we have not recently made
progress mm planned is our schedule for start of
construction of the ESF. The schedule for start
of ESP construction was delayed by 1 year, from
November 1992 to November 1993, as a result of
a fiscal year appropriation that was $30 million
less than the $806 million requested.
The record reveals that DOE rather
than the Congress or anyone else is
solely responsible for the delay in ESF
construction. According to GAO's
testimony before the Senate Subcom-
mittee on Nuclear Regulation in April
1991, inadequate design work by DOE
has been responsible for the delay in
the program:
DOE spent about $49 million, or 10 percent of
total project costs, on exploratory shaft facility
activities during fiscal years 196$ through 1990.
In fiscal years 196$ and 1969, over $36 million
was spent on management and integration activi-
ties primarily related to developing preliminary
and more advanced designs of its proposed facili-
ty. These design activities were stopped late in
early focal year 1990 because of external criti-
cism, and it is questionable whether this work
will be usable for constructing the ESP. As a
result, DOE has begun studying alternative
facility designs. Depending on the final selection
of a new facility design and construction method,
according to the manager of the project, signifi-
cant modifications to the original design may be
required; however, the extent and cost of these
modifications cannot be determined at this Usee.
In 1990, DOE spent over $12 million on ex-
ploratory shaft facility activities. Including about
$4 million on the study of facility design and
construction activities.
The Nuclear Waste Technical Re-
view Board was a significant source of
the criticism of DOE's original ESF
design. According to DOE, the rede-
sign activities delayed the ESF con-
struction from November 1989 to No-
vember 1992. The redesign activities
have cost at least $40 million.
All of the added costs and the delay
in ESF construction from 1988 to No-
vember 1992 are due to DOE's mis-
takes and inadequacies. It is disingen-
uous for DOE to now blame Congress
for any additional delay due to the
absence of new funds to cover the
costs of DOE's mistakes during the
previous 4-year period.
Most recently, and perhaps most
outrageously, DOE is now blaming
NRC and EPA requirements, and all
of the environmental laws, for the
cost escalations and programs delays
over the past several years. At the
Senate Energy Committee hearing in
March of this year, the chairman of
the committee, Senator Johnston,
asked Dr. Bartlett why the projected
cost of site characterization had risen
astronomically over the past decade:
Senator Johnston. Now what fundamentally
has changed? Has it been the NRC or the EPA or
DOE or what?
Dr. Bartlett. Two things, Mr. Chairman. On*
ie, let no call it development of understandinajof
what it ie going to take in the way of information
to comply with these regulatory requirement*,
Ws have over 2,600 of then, collectively, as wel
as the stringency of the safety requireaienta.
That is one thing that we have learned, dialog in
the technical community. NRC says, well have it
what I think you need to do.
Senator Johnston. • • • Now is it the NRC
driving the program? Is the NRC un
Are they going to come up with thet i
regulations? Is this just a way
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thousands upon thousands of bureaucrats and
jobs? I moan what is it? Ws havs sot to havs a
bsttsr explanation for this thing.
Dr. Bartlott Ths Nuclear Work ProUfsration
Act, Mr. Chairman, not ths NEC. Although I will
say, in my opinion and I think it is mors than an
opinion, ths cost, ths activities, ths schedules
are, in fact being driven by compliance with regu-
latory requirements, a host of them.
There are two critical factors which are leading
to these cost factors. One is ths stringency of
ths EPA requirements. That is requirement*.
That is ths master requirement, that is ths ons
that is ths difference between standing up and
sitting down. And then the NRC, on top of thst,
says here is whst you have to do to get in our
comfort tone. A 1,000-year canister and prove it,
and also now here is what you have to do in
order to demonstrate, broadly, this compliance.
Now the other cost factor is the complexity, the
geologic complexity of the Yucca Mountain site.
It is not s monolith. As you ssw from Mr.
GerU's picture, it is s vsry complicated geology,
it has a very complicated history. That has to bs
characterized well enough so you have defensible
information in this licensing arena against these
standards. The EPA standard is s factor of a
million, roughly, more stringent than ell ths
other standards we humans normally accept for
protection of health and safety in radiological
conditions.
DOE again bluntly blamed the NRC
and EPA regulations for the cost esca-
lations in its responses to written
questions following this hearing:
Question 7. In your statemsnt, you said that
site characterization is now estimated to cost $6
billion. Five years ago, the cost was estimated st
dose to $2 billion. Five years before thst, the
cost was estimated to be between $40 million and
$60 million. What hae caused this severe escala-
tion of coots? * • •
Answer. The increase of estimated sits charac-
terization coots can be attributed to regulatory
requirements and the required interactions with
external organizations.
Here again DOE misrepresents the
record. In response to posthearing
questions following this hearing, an-
other witness, Mr. John T. Kauffman,
chairman of the board and chief exec-
utive officer of Pennsylvania Power
and Light, testifying on behalf of the
American Nuclear Energy Council,
the Edison Electric Institute, and the
Utility Nuclear Waste and Transpor-
tation Program, disputed DOE's attri-
bution of increased costs solely to
regulatory requirements:
According to DOE, there are 26 specific items
that make up the base eite characterization effort
totaling $122 million in fiscal year 1992. Thie
would seem to be a disproportionately high
percentsgo of the overall program costs and the
industry is concerned that the moony could be
better spent. • • • There is no ons element
greater than $12.6 million and most are shout $6
million. Each ons needs to be reviewed objective-
ly against ths goals of ths program and eliminat-
ed if not needed.
DOE ststes thst many of these cost (sic) are
associated with having to meet numerous regula-
tory requirements on an ongoing basis. However,
in assigning coots to regulations from the list of
26 items, it appears thst less than half of $122
million is being spsnt to meet regulations. At
least half of the costs appear to relate to activi-
ties not associated with regulations.
Thus, the nuclear industry dis-
agrees with DOE's attribution of its
costs to regulatory compliance.
Ivan Selin, the Chairman of the
Nuclear Regulatory Commission, has
sharply disagreed with DOE for blam-
ing NRC regulations for cost increas-
es. In June, following the hearing at
which DOE blamed NRC for the cost
increases, Dr. Bartlett briefed the
NRC on the status of the DOE pro-
gram. Mr. President, I ask unani-
mous consent that a copy of an article
that appeared in the Las Vegas
Review-Journal of Thursday, June 25,
1992, be printed in the Record. In
correspondence with the chairman of
the House Committee on Energy and
Commerce, Dr. Selin confirms that
this article accurately reflects the
substance of the briefing. I also ask
that the correspondence between
Chairman Dingell and Chairman Selin
be printed in the Record at the con-
clusion of my remarks.
The PRESIDING OFFICER. With-
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out objection, it is so ordered.
(Sea exhibit 1.)
Mr. GRAHAM. According to the
article 'Selin also chided Bartlett for
blaming NRC regulations for sky-rock-
eting costs in developing the Yucca
Mountain repository.' It then quotes
Chairman Selin, *You haven't come to
NRC and said you disagree with the
procedures. The Department of Ener-
gy has not come up with suggestions
on how to reduce cost.' Incredibly,
'Bartlett denied he had blamed the
NRC for escalating costs,' the article
reports. ('No, I'm not saying that it's
causing problems.').
In his letter to Chairman Dingell,
Chairman Selin stated:
As an independent regulatory agency, the NRC
is committed to ensuring the protection of public
health and safety while avoiding new and elimi-
nating existing requirements that may be either
unnecessary or unnecessarily burdensome. • • •
During the June 24 briefing, the Commission
encouraged Dr. Bartlett to bring to our attention
proposals for cost cutting. Since the briefing, Dr.
Bartlett has not brought to our attention any
proposal for cutting coots at the Yucca Mountain
project. NRC stands ready to meet and discuss
any specific proposal that would allow DOE to
run a more efficient and effective repository
program consistent with ensuring the protection
of the public health and safety.
The electric and nuclear utility
industries dispute DOE's attribution
of program costs to regulatory re-
quirements. The NRC disputes
DOE's assertion that NEC's regu-
lations are the cause of the huge in-
crease in the projected cost of charac-
terization. Considering DOE's record
of blaming others for its own mis-
takes, DOE's position on this issue
does not carry credibility in the face of
these assertions to the contrary.
We have seen, therefore, that DOE
falsely has blamed everyone else for
all of its troubles in implementing this
program. As GAO reports and con-
gressional hearings have demon-
strated, the foremost cause of rising
costs and lengthy delays in the nucle-
ar waste program is the DOE's mis-
management of the nuclear waste
program. Neither the State of Neva-
da, nor the EPA regulations, nor the
NRC regulations, nor the environ-
mental laws are to blame for the prob-
lems of the program to date. By fo-
cusing attention on other extraneous
issues and away from this fundamen-
tal cause, this bill disserves the inter-
est of the Nation in terms of provid-
ing for a safe and effective method of
disposing of our high-level nuclear
waste.
THE CURRENT STANDARDS ARE ACHIEV-
ABLE
With respect to the future of the
program, the nuclear industry and
DOE have stated in testimony to the
Congress that they believe that the
repository program as currently struc-
tured can succeed. They believe that
a repository at Yucca Mountain could
meet the current EPA and NRC regu-
lations. If DOE and the nuclear in-
dustry believe the present program
can succeed, then it is not apparent
why there is a need for this legislation
to radically alter the program.
DOE and the nuclear industry have
expressed confidence that the current
Nuclear Waste Program, including the
current regulatory environment, will
succeed in response to some very spe-
cific skepticism to the contrary. In
August 1990, the Board on Radioac-
tive Waste Management of the Na-
tional Academy of Sciences issued a
report very critical of the current
program. The report was entitled
'Rethinking High-Level Radioactive
Waste Disposal.' The Subcommittee
on Nuclear Regulation conducted a
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hearing on the nuclear waste program
shortly after this report was issued.
At this hearing, DOE and the nuclear
industry stated that the major prob-
lems in the waste program as identi-
fied by the Board report had been
addressed.
The NAS Board report had pessi-
mistically concluded that 'the U.S.
program, as conceived and implement-
ed over the past decade, is unlikely to
succeed.' The Board stated that 'geo-
logic models, and indeed scientific
knowledge generally, are being inap-
propriately applied in the U.S. radio-
active waste repository program.'
The basic reason for this pessimism
is that the Board believed that the
program could not deliver thd techni-
cal certainty that the program as
currently structured will require in
order to allow for the licensing of a
repository. The NAS Board stated
that:
The Government's HLW Program
and its regulation may be a 'scientific
trap' for DOE and the U.S. public
alike, encouraging the public to expect
absolute certainty about the safety of
the repository for 10,000 years and
encouraging DOE program managers
to pretend that they can provide it.
The Board recommended a more
flexible approach for the repository
program to accommodate the uncer-
tainties that the Board believes inevi-
tably will arise in the course of this
first-of-a-kind technical and political
undertaking. NAS stated that there
is a 'need to revise both technical
design and regulatory criteria as more
information is discovered.'
The Board made a number of addi-
tional recommendations. These in-
cluded reconsideration by EPA of its
performance standards, the use of
quantitative probablistic release crite-
ria in the standard, and the use of
only a dose requirement in the stan-
dard. The Board suggested that NRC
reconsider its detailed licensing re-
quirements, including the use of engi-
neered features, the level of statistical
or modeling evidence required, and
how changes can be accommodated
during construction of the repository.
Mr. President, I ask unanimous
consent that the full study by the
Board and its recommendations be
included in the record following my
statement.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(See exhibit 2.)
Mr. GRAHAM. In August 1990, the
Subcommittee on Nuclear Regulation,
which I chair, conducted a hearing on
the Federal program for the disposal
of spent nuclear fuel and high-level
radioactive waste. At this hearing the
subcommittee examined the Board's
report. The subcommittee asked the
DOE, the NRC, the EPA, the nuclear
industry, the National Association of
Regulatory Utility Commissioners
(NARUC), and the State of Nevada to
comment on the Board report.
DOE stated its confidence in the
program as follows:
The (Board's) position statement is based
largely on an assessment of the high-level radio*
active waste management program as it was two
years ago. Significant changes in the program
were initiated last fall by the Secretary, as re-
flected in the November 1969 'Report to Con-
gress on Reassessment of the Civilian Radioactive
Waste Management Program.' These and other
initiatives are being implemented by the program
with the full support of the Secretary. The cur-
rent approach taken by the Department is not,
therefore, the approach actually assessed by the
(Board). Although the program faces many chal-
lenges, the Department does not believe that the
approach currently being taken is unlikely to
The EPA also believes the program
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can succeed:
There is no doubt that tho country has oat for
itself a considerable challenge in seeking to
eatabliah a high-level radioactive waste reposi-
tory. In our evaluation of the regulatory aspect*
of this issue we do not see the system mm broken
beyond repair. We believe thet it is more appro-
priate for DOE, as program manager, to comment
on the likelihood of success of the current pro-
gram. We believe that our original 1986 •Un-
dents would be implementable and we anticipate
that any changes resulting from our revised
regulation, based on comments to data, will
result in regulations that support the develop-
ment of a high- level waste disposal program that
is technologically sound and protective of human
health.
We recognize that flexibility is necessary to
address unforeseen circumstances, and we believe
that the regulatory system allows such flexibility.
The nuclear industry agreed that
'(t)he program can succeed.'
Although DOE and the nuclear
industry believe that the current pro-
gram can succeed, they also have
stated that their belief that the EPA's
standards are unduly restrictive. For
example, DOE believes the EPA's
containment requirements may be too
stringent. At the subcommittee's
hearing DOE stated that it is 'con-
cerned with the implementability of
the containments (sic) requirements
as they are being interpreted. A liter-
al interpretation of the requirements
would preclude the use of qualitative
judgment by the implementing agency
as intended by EPA. Without a signifi-
cant measure of qualitative judgment
allowed by the rule, the combination
of the quantitative, probabilistic na-
ture of the standard and the stringen-
cy of the numerical limits for allow-
able releases would make it difficult to
demonstrate compliance at any site.'
The EPA containment standards
criticized by DOE are designed to
limit the total projected release of
specific radionuclides over a
10,000-year period. Total releases
within these limits, from both antici-
pated and unanticipated events, are
projected to cause no more than 1,000
premature deaths over the entire
10,000-year period. Compliance with
the containment requirements must
be demonstrated in a probabilistic
manner. Cumulative releases must
have a probability of less than 1
chance in 10 of exceeding the limits,
and must have a probability of less
than 1 chance in 1,000 of exceeding 10
times the limits.
The nuclear industry also has ex-
pressed its concern over the stringen-
cy of the EPA containment standards.
Additionally, the Nuclear Waste Tech-
nical Review Board questioned the
conservatism of the EPA standard. It
recommended that the limits in the
standard 'be reevaluated in light of
current environmental and regulatory
requirements.' NRC has commented
that EPA should 'reexamine the strin-
gency of the standard in light of other
risks experienced by society and risk
levels used as the basis for other safe-
ty standards.'
However, the concern over the
implementability of the EPA contain-
ment standards has not been ex-
pressed only with respect to the po-
tential repository site at Yucca Moun-
tain. This concern has not been ex-
pressed for the other potential site for
the disposal of highly radioactive nu-
clear wastes, the Waste Isolation Pilot
Plant (WIPP) site in New Mexico.
The WIPP facility is over 2,000 feet
below ground and consists of several
miles of mined drifts in a geologically
stable salt formation. WIPP is intend-
ed to be used for the permanent, deep
geologic burial of transuranic wastes
generated by the Department of
Energy's nuclear weapons complex.
Until now, the EPA's generalr/
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applicable environmental standards
for the release of radiation from the
disposal of high-level and transuranic
nuclear wastes applied in the same
manner to both the Yucca Mountain
site and the WIPP site. Both sites
had to comply with the same EPA
standards.
According to the EPA, 'Early per-
formance assessments conducted for
the Department of Energy on the
Waste Isolation Piolot Plant facility in
southeastern New Mexico, show
'reasonable confidence that comp-
liance with the standard is achievable.
(See 'Sandia Status Report: Potential
for Long-Term Isolation by the WIPP
Disposal System, June 1990').'
More recently, in December 1991,
Sandia National Laboratories issued a
preliminary evaluation of the ability
of WIPP to comply with the EPA
standards. The Sandia report con-
cluded that, 'Results of the 1991 pre-
liminary performance assessment do
not indicate potential violations of
subpart B of the standard and support
the conclusion based on previous anal-
yses, including the 1990 preliminary
performance assessment, that reason-
able confidence exists that compliance
with (the EPA standard) can be
achieved.'
The selective concern over the strin-
gency of the EPA standard indicates
that perhaps it is the site, rather than
the standard, which may be defective.
If compliance with the EPA standard
is achievable at a stable salt site like
WIPP, but less certain at geologically
complex site like Yucca Mountain,
then perhaps Yucca Mountain is not
an ideal site.
At the subcommittee's hearing in
1990, 1 asked this question:
Senator Graham. If the panelists believe that
the New Mexico project, the WIPP project, can
t EPA standards, with the possible exception
of the problem of human intrusion, then why do
you believe that there is a problem with the stan-
dards at the Yucca Mountain site? Why is there
a problem with the site rather than the stan-
dards?
Mr. Loux (Executive Director, Nuclear Waste
Project Office, State of Nevada). Mr. Chairman,
if I might just offer, parenthetically, at the recent
symposium that the National Academy conducted
earlier this month, several Department of Energy
program people associated with Yucca Mountain
stated their belief that the EPA standards could
be met at Yucca Mountain in some esses by sev-
eral orders of magnitude, in collusion with the
statements by some DOE people that they could
be met at WIPP as well and Nevada is sort of
asking the same sort of question.
Senator Graham. Is there any more comment
on that question?
Mr. Bartlett. Yes, Mr. Chairman, If I may. I
would concur with what Mr. Loux said. It is not
appropriate to characterize the concern as wheth-
er or not Yucca Mountain would meet the stan-
dard at this point because we don't have a suffi-
cient information base. There is too high a degree
of uncertainty at this stage about what the prop-
erties and characteristics of the Yucca Mountain
site are and how they would be relevant to the
standards as they would be applied to an evalua-
tion for licensing purposes, and initially, as ap-
propriate to a suitability evaluation.
Thus, in reality, despite DOE's criti-
cisms of the containment standards,
DOE does not believe that the current
EPA standards are not achievable at
Yucca Mountain. Additionally, DOE
believes these standards are achiev-
able at WIPP.
The Nuclear Waste Technical Re-
view Board, despite its criticisms of
the EPA containment standards,
nonetheless also believes the current
standards are achievable at Yucca
Mountain. In response to written
questions following the Senate Energy
Committee's March 1992 hearing, the
NWTRB stated:
Although predicting the performance of a re-
pository at Yucca Mountain over the next 10,000
years will be a significant challenge, the Board is
optimistic that adequate and reasonable technical
and scientific judgments about the geologic barri-
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era to radionuclide migration can bt made to
support conclusions on repository performance
for 10,000 years within the current regulatory
At this point, the Board is not aware of any
technical problems such that the proposed reposi-
tory or other elements of the storage, transport,
and disposal system are 'destined to fail' in ob-
taining regulatory approval.
In 1987, when Congress was consid-
ering the legislation which selected
Nevada as the sole site to be charac-
terized, DOE testified before the Con-
gress that it was 'not conceivable that
this site would fail to meet the NRC
and EPA standards.' The same EPA
and NRC regulations that are in place
today that were in place when this
statement was made in 1987. To date,
DOE has never informed the Congress
that the confidence it expressed in
1987 was erroneous.
Thus, the DOE, the Nuclear Waste
Technical Review Board, the nuclear
industry, and the EPA believe that
the current program, which includes
the current EPA and NRC regulatory
requirements, can succeed. There are
critics of certain aspects of these re-
quirements, but none of these critics
have stated any belief that these criti-
cisms constitute fatal flaws in the pro-
gram.
In sum, the NRC and EPA regulato-
ry requirements have not been the
cause of the problems in DOE's pro-
gram. The DOE is the problem with
the DOE program.
Hence, the solution in this legisla-
tion to the cost increases and schedule
delays in the DOE program does noth-
ing to address the cause of those costs
and delays. The cause of the
program's problems is the manage-
ment and attitude of DOE. To fix the
program, the Congress should consid-
er removing the program from DOE,
changing the management structure
of the program within DOE, adopting
a more flexible schedule for the opera-
tion of the repository, and other possi-
ble structural changes to the program
that may be suggested. This legisla-
tion, unfortunately, does nothing to
change the management or structure
of this program.
Instead, this legislation will encour-
age a controversial rewriting of the
EPA and NRC standards for the pro-
tection of the public health and safety.
The existing problems in the program
will persist, and will be compounded
by the new contentious issues intro-
duced by this legislation.
I would now like to address those
new issues.
THE SUBSTANCE AND PROCEDURE OF
THIS PROVISION IS FLAWED
The approach in section 801 of this
legislation on several scientific issues
represents a significant departure
from the current scientific consensus
on those issues. The procedures speci-
fied in section 801 to consider or en-
courage the adoption of these contro-
versial scientific positions raise a host
of difficult issues of constitutional and
administrative law. This section wul
entangle the high-level waste program
in a legal and scientific quagmire for
years.
TECHNICAL ISSUES
One major technical problem with
this legislation is that it attempts to
increase the reliance of the repository
program on postclosure oversight to
protect the public health and safety.
This attempt squarely conflicts with
the current scientific consensus on
how best to protect the public health
and safety over the long term from
highly radioactive wastes.
Section 801(bX2) of the bill i
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The Commission '■ requirements and criteria
shall aeaume, to tha extant consistent with the
findinge and recommendations of the National
Academy of Sciences, that following repository
closure, the inclusion of engineered barriers and
the Secretary's post-closure oversight of the
Yucca Mountain site, in accordance with subsec-
tion (c), shall be sufficient to -
(A) prevent any activity at tha aite that poses
an unreasonable risk of breaching tha
repository's engineered barriera; and
(B) prevent any increase in the exposure of
individual members of the public to radiation
beyond allowable limits.
Subsection (c) then directs to Secre-
tary of Energy to conduct poetcloeure
oversight activities.
This emphasis on postclosure over-
sight is technically unsound. Both
EPA and NRC have determined that
postclosure oversight is not reliable
for more than 100 years. Current
NRC and EPA regulations do not rely
on postclosure oversight to protect the
public health and safety.
The current EPA high-level waste
standard states that •
Active institutional controls over disposal sites
should be maintained for as long a period of time
as ia practicable after disposal; however, perfor-
mance assessments that sssess isolation of the
wastes from the accessible environment shall not
consider any contributions from active institu-
tional controls for more than 100 years after
disposal.
NRC's low-level radioactive waste
disposal standard similarly limits reli-
ance on institutional controls to 100
years. According to the NRC, 'a clear
consensus was developed which sup-
ported the 100-year limit. The Com-
mission has not seen any compell-ing
reason to change its view on the
100-year limit.' (Supplementary Information
for Part 61 Final Rule, 47 Fed. Reg. 67,446, Dec.
27, 1982).
Mr. President, I ask unanimous
consent to enter into the record mate-
rial that was provided to the subcom-
mittee concerning the basis for the
100-year limit for the period of insti-
tutional controls. The NRC states in
this document that, 'Most observers
have accopted the idea that long-term
use of 'active' institutional controls is
not a reliable way to achieve safe
waste disposal.'
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(See exhibit 3.)
Mr. GRAHAM. To the extent that
this legislation would require reliance
upon institutional controls for more
than 100 years, this legislation would
impose upon the repository program a
methodology for waste disposal that
most observers believe is not reliable
to protect the public health and safe-
ty-
Another major problem with this
legislation is that it appears to dimin-
ish reliance upon geologic barriers in
the repository system. This also
squarely conflicts with the current
scientific consensus regarding how to
best protect the public health and
safety.
Section 801(b)(2) directs the NRC to
assume, to the extent consistent with
the findings and recommendations of
the NAS, that following repository
closure, the inclusion of engineered
barriers and postclosure oversight of
Yucca Mountain shall be sufficient to
prevent either an unreasonable risk of
a breach of the repository or any ex-
posure of individuals to radiation in
excess of the allowable limits.
To the extent that this provision
would require NRC to assume that
engineered barriers and postclosure
oversight are sufficient, without the
consideration or use of geologic barri-
ers as an integral component of the
repository system, this provision
makes no technical or legal sense.
What is the purpose of the geologic
barriers, which are referenced in sec-
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tion 801(bX2XA), if the engineered
barriers and poetcloeure oversight are
to be assumed to be sufficient to pre-
vent any breach of the repository?
According to the N AS Board report
I discussed earlier:
There is a strong world wide consensus that the
best, safest long-term option for dealing with
HLW is geologies! isolstion. High-level waste
should be put into specially designed and engi-
neered facilities underground, where the local
geology and ground water conditions have been
chosen to ensure isolation of the waste for tens
of thousands of years or longer, and where waste
nateriaJs will migrate very slowly if they come
into contact with the rock.
The United States, after careful and
deliberate consideration by both the
technical community and the Con-
gress, has adopted deep geologic dis-
posal as the preferable approach to
protect the public over the long-term
from spent nuclear fuel and high-level
nuclear waste.
In 1978, President Carter created
an Interagency Review Group (IRG),
consisting of representatives from 14
Federal agencies, to make recommen-
dations for Federal policy for the
long-term management of nuclear
wastes. After examining a variety of
technologies, the IRG concluded that,
'Disposal in mined repositories is the
nearest-term option.'
The IRG final report recommended
that a system of multiple barriers be
structured to isolate the high-level
wastes from the environment. These
barriers would include the waste form
itself, other engineered barriers, and
the natural repository environment.
With respect to the type of barriers
to be used to isolate the wastes, the
IRG stated as follows:
The IRG review identified a niuabsr of fanpoc-
tant technical findings which it believes to repre-
sent the views of a majority of infonned technical
approach should be used to select
waste form. A systems approach recognises that,
over thousands of years, the fate of radionuclides
in a repository will be determined by the natural
geologic environment, by the physical and chwl-
csl properties of the medium chosen for waste
emplacement, by the waste form itself and other
engineered barriers.
In the Nuclear Waste Policy Act of
1982 (NWPA) Congress adopted the
IRG'b recommendations concerning
deep geologic disposal and multiple
barriers. The NWPA required DOE
to conduct two searches for two geo-
logic repositories. Section 121(b) of
the NWPA states that the NRC's li-
censing requirements and criteria
'shall provide for the use of a system
of multiple barriers in the design of
the repository. • • •' Accordingly, in
conformance with the global scientific
consensus and the direction in section
121(b) of the NWPA, current NRC
and EPA regulations rely on engi-
neered and geologic barriers, and not
on poetcloeure oversight
Hence, to the extent that this legis-
lation is interpreted to require the
NRC to issue requirements that as-
sume that engineered barriers and
poetcloeure oversight are sufficient,
without reliance on geologic barriers,
the legislation contradicts a worldwide
and national scientific consensus that
engineered barriers and geologic barri-
ers should be the fundamental ele-
ments of a repository for long-term
isolation of nuclear wastes from the
human environment
Standards that rely upon engi-
neered barriers and post-closure over-
sight are more appropriately applica-
ble to a storage facility for nuclear
wastes rather than a disposal facility.
It is clear, however, that this legisla-
tion does not reference and is not in-
tended to apply to a storage facility
for wastes. It clearly is intended to
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apply to a geologic repository, where
wastes are intended to be disposed of
permanently.
This is obvious from the use of the
term 'repository' in several instances.
The section refers to 'the repository at
the Yucca Mountain site,' 'the
repository's engineered or geologic
barriers', and 'radioactive materials
stored or disposed of in the reposito-
ry.' The NWPA defines 'repository' as
'any system licensed by the Commis-
sion that is intended to be used for, or
may be used for, the permanent deep
geologic disposal of high-level radioac-
tive waste and spent nuclear fuel,
whether or not such system is de-
signed to permit the recovery, for a
limited period during initial operation,
of any materials placed in such sys-
tem. Such term includes both surface
and subsurface areas at which
high-level radioactive waste and spent
nuclear fuel handling activities are
conducted.'
The term 'disposal' is defined as
'the emplacement in a repository of
high-level radioactive waste, spent
nuclear fuel, or other highly radioac-
tive material with no foreseeable in-
tent of recovery, whether or not such
emplacement permits the recovery of
such waste.'
Thus, this section pertains to stan-
dards for a deep geologic repository
for the emplacement of nuclear waste
with no intent of recovery. It is clear,
therefore, that the standards estab-
lished under this section, or the repos-
itory referred to in this section, is not
a storage facility, such as a monitored
retrievable storage facility.
Accordingly, nothing in this section
should be interpreted to authorize or
direct the construction of a monitored
retrievable storage facility at Yucca
Mountain or elsewhere. Nothing in
this section should be interpreted to
authorize or direct the NRC or the
EPA to establish standards or criteria
or any other regulatory requirements
for a monitored retrievable storage
facility at Yucca Mountain or else-
where.
A third major technical deficiency in
this legislation is that this section
directs the EPA only to promulgate
standards for the maximum dose that
any individual can be exposed to from
radiation that might escape from the
repository. It fails to also direct EPA
to promulgate standards for the maxi-
mum cumulative releases of radioac-
tive material over an extended period
of time. This notable omission con-
flicts with EPA*8 current judgment
that both a containment standard and
an individual dose standard is the
appropriate manner in which to pro-
tect the public health and safety.
Currently, EPA's regulations pro-
vide containment standards and indi-
vidual dose standards. As I mentioned
before, containment standards limit
the total amount of radioactive mate-
rial that may be released to the envi-
ronment over 10,000 years. Individual
dose standards limit the amount of
radiation any individual may be ex-
posed to from the repository.
The NRC has stated that the con-
tainment standards are 'the most
substantive of the three (EPA stan-
dards) because it applies for a full
10,000 years and because it restricts
releases following disturbances to the
repository as well as releases from
undisturbed performance.'
It is important for a standard to
include some type of limit on the total
radiation that may be released from a
repository, in addition to limits on the
amount of radioactivity that way par-
ticular individual may receive. The
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inclusion of either a population stan-
dard or a cumulative release limit will
ensure that a large number of persons
will not be injured as a result of a
large number of exposures to doses
that may be permissible for individu-
als.
Hence, the legislative language
adopted today does not explicitly di-
rect EPA to promulgate the full range
of standards that have been deter-
mined appropriate for the protection
of the public health and safety from
the release of radioactivity at a nucle-
ar waste repository. If EPA only pro-
mulgated the standards explicitly
specified in this legislation, EPA
would be offering less protection to
the public health and safety than it
has determined is appropriate.
PROCEDURAL ISSUES
The language adopted today raises
many difficult procedural and legal
issues. These procedural and legal
issues will surely delay the program.
First, the legislation requires both
the EPA and the NRC to promulgate,
by rule, specified regulations 'based
upon and consistent with the findings
and recommendations of the National
Academy of Sciences.' The conference
report on this provision ambiguously
states both that the EPA's and NRC's
standards promulgated under this
section must be 'based upon and con-
sistent with the findings and recom-
mendations of the National Academy
of Sciences, ' and that, 'The provisions
of section SOI are not intended to
limit the (Commission's or
Administrator's) discretion in the
exercise of (its or his) authority relat-
ed to public health and safety.'
The statement in the conference
report that the agencies must issue
rules based on and consistent with the
findings and recommendations of the
NAS is inconsistent with the other
statement in the conference report
that the agencies retain their discre-
tion on the public health and safety
issues that the Board may address.
Given this confusing set of explana-
tions of what this provision means,
the issue of the binding nature of the
NAS recommendations is sure to pro-
voke lively litigation.
To the extent that this legislation is
interpreted as limiting the discretion
of either the EPA or the NRC in those
matters addressed in findings and
recommendations of the NAS, the
legislation raises constitutional issues
regarding the appointments clause of
the U.S. Constitution and the delega-
tion of executive powers to a private
body. If the legislation is interpreted
as requiring that the NAS findingi
and recommendations be translated
into rules and regulations, either in
whole or in part, by EPA or by NRC,
then it would appear that the Nation-
al Academy of Sciences would be exer-
cising legislative authority. The case
law on the extent to which a private
body can exercise this type of legisla-
tive authority is unclear.
It also appears that the NAS would
be subject to the Federal Advisory
Committee Act (FACA) in carrying
out its task to provide advice and
recommendations to Federal agencies
in the manner specified in this sec-
tion. Under FACA, an advisory com-
mittee 'means any committee, board,
commission, council, conference, pan-
el, task force, or other similar group,
or any subcommittee or other sub-
group thereof • • • which is (A) estab-
lished by statute or reorganization
plan, or (B) established or utilised by
the President, or (C) established or
utilized by one or more
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the interest of obtaining advice or
recommendations for the President or
one or more agencies or officers of the
Federal Government • * *.' It certain-
ly appears, from this definition, that
the NAS's role under this legislation
would qualify the NAS as an advisory
committee under FACA.
In Public Citizen v. U.S. Depart-
ment of Justice, 109 Sup. Ct. 2558
(19S9), the U.S. Supreme Court inter-
preted the requirements of FACA.
The Court stated:
The phrase 'or utilized' (in section S) therefore
appears to have been added simply to clarify that
FACA applies to advisory committees established
by the Federal Government in a generous sense
of that term, encompassing groups formed indi-
rectly by quasi-public organizations such um the
National Academy of Sciences 'for' public agen-
cies as well »m 'by' such agencies themselves.
Read in this way, the term 'utilized' would
meet the concerns of the (House) that advisory
committees covered by Executive Order 11007
because they were 'utilized by a department or
agency in the same manner as a
Government-formed advisory committee' - such
»m the groups organized by the National Academy
of Sciences and its affiliate* which the Report
discussed - would be subject to FACA a require-
ments.
It thus appears that FACA would
apply to the NAS in its role under this
legislation.
There are a host of requirements
that apply to advisory committees
under FACA. For example, FACA
requires that committee memberships
be 'fairly balanced in terms of the
points of view represented and the
functions to be performed.' FACA
members are subject to the Federal
conflict of interest statutes. Federal
advisory committees must arrange
meetings for reasonably accessible and
convenient locations and times, pub-
lish adequate advance notice of
planned meetings in the Federal Reg-
ister, open meetings to the public,
make available for public inspection
all papers and records, including de-
tailed minutes of each meeting, and
maintain records of expenditures,
with limited exceptions, for public
inspection.
Substantively, the NAS is not suited
for the prominent role in Federal
nuclear waste policy contemplated by
the sponsors of this legislation. The
NAS can provide excellent peer review
of the science underlying public policy
choices, including the science underly-
ing the Federal regulations to protect
the public health and safety but the
NAS is not suited to go beyond that
limited role.
The NAS is neither a regulatory nor
a standard-setting body. It has no
expertise or experience in establishing
standards to protect the public health
and safety. Its members are not polit-
ically accountable for their findings
and recommendations. Thus, the
NAS is not the proper institution to
make findings or recommendations
that Federal agencies must use and
that will directly affect the public
health and safety. It also is not the
proper institution to bind Federal
agencies to particular policies or scien-
tific viewpoints. As the NAS acknowl-
edges, the application of science to the
citizens in a democratic society must
be done with the consent of those
governed, and not imposed upon the
public by a politically unaccountable
scientific organization.
The fundamental controversies
underlying the nuclear waste program
are as much political as they are tech-
nical. Whether the current EPA stan-
dards are too stringent or too lax is as
much a question of social policy as it
is of science. As the NAS Board on
Radioactive Waste Management itself
stated, 'safety is in part a social judg-
ment, not just a technical one. How
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safe is safe? Is it safer to leave the
waste where it is, mostly at reactor
sites, or to put it in an underground
repository? In either case safety can-
not be 100 percent guaranteed. Tech-
nical analyses can provide background
for answering such questions, but
ultimately the answers depend on
choices made by the citizens of a dem-
ocratic society.'
Thus, it is the Federal regulatory
agencies, which are politically ac-
countable, that are most suited to
answer the questions that the legisla-
tion directs to the NAS. The NAS can
provide peer review on the science
underlying the decisions to be made
by the political system, but it cannot
make policy that is in any sense bind-
ing upon the regulatory agencies.
The use of the NAS in the manner
contemplated by this legislation per-
petuates some of the problems with
the current program that the NAS
Board report discussed. To the extent
that this legislation is based upon the
premise that the NAS, as a
non-politically accountable scientific
organization, will be able to arrive at
reasonable and objective 'scientific'
recommendations upon which the
federal regulations will be based, and
therefore somehow bring credibility,
objective science, and definite answers
to the program, the legislation puts
the NAS into the scientific trap that
the NAS Board report warned about.
The NAS Board report also stated
that 'a management plan that promis-
es that every problem has been antici-
pated, or assumes that science will
provide all the answers, is almost
certainly doomed to fail'
Furthermore, this legislation seeks
to use the NAS to further a basic
approach that the NAS believes is
inappropriate for the repository pro-
gram. This legislation calls for the
NAS to make findingi and recommen-
dations as to what constitutes reason-
able protection to the public health
and safety from radioactive releases at
a nuclear waste repository at Yucca
Mountain. The NAS Board report has
concluded, however, that an approach
to repository siting and licensing that
attempts to answer the question of
what constitutes reasonable protection
prior to the development of extensive
knowledge about the site is an inap-
propriate use of science and is unlike-
ly to succeed. In light of the NAS's
criticism of the type of task presented
to it by this legislation, it will be diffi-
cult for the NAS to provide the find-
ings and recommendations requested
in this legislation without compromis-
ing its earlier position and therefore
its credibility.
In its report, the NAS Board recom-
mended a flexible regulatory approach
in order to accommodate the surprises
that the Board believes are inevitable
in a repository program. The flexible
approach advocated by the Board
would be based upon the following
three principles:
Start with the simplest description
of what is known, so that the largest
and most significant uncertainties can
be identified early in the program and
given priority attention.
Meet problems as they emerge, in-
stead of trying to anticipate in ad-
vance all the complexities of a natural
geological environment.
Define the goal broadly in ultimata
performance terms, rather than im-
mediate requirements, so that in-
creased knowledge can be incorpo-
rated in the design at a specific site.
According to the Board, this ap-
proach would use science in the prop-
er fashion. The Board added that
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Implicit in this approach, however, is
the need to revise the program sched-
ule, the repository design, and the
performance criteria as more informa-
tion is obtained.'
I am not yet persuaded that the
Board's flexible approach should be
adopted. It is something to consider.
I am concerned that such an approach
would impair public confidence in the
program by giving the appearance
that the standards were continually
being changed in order to fit the data
presented by the site.
Similarly, this legislation does not
adopt the flexible approach. In this
respect, the legislation is not based
upon and consistent with the findings
and recommendations of the NAS.
Instead, it continues the current ap-
proach, which the NAS has so sharply
criticized.
However, with respect to the degree
of protection afforded by the EPA and
NRC standards, this legislation seeks
to substitute the judgment of the NAS
for the current judgments of the EPA
and NRC as to what constitutes rea-
sonable protection. It thus uses the
NAS findings and recommendations in
a selective manner. It uses the NAS
only when the NAS findings and rec-
ommendations are consistent with a
particular preconceived objective.
Thus, rather than seeking to base
the repository program on die views
of a scientific body such as the NAS,
this legislation simply has chosen the
NAS to be used solely as a vehicle to
force a rewrite of the current safety
standards. This approach is nothing
more than blatant 'standard shopping'
and 'scientist shopping' in order to
produce a desired political result. It
seeks to cloak the desired political
changes to the standards with the
imprimatur of the NAS.
I would hope that the NAS would
resist the pressures to be used in this
manner. It will damage the credibility
of both the repository program and
the NAS for the NAS to become en-
tangled in a contrived process to re-
write the standards as to what consti-
tutes reasonable protection to the
public health and safety.
PREJUDGMENT OF SUITABILITY OF YUC-
CA MOUNTAIN SITE
This legislation judges the suitabili-
ty of the Yucca Mountain site for a
nuclear waste repository prior to the
characterization activities that are
necessary to determine whether the
site is, in fact, suitable for a reposito-
ry. This prejudgment of the site con-
flicts with the requirement that the
licensing of Yucca Mountain be based
upon scientific information. It makes
it clear that the Federal Government
will do everything it can to try to put
nuclear waste in Nevada regardless of
what the science tells us about the
suitability of the site.
Section 801 refers to 'the repository
at the Yucca Mountain site.' The con-
ference report also refers to 'a reposi-
tory at the Yucca Mountain site,' and
'a repository at Yucca Mountain.' The
legislation directs the EPA and the
NRC to promulgate standards for this
specific site for a repository.
It seems both logically nonsensical
and scientifically unsound to establish
site-specific standards for a repository
at a location which has not yet been
determined to be suitable for a reposi-
tory. Moreover, the establishment of
site-specific standards by the NRC
would appear to compromise the im-
partiality of the NRC to make a deter-
mination in a licensing proceeding of
whether a repository at Yucca Moun-
tain will provide adequate protection
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to the public health and safety. The
NRC essentially already would have
determined that question in establish-
ing its licensing standards. A licens-
ing proceeding that is called upon to
determine whether an application
meets a standard that the judge al-
ready has determined is met will be a
sham.
The DOE presently is characteriz-
ing Yucca Mountain to determine
whether Yucca Mountain is suitable
for a nuclear waste repository. DOE
states that The overall objective of
the scientific studies is to determine if
Yucca Mountain can isolate radioac-
tive materials by using natural and
engineered barriers. The studies are
expected to take from seven to ten
years to complete.' At present, DOE
does not anticipate making a deter-
mination on the suitability of Yucca
Mountain for a repository until 2001.
It is difficult to understand how the
NAS, the EPA, or the NRC could
establish standards for the protection
of the public health and safety for a
repository site that has not yet been
determined to be suitable for a reposi-
tory. Such standards could be pro-
mulgated at this date only in igno-
rance of the scientific information
that is necessary to establish such
site-specific standards.
The concept of site-specific stan-
dards is difficult to understand logi-
cally. It is either an oxymoron or a
tautology. If the site-specific standard
is expected to be based upon require-
ments that are supposed to be achiev-
able at the specified site, then it
would not represent a standard at all,
but rather a judgment about the capa-
bilities of the site. By definition, judg-
ments about the capabilities of the
site will meet the judgments about the
capabilities of the site. In this case,
the concept is a meaningless tautolo-
gy.
On the other hand, if the
site-specific standard is expected to be
based upon general principles of what
constitutes reasonable protection of
the public health and safety, and does
not take into account or depend solely
upon whether those principles can be
met at the specific site, then it would
not be a site-specific standard. It
would be no different from a general
standard. In this case, the concept is
a meaningless oxymoron.
Thus, if it's site-specific, it can't be
a standard, and if it's a standard, it
can't be site-specific. This bizarre
concept of site-specific standards will
cause tremendous confusion and con-
troversy for the repository program.
To the extent that the standards
adopted by NRC represent any type of
determination as to what is achievable
at Yucca Mountain, it would call into
question the NRC's ability to function
as an impartial judge in an adjudicato-
ry licensing proceeding as to whether
die site meets the standards. If the
NRC's licensing standards constitute
a judgement by the NRC on
site-specific issues regarding Yucca
Mountain, then it would be impossible
for parties appearing before the NRC
to obtain an impartial and unbiased
hearing on those site-epecific issues.
The Nuclear Waste Policy Act and
the NRC's regulations, pursuant to
that act, provide for an adjudicatory
hearing on an application for a license
to construct and operate a repository.
A host of due process issues would be
raised if the Commission were to be-
gin addressing and deciding
site-specific issues, through its regula-
tions, either promulgated by rule or
by EPA or NAS judgments that may
be binding on the NRC under this
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legislation, establishing site-specific
standards, prior to the commence-
ment of the abjudication on the suit-
ability of the site. Moreover, due
process issues are raised to the extent
that the NAS and the EPA use
non-a^judicatory procedures to deter-
mine adjudicatory issues - that is,
site-specific issues - in a manner that
affects persons who are entitled by
law to an adjudicatory hearing before
the NRC on the licensing of the nucle-
ar waste repository.
Thus, there may be serious due
process concerns with the promulga-
tion of site-specific standards if such
standards are to be a basis for the
licensing of that same specific site.
NRC INDEPENDENCE COULD BE UNDER-
MINED
To the extent that this legislation
reduces, in any manner, the discretion
of the NRC to promulgate regulations
in the manner that the NRC deems
most appropriate, the integrity and
independence of the NRC could legiti-
mately be called into question. Under
this provision the NAS will be a con-
tractor of the EPA. It would be a clear
infringement upon the independence
of the NRC for the NRC to be re-
quired to base its views on how to
protect the public health and safety
on the findings and recommendations
of an EPA contractor.
More generally, this legislation fur-
ther confuses the relationship between
the EPA and the NRC. These two
agencies have had a history of duplica-
tion, confusion, and conflict in fulfill-
ing their respective responsibilities to
protect the public health and safety
from radiological hazards. Recently
the relationship and cooperation be-
tween the two agencies has improved.
This legislation will disrupt the cur-
rent positive relationship and reintro-
duce conflict and confusion between
the agencies.
Under current law, EPA has the
responsibility and authority for issu-
inggenerally applicable environmental
standards to protect the public health
and safety from radiation hazards.
Pursuant to this authority the EPA
has issued generally applicable envi-
ronmental standards for the protec-
tion of the public from a variety of
activities that use radioactive materi-
als, such as the operation of nuclear
powerplants and the operation of a
nuclear waste repository.
Under current law NRC has the
responsibility for issuing technical
requirements and criteria to ensure
that the generally applicable EPA
standards are met by persons conduct-
ing activities within NRC's licensing
authority. The NRC technical re-
quirements must be not inconsistent
with the EPA general standards.
These overlapping roles in protect-
ing the public health and safety from
radiation hazards have led to a num-
ber of conflicts between the two agen-
cies. It has taken many years and a
considerable amount of effort for the
NRC and the EPA to come to agree-
ment on how to best minimize con-
flicts and duplication in their overlap-
ping roles. In March of this year the
EPA and the NRC signed a memoran-
dum of understanding (MOU) on how
to cooperate in the exercise of their
respective responsibilities.
This legislation will raise many new
issues regarding the roles of the EPA
and the NRC. Never before has the
EPA been directed to issue site- specif-
ic standards for NRC-licensed activi-
ties, as section SOI directs EPA to do
with respect to Yucca Mountain.
Additionally, section 801(aX2) is
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confusing with respect to the role of
the NRC and other environmental
laws. This section states that EPA's
standards for the protection of the
public health and safety from releases
of radiation 'shall be the only such
standards applicable to the Yucca
Mountain site.' The conference report
explains that:
The provision* of section 801 address only the
stsndsids of the Environments! Protection
Agency v end comparable regulations of the Nucle-
ar Regulatory Commission, related to protection
of the public from releases of radioactive mated-
els stored or disposed of at the Yucca Mountain
site pursuant to authority under the Atomic
Energy Act, Reorganization Plan No. 3 of 1970,
the Nuclear Wests Policy Act of 1982, and this
Act. The provisions of section 801 are not in-
tended to affect in any way the application of any
other existing laws to activities at the Yucca
Mountain site.
It could be disputed, therefore, what
section 801 means with respect to
NRC'8 regulations. Although section
801(a)(2) would seem to rule out any
role for the NRC once EPA issues its
standards, section 801(b) directs the
NRC to promulgate regulations.
Clearly, therefore, section 801(a)(2)
cannot be given an expansive reading,
since such a reading would be incon-
sistent with section 801(b). To mini-
mize confusion between the NRC and
the EPA, and to protect the public
health and safety and the nature
environment to the full extent that
federal and state laws provide, I hope
that section 801(a)(2) is given as nar-
row a reading as possible.
Under section 801(b), however, the
NRC'8 role is defined differently from
its role under current law. Section
801(b) states that NRC's regulations
shall be 'consistent with' the regula-
tions of the EPA. This is a novel stan-
dard. Under current law the NRC's
requirements and criteria shall 'not be
inconsistent with' EPA's standards.
This legislation raises a host of ques-
tions regarding the relationships be-
tween the NRC and EPA with respect
to these standards. Is there a differ-
ence between 'consistent with' and
'not inconsistent with'? If so, what is
it? If there is no difference, then why
is a new standard used? If NRC's
regulations differ from EPA's by one
word, does this mean NRC's regula-
tions are not 'consistent with' the
EPA's?
It is not sound public policy to at-
tempt to undermine the NRC's inde-
pendence by providing a needless op-
portunity for persons to contend that
this legislation requires the NRC to
conform its judgments to those of the
EPA to a greater degree than under
current law. I do not believe that this
language should be interpreted in this
manner, but, unfortunately, the lan-
guage does open up this question. It
will be harmful to public confidence in
this program - if there is any left after
this legislation is enacted • to provide
an opportunity to force the NRC to
conform its regulations to the findinp
of an agency that is a member of the
same executive branch that is at-
tempting to license this facility.
PUBLIC PARTICIPATION COULD BE SE-
VERELY CURTAILED
This legislation raises a host of
problems regarding how the public is
to participate in the contemplated
studies and rulemakings, I already
have mentioned there may be due
process concerns with proceeding to
determine site-specific issues, which
may involve adjudicative facts, outside
of the adjudicatory proceeding to
which affected persons are entitled. I
also have mentioned the applicability
ofFACAtotheNAS.
There are other issues that come to
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mind. I have not had time to fuljy
analyze them, eo I shall oiuy briefly
mention a few. One issue concerns
the role of the public in the EPA and
NRC rulemakings. If the EPA and
NRC must issue regulations based
upon and consistent with the findingi
and recommendations of the NAS,
then what is the purpose of notice and
comment in these rulemakings - is
notice and comment appropriate for
all of the issues raised by the proposed
regulations, or appropriate only for
the issue of whether the proposed
agency regulations are truly consis-
tent with the NAS findings and rec-
ommendations? To the extent it is the
latter, then there would be no oppor-
tunity for effective public notice and
comment on the substance of the
regulations, and thus may violate the
Administrative Procedure Act.
Another issue concerns the record
of these rulemakings for judicial re-
view. To the extent that either the
EPA or the NRC rely upon the NAS
findings and recommendations, and do
not develop an independent record,
those NAS findings and recommen-
dations will be subject to judicial re-
view as part of the the rulemaking
record. Hence, to the extent that the
NAS seeks to have its findings and
recommendations incorporated into
EPA or NRC regulations - a course
which I discourage - the NAS findings
and recommendations may have to be
able to withstand judicial review.
These are just a few of the public
participation issues that stand out. I
am confident that more will arise as
the EPA and NRC attempt to imple-
ment this.
PUBLIC TRUST
Mr. President, this is no way to run
a nuclear waste program, this is a
transparent attempt to rewrite the
public health and safety standards
governing nuclear waste disposal at
Yucca Mountain so that the Yucca
Mountain site will be able to pass
muster.
The standards for the WIPP site are
not being rewritten in this manner.
They are being rewritten like this only
at the Yucca Mountain site.
There were no hearings on this
proposal. Hardly anyone other than a
few a conferees on the Energy bill had
any knowledge or opportunity to com-
ment on this proposal prior to its
inclusion in the conference report.
The Nuclear Regulatory Commission,
the agency with the ultimate responsi-
bility for protecting the public health
and safety from nuclear wastes, has
not had enough time to analyze the
significant issues raised by this legisla-
tion. Mr. President, I ask unanimous
consent that the NRC's letter on this
legislation be printed in the Record.
At the conclusion of my remarks.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(See Exhibit 4).
Mr. GRAHAM. This approach will
destroy any remaining public confi-
dence in the integrity, fairness, and
trust worthiness of the Federal Gov-
ernment in carrying out its responsi-
bilities with respect to nuclear waste.
The message from this legislation is
simple: the federal government will do
anything, it will say anything, it wil
spend an unlimited amount of rate-
payer dollars, and it will make up the
rules as it goes along, including the
standards for the protection of the
public health and safety, in order to
find as quickly as possible a place to
dispose of or to store highly radio-
active level nuclear waste. Any State,
scientific viewpoint, fact, or law that
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becomes an obstacle to this objective
will be legislated out of the process.
I do not believe that this strong-arm
approach can succeed. We live in a
democracy, where the consent of the
governed and truth in government are
part of the foundation of the rule of
law. Even in a totalitarian state,
however, these tractics could not suc-
ceed. In the former Soviet Union,
following the Chernobyl accident the
credibility of the Soviet Government
on nuclear issues was so damaged that
public distrust and opposition prevent-
ed the siting of any new facilities. If
these tactics could not work in the
former Soviet Union, I doubt they can
work here.
At this time I would like to enter
into the Record the letter that Gov.
Mike Sullivan of Wyoming sent to the
Fremont County Commissioners re-
garding his decision to veto Fremont
County's request to proceed to Phase
Ha of the program to consider wheth-
er to locate a monitored retrievable
storage facility in Fremont County,
WY. The basic reason cited by Gover-
nor Sullivan in his decision to termi-
nate the study process was that he did
not trust the DOE or the Federal
Government. Here are some examples
of what the Governor said about the
credibility of the Federal Government:
(c) Can we take comfort from the
DOE record of nuclear facilities in the
West? I think not. Can we be assured
of continuing control or oversight of
such a facility? Last month the House
of Representatives voted to exempt
Yucca Mountain from state environ-
mental permitting because DOE con-
tended Nevada was not cooperative.
Unless the Supremacy clause of the
U.S. Constitution is changed, Con-
gress, for fiscal reasons or preemptive
reasons, can mandate new terms and
new controls as it deems expedient or
simply not accept the terms initially
negotiated.
(d) Can we trust the federal govern*
ment or the assurance of negotiation
to protect our citizens' interests? To
do so would disregard the geographic-
al voting power in Congress and 100
years of history and experience.
I am absolutely unpersuaded that
Wyoming can rely on the assurances
we receive from the federal govern-
ment.
I ask unanimous consent that the
Governor's letter be printed in the
Record at the conclusion of my re-
marks.
The PRESIDING OFFICER With-
out objection, it is so ordered.
(Sm exhibit 6).
Mr. GRAHAM. Today's actions
make Governor Sullivan's letter pro-
phetic. Unfortunately, this onjy will
reinforce the essential point of the
letter • that the States can't trust the
Federal Government when it comes to
nuclear waste disposal.
CONCLUSION
Mr. President, I support nuclear
power. I come from a State which has
used nuclear power extensively. I
come from a State which has had a
good experience with nuclear power.
I want to see nuclear power moved
in the direction that will allow it to
play a larger role in our energy fu-
ture. I believe that nuclear power is
one of the ways in which we can
achieve what I described in my earlier
remarks as the fundamental goal of a
national energy strategy, which is to
reduce our current level of reliance on
petroleum.
I believe, however, that fundamen-
tal to a resurrection of this industry is
a resurrection of public trust in this
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industry.
Therefore, I believe that this legisla-
tion which goes in the opposite direc-
tion by degrading public trust will
have a negative impact on the future
of nuclear as an energy source in this
Nation.
Unfortunately, section 801 of this
legislation will undermine rather than
bolster public confidence in the regu-
lation of nuclear power. It also will
make the nuclear waste disposal pro-
cess less credible and more difficult to
implement. It is a major mistake.
EXHIBIT 1
Nuclear Regulatory Commission,
Washington, DC,
August 18, 1992.
Hon. John D. Dingell, Chairman, Committee on
Energy and Commerce, House of Representatives,
Washington, DC.
Dear Mr. Chairman:
I am responding to your July 24, 1992 letter
requesting my comments on the June 25, 1992
Las Vegas Review-Journal article on the possibili-
ty of reducing costs of high-level waste repository
program activities at Yucca Mountain. I believe
that the article generally reflects the discussions
that took place during the June 24, 1992 briefing
by Dr. John Bartlett, Director of the Department
of Energy's (DOE's) Office of Civilian Radioac-
tive Waste Management. As an independent regu-
latory agency, the NRC is committed to ensuring
the protection of public health and safety while
avoiding new and eliminating existing require-
ments that may be either unnecessary or unnec-
essarily burdensome. As NRC has developed and
b implementing Part 60 of Title 10 of the Code
of Federal Regulations: 'Disposal of Radioactive
Wastes in Geologic Repositories' (10 CFR Part
60), we have continued to strive to meet these
objectives and to identify ambiguities and uncer-
tainties in these regulations that need to be clari-
fied. DOE has not identified any regulatory
requirements which have imposed an unneces-
sary coot burden.
During the June 24 briefing, the Commission
encouraged Dr. Bartlett to bring to our attention
proposals for cost cutting. Since the briefing, Dr.
Bartlett has not brought to our attention any
proposal for cutting costs at the Yucca Mountain
project. NRC stands ready to meet and discuss
any specific proposal that would allow DOE to
run a more efficient and effective repository pro-
gram consistent with ensuring the protection of
public health and safety.
I trust that this reply responds to your con-
esrns. If I can be of further assistance, please let
me know.
Sincerely,
Ivan Selin.
House of Representatives, Committee on Ener-
gy and Commerce,
Washington, DC,
July 24, 1992.
Hon. Ivan Selin, Chairman,
Nuclear Regulatory Commission, Washington,
DC.
Dear Chairman Selin:
I have enclosed a June 26, 1992 newspaper
article from the Las Vegas Review-Journal.
I would appreciate your comments on the arti-
cle and the suggestion in it that changes could be
made to the Nuclear Regulatory Commission's
regular procedures which would assist in reduc-
ing costs of the Yucca Mountain project.
I would also like to know of subsequent com-
munications you may have had with officials at
the Department of Energy on this issue.
With every good wish.
Sincerely,
John D. Dingell,
Chairman.
(From The Las Vegas Review-Journal, June 25,
1992)
DOE AIMS TO CUT COSTS OF NUKE DUMP
(by Tony Batt)
Washington. • The Energy Department still is
thinking out loud' about ways to reduce the
estimated $6.3 billion cost of licensing a nuclear
waste repository at Yucca Mountain, including
the possibility of storing waste at the site before
it is fully licensed, the program's director told the
Nuclear Regulatory Commission on Wednesday.
While the placement of nuclear waste at Yucca
Mountain before its projected opening in 2010
would require a special license from the NRC and
legislation from Congress, the department also is
considering cost-cutting options that would not
require special permission, said John Bartlett,
director of the Office of Civilian Radioactive
Waste Manage-ment.
He told regulators that project official are
weighing the idea of conducting fewer site tests
to back its license application, or placing nuclear
waste at a 'test evaluation facility' near Yucca
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Mountain but off the study site. Bartlett said ho
did not know how much money these measures
could save.
'What I want to emphasise is that there's
nothing new here/ Barilett told commissioners.
'We have for years been looking at contingencies,
alternatives for dealing with cost, dealing with
The department has suggested accepting ■
waste at Yucca Mountain and incorporating it
into studies of whether the site, 100 miles north-
west of Las Vegas, could safely store the highly
radioactive material for 10,000 years. Depart-
ment officials have not said how much waste
would be needed to speed its studies.
Discussion of cost-cutting options accelerated
after several senators at a March 81 hearing on
Capitol Hill expressed alarm about escalating
expenses, Barilett said.
Bartlett's comments drew a puzzled reaction
from NRC chairman Ivan Selin.
'I really am up in the air aa to what you're
thinking about and where it is that the NRC
would have to change its procedures,' Selin told
Barilett. 'Are you going to come to ua with some
quite different course of action or is this just sort
of thinking out loud?'
'It's really thinking out loud at this stage,'
Bartlett responded. 'We are not coming with any
proposed alternative course of action.'
Asked after the hearing if the NRC would be
willing to consider issuing a special license for
the early storage of nuclear waste at Yucca
Mountain, Selin said, 'I'm not going to answer
that until something is actually proposed. So fsr,
he (Bartlett) hssn't ssked us to do anything thst
would require us to change our procedures.'
Bartlett first discussed the possible early etor-
sge of nuclear waste at Yucca Mountain during
an address to s group of nuclear utility execu-
tives on Msy 6 in Washington.
At thst time, he said the Energy Department
hoped to decide within a few weeks whether to
pursue thst option. But he said Wednesday he
did not think the department would decide before
August.
Bartlett has said early storage of nuclear waste
at Yucca Mountain could save money by allowing
the Energy Department to more quickly collect
data for licensing reviews.
But NRC Commissioner Kenneth Rogers sug-
gested Wednesday early storage of nuclear waste
sway from Yucca Mountain would be preferable
because it could be done st s 'modest cost' with-
out triggering 'public concern issues which raise
the cost very, very high.'
Bartlett seemed cool to Rogers' sug
saying if the carry storage of waste occurs aft a
site away from Yucca Mountain, it probably could
not be located further away than Arizona.
'One of the issues in using a test evaluation
facility is how representative really is the dais,'
Bartlett said. 'If you're not in the same geology,
if you're not in the same formation, that's one of
the issues associated with that.'
On a related subject, Bartlett aaid the Energy
Department believea it is not obligated to take
possession of nuclear waste from power plants if
a temporary or permanent repository b not ready
by 1998.
However, Commissioner James Curtis* cited s
Sept. 7, 1984, letter from then Energy Secretary
Donald Hodel who said the department had inter-
preted federal law to require it to accept the
waste in 1998 even if it had no place to store it.
Selin also chided Barilett for blaming NRC
regulations for sky -rocketing costs in developing
the Yucca Mountain repository.
'You hsven't come to NRC and said you dis-
agree with the procedures,' Selin said. The De-
partment of Energy has not come up with sug-
gestions on how to reduce cost.'
Bartlett denied he hsd blamed the NRC for
escalating costs.
Carl Gertz, the Energy Department's site su-
pervisor st Yucca Mountain, told the emmmi— iian
thst recent drilling st the site revealed its geolo-
gy is more uniform than previously thought.
'This msy be simpler than we thought,' Gertz
said about the aite characterisation studies.
Gertz ssid 7 inches of rain this spring gave
Energy Department officials an opportunity to
monitor seepsgs of rainfall at Yucca Mountain.
He ssid preliminary studies showed the rain did
not go further down than 100 feet, snd the repos-
itory will be 1,000 feet below the mountain.
John Roberts, the Energy Department's acting
director of the Office of Systems snd Compliance,
told the commission Uiat erosion at Yucca Moun-
tain 'appears to be minimal.'
At the beginning of Wednesday's hss rings
Energy Department officials played ssgssenta of
Las Vegas television news broadcasts about a
June 16 news media tour of Yucca M^mliin
Bartlett and Gertz aaid local news media are
treating the Energy Department mora fairly.
EXHIBIT 2
RETHINKING HIGH-LEVEL RADIOACTIVE
WASTE DISPOSAL: A POSITION STATE-
MENT OF THE BOARD ON RADIOACTIVE
WASTE MANAGEMENT
(Commission on Geosdenees, Environment, and
Resources, National Rssssrch CmmriD
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Notion The project that is the subject of this
report was approved by the Governing Board of
the National Research Council, whose members
are drawn from the councils of the National
Academy of Sciences, the National Academy of
Engineering, and the Institute of Medicine. The
members of the committee responsible for the
report were chosen for their special competences
and with regard for appropriate balance.
This report has been reviewed by a group other
than the authors according to procedures ap-
proved by a Report Review Committee consisting
of members of the National Academy of Sciences,
tho National Academy of Engineering, and the
Institute of Medicine.
The National Academy of Sciences is a private,
nonprofit, self-perpetuating society of distin-
guished scholars engaged in scientific engineer-
ing research, dedicated to the furtherance of
science and technology and to their use for the
general welfare. Upon the authority of the char-
ter granted to it by the Congress in 1863, the
Academy has a mandate that requires it to advise
the federal government on scientific and techni-
cal matters. Dr. Frank Press is president of the
National Academy of Sciences.
The National Academy of Engineering was
established in 1964, under the charter of the
National Academy of Sciences, es a parallel orga-
nisation of outstanding members, sharing with
the National Academy of Sciences the responsibil-
ity for advising the federal government. The
National Academy of Engineering also sponsors
engineering programs aimed at meeting national
needs, encourages education and research, and
recognises the superior achievements of engi-
neers. Dr. Robert M. White is president of the
National Academy of Engineering.
The Institute of Medicine was established in
1970 by the National Academy of Sciences to
secure the services of eminent members of the
appropriate professions in the examination of
policy matters pertaining to the health of the
public The Institute acts under the responsibili-
ty given to the National Academy of Sciences by
its congressional charter to be an adviser to the
federal government and, upon its own initiative,
to identify issues of medical care, research, and
education. Dr. Samuel O. Thier is president of
the Institute of Medicine.
The National Research Council was organised
by the National Academy of Sciences in 1916 to
associate the broad community of ecience and
technology with the Academy's purposes of fur-
thering knowledge and advising the federal gov-
ernment. Functioning in accordance with gener-
al policies determined by the Academy, the Coun-
cil has become the principal operating agency of
both the National Academy of Sciences and the
National Academy of Engineering in providing
services to the government, the public, and the
scientific and engineering communities. The
Council is administered jointly by both Academies
and the Institute of Medicine. Dr. Frank Press
and Dr. Robert M. White are chairman and vice
chairman, respectively, of the National Research
Council.
The material summarised in this report was
the product of a July 1968 retreat sponsored by
the Board on Radioactive Waste Management and
was supported by the U.S. Department of Energy
under Contract No. DE-AC01-66DP480S9.
ABSTRACT
There is s worldwide scientific consensus that
deep geological disposal, the approach being fol-
lowed in the United Statee, is the best option for
disposing of high-level radioactive waste (HLV).
There is no scientific or technical reason to think
that a satisfactory geological repository cannot be
built. Nevertheless, the U.S. program, aa con-
ceived and implemented over the peat decade, is
unlikely to succeed.
For reasons rooted in the public's concern over
safety and in the implementing and regulatory
agencies' need for political credibility, the UA
waste disposal program is characterised by a high
degree of inflexibility with respect to both eched-
ule and technical opacifications. The current
approach, in which every step is mandated in
detail in advance, does have several advantages:
It facilitstes rigorous oversight and technical
auditing;
Its goals and standards are clear;
It is designed to create a sense of confidence in
the planning and operation of the repository; and
If carried out according to specifications, it is
robust in the face of administrative or legal chal-
lenge.
This approach is poorly matched to the techni-
cal task at hand. It assumes that the properties
and future behavior of a geologic repository can
be determined and specified with a very high
degree of certainty. In reality, however, the in-
herent variability of the geological environ-ment
will necessitate frequent changes in the specifica-
tions, with resultant delays, frustration, and loss
of public confidence. The current program b not
sufficiently flexible or exploratory to accommo-
date such changes.
The Board on Radioactive Waste Management
is particularly concerned that geological models,
ami indeed scientific knowledge generally, have
been inappropriately applied. Computer modeling
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techniques and geophysical analysis can and
should have a ksy role in the assessment of
long-term repository isolation. In the face of
public concerns about safety v however, geophysi-
cal models are being asked to predict he detailed
structure and behavior of sites over thousands of
years. The Board believes that this is scientifi-
cally unsound and will lead to bad engineering
practice.
The United States appears to be the only coun-
try to have taken the approach of writing detailed
regulations before all of the data are in. As a
result, the U.S. program is bound by require-
ments that may be impossible to meet. The
Board believes, however, that enough has been
learned to formulate an approach that can suc-
ceed. This alternative approach emphasises flexi-
bility: time to assess performance and a willing-
ness to respond to problems as they mn found,
remediation if things do not turn out as planned,
and revision of the design and regulations if they
are found to impede progress toward the health
goal already defined as ssfe disposal. To succeed,
however, this alternative approach will require
significant changes in laws and regulations, as
well as in program management.
SUMMARY
Since 1955, the National Research Council
(NRC) haa been adviaing the US. government on
technical matters related to the management of
radioactive waste. Today, this advice ia provided
by the Board on Radioactive Waste Management
(BRWM or 'the Board'), a permanent committee
of the NRC. The conclusions presented in this
position statement are the result of several years
of discussions within the Board, whose members
possase decadea of professional experience in
relevant scientific end technical fields.
In July 1068, the Board convened a week-long
study session in Santa Barbara, California, where
experts from the United States and abroad joined
BRWM in intensive discussions of current VS.
policies and programs for high-level radioactive
waste management. The group divided its deliber-
ations into four categories: (1) the limitations of
analysis; (2) moral and value issues; (3) modeling
and its validity; and (4) strategic planning. A
summary of the findings of these discussions,
from which this position statement has been
developed, follows the Summary.
CURRENT VS. POLICY AND PROGRAM
In the Nuclear Waste Policy Act of I9S2
(NWPA), Congress assigned responsibility to the
Department of Energy (DOE) for designing and
eventually operating a deep geological repository
for high-level radioactive waste (HLW). The re-
pository must be licensed by the UJS. Nudeer
Regulatory Commission (U8NRC) and ■
radionuclide release limits, based on a j
repository, that would result in less than 1000
deaths in 10,000 years as specified in a Standard
established by the Environmental Protection
Agency (EPA) (40 CFR 101).
The VS. program is unique among those of all
nations in its rigid schedule, in ite insistence on
defining in advenes the technical requirements
for every part of the multibarrier system, and in
its major emphasis on the geologirel component
of the barrier as detailed in 10 CFR 60. Beeauss
one ia predicting the fate of the HLW into the
distant future, the undertaking is necesearir/ full
of uncertainties. In thie sense the government's
HLW program and ite regulation may be a 'seism-
tifie trap' for DOE and tho VS. public alike,
encouraging the public to expect absolute certain-
ty about the safety of the repository for 10.000
years and encouraging DOE program managers
to pretend that they can provide it.
For historical and institutional reasons, DOE
msnsgers tend to feel compelled to do things
perfectly the first time, rather than to make
changes in concept end design as unexpected
geological features are encountered and as scien-
tific understanding develops. This 'perfect
knowledge' approach ia unrealistic, given tbs
inherent uncertainties of this unprecedented
undertaking, and it rune the risk of encountering
'show-stopping' pmhlsms and delays that could
lead to a further deterioration of public and sci-
entific trust. Today, because of the regulatory
requirements and the way the program b being
carried out, VS. policy has not led to satisfactory
piugicos on the problem of radioactive wests
SCIENTIFIC CONSENSUS ON GEOLOGICAL
ISOLATION
There iaa strong worldwide oonseneue that the
best, safest long-term option for
HLW is geological isolation,
should be put into speetelry i
n cared facilities underground, where the local
geology and groundwater conditions have keen
chosen to ensure isolstion of the waste for tens
of thousands of years or longer, and where %
materials will migrate very alowfy if Ussy <
into contact with the rock.
Although the scientific community hen
confidence that the general strategy of |
isolation b the best one to pursue, t
are formidable. In.
amounts to building a mine in which *csV wall be
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put back into the ground rather than taken out.
Mining; however, has been and remains funda-
mentally an exploratory activity: because our
ability to predict rock conditions in advance is
limited, miners often encounter surprises. Over
the years, mining engineers have developed
methods to deal with the vagsries of geological
environments, so that mineral extraction and
construction can continue safely even when the
conditions encountered are different from those
anticipated.
It is at this point that geological isolation of
radioactive waste differs in an important sense
from mining. In the United States, radioactive
waste management is a tightly regulated activity,
surrounded by laws and regulations, criteria and
standards. Some of these rules call for detailed
predictions of the behavior of the rock for the
tens of thousands of years that the radioactive
materials are to be isolated.
Preparing quantitative predictions so far into
the future stretches the limits of our understand-
ing of geology, groundwater chemistry and move-
ment, and their interactions with the emplaced
material (radioactive waste package, backfill,
sealants, and so forth). Although the basic scien-
tific principles are well known, quantitative esti-
mates (no matter how they are obtained) must
rery on many assumptions. As a consequence,
the resulting estimates are uncertain to some
degree, and they will remain uncertain no matter
bow much additional information is gathered.
TREATMENT OF UNCERTAINTY
The character and implications of these uncer-
tainties must be clearly understood by political
leaders, program managers, and the concerned
public. Engineers and scientists, no matter how
experienced or well trained, are unable to antici-
pate all of the potential problems that might arise
in trying to site, build, and operate a repository.
Nor can science 'prove' (in any absolute sense)
that a repository will be 'safe' as defined by EPA
standards and USNRC regulations. This is so for
two reasons.
First, proof in the conventional sense cannot
be available until we have experience with the
behavior of an engineered repository system -
precisely what we are trying to predict. The
existence of uncertainties has prompted efforts to
improve the technical snslysis, but there will
alwsys remain some residual uncertainty. It is
important to recognize, however, that uncertainty
does not necessarily mean that the risks are
significant. What it does mean is that a range of
results are possible, and a successful manage-
ment plan must accommodate residual uncertain-
ties and still provide reasonable assurance of
safety.
Second, safety is in part a social judgment, not
just a technical one. How safe is safe enough? Is
it safer to leave the waste where it Is, mostly at
reactor sites, or to put it in an underground
repository? In either esse safety cannot be 100
percent guaranteed. Technical analyses can pro-
vide background for answering such questions,
but ultimately the answers depend on choices
made by the citizens of a democratic society. The
EPA has not based its standards (which must
allow for these choices by the citizenry) on social
judgments derived from realistic consideration of
these alternatives. Both of these important limi-
tations of the snslysis have been understated.
The federal government must provide full pub-
lic accountability aa information about the risks
changes with experience. This is not an impossi-
ble task: government and business make deci-
sions every day undsr similar conditions of tin-
certainty. But a policy that promises to antici-
pate every conceivable problem, or assumes that
science will shortly provide all the answers, is
bound to fail.
The public hss been told too often that abso-
lute guarantees can be provided, but most citi-
zens watching ths human frailties of their gov-
ernments and technologists know better. A real-
istic • and attainable • goal is to assure the public
that the likelihood of serious unforeseen events
(serious enough to cause catastrophic failure in
the long term) is minimal, and that ths conse-
quences of such events will be limited. These
assurances rest on ths credible application of
general principles, rather than a reliance on
detailed predictions.
MODELING OF GEOLOGICAL PROCESSES
The current VS. approach to developing a
geological repository (with a mandated
10,000-year lifetime) for radioactive waste is
bssed on a regulatory philosophy that was devel-
oped from the licensing of nuclear power plants
(which have s nominal 40-year lifetime). The
geological medium, however, cannot be specified
in advance to the degree possible for man-made
components, such »m valves or electronic instru-
ments, nor can it be tested over its projected
lifetime um can many man -mads components.
Commercial mining and underground construc-
tion both operate on the sound principle of 'de-
sign (and improve ths design) as you go.' Ths
inherent variability of the geological environment
necessitstes changes in spsctfieations as experi-
ence increases. If that reality b not scknowl-
there will be unforeseen delsys, rising
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costs, frustration among field personnel, and loss
of public confidence in the sits and in tho pro-
Models of the repository system ere useful,
indeed indispensable. The computerised sisths
matical models that describe the geological struc-
ture and hydrologies! behavior of the rock are
needed to manage the complex calculations that
are necessary to evaluate a proposed sits. Models
are vital for two purposes: (1) to understand the
history and present characteristics of the sits;
and (2) to predict its possibls future behavior.
Putting the available data into a coherent concep-
tual framework should focus attention on the
kinds of uncertainty that persist. For example,
the modeling of groundwater flow through frac-
tured rock lies st the heart of understanding
whether end how a repository in herd rock will
perform its essential task of isolating radioactive
materials. The studies done over the pest two
decades have led to the realization that the phe-
nomena are mors complicated than had been
thought. Rather than decreasing our uncertain-
ty, this line of research has increased the number
of ways in which we know that we sre uncertain.
This does not mean that science has failed: we
hsve learned a great deal about thess phenome-
na. But it is s commonplace of human experi-
ence that increased knowledge can lead to greater
humility about one's ability to fully undsrstsnd
the phenomena involved.
Uncertainty is treated inappropriately in the
simulation models used to describe the charac-
teristics of the waste repository. As the quantity
of information about natural geological settings
grows, so too does our appreciation of their vari-
ability and unpredictability. This distinction has
often been ignored. Indeed, the very existence of
large dstsbsses and sophisticated computer mod-
els suggests, erroneously, thst it is appropriate to
design s geological repository um if it were s nu-
clear power plant or jet airliner, both of which
have predictable attributea over their short life-
times. Thst assumption of accurate predictability
will continue to produce frustration and failure.
Under the present program models sre being
ssked to provide snswers to questions thst they
were not designed to address. One scientifically
sound objective of geological modeling is to learn,
over time, how to achieve reasonable assurance
about the long-term isolation of radioactive
waste. Thst objective is profoundly different
from predicting quantitatively the long-term
behavior of a repository. Yet, in the face of pub-
lic concerns shout the safety of HLW disposal, it
is the letter use to which models have been put
The Board believes thst this use of geological
inJbrmation snd analytical tools - to pretend tees
sbls to make very accurate predict tone of
long term sits behavior • is scientifically un-
sound. Its conclusion is bssed on detailed re-
views of the methods used by the DOE snd Iks
regulatory sgendes in implementing the NWPA.
Well-known geophysical principles can be used
te estimate or to set bounds on the behavior of a
sits, so that its liksry suitability ss a waste repos-
itory can be evaluated. But it is inappropriate to
stretch the still- incomplete underatsnding of s
sits into a quantitative projection of whether s
repository will be safe if constructed and operated
these. Onry after a detailed and costry exaamina-
Uon of the site itself can an informed judgment
be reached, and even then there will still be un-
certain tiee.
Many of the uncertainties associated with s
csndidsts repository sits will be technically inter-
esting but irrelevant to overall repository perfor-
mance. Further, the issues that are snalytieauy
trsetsbls sre not necessarily the most important
The key task for performance modeling b to
separata the significant uncertainties and risks
from the trivial. Similarly, when there are tech-
nical disputes over chsrscteristks snd prnnsssm
thst affect calculations of wests transport, sensi-
tivity analysis with alternative models snd pa-
rameters can indicate where further analysis snd
date are required and where enough is known to
move on to other eoncerne.
It may even turn out to be appropriate to delay
permanent closure of a waste repository until
sdequsts occurences concerning its
behavior can be obtained through <
in-site geological studies. Judgments of whether
enough is known to proceed with placement of
waste in a repository will be needed throughout
the life of the project. But tho
should be bssed on s comparison of i
sltsrnetives, rather than a simplistic debate over
whether, given current uncertainties, a reposito-
ry site is We/ Even while the detailed,
long-term behavior of an underground repository
is still bring studied, it may be marginally safer
to go ahead and store reactor waste there (ins
way that permits retrieve! if neesssnry), i
than leaving it at reactors.
As a rule, the values determined frees i
should onry be used for comparative |
Confidence in the disposal techniques must s
nt natural analogues (see below), snd
the possibility of remedial action in the event of
unforeseen events. There may be political pres-
sure on implementing sgsneies to proviso sese-
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luU guarantees, but * mora realistic • and attain-
able - goal is to mun Um public that Um likeli-
hood of unforeseen events ie minimal, and that
the magnitude of the eoneequenoat of eueh
events is limited. Such an alternative approach,
now being used in Canada and Sweden, promisee
to be far more successful in achieving a safe and
practical i
is to discover what is there.
Instead of pursuing an ever-receding mirage, it
is sensible to pursue an empirical exploratory
approach: one that emphasixes fairness in the
pro reei while seeking outcomes that the affected
populations judge to be equitable in light of their
own values. This is not an easy course, but it is
If ORAL AND ETHICAL QUESTIONS
Radioactive waste posts hazards that raise
moral and ethical concerns. Fust, some of the
radioactivity lasts for extremely long periods of
time - the EPA standard for HLW calls for isola-
tion of the wests for 10,000 years and more, a
time longer than recorded human history. Sec-
ond, the risks of high-level waste will be concen-
trated at a very few geological repositories. The
neighbors of proposed waste repositories have
understandably been alarmed at the prospect of
hosting large quantities of a material that needs
to be handled with great care. Ethical studies in
this area underscore two points: (1) the central
role of fair process; and (2) the pervasive problem
of promising more certainty than can be deliv-
ered.
The need for e fair process is simply stated:
people feel threatened by radioactive waste; and
they deserve to be taken seriously in the
decision- making process. The sense of threat is
often ill informed, in e narrow technical sense;
but when that occurs, it is the duty of technical
experts and program managers to provide infor-
mation and employ analyses that will be credible
to the affected populations. Only with valid
information that they believe csn those affected
parties negotiate equitablesolutions. The primary
goal of the program is to provide safe disposal; s
secondary goal is to provide it without any gross
unfairness. Ass result, the mechanisms of nego-
tiation, persuasion, and compensation are funda-
mental parts of any program to manage and dis-
pose of radioactive waste • not mere procedural
hoops through which program managers must
jump.
The second ethical point is also important: the
demand for accountability in our political system
has fostered e tendency to promise e degree of
certainty that cannot be realised. Pursuing that
illusory certainty drives up costs without deliver-
ing the results promised or comparable benefits.
The consequence is frustration and mistrust.
For example, it is politically costly to admit that
one has been surprised in exploring sites being
considered for HLW repositories. Yet, this situa-
tion is self-defeating: surprises are bound to
occur because s principal reason for exploration
AN ALTERNATIVE APPROACH
There are scientific reasons to think that a
satisfactory HLW repository can be built and
licensed. But for the reasons described earlier,
the current VS. program seems unlikely to
achieve that desirable goal. The Board proposes
an alternative approach that is build on
well-defined goals and objectives, utilises estab-
lished scientific principles, and can be achieved in
stages with appropriate review by regulatory and
oversight bodies and with demonstrated manage-
ment capabilities. The Board suggests an institu-
tional approach that is more flexible and experi-
mental - in other words, a strategy that acknowl-
edges the following premises:
Surprises are inevitable in the course of inves-
tigating any proposed site, and things are bound
to go wrong on e minor scale in the development
of e repository.
If the repository design csn be changed in re-
eponse to new information, minor problems can
be fixed without affecting safety and major prob-
lems, if any appear, can be remedied before dam-
age is done to the environment or to public
health.
This flexible approach can be summarized in
three principles:
Start with the simplest description of what is
known, so that the largest and most significant
uncertainties can be identified early in the pro-
gram and given priority attention.
Meet problems ss they emerge, instead of try-
ing to anticipate in advance all the complexities
of s natural geological environment.
Define the goal broadly in ultimate perfor-
mance terms, rather than immediate require-
ments, so that increased knowledge can be incor-
porated in the design st s specific site.
In short, this approach uses s scientific ep-
proach and employs modeling tools to identify
areas where more information is needed, rather
than to justify decisions that have already been
made on the basis of limited knowledge.
The principal virtue of thie strategy is that it
would use science in the proper fashion. It
would be similar to the strategies now being
followed in Canada and Sweden, where the explo-
ration and construction of an underground test
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laboratory and a shallow underground low-level
waata rapositoiy have followed a flexible path. At
each etep, information and understanding devel-
oped during the prior stages are combined with
experience from other underground construction
projects, in order to modify designs and proce-
dures in light of the growing stock of knowledge.
During operation* and alter closure of the facili-
ties, the emphasis will be on monitoring and
assuring the capability to remedy unforeseen
problems. In that way, the possibility is mini-
mized that unplanned or unexpected events will
compromise the integrity of the facility.
This flexible approach has more in common
with research and underground exploration than
with conventional engineering practice. The idea
is to draw on natural analogues, integrate new
data into the expert judgments of geologists and
engineers, and take advantage of favorable sur-
prises or compensate for unfavorable ones.
Natural analogues - geological settings in
which naturally occurring radioactive materials
have been aubjected to environmental forces for
millions of years - demonstrate the action of
transport processes like thoss that will affect the
release of man-made radionuclides from s reposi-
tory in a similar setting. Where there is scientific
agreement that the analogy applies, this approach
provides e check on performance assessment
methodology and may be more meaningful than
sophisticated numerical predictions to the lay
public
A second element is to use professional judg-
ment of technical experts ss an input to modeling
in areas where there is uncertainty as to parame-
ters, structures, or even future events. Such
judgments, which msy differ from thoss of DOE
program managers, should be incorporated early
in the process; s model created in this way might
redirect the DOE program substantially.
The large number of underground construction
projects that have been completed successfully
around the world are evidence that this approach
works well. Implicit in this approach, however,
is the nssd to revise the program schedule, the
repository design, and the performance criteria ss
more information is obtained. Putting such an
approach into effect would require major changes
in the way Congress, the regulatory agencies, and
DOE conduct their business.
THE RISK OF FAILING TO ACT
Given the history of radioactive i
ment in the United States, s likely alternative is
that the program will continue as at present.
That would leave the nation's inventory of
high-level waste, indefinitely, where it is now:
mostly at reactor sites at or near the earth's
surface. By the year 2000 spent fuel is expected
to contain more than 6x 10 W curies, while High
Level Waste is expected to contain another 10 *
curies.* This alternative is safe in the short term
- on-site storage systems are safe for at least 100
years, according to present evidence.** The
st surface alternative may be irresponsible for
the long run, however, due to the uncertainties
sesoristed with maintaining safe institutional
control over HLW si or near the surface for cen-
turies.
•Footnotes at end of article.
In judging disposal options, therefore, H is
ssssntiil to bear in mind that the comparison is
not so much between ideal systems and imperfect
reality ss it is between s geologic repository and
at-eurfece storage. From that standpoint, both
technical experts and the general public would be
reassured by e conservative engineering approach
toward long-term safety, combined with an insti-
tutional structure designed to permit flexibility
and remediation.
INTRODUCTION THE ORIGINS AND PUR-
POSE OF THIS DOCUMENT
Since 1066, the National Research Council
(NRQ has been advising the VS. government on
technical matters releted to the management of
radioactive waste. Today, such review and advios
is rendered by the Board of Radioactive Waste
Manaanmont (BRWM or *tha Board*), a perma-
nent committee of the Notional Research Coun-
cil. Over the past quarter century, the BRWM
and Hs predecessors have acted ss observer, crit-
ic, and advissr to the federal agencies responsible
for the management of radioactive waste. In
1066, the National Research Council's Committee
on Earth Sciences, ths forerunner of the BRWM.
first examined the problem of high-level radioes
ti ve wests (HLW) and recommended the strategy
of isolatioo in stable geological formations. That
beak approach io the one still being pursued la
the United States snd throughout the world. In
1086, the Board published ths report of its Wssts
Isolstion Systems Panel, a technical document
that supported the use of 'performance ssssss-
msnt' This method, first employed by the
Karnbrsnslsssksrhst (KBS) in Sweden forjudg-
ing the performance of high-level wssts and Its
packaging in geologies] formations, makes H
possibls to evaluate the ability of a repository to
i for ths vsry long term. Parlor
nt has become the keystone of
the policies and regulations guiding the p1— *Hng
of HLW disposal in ths United Stetes ss well as
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Thus far,
earrisd out by government and industry in the
UniUd Statea have not fed to a socially estisfsc-
toty resolution of ths problem of HLW msnsejs-
msnt and disposal. Than are two reasons for
this future.
The first is ths controversy over nuclear ener-
gy and radioactive waste disposal as part of nu-
clear energy development. The Board takes no
position on ths use of nucfesr energy. However,
it notes that even if nucfesr power in this coun-
try were discontinued tomorrow - a highly un-
likely event - we would still need to dispose of
nucfesr waste from existing power plants and
defenss programs, and we would therefore still
require s visbfe HLW disposal program.
The second reason that radioactive wsste man-
agsmsnt remains in trouble is ths way in which
the programs have been designed snd carried out.
That problem is the subjsct of this report: ths
Board believes that important sdsntific snd tech-
nics! issues concerning HLW hsvs been widely
misunderstood; the result is s sst of programs
that will not achieve their atated gosis. Neither
the technical nor the socisl problems of ths wsste
materials already in existence are being handled
effectively. The Board beiievee that the ssfs snd
effective isolstion of radioactive waate ia fessibls.
Improvements to what is now being done ere
described below.
These conclusions are the result of several
years of discussions within ths Board snd ere
bssed on ths decades of scientific snd profession-
si experience represented among ths members of
the BRWM. In July 1986 ths Board convened e
week-long study session in Sent* Barbara, Cali-
fornia, where ths Board waa joined by experta
from the United Statea and abroad. The group
divided ite deliberationa into four categories: (1)
ths limitation of analysis; (2) moral snd value
issuee; (3) modeling and its validity; and (4) stra-
tegic planning. These cetegoriee also determine
the structure of this position statement, although
in the analysis here, ss in ths reel world, there is
no easy separation among them.
Although this position ststsmsnt is critical of
present policies, it must be smphssixsd thst ths
changes thst need to be made are not restricted
to the UJS. government. The nsturs of ths risks
snd ths government's responsibility to sddrsss
them need to be presented snd understood in
terms different from those reflected in todsy's
public policy. Doing so will not feed to less safsty
but to more. Yet achieving that result will re-
quire courage on the part of leaders in govern-
ment snd industry, ss well ss s willingness to
rethink risks among ths public st large and in
the interest groups concerned with public policies
for ths management of riak.
Tbeee questions touch on fsr mors than radio-
active wests, snd ths rethinking they imply will
be difficult to launch and to sustain. The Board
believes, however, thst this rethinking is ssssn-
tisl snd that radioactive waate management is s
reasonable place to begin. This position statement
ia a step in that direction.
HIGH-LEVEL WASTE IN CONTEXT
At present, approximately 17 percent of the
world's electricity b derived from about 400 nu-
clear power planta, although ths percentage ia aa
high aa 70 percent in Francs snd 50 percent in
Sweden. The chsllenge of HLW disposal is domi-
nsted by the spent fuel from these nucfesr power
planta. Each 1,000-megawatt (MWE) nuclear
power plant produces seen yssr about SO tone of
spent fuel, which if reprocessed snd vitrified
could be reduced to between 4 snd 1 1 cubic me-
ters (mS) of highly radioactive glass. Some coun-
tries, including ths United Statea, have chosen to
dispose of commercial spent fuel directly. Each
power plant also produces some 400 mS of
short-lived, low-level wests (LLW) each year.
Fuel production would leave another 86,000 tone
of mill tailings on the earth 'a surface for each
reactor, per year.
RADIOACTIVE WASTE MANAGEMENT POL-
ICY
Because HLW must be isolated from the living
environment for 10,000 years or mors, all nations
faced with the tesk of radioactive wsste disposal
hsvs chosen underground repositories ss ths
bssic technical approach. In the United States,
the Department of Energy (DOE) haa been given
ths task of designing snd eventuelly operating
such a repository. Before operations begin, how-
ever, DOE must demonstrate to the VS. Nuclear
Regulatory Commission (USNRC) thst ths repos-
itory will perform to standarde established by the
US. Environmental Protection Agency (EPA)
thst limit ths releese of radionuclides to specific
levels for 10,000 years after disposal. Before ths
USNRC will grant a license to operate s reposito-
ry, DOE must present convincing dsts snd analy-
sis to the USNRC showing thst ths proposed
fsdlity can meet specified releese limits.
To develop such an assessmsnt, it is i
to examine all credible possibilitfes for ths i
msnt of radionuclides from ths repository snd
into ths accessibls environment. In conducting
these analysee, DOE has relied heavily on build-
ing computer models of the repository snd sur-
rounding geological environment, along with
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possible pathways of radionuclide transport.
However, preparing quantitativa prediction* ao
far into tha future puahea the boundaries of our
understanding of geology, groundwater chemistry
and movement, and their interactions with the
emplaned material (radioactive waste package,
badLTilJ, sealants, and so on). Although the basic
scientific principles are well known, quantitative
estimates (no matter how they are obtained)
must rerjr on many assumptions. The resulting
estimates cover e range of outcomes.
While continued scientific investigations
should reduce the uncertainty, absolute certainty
cannot bo achieved. Indeed, e major theme of
this position statement b the need for public
policy to benefit from, and change in response to,
accumulating experience.
FINDINGS THE LIMITATIONS OF ANALY-
SIS OVERVIEW
Engine rs are unable to anticipate all of the
potential problems that might arias in trying to
site, build, and operate e repository. Nor can
science prove that a repository will bs absolutely
'safe.' This is so for two reasons. First, proof in
the conventional sense cannot bo availeble until
we have experience with the behavior of an engi-
neered repository system • precisely what we are
trying to predict ahead of time. And second,
safety is in part a social judgment, not just s
technical one. While technical analysis can
greatly illuminate the judgment of whether e
repository is safe, technical analysis alone cannot
substitute for decisions about the degree of risk
that is acceptable. These decisions belong to the
citizenry of a democratic society. Both of these
important limitations of technical analysis hsve
been understated, a lapse that feeda the concern
and magnifies the public's distrust of nuclear
waste management when these limitations are
pointed out by the program's critics.
UNCERTAINTY AND SIGNIFICANT RISKS
A principal source of concern over the UA
program is the uncertainty in estimating the
risks from a radioactive waste repository. Tech-
nical approaches are available to reduce or et
least bound these uncertainties. Yet in focusing
on ways to improvs the analysis, public discus-
sion has often overlooked e more important ques-
tion: whether the uncertainty matters. This is,
in principle, the domain of performance assess-
ment, which draws together the different por-
tions ofthe technical anarysis so that one can see
which parts of the waste confinement system
may pose environmental haiards during or after
the time when the repository receives waste.
at of a rspoajtoty system
is necessarily e task for computer modeling. Ties
waste management ■ystoss, which starts at tha
reactor and continues into the distant future of
s sMlad repository, includes many different parts
and proceeeei that are described through differ-
ent Undo of data (with different levela of quali-
ty), and different kinds of analysis (with different
level of accuracy). It b a practical eonsiqusnai
ofthec<«iplexityofHLWdiepoeai,toex4herwith
the fact that no one has over operated a reposite
■ry, that performance ssssssmant ie, in the end, a
matter of technical judgment.
The traditional approach in such cases, where
an important social decision hinges on uncertain
scientific data and projections, is to inform tha
political decision through a consensus of the
appropriate technical community. Such consen-
sus is difficult to reach in this case, however,
given the political controversy, conflicting value
systems, and overlapping technical spscisltiss
involved in assessing repository performance.
Indeed, the allowable residual risk aaooriitod
with a permissible repository site is a political
choice; EPA kiss taken the position that the im-
plementation of their guidelines constitutes the
exerciee of thie choice. Unfortunately, the num-
ber end magnitude of the uncertainties in the
probabilistic approach may be expected to reintro-
duce political controversy. This wss reoogniied
by the High-Lsvsl Radioactive Waste Dicposel
Subcommittee of EPA'e Science Advisory Board
in their January 19*4 report reviewing EPA
Draft Standard 40 CFR 191. That i
concluded there wee 'insufficient basis fori
ing with the EPA staff thet the |
criterion with its probabiliatic corollary can be
demonstrated to have been met with reasonable
assurance, end that this could be argued defini-
tively in a legal setting.'
The subcommittee strongly affirmed tha validi-
ty of EPA'e probabilistic spproach, hut warned
that 'if EPA cannot have high confidence in the
adequacy and workability of a quantitative,
probabilistic standard, (it ahould) use qualitative
criteria, euch as recommended by (the US) NHC.'
Specifically, with regard to the first major topee
of the Science Advisory Board's finding* and
recommendations, 'Uncertainty and the Stan-
dard,' the subcommittee recommended ralsiing
the nuclide relssss limits by a factor of 10, modi-
fying the probabilistic relssss criteria so that
'analysis of repository performance shall dsmom-
strate that there is less than a 60% chance of
exceeding the Teble 2 releess limits, modified as
is appropriete. Events whose msdisn ftsqussjnj
is less then one in one-thousand in 10,000 years
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I not be considered/ and, floaty 'that uae of
a quantitative probeJbilletic condition on the mod-
ified Table 2 raleaaa limite be made dapandant on
EPA'e ability to provide convincing evidence that
eueh a condition ia practical to meet and will not
lead to oariouc impedimenta, legal or otherwiee,
to the liconoing of high-level-waste geologic re-
positories. If auch evidence cannot be provided,
we recommend that EPA adopt qualitative crite-
ria, auch aa those suggested by the (US)NRC. *
»
Unfortunately none of these recommendations
was adopted.
The USNRC atalT, in commenting on the EPA
Draft Standard, strongly questioned the work-
ability of quantitative probabilistic requirements
for the defined releases stating; in part 'numeri-
cal astimstea of the probabilities or frequencies of
some future events may not be meaningful. The
(US)NRC considers that identification and evalu-
ation of auch eventa and processes will require
considerable judgment and therefore will not be
amenable to quantification by statistical analyses
without the inclusion of very broad ranges of
uncertainty. These uncertainty ranges will make
it difficult, if not impossible, to combine the prob-
sbtlities of such events with enough precision to
make a meaningful contribution to a licensing
proceeding. '
The problem is compounded when the adequa-
cy of the performance assessment - to determine
if the allowable residual riak ia achieved - ia
judged by its political impact (i.e., the effect of
reopening the discussion on what is allowable
residual risk) ss well es its technical accuracy.
The difficulty of evaluating performance as-
sessments is compounded by the feet that there
is no actus! experience in the disposal of HLW on
which to bass estimates of the riak. Some risk
sconsrios include low-probebility/high-conse-
quencs events. Others are based on explicit or
implicit assumptions thst cannot bs plausibly
proved or disproved • for example, the conse-
quences of climatic changes that could incresse
rainfall and groundwster flows st s repository
site. The data and methodologies for modeling of
repository isolation performance are still under
development.
The actual performance of e repository is diffi-
cult to predict for many reasons. Geologists
often disagree about the interpretation of data in
analyzing the history of s sits or geological struc-
ture. Long-term predictions are even more un-
certain. Releases may occur thousands of years
in the future, end they are likely to be diffuse
and hard to detect. The potential for (and effects
of) human exposure will be further shaped by
unpredictable changes in demographics and tech-
These uncertainties do not necessarily mean
that the risks ere significant, nor that the public
should reject eflbrta to aite the repository. Esth-
er, they simply mean that there are certain irre-
ducible uncertainties ebout future risk. An es-
sential part of any successful management plan
is how to operate with Urge residual uncertain-
ties, and how to maintain full public accountabili-
ty as information about the risks changes with
experience. Thie is not an impossible task: public
policy is made every dey under these conditions,
and private firms undertake all aorta of activities
in the face of uncertainty.
What ia dear, however, ia that e management
plan that promises that very problem hea been
anticipated, or easumea that science will provide
all the answers, is almost certainly doomed to
fail. There heve been many esses where ettsmpts
to understate uncertainly heve damaged an
agency's credibility and subverted its mission.
For this reeson, experienced regulatory agencies
like EPA now pay careful ettention to describing
the uncertainties associated with their riak aa-
PERCEPTIONS OF RISK
Studies heve linked the high public perceptions
of the risk from nuclear power phuita to certain
qualities of thst risk, in particular to peroaptiona
that the risks ere catastrophic, new, uncertain,
and involuntary (i.e., beyond individual control).
Radioactive wests posts risks with many of the
same technical characteristics: the principal
health risks (chiefly cancer and genetic defects)
originate in the haxards of ionising radiation.
The risks from radioactive waste also have some
of the same eocial characteristics ss risks from
nuclear reactors: a long time may pass before the
haxards become apparent, dangers may be im-
posed involuntarily on populations, and there ia
a perceived possibility of catastrophe. The last
perception, in particular, Is qualitatively incorrect
for HLW, since radioactive waste materiala heve
far lower energy levda in eompariaon to those of
reactors, thereby limiting the riak associated with
HLW to much lower levela in virtually all acci-
dent scenarios.
Given the complexity of the potential risks
from HLW, most people will transfer the judg-
ment of the aafety of geologic disposal to the
experts. The key question is which experts they
will listen to. The answer dependa on who seems
more trustworthy: dtizene may have little experi-
ence with radioactive waste, but they have con-
aiderable experience in evaluating people.
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The perception of integrity end competence in
riek manager* depends not onrjr on their pereonel
ettributee but eleo on the character of the poli-
ctee they implement end the institution* they
represent. The current decision process is struc-
tured in e wey that does not promote trust in
those who ere implementing the waste manege
ment program. The current situation in Nevada,
for example, demonetrstes the importance of local
input in the acceptance of risk. The political
leadership of Nevada in fighting the proposed
repository end portraying their State ae e victim,
reinforcing the perception on the part of the
broader public that the program is beyond local
control.
The Department of Energy should recognize
that communications about the program will be
ineffective so long ee Nevedane believe they heve
no voice in the process. To the extent that DOE
can share power, however, the increased percep-
tion of local control is likely to improve accep-
tance of e repository. The funding of e technical
review group whoee members ere selected by the
State government would be one poeitive etep in
this direction. In order to encourage rigorous
technical analysis, it should be required thet the
findings of this review group include e statement
of the technical evidence end reasoning behind
the conclusions, ss is done now by the State of
New Mexico's Environmental Evaluation Group
for the Weete Isolation Pilot Plant.
Given the highly polerixed reactions to radioac-
tive wests disposal, it is reasonable to anticipate
criticisms end challenges to the technical compe-
tence and integrity of the program and its partici-
pants. Critics of the program point to the per-
ceived incentives to find the proposed site end
technology suitable, the motivation to meet
echedulee and budgets, end the resulting incen-
tive to dieregmrd or pley down troubling findings.
Claims to predict accurately eventa like sarth-
quakee end climatic change are guaranteed to be
challenged. These concern* have been addressed
through e regulatory review process that is care-
fully designed to reveel errors, optimistic as-
sumptions, and omissions; but the perceived
credibility of thet process can be bolstered if state
and local groups and individuate have en oppor-
tunity to participate, not only in the formal re-
view process but also through informal working
reletionships with project staff.
Those involved in HLW management must also
avoid the trap of promising to reduce uncertain-
ties to levels that are unattainable. Uncer-
tainties are certain to persiet. Whether the un-
certainties in geologic disposal are too great to
allow proceeding can only be judged in compari-
eon to the projected risks and uncertainties far
the alternatives, such ss delayed implssssntstinn
of disposal or surface storage of spent fuel. Ass
rule, the values determined from asodele should
onry be used for comparative purpoooo. Confi-
dence in the disposal techniques must corns from
e combination of remoteness, engineering doojcn,
mathematical modeling, performance ssseeeoeeat,
natural analogues, end the possibility of rsmidlsl
action in the event of unforeseen events* Tears
may be public desire or political pressure on
implementing agencies to provide absolute guar-
antees, but e more reelietic ■ and sttsinsbls - goal
is to secure thet the likelihood of unforeseen
events is minimal, end that the ooneequenoss of
euch evente ere of limited magnitude.
Technical program managers may ask whether
it ie better for the public to know too much or
not enough. When unforeseen evente occur, for
example, the public can roioc questions ebout the
validity of the technical approach, ee well ae the
competence of the riek anar/sis that was used to
justify it. Conversely, when forces en evente oc-
cur, they lead to queetione ebout why they were
not prevented. The technical crsdsVility of the
project teem suffers in either cane, but it |
BufTere more when the organ
stated the riek or uncertainly.
MORAL AND VALUE ISSUES
OVERVIEW
The foregoing discussion suggests that, in the
area of radioactive weete, ethical issues are es
important ae management and technical eeei-
eione. Interested parties epproech the issues
with different viewe ebout the right way to pro-
ceed, often due to diffsreness in morel and value
perspectivee. As s result, en exploration of ethi-
cal iesuee can illuminate the I
debates in this field by showing the i
issues in their political end some! context. Suck
en exploration eleo provides ecsantmta with aa
opportunity to explore their own ethical reapesmV
bilitiee ss they provide society with ti can I ml
advice on controversial subjects. During Ma Ittt
etudy session the Board exsminsd resent work en
ethical queetione in radioactive waste memasmv
ment conducted by echolare from a variety of
diedplinee.
These ethical eoneerne fall into two principal
areas; (1) queetione eonosn
reeponeibility of scientiets and «
questions concerning the appropriate
science in the decision-making |
end engineering are part of broader hu
ities, and ee science entei
decieione can no longer be purer/ scientific; peed
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» is not<
an important source of information and analysis
for ths public poliejr process, and scientists find
thsaaaslvss being called to account for, and to
justify ths rasults of, those decisions. Is this
rosponsibls, good, or desirable? How can the
pro ruse be improved and the parties satisfied?
Scientists have been sheltered from such ques-
tions in the past, but the increasing scale, sophis-
tication, and pervasiveness of technical informa-
tion require a corresponding increase in ths so-
phistication with which these value judgments
THREE ISSUES OP EQUITY
To see how questions of equity epply to radio-
active waste management, consider first s study
by Roger E. Ksspsrson and Samuel Rstick. *
This project identified three sets of equity con-
cerns, each of which raises questions of differen-
tial impact, public values, and moral accountabili-
ty:
Labor: Who does the work and who pays for it?
Congress has determined that DOE will be re-
sponsible for the work and that the beneficiaries
of nuclear power will pay for it through a aur-
chargs on their electric rates.
Legacy: What do we owe to future generations?
Moral intuition tells us that our descendants
deserve s world that we hsve tried to make bet-
ter. 4 Posterity matters to us, indspendent of
economic trade-ofle; policy should therefore take
that interest into account. Ths EPA regulstion
requiring evidence that radioactive waste releases
will bs limited for 10,000 years and mors is an
illustration of auch a concern for the distant
future.
Locus: Who benefits, and who is exposed to
risk? A repository is ths final resting place for
the waste from nuclear power plants thst provide
benefits spread over the whole nation for a abort
time; but it also concentrates risks and burdens
along transportation routes and, for a much lon-
ger time, st the disposal site. A radioactive waste
repository poses additional complications: it will
be the first facility of its kind; the risks it poses
are uncertain and, to the extent they exist st all,
are likely to emerge over very long time spans;
public fears are unusually high; and the history
of federal action has raised concerns about
whether the interests of Iocs! populations will bs
treated equitably.
Thsss ethical questions, when spplied to radio-
active waste management, demonstrate thst once
science enters the policymaking arena, good sci-
ence is no longer enough, becsuss technics! deci-
sions are no longer simply scientific. When the
questions an no longer scientific, scientists alone
cannot be expected to answer them. Sheldon
Reaven suggests thst the Nuclear Waste Policy
Act creates a 'scientific trap/ in which dtisens
are encouraged to expect certainty from flawless
science, and in which scientists and engineers are
encouraged to believe or pretend that they can
supply it. *
Sheila JasanofT makes ths same point: the
political need for accountability in the United
Ststss pressures regulators to seek a 'scientifical-
ly correct' answer, even when there is none. •
The attempt la doomed to scientific end political
failure. It is therefore critical to recognise the
boundaries of scientific understanding ae it can
be applied to a societal problem.
FIVE ISSUES OP POLICY
Thess ethical considerations have been applied
to the current HLW aituation by an interdisd-
plinary team led by E. William Colgiaxier. 'For
each of five key policy issues, ths study discusses
ths 'fairness' and appropriateness of ths proce-
dures for making decisions, the distribution of
costs and benefits, end the type of evidence that
is considered sufficient end admissible. Ths
study placed special emphasis on the role of sci-
entific evidence because of the Urge scientific
uncertainties and the continuing controversy,
even among experts, on whst is known and not
known. The study's observations include the
following:
The need for the repository: The core policy
dispute concerns the choice between permsnent
disposal In a geologic repository and long-term
monitored storage in an engineered facility (in-
cluding at-raactor storage) at or near the surface.
The controversy has been over the distribution of
costs and benefits to current and future genera-
tiona and to varioua stakeholder groups:
Pro-nuclear groups feel that the federal gov-
ernment promoted nuclear power and therefore
has a special responsibility (spelled out in con-
tractual obligations) to accept spent fuel in a
timely manner for permanent disposal.
Many environmental groups, on ths other
hand, view radioactive waste ss a special threat
to people and the environment; they also favor
permanent disposal in order to fulfill this
generation 'a reeponaibility, and view Interim
storage as an unfair 'legacy* to future ganera-
tiona.
Some proponents of interim storage, however,
argue that this generation should not make deci-
sions thst would bs costly to correct in the fu-
ture; new technological developments may occur
over the next century that could change our view
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of how to bandit nuclear waste.
In abort, all stakeholder groupe agree that this
generation should fulfill its responsibility to fu-
ture generations, but they disagree on bow to
turn this value principle into policy.
Siting: In making politically difficult siting
decisions, political leaders have two basic options;
make the choice internally and impose it on a
week constituency; or set up and follow a selec-
tion process perceived as objective, scientifically
credible, and procedurally fair. When NWPA was
paeead in 19S2 the latter course appeared neces
eery for both technical and political reasons.
However, critics soon claimed that DOE was
being political rather than objective in ita deci-
sions, citing as evidence DOE's choice of
first-round sites and its decision to defer the
eeoond round of site eelection. Thie perception
led to a stalemate: DOE lacked credibility, and
credibility ia essential to implement the siting
approach eat forth in the NWPA. Thie stalemate
was broken by Congreas with the 19S7 NWPA
amendments, which doaignated Yucca Mountain,
Nevada (one of DOE'a first-round choices), as the
initial site to be characterised and, if acceptable,
to be licenced.
Intergovernmental sharing of power: Procedur-
al values were alao important in NWPA, which
eetabliahed rulee for sharing power among the
affected governmental entities,
states feel thet federal agencies,
DOE, have generally chosen to try to i
atones rather than alow down the process to live
up te the spirit of 'consultation and cooperation.'
DOE, for ita part, feole that it has a mandate to
move forward expeditiously; it has tried to ac-
commodate the states, which (in DOE's view)
seek delays to throw obstacles in the way of effi-
cient implementation. Nevada, in particular,
interprets the 1967 NWPA amendments as unfair
on procedural (as well aa diatributional and evi-
i to keep to a fixed schedule, eo ee to
limit coats, discharge obligations to future annnr-
ftffofl^ and meet contractual commitaaanta to
utilities holding spent fuel.
Impacts. The debate over the diatrmiitianal
impaeta of the repository program include such
issues aa who ahould pay for the program, haw
the impaeta can be fsirry calculated, and what is
fair compensation for negative impacts. NWPA
determined that the costs ahould be paid by the
beneficiaries of nnrlssr generated oJsctricsfe*
through fees, initially, of one mil par
kilowatt-hour. An evidential dispute concema
the potential 'stigma effect,' including lost Jobs
and lost tax revenues, due te
sftrisl science mcthodologiee for i
effect are still controversial. Another i
earns the use of incentives and c
the 1987 amendmenta, Congreas authorised aso-
cial paymente for the boat state, provided it Car-
goes its right to object. Thie runs the risk of
being perceived by opponenta aa a bribe, offered
in exchange for taking othoi eriaa unacceptable
risks. Congreas alao sought a procedural solution
to these diatributional impacte through 4
of the Office of Special Negotiator, I
the negotiator might find an anneptehle i
meat with the host state.
Consideration of these policy achates regarding
the diepoaal of radioactive waste leads te three
important conduaions:
No interested party has an exclusive emies to
be rational or to articulate the puMrr •
What is considered fair or unfair is i
Safety. The fundamental aafety issue b the
determination of e fair evidential profess and
standard of proof for showing that the repository
ie aoosptabry earn for the thousands of years over
which the waste will remain dangerously radioac-
tive. The United States has adopted s set of
Breaming criteria feg>, groundwater flow time,
package lifetime, wests releaae limits, and so on)
that require cionaidarahli certainty. Aa ia often
the case with frontier science, however, knowing
more may actually increase rather than decrease
the uncertaintiea, si least in the near term. The
evidential uncertaintiea in
aafety may point to a mc
ary approach (ooe below); hut this conflicts with
And with regard to repository aafety. the •
ie acreptebility rather than certainty -
ty being what ia acceptable to society, given the
evidential uncertaintiea, perceptions of rink, and
content ious etsJcs-hoessr d
These conduseone highlight the adventage of
an empirical approach - one t
nam in process, outcomes, and
reflects an understanding of the values as watt en
the interests of the i
preach may lead to policies that have
more wider/ perceived ee fair.
MODELING AND ITS VALIDITY
OVERVIEW
central role in the design ai
repository. Because thie is where
into the design and evaluaf
the appropriate use of
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for which i
■hip among modeling, tree tmtnt of uncertainties,
ami regulation; and supplement* to tho um of
modeb in tho current program.
Tim role of modeb In tho design and lioanaing
of tho ropoaitory abould property ha undoratood
to ha dilfarant from tho uaa of modola in dcsign-
iag airplanaa or Uoanaing nuclear react ora.
Users ere major aoureaa of uncertainty in quan-
titative gaophyaieal modeling - even
pnohydrology, the heat developed, can provide
only approximate answers. GeoaciantiatB will
need mora time to learn how to do more reliable
predictive modeling of near* term events, and
coma eventa may prove to he chaotic • that b,
impossibb to predict in detail.
hi particular, there is a critical need for (1)
geological experts, in order to improve model
prediction; and (2) a more open, quality-reinforc-
ing proceee auch aa could be obtained through a
pear reviewed research program at universities
and elsewhere. Thb would do more to improve
technical and public confidence in modob. DOE
could aupport auch an effort by allocating R&D
funds, possibly through or in cooperation with
tho National Science Foundation, for model im-
provementa.
In the meantime, however, modob can be use-
ful in identifying and evaluating significant con-
tributors to risk snd uncertainty. Modeb are not
well suited to describe the risk and uncertainties
to lay audiences, however. Natural analogues, if
they can be found, are far mora useful for thb
purpose (see below).
Problems of repository performance assess-
ment, according to the scheme shown in Figure
1, belong in Region 2 or at the border between
Regions 4 snd 2. However, there b s general
tendency to assume that we can address them
using s Region 3 approach: that b, start with a
deterministic model that incorporates all
'relevant' contributors to overall behavior, and
than attempt to collect enough data to move the
problem from Region 2 into Region 3. In reality,
however, thb approach leada to increasingly
complex modeb and increasingly expensive site
evaluations, without a concomitant improvement
in either understanding or design. Anthony If.
Starfield and P.A. Cundall have suggested that
wa sometimes demand answers that the model b
incapable of providing because of complexity or
input demands. The design of the model should
be driven by the questions that the model b eup-
poaed to answer, rather than by the detaib of the
system that b being modeled. Under the present
HLW program, gaophyaieal modeb are being
asked to provide answers to questions that they
were not designed to tackle. "
MODELS AND MODELING PROBLEMS
Figure 1 illustrates a general classification of
the types of modeling problems taken from C.S.
HoUing. * In Region 1 there are good data but
littb understanding; thb b where statistics b
the appropriate analytic tool. In Region 3 there
are both data and understanding; thb b where
modeb can be built, validated, and used with
conviction. The uaa of finite-element modeb in
structural design b a good example of Region 3
modeb. Regions 2 and 4 contain probbma that
are data-limited in the sense that the relevant
data are unavailable or cannot be placed in a
rigorous theoretical framework. In Region 2 the
understanding of basic mechanbma b good; it b
the detailed information that b unobtainable. In
Region 4 there b not even a sound understand-
ing of the basic mechanbma and interactions.
APPROPRIATE USES FOR GEOPHYSICAL
MODELS
In the Boards judgment, a scientifically sound
objective of gaophyaieal modeling b learning; over
time, how to achieve the long-term isolation of
radioactive waste. That b a profoundly different
objective from predicting the detailed structure
and behavior of a site before, or even after, it b
probed in detail. Yet, in the face of public con-
cerne about safety, it b the Utter use to which
modeb have been put. The Board believes that
thb b scientifically unsound. Thb conclusion b
baaed on review of the modeling approach used
by DOE and the regulatory agenciee in order to
implement the NWPA.
In order to aupport the regulatory and political
argument that a eite will be cafe, it b necessary
to make detailed, expensive, and extended extrap-
obtions. These are informed speculations based
on existing knowledge. In many instances the
guesses are likely to be correct. The geotechnical
modeb used to assure that the foundations of a
building or bridge will be secure in the event of
earthquakes provide an axampb of a
well-founded predictive use of geophysical model-
ing. But to predict accurately the response of a
complex mass of rock and groundwater aa it re-
acta over thousands of years to the insertion of
highly radioactive matariab b not poaeibb.
Thb point b important to the public concerns
that have surrounded the U JS. radioactive waste
Uee of complex computer modob b
f to apply well-known geophysical princi-
ples in order to estimate or to set bounds on the
behavior of a eite, so that its likely suitability for
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s wuto repository can be evaluated. But it ia
impossible to stretch the almoat slweyo incom-
plete underatanding of a site into an accurate
quantitative projection of whether a repository
will be aafe if constructed and operated there.
Even after a detailed and cosily elimination of
the sits itself, onrjr an informed judgment can be
reached, and even then there will be uncertain-
ties.
As modelers hsve become more aware of the
proceesei they are attempting to model, they are
also recognising that the geological environment
la more comples than originally thought and that
quantitative prediction ie correspondingly more
difficult and uncertain. Many computer simula-
tion models of geological environments are based
on deterministic models that have been used
successfully in breaches of mechanics such aa
serospase engineering; where the basic phenom-
ena are much better defined. Such models are of
limited value for the ill-defined, data-limited,
long-term situations such aa the repository isola-
tion problem. It is illusory to expect accurate
quantitative estimates of radionuclide releases
SOURCES OF UNCERTAINTY IN GEOPHYS-
ICAL MODELS
Performance ssaessmsnts estimates of the
repository's ability to Isolate HLW - are based on
current computer simulations and parameters
derived from laboratory and field measurements.
As s consequence, they will hsve Urge uncertain-
ties associated with the predicted performance.
These uncertainties could pose serious ohetsrlsa
in demonstrating compliance with licensing re-
quirements. Discussions at BRWM'a 1983 study
session identified four principal causes of uncer-
tainty:
1. Structural uncertainty. Do the equations
adequately represent the operative physical pro-
cesses? Do we in fact understand the system will
enough to model it mathematically? Modeling
will be meet successful in solving Region 3 prob-
lems (see Figure 1), where we hsve s great deal
of data and a good understanding of how the
2. Parametric uncertainty. Have we <
the right values for the variables (e.g.,
ability) in the equations? Hsve we in fact chosen
the right variables to represent the behavior of
the system? Are our measurement techniques
valid? Will they produce enough, and good
enough, data?
3. Uncertainties In initial and boundary condi-
tions. Have we interpolated adequately from a
few spatially molated point measurements to a
broad three-dlmenaional domain (sjl, i
ter, heat, in situ stress)?
4. Uncertainties in forcing functions,
well can we characterise past and future events
that might play a part in the fate of the reposito-
ry <«.g., climate, tectonics, human intrusion)?
Urgent sttention should be given toexeseining
theee and other cauees of uncertainly, hut even
with continuing reaaarch along the present lines,
improvement will come slowry. It may even tun
out to be appropriate te delay permanent cMsmre
of s waste repository until adequate i
concerning its long-term behavior can bee
whether enough is known to proceed with |
ment of waste in s repository are
throughout the life of the project. But to resent
the Board's earlier point: those judgments should
be based on s comparison of the available altsrae-
tives, rather than just s simplistic debate over
whether, given current uncertain ties, a reposite
ry site is'eafe.' Even when the detailed behavior
of an underground repository ie still under at nay,
it may well be safer to put waste there. In a way
that permits retrieval if necessary, rather than
leaving it at react ore or in storage at, or near, the
surface of the earth.
MODELING LIMITATIONS - AN EXAMPLE
The inherent difficulties of modeling are illus-
trated by the esse of ground -water flow, which ia
used ss an esamplo precisely because it the best
developed in terms of modeling. Groundwater
flow ties been esteneivery modeled far a breed
range of engineering problems, and it conse-
quently has s richer base from which to draw
than do many other aspects of repository avia-
tion. Groundwater flow ia also nsnaralry ascent-
ed ee the primary mechanism by
radionuclides could move from the i
tlmbioephere,eoithesbeenemphssasedinsaasl.
eling etudiea of repository isolation.
eulty of applying Hassiral hydrology i
the problem of radioactive waste iooletion.
Groundwater hydrologists are becoming in-
creasingly swaxe that inaoaquato and inaejflkams
data limit the rehability of traditional 4
tic (dsatributed-perameter) groundwater i
The data may be
heterogeneities occur on s scale emsller than ami
be defined on the beam of
quentry, and
To
tiona, hydrognologisti
models end stochastic sii
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ally developed to mew piexometric response in
near-surface uneonsolidsted aquifers over limited
spatial distances and short time frames with
relatively abundant data • • • . These techniques
may not be as valuable when applied to the as-
sessment of radionuclide transport in deep rock
formations, over large distances and long time
frames, under conditions of sparse data availabili-
ty • • • . (The authors) hsve repeatedly drawn
attention to the potential problems associated
with the geostatistical methods (Bayesian and
otherwise) when data networks are •parse and
sample sixes small. In our opinion, this is the
potential Achilles heel for the application of
geostatistics at nuclear repository sites. ( 11
With regard to repository isolation modeling,
increased study haa thua far resulted in the iden-
tification of greater complexity. Progress is being
made toward including some of this complexity in
the models, st least in terms of groundwater
studies; but other geotechnical aspects of reposi-
tory isolation (such as constitutive properties of
rock joints, excavation and repository scale defor-
mation behavior, and regional in aitu stress) are
far less developed. It will take years of additional
research to repreeent them adequately in the
models. As s reeult, the prospects are poor, espe-
cially in the abort term, for models that can pro-
duce reliable quantitative measuree of isolation
performance.
APPROPRIATEOBJECTIVESFX)RMODEUNG
Repoaitory performance assessments are un-
likely to prove beyond doubt that risks are below
established limits. Nor do the regulations re-
quire it - EPA requires only s 'reasonable sssur-
snce.' The problem is thst in s esse without clear
precedents, it is unclear what is 'reasonable/ The
Boards point is that unsound use of technics!
information is not s proper substitute for the
political reasoning thst, in s democratic society,
must in the end win consent for taking reason-
sole steps to advance public health and safety.
In light of the limitations of technical knowl-
edge, the Board concludes that it makes sense to
conduct the assessments through an iterative
process, in which the sssessment provides direc-
tion to those characterizing a repository site end
developing the repository engineering features.
As further informstion is developed shout the
candidate site, it is also used in the performance
Many of the uncertainties associated with a
candidate repoaitory site will be technically inter-
esting but irrelevant to overall repoaitory perfor-
mance. Conversely, the issues thst ere analyti-
cally tractable are not necessarily the most im-
portant. A key task for performance modeling is
to separate the significant uncertainties and risks
from the trivial. Similarly, when there are tech-
nical disputes ovsr characteristics and processes
that affect calculations of wests transport, sensi-
tivity analysis with alternative models and pa-
rameters can indicate where further analysis is
required end where enough is known to move on
to other <
USING MODELS TO REDUCE UNCERTAINTY
Models do hsvs an indispensable role in devel-
oping understanding of auch problems, provided
that the models are developed and used within
the proper limitations. In other words, modeling
can be used to improve models. The following
quotations from those concerned with such prob-
lems illustrate this point:
•• • • much time can be eeved in the early
stages of hypothesis formulation by the explora-
tion of these hypotheses through mathematical
models. Similarly, mathematical models can be
used to investigate phenomena from the view-
point of existing theories, by the integration of
disparate theories into a single working hypothe-
sis, for example. Such models may quickly reveal
inadequacies in ths current theory and indicate
gaps where new theory is required. **
'The updating properties of the Bayesian ap-
proach • • • are well suited to the iterative ap-
proach we espouss for the modeling/data gather-
ing sequence st s site. We feel that the first
modsling efforts should precede or accompany
initial site investigations.' *3
A good example of this general approach is the
'regionalixed sensitivity analysis' spprosch, by
which G. M. Homberger and his collaborators
hsve been sble to identify the 'critical
uncertainties' in spplying s particular model to
several data-eparss ecological problems, and
thereby define programs of investigations to re-
duce those uncertainties. *4
In summary, modela should be qualitatively
sensible, robust to sensitivity analysis, and inde-
pendent of minor effects or processes, and they
ahould include acceptable levels of uncertainty.
However, models cannot prove that the reposito-
ry is safe, nor can they resolve public concerns
shout ths repository.
SUPPLEMENTS TO MODELING
Natural Analogues: Because models cannot be
conclusive with regard to the safety of a reposito-
ry site, it is important to think carefully about
natural analogues. Thess ere natural 'test cas-
es,' geological settings in which naturajry occur-
ring radioactive materials have been subjected to
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environmental force* for millions of yean. These
natural experiment* demonstrate the action of
transport processes that are similar to those that
will govern the release of man-made
radionuclides from s repository in s similar set-
ting.
The natural analogue approach depends, of
course, on whether the natural case is in fact an
analogue for e repository situation. Where there
is scientific agreement that the analogy applies,
however, the approach is powerful because it
allows us to predict processes with confidence
over many millennia. And natural analogues can
serve two additional roles: (1) they can provide a
check on performance assessment methodology;
and (2) they may be more meaningful than so-
phisticated numerical predictions to the lay and
(2) they may be more meaningful than sophisti-
cated numerical predictions to the lay public.
The alternative management strategy described
in the following section would make substantial
ues of natural analogues, such es undisturbed
natural deposits of radioactive elements and
groundwater systems, in order to illuminate the
behavior of the geologic environment.
Professional Judgment: A second approach is
to use the professional judgment of technical
experts as an input to modeling in areas where
there ie uncertainty as to parameters, structures,
or even future events. Such judgments, which
may differ from those of DOE program managers
and their staffs, should be incorporated early in
the pro esse. A model crested by this process can
redirect the DOE program substantially.
It is important to bear in mind that all uses of
technical information entail judgments of what is
important and what is less so. If the technical
community is to learn from the successes and
failures of the DOE program, it is essential that
these technics] judgments be documented. Set-
ting out the reasoning of DOE staff and of inde-
pendent outside experts contributes to learning
and builds credibility in the pro esse even when
the experts disagree with DOE staff and among
themselves.
IMPLICATIONS FOR PROGRAM MANAGE-
MENT
The Board has concluded that geological mod-
els, and indeed scientific knowledge generally, are
being inappropriately applied in the U A radioac-
tive waste repository program. That misapplica-
tion prompts this Board to outline an alternative
management strategy. The next section describes
an alternative management approach that em-
ploye natural analogues and professional judg-
ment in e program design that usee science ap-
propriately in the search for a eels < .
tern. Putting euch an approach into effect, how-
ever, would require major changes in the way
Congress, the regulatory agencies, sod DOB
conduct their business. Such changes will be
difficult to achieve, but the Board has reluctantly
concluded that nothing dee will put to rest ths
problems that plague the national program today.
STRATEGIC PLANNING
OVERVIEW
. There is no scientific reason to think that an
acceptable HLW repository cannot be built end
licensed. For historic and institutional i
however, DOE managers often feel «
'get it right the first time.' Thm management
strategy runs ths risk of encountering
'show-stopping* problems thet may delay licens-
ing and will certainly cause further deterioration
of public and scientific trust.
The alternative would be a more flexible, exper-
imental strategy that embodies ths following
principles:
Respond with conservstive design changes ss
sits attributes are discovered;
Uee modeling to identify arses where mors
information ia needed; and
Allow for remediation if things do not turn out
as planned.
Implicit in this approach is the need to revise
both technics! design and regulatory criteria ss
more information is discovered. This is difficult
to achieve in a governmental structure that dis-
perses suthority among legislative end executive
agencies and ssparatee regulation from imple-
mentation. When presented with intense contro-
versy, such an institutional arrangement breeds
distrust among governmental units and the pub-
lic In that setting; partial remedies further
entangle the procedural morass.
Mors practically, however, DOE can *ntnnft
the credibility of the program and reduce ths
likelihood of Iste-stags surprises by (1) <
ing effective communication within its <
management structure; and (2) providing incen-
tives for field personnel to identify and solve
problems. DOE and ths USNRC can also en-
hance credibility by encouraging periodic external
reviews of ths repository design, construction,
and licensing requirements and eoanciitsd pre-
POUCY CONTEXT
Ths present U A approach to HLW disposal is
increasingly vulnerable to being derailed by mi-
nor surprises. This vulnerability doss not arms
from a lack of talent or effort i
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•grades and private contractor* working on the
program. Nor does the design or construction of
the repository represent sn unusually difficult
technical undertaking. Instead, the program is st
risk because it is following the wrong approach to
implementation. The current predetermined
proosss, in which every step is mandated in detail
as in the more than 6,000 page 'Site Character-
isation Plan/ 1S is inappropriate.
The current policy calis for s sequential pro-
cess in which EPA and the USNRC first estab-
lish the criteria for safe disposal, and then DOE
describes in detail what steps will be taken to
move through aite characterization, licensing,
and operation of the facility. The result of this
approach is that any late change, by any of the
participating agencies, is taken as an admission
of error.
And late changes are bound to happen. One
worker wee killed and five injured in an HLW
repository under conetruction in West Germany
when e support ring failed unexpectedly. At the
Weate Isolation Pilot Plant (WIPP) in New Mexi-
co, the discovery of pockets of pressurized brine
in formations below the repository level led to
public outcries and a continual National Ra-
eearch Council review of the suitability of the
sits.
Ths United States seems to be the only coun-
try that haa taken the approach of writing de-
tailed regulations before all of the data are in.
Almost all other countries have established limi-
tations on the allowable levels of radiation doss
to individuals or populations resulting from re-
pository establishment - but hsvs taken e 'wait
and see' approach on design, while collecting data
that may be of use in setting design. The United
States, on the other hend, seems to hsve felt thst
detailed regulations can be, in fact must be, writ-
ten without regard to any particular geological
setting or other circumstance. As s direct conse-
quence, the U.S. HLW program ia bound by re-
quirementa that may be impossible to meet, even
though overall doss limits can be achieved.
ALTERNATIVEMANAGEMENTSTRATEGIES
The preceding sections hsvs shown that there
are a number of unresolved issues in the U.S.
radioative waste disposal program, as well es
(and in part because oO high levels of uncertainty
and public unease shout the performance of the
repository. Ths Board 'a consideration of these
subjects indicates that the proper response to
distrust is greater openness in ths process, and
that the proper response to uncertainty is greater
knowledge and flexibility, as well es redundancy
of barriers to nuclide transport. Ths U.S. pro-
gram will continue to face controversy until it
adopts a managsment strategy based on theee
principles.
The current approach to the design, construc-
tion, and licensing of the Nevada aite is derived
from the philosophy and procedures used for
licensing nuclear power plants. The characteris-
tics of the repository and its geological sstting are
carefully determined and specified ss s bams for
a complex eet of calculations thst describes ths
behavior of the system. This model ie used to
generate predictions of the migration of radioac-
tive elements into ths biosphere and analyzes the
consequences of vsrious events ('scenarios') thst
might siTect the sits over the next 10,000 years,
in order to demonstrate that the repository sits
meats regulatory requirements (i.s., is 'safe*).
Based on the model and geologic studies of the
site, the conetruction of the repository is speci-
fied in detail and then carried out under an ag-
gressive quality assurance program, which ia
designed to withstand reguletory review end legal
challenge. Within these requirements it ia the
geological setting thst ensures isolation, not ths
engineered characteristics of the system; closure
aims for complete entombment and discourages
subsequent remedietion. For all the reasons
discussed above, s management process based on
the regulstion of nuclear power stations is insp-
propriste to the development of a waste reposito-
ry.
A well-documented alternative to this approach
ia being followed, to various degrees, by countries
such ss Csnsds and Sweden. The exploration and
conetruction of a geological test facility snd s
low-level wests repository, respectively, follow e
flexible peth, allowing each step in the character-
ization and design to draw on the information
and understanding dsvslopsd during ths prior
steps, and from prior experience with similar
underground conetruction projects. During and
subsequent to the closing of the respitory, the
emphasis will be on monitoring and on the ability
to repair, in order to minimize the possibility
thst unplanned or unexpected events will com-
promise ths integrity of the disposal system.
Engineered modifications can be incorporated
(e.g., in the weate containers or in the material
used to bsckfill ths repository) if ths computer
models suggest unacceptable or irreducible uncer-
tainties in ths performence of the unmodified
containment system.
The Canadian experience et their Underground
Research Laboratory provides a good example.
All of the major rock structures snd groundwater
conditiona were defined from surface and
borehole obeervetione before shaft construction
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began. Detailed geological structure can never be
toUlly determined from surface information,
however, and the final details of the facility de-
sign were modified to take account of informa-
tion gathered during ehaft construction.
What are the risks and benefits of the two
approaches? The US. approach facilitates rigor-
ous oversight and technical auditing. Its goals
and standards are dear, and, if carried out ac-
cording to specifications, this approach ie robust
in the face of administrative or legal challenge.
It is designed to create a sense of confidence in
the planning and operation of the repository, and
if facilitates precise answers to specific technical
However, such an approach is not consistent
with normal geologic or mining practice. It as-
sumes thst the properties of the geologic medium
can be determined and specified in advance to a
degree analogous to thst required for man-made
components, such as reinforcing rode, structural
concrete, or pipes. In reality, geologic exploration
and mine construction never proceed in this way.
Most underground construction projects are more
qualitative, using a 'design (and improve the
design) as you go' principle. New sections of drill
core often reveal surprises thst must be incorpo-
rated into the geologists' concept of the site,
integrated with past experience, and used to
modify the exploration plan or mine design. Ins
project where adherence to predetermined specifi-
cations is paramount, the inherent variability of
the geologic environment will result in endless
changes in the specifications, with resultant
delays, frustration for field personnel, high over-
head costs, and loss of public confidence in both
the suitability of the site and the competence of
the professionals working on the project.
The second approach has more in common
with research than with conventional engineer-
ing practice. This approach continually inte-
grates new data into the expert judgments of
geologists and engineers. It makes hesvy use of
natural analogues, such as undisturbed natural
deposits of radioactive elements and groundwater
systems. In order to illuminate the behavior of
the geologic environment. It can immediately
take advantage of favorable surprises and com-
pensate for unfavorable ones. That this approach
works well is evidenced by the enormous number
of underground construction projects in diverse
geologic settings that have been completed suc-
cessfully around the world. These projects were
not designed to contain radioactive waste for
thousands of years, but many of them faced tech-
nical problems of comparable magnitude, such as
crossing active faults, sealing out massive
groundwater flows, or stabilising highly fractured
and structurally week rock masses.
The second approach, with its reliance on con-
tinuous adaptation, would be much m
to document, audit, and defend before a 1
authority or court of law than is the mora pre-
scriptive approach. Some aspects of quality as-
Other
to be
sample control, the use of standard
and took, and personnel qualifications,
quality assurance techniques are likely
contentious and may be impossible to
in the same way they are implemented in
power plants, including design control,
tifuf»mi procedures, drawings, inspections, and
control of nonconforming items. An alternative
is to use an aggressive and independent pear
review system to appraise the decisions
the competence of the technical personnel
The legal system is able to accept expert opin-
ion as a basis for action or assesssseaU of action,
but one cannot predict whether a repository
could ever be liesused in the face of the batteries
of opposing 'experts' who would inevitably be
called on to aseess a flexibly designed and con-
structed repository for HEW disposal. The de-
bete will hinge in part on a dear understanding
of the alternatives against which s proposed
'solution' will be judged. By contrast, the EPA
standards and USNRC regulations define re-
quirements that, if met, form the basis for the
presumption that the fadlity is 'safe.'
Given the unhappy history of radioactive waste
disposal in the United States, however, one very
real and likely alternative is that nothing at all
will be done. In judging disposal options, there-
fore, one should also adopt inaction or seams
other likely scenario as s default option, so that
comparison can be made and program consistent
|y assessed over time. The combination of a con-
servative engineering approach and designed In
maximum flexibility, to allow unantidpated proh
lime ti be oorrected, should rssssiiri Inth Isrhnl
cat experts and concerned nonexperts. Tim barri-
er is not logical but institutional, and the pre-
ecriptive approach in the UJS. |
by a governmental structure that i
lation from implementation.
Within the present program, for
'quality assurance' has become the beta noire of
frustrated field personnel, who are trying to work
within a system that is hostile to eurprmes in a
at is full of them.
, flexibility (induding the
uncertainty is inevitable and must be
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dated) U mora likely to load to the design end
construction of e safe repository system than are
rigid, predetermined protocols. In employing and
evaluating euch an adaptive approach to con-
struction, emphasis focuses on those decisions
that have irreversible or noneorrectable conse-
quences on disposal, rather than on the myriad
email enlistments that do not affect the basic
flexibility and robustness of a repository.
THE ELEMENTS OP A If ORE
FLEXIBLE SYSTEM
In s program governed by this alternative ap-
proach, change would not be seen as an admis-
sion of error; the system would be receptive and
responsive to a continuing system of information
from site characterization. The main actors
would reduce their reliance on detailed preplan-
ning during initial site characterisation, making
it possible to debug the preliminary design during
rather than before characterisation. ( '° But the
necessary conditions of the system are flexibility
and resiliency-flexibility to respond rapidly to
ongoing findings in the geology, geohydrology,
and geochemistry (within broad constraints); and
resiliency to continuously adjust the performance
sssessment to reflect new information, especially
where euch information indicates possible precur-
sors of substantial increases in risk. These quan-
tities could be developed through the following
Interactive performance sssessment: The basic
approach outlined here would start with a simpli-
fied performance sssessment, based on known
data and methods of interpretation. Given the
inherent uncertainties and technical difficulties
of the process, the present system may well ex-
pand large efforts on small risks, and vice versa.
An iterative approach, on the other hand, could
allow characterisation efforts to give priority to
major uncertainties and risks, while there is still
time and money left to do something about them.
As in probabilistic risk sssessment, analysis fo-
cuses on efforts to reduce the important risks
and uncertaintiea. In this esse, that means ac-
quiring information on the design features and
licensing criteria that are most likely to deter-
mine whether the site is suitable or should be
abandoned.
Fixing problems va. anticipating problems: The
underlying concept of the present, anticipatory
UU. management strategy is 'Get it right the
first time.' One result ie a 6,300-page site charac-
terisation plan for Yucca Mountain. For the rea-
sons described above, however, e process besed on
getting all of the needed measurements and anal-
ysis on the first pass, with acceptably high quali-
ty, is not likely to succeed. The geological envi-
ronment will always produce surprises, like the
pockets of pressurised brine at WIPP. No matter
whet technical approach is initially adopted, the
design can be improved by matching it with spe-
cific features of the site. Experiments are now
being conducted at WIPP with backfill material
and other engineered barriers thst were not part
of the original design. These are being tried as
ways to make the disposal system aa a whole
robust in the face of newly discovered uncertain-
ties in the geology.
Define the problem broadly: As characterisa-
tion proceeds, especially if it is done without the
guidance of iterative performance assessment,
DOE may eventually find it difficult or impossi-
ble to meet some of the criteria eet by the
USNRC and/or EPA. This will not mean that
Yucca Mountain is unsuitable for a repoaitory -
the problem could be with the detailed criteria.
Thie is no reason to abritrarily abandon the re-
lease limits - it is the more detailed requirements
that may need to be reconsidered, since they
ultimetely affect the release limits and the imput-
ed dose. However, one ehould not take EPA's
release standards or the USNRC'e detailed li-
cencing requirements as immutable constraints.
They are roadmarkers to, and aurrogatee for,
dose limits. Although ths EPA standards and the
USNRC regulations recognize and accept a cer-
tain level of uncertainty, the discussion to date of
the application of these standards and reguJa-
tiona does not warrant confidence in the accep-
tance of uncertainty in licencing procedures.
Some process is needed in order to determine
whether DOE's insbility to meet s particular
requirement is dus to s disqualifying deficiency
in the site or to an unreasonable regulatory de-
mand, one that is unlikely to be met st any site
and is unnecessary to protect public heslth. And
to the extent thet reguletory criteria can be cor-
rected earlier instead of later in the process, they
are more likely to be perceived as technical ad-
justments rather than as a diminution of public
safety. Given the history of VS. efforts to dis-
pose of radioactive waste, current plans for the
program have little chance of progressing without
nsjor modification in the 20 years or mora that
will be required to get e repoaitory into opera-
tion.
RECOMMENDATIONS
The Board's conclusions are explicit or implicit
throughout this document, as are many of the
actions it would recommend to the vsrious play-
ers. These recommendations are summarized
below.
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1. Congrss ■ should reconsider the rigid, inflexi-
ble echedule embodied in NWPA and Um 1987
amendments. It may be appropriata to dalay the
lioanaing application, or avan tha scheduled open-
ing of the repository, until more of the uncertain-
ties can be resolved. The Secretary of Energy's
recent announcement of a more realistic sched-
ule, with the repository opening in 2010 rather
than 2003, ia a welcome atop.
2. The Environmental Protection Agency, dur-
ing its revision of the remanded 40 CFR Part
191, should reconsider the detailed performance
standards to be met by the repository, to deter-
mine how they affect the level of health risks
that will be considered acceptable. In addition,
EPA should reexamine the use of quantitative
probabilistic release criteria in the standard and
examine what will constitute a reasonable level of
assurance (i.e., by whst combination of methods
and strategies can DOE demonstrate that thoae
atandarda will be met?). All other countries use
only s doss requirement. In setting regulatory
atandarda and lioanaing requirements, the EPA
should consider using only doss requirements.
3. The US. Nuclear Regulatory Commission,
likewise, should reconsider the detailed lioanaing
requirements for the repository. For example:
What level of statistical or modeling evidence
is really necessary, obtainable, or even feaaible?
To what extant ia it necessary to prescribe
engineering design, rsther than allowing alterna-
tives that accomplish the same goal?
What can be done to accommodate design
changes necessitated by surprises during con-
struction?
Whst new strategies (e.g., engineered festures
like copper containers) might be si lowed or en-
couraged aa events dictate?
4. The Department of Energy, for its part,
should continue and also expand its current ef-
forts to become s mors responsive plsyer in thess
regulatory issues. The following activities should
be included:
Publicly negotiated prelicensing sgreements
with the USNRC on how to deal with the high
levels of uncertainty arising from numerical pre-
dictions of repository performance;
Publicly negotiated prelicensing sgreements
with the USNRC on improved strategies for per-
formance assessment;
Active negotiations with EPA and the USNRC
on the real goals and precise definitions of their
standards and requirements;
An extramural grant program, in cooperation
with the National Science Foundation, for the
development of improved modeling methodology,
in combination with training programs and pub-
lac education cflbrta;
Expanded use of expert scientists from outside
the program to review and critique detailed ss-
peets and to provide additional professional Judg*
Greatly expanded risk communication efforts,
aimed at reaching appropriata and aohiavsJble
goals acceptable to the UJB. public;
Meaningful dialogue with state and local gov-
ernments, Indian tribes, environmental public
interest groups, and other interested organise-
6. The Department of Energy should make
greater use of conservative engineering design
Instead of using unproven engineering rissign
based on scientific principles.
6. The Department of Energy ahould partid-
peta more actively in international studies snd
forums, such aa those sponsored by the Interna-
tional Atomic Energy Agency, the Nuclear Ener-
gy Agency, and the Commission of Furopesn
Communities, snd should subjsct its plans snd
procedures to international scientific review, ss
Sweden, Switzerland, and the United Kingdom
have already done.
7. Although geologic disposal has been the
national policy for many years, and the Board
believes it to be feaaible, contingency planning far
other sites snd options (for sismpls Subseabed
Disposal of apant fuel and high-level radioactive
waste) ahould be pursued. The nation, the Con-
gress, the federal government, utilities, and the
nuclear induatry ahould recognise the importanos
of contingency planning in the event that some
issue should make it impossible to license a geo-
logic repository.
S
•Integrated Database for 1988: Spent Puei and
Radioactive Waste Inventories, Projections, and
Characteristics: DOB/RW4006 Revision 4, Sept
1988.
•• Waste Confidence Decision Review. 64 FR
39767 (Sept. 28, 1989
1 Report on the Review of Proposed Environ-
mental Standards for the Management and Dis-
posal of Spent Nuclear Fuel. High Level and
Tranauranic Radioactive Wastes (40 CFR 191) ky
the High-Lsvsl Radioactive Waste Disposal Sub-
committee of the Science Advisory Board, VS.
Environmental Protection Agency, (January
1934) pp. 10-14.
2 May 10, 1933 letter from John G. Davis to
EPA transmitting USNRC staff comments on the
proposed High-Lsvel Waste Standard (40 CFR
191).
1 Roger E. Kssperson and Samuel Ratiek.
'Assessing the State/Nation Distributions! Equity
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Issues Associated with the Proposed Yucca
Mountain Repository: A Conceptual Approach/ a
technical report prepared for the Nevada Nuclear
Watte Project Office and Mountain West Re-
search, Inc^ (June IMS) pp. 1-22.
* Each generation mutt not only preserve the
guns of culture and civilisation, and maintain
intact those just institutions thet have been ee-
tsbliehed, but it must also put sside in each peri-
od of time a suitable amount of real capital accu-
mulation.* J. Rewls, 'A Theory of Justice,' (Har-
vard University Press, 1971) p. 264.
S Sheldon J. Heaven, 'How Sure is Sure
Enough/ Department of Technology and Society,
State University of New York at Stony Brook,
draft paper prepared for the project referenced in
Colglasier (note 7), (1988).
° Sheila Jssanoff, draft chapter 'Acceptable
Evidence in a Pluralistic Society/ in 'Acceptable
Evidence; Science and Values in Hazard Manage-
ment,' Deborah G. Mayo and Rachelle Hollander,
eds. (Oxford University Press, 1990, in press).
^ This project, supported by the National
Science Foundation, included the following re-
searchers: E. William Colglasier, David Dungan,
and Mary English of the University of Tennes-
see; Sheldon Reaven of the State University of
New York st Stony Brook; and John Stucker of
Carter Goble Assodetes. Some of the project
papers published to date by Colglasier include:
'Evidential, Ethical, and Policy Disputes: Admis-
sible Evidence in Radioactive Waste Manage-
ment,' in 'Acceptable Evidence: Science and Val-
ues in Hazard Management,' Deborah G. Mayo
and Rachelle Hollander, eds. (Oxford University
Press, 1990, in press); 'The Relation of Equity
Issues to Risk Perceptions and Socioeconomic
Impacts of a High Level Waste Repository/
'Waste Management '89/ proceedings of the
Waste Management '89 Conference (University of
Arizona, 1989); 'The Policy Conflicts in the
Siting of Nuclear Waste Repositories/ 'Annual
Review of Energy/ Vol. IS (1988), pp. 317-367;
and 'Value Issues and Stakeholders' Views in
Radioactive Waste Management/ 'Waste Manage-
ment '87/ proceedings of the Waste Management
'87 Conference (University of Arizona, 1987).
8 Anthony M. Starfield and P. A. Cundall,
'Towards a Methodology for Rock Mechanics
Modeling.' 'International Journal of Rock Me-
chanics snd Mining Sciences and Geomechanics
Abstracts/ epeeisl issue, C. Fairhurst, ed., Vol.
26, No. 3 (June 1988) pp. 99-106.
9 C. S. Holling, ed., 'Adaptive Environmental
Asseesment snd Management/ (Wiley,
Chichester, 1978).
10 L. P. Konikow, 'Predictive Accuracy of a
Ground-Water Model: Lessons from a Post Au-
dit,' 'Ground Water/ Vol. 24, No. 2 (March-April
1986) pp. 173-184.
11
R. A. Freeze, G. de Marshy, et si., 'Some
Uncertainties About Uncertainty/ paper present-
ed at the DOE/AECL symposium on the use of
gecetattetice in nuclear waste disposal, San Fran-
cisco (September 1987).
*" George M. Hornberger snd R. C. Spear,
'An Approach to the Preliminary Analysis of
Environmental Systems,' 'Journal of Environ-
mental Management/ Vol. 12 (1981), pp. 7-18; J.
N. R. Joflers, 'The Challenge of Modern Mathe-
matics to the Ecologist,' in 'Mathematical Models
in Ecology/ J.N.R. Jeffers, ed. (BlsckweU Scien-
tific. Oxford, 1972).
13 Freeze, de Marsiry, et si., op. cit.
14 G. M. Hornberger, B. J. Cosby, and J. N.
Galloway, 'Modeling the Effects of Acid Deposi-
tion: Uncertainty and Spatial Variability in Esti-
mations of Long-Term Sulfate Dynamics of a
Region/ 'Water Resources Research/ Vol. 22, No.
8 (August 1986) pp. 1293-1302.
'° Department of Energy, Office of Civilian
Radioactive Waste Management, 'Site Character-
ization Plan: Yucca Mountain Site, Nevada Re-
search and Development Area, Nevada.*
DOE/RW-0199 (U.S. Department of Energy, Oak
Ridge. TN, December 1988).
" C. G. Whipple, 'Reinventing Radioactive
Wests Management: Why 'Getting It Right the
First Tune' Won't Work,' 'Waste Management
'89/ proceedings of the Wests Management '89
Conference (University of Arizona, 1989).
EXHIBIT 3
(Material Submitted to the Subcommittee on
Nuclear Regulation by the VS. Nuclear Regu-
latory Commission, October 1, 1992)
QUESTIONS CONCERNING REGULATORY
REQUIREMENTS FOR HLW REPOSITORY
(1) EPA's high-level waste standard explicitly
limits reliance on active institutional controls to
a period not to exceed 100 years. What is the
rationale for this approach? How does this ap-
proach compare to the approach taken in other
regulatory programs that address risks that ex-
tend over a long period of time (e.g., low-level
waste, uranium mill tailings, hazardous waste)?
Is there a similar assumption contained in NRC's
10CFR60?
EPA's rationale for limiting reliance on active
institutions! controls is skepticism about the
sbilty (or willingness) of society to maintain ac-
tive institutions! controls for periods of time
longer than about a century. EPA distinguishes
between 'sctive' institutions! controls, which
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indude monitoring or guarding a site, and
longer-lived 'passive' Institutional controls such
Tho NBC's HLW repository regulations similarly
sntidpsts that 'passive' controls can bo effective
in providing long-term protoetion for a repository
site, but do not antidpata long-term ralianeo on
'ectivc' controls.
EPA admita that tho specific time limit allowed
for rolianoa an 'active' controls is judgmantal.
However, tho timo limit imposed by EPA has not
been especially contentious during development
of EPA's HLW standards. Most observen have
acoepted the Idea that long-term uee of 'active'
institutional controls is not a reliable way to
achieve eafe waste disposal. For example, while
the NBC's final decommissioning rule dose not
contain specific restrictions on the time period
involved for delay in completion ofdocommiosion-
ing, the proposed rule indicates this period
should be on the order of 100 yean bees uee this
is considered a reasonable time period for reli-
ance on institutional control (63 FR 24,018, dat-
ed June 27, 1986). In discussing delay in comple-
tion of decommissioning, as in the cess of
SAFSTOR or ENTOMB, and after noting appro-
priate delay will depend on the type of facility
end the contaminant isotopes involved, the Com-
mission said that delay 'should be no greater
than about 100 years ss this Is considered a rea-
eonabie time period for reliance on institutional
control' (citing NUBBG/CR-224 1, dated January
1982).
The 100-year limit for reliance on active insti-
tutional controls emerged, in part, ae e consensus
position from s series of public workshops on
low-level radioactive waste disposal held by NBC
in the 1970s. Those workshops resulted in an
NRC requirement (10 CFR Pert 61.69(b)) that
institutional controls may not be relied upon for
mora than 100 years following transfer of control
of s low-level wests disposal sits to the owner.
In response to comments that the period of insti-
tutional control should be raised from 100 to 300
years, the Commission said 'it is not a question
of how long the government can survive (that
determines the institutional control period), but
how long ehould they be expected to provide
nistodicl cere.' The Commission want on to note
that 'a clear consensus was developed which
eupported the 100 year limit The Commission
has not seen any compelling reason to change its
view on the 100 year limit' (Supplementary In-
formation for Pert 61 Final Rule, 47 FR 67,446
dated December 27, 1982).
EPA appeare to have consistently used s 100
year limit on active institutions! controls in all
waste diss nil
EPA'eepproaoh for non-redioaetive wastes, haar-
ever, has differed somewhat with respect to rail*
ones an long-term institutional controls Is pro-
tect ntembere of the publk end ts« en vironssss^.
In the heaardous wests program, for esampee,
EPA generally requires the speralor of e haaord-
ous waste disposal facility to control and i
tain the facility for 30 years loll
(i a, the post-closure care period). Att
eion of this period, EPA'e slender
reliance on continuing institutional oontrole
ions. EPA's
for land disposal of solid
i (as compared to basardoua wastes) in 40
CFR Part 241 do not address institutional con-
trols. EPA has not eddrassed the potential for
inadvertent human intrusion into basardoua or
solid wests after closure. However, control over
the dieposel facility may be roimposed at a later
data under the Compcahansivs Environment
Response, Compenaation, and Liability Act if the
facility causes or threatana e relesss of hazardous
constituents to the environment
The NBC'e repository regulstiono in 10 CFR
Part 60 do not contain an explicit limit on the
duration of active institutional control. However,
the provision (in Section 60.62) for termination
of a repository lioonss indicates that long-term
reliance on active institutional controls is not
EXHIBIT 4
Nudsar Regulatory Commissi na,
Washington, DC,
Octobers, 1902.
Hon. Bob Graham, Chairman, Committee an
Environment end Public Works, U A Senate,
Washington, DC.
Dear Mr. Chairman:
Thmbuirmponee to your telephone csll to ms
thio afternoon requesting the Nudsar Bognlotory
Commission's views on proposed provisions to bs
induced in HJL 776, National Energy Strategy
legislation, relating to the Yuoce Mountain
high-levd wests repository. While wa have not
had uom to fuUyevdtiate the implication* of ^
legislation, wa are pleased to provide yon with
our initial thoughts.
NRC is examining the laghdetion to determine
the role of the National Academy of Sciences hi
miction to NBC'e important licencing lunation as
an independent regulatory <
and/or <bK2>(B) extend only to the role of the
Secretery'e pom-dosurs oversight end •
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barriers in dealing with itlaww resulting from
human intrusions into tho repository, or also
eitsnd to the rols of oversight end barriers in
dealing with other potential causes of i
including geologic and hydrologic j
Under existing legislation NBC would be re-
quired to publish requirements and criteria not
inconsistent with any comparable standards pro-
mulgated by EPA. As we currently understand
this legislation, NRC's actions would be required
ultimately to be consistent with Academy recom-
mendations of the same scope and with Academy
recommendations for dealing with human intru-
sions into the repository. We do no read the
legislation as otherwise sifecting NRC's regulato-
ry and licensing functions regarding the Yucca
Mountain repository.
Sincerely,
Kenneth C. Rogers,
Acting Chairman.
EXHIBIT 6
State of Wyoming,
Cheyenne, WY,
August 21, 1992.
Fremont County Commissioners, Office of the
County Commissioners, Lander, WY.
Dear Commissioners:
The process which you requested commence
relating to the siting of a Monitored Retrievable
Storage (MRS) facility for storing nuclear waste
in Fremont County has reached the conclusion of
Phsse I and you have not requested that I agree
to a continuation of the process into Phsse lis. I
conclude not to do so. This is not s decision I
make lightly or without considerable thought for
I know thia issue of continuing the process hss
many supporters as well as detractors and there
are many people whose opinions I respect on both
sides, including your own. I arrive at thia deci-
sion, which the federal government in its infinite
wisdom has placed in the lap of the Governor,
because I believe it to be in the best long term
interests of Wyoming, its citizens and future
generations. Before outlining the reasons for my
decision, let me make some observations:
( 1) While the Phase I process hss been subject-
ed to criticism from some quarters, I believe it
has worked well. The participants, including the
Citizens Advisory Group and the County Com-
missioners, have worked conscientiously to gen-
erate public debate and discussion and they have
done so. While I do not accept the recommenda-
tion, I commend you and the Citizens Advisory
Group for your efforts. Msny on both sides of
this issue hsve called or written my office elo-
quently expressing their views.
(2) This is not an issue that simply pits antis
or 'environmentalists' vs. 'proponents'. It cuts
across all segments of Wyoming citizens and haa
caused them to assess personal values, emotions,
economic realities, their personal image of Wyo-
ming; the image they want others to hsve of
Wyoming and ultimately their vision for this
great State.
(3) This is not s political issue in the sense of
a Republican-Democrat, Liberal-Conservative
ideological controversy. I have received comments
pro and con from citizens of both political persua-
sions and philosophies and it cannot be divided
by politics or philosophy.
(4) Phsse lis, while billed as simply additional
education and atudy, is clearly programmed to be
more than that. The process provides thst an
applicant to receive the grant shsll conduct the
following initial activities during the grant peri-
od:
4 1. Conduct of public information activities;
2. Participation in MRS meetings; and,
3. For a state or local unit of government . . .
execution of a letter in which the governor of the
state ... in which an area has been identified to
be considered for s potential MRS site, notifies
the Office thst:
(s) The state ... is requesting to enter into
credible formal discussion with the Negotiator
which may lead to an agreement for presentation
to the Congress;
(b) One or more areas to be considered for s
potential MRS site hss been identified;
(c) The area proposed is within the jurisdiction
of the applicant, and the applicant haa identified
the means by which they have control of the
area; and,
(d) Appropriate intergovernmental notification
and coordination haa been conducted.' Phase lis
clearly anticipates s greater involvement than
aimply further public education, including the
obligation to identify sites and secure the
Governor's agreement to negotiate.
(6) The MRS siting snd operation is a project
that is essentially federal government sponsored,
will be controlled and overseen by the federal
government.
(6) While s persuasive argument for Phaee II
is thst a vote be allowed in Fremont County, the
issue Is not local but statewide and, if the MRS
were proposed to be sited in Wyoming, would
ultimately become a regional issue. While noth-
ing in my decision precludes the Commissioners
from conducting a vote in Fremont County,
should they choose to do so, such s vote would
not and could not address the statewide nature of
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the issue.
I am vetoing the federally adopted end pro-
grammed Pheee II because by training es e law-
yer and my experience as governor clearly sup-
ports the conclusion that under the current cir-
cumstances, this rural sparsely populated state
cannot expect to control the terms under which
such a long term decision would be implemented.
I do not object to further education or debate but
the discussion I would seek b only tangentially
related to Phase II. The process is federally engi-
neered to avoid several basic questions that I am
not convinced can be answered to the satisfaction
of the people of Wyoming. They are:
(a) Does the national policy which was initially
designed to place the MRS in the East near the
point of origination of the waste and now appears
to target the West continue to make sense? Does
a policy, which the Nuclear Regulatory Commis-
sion states is not required for public health and
safety, i.e. transporting s portion of the waste
from the approximately 70 points of storage half
way across the country to a 'temporary' sits only
to be moved again if and when a permanent sits
is established, represent appropriate national
policy? If the storage of the waste is as safe and
as benign es represented, does it not make better
sense to leave it where it ie or, if it is to be
moved temporarily, to place it at or near the
location of the permanent repository?
(b) After five years end even a billion dollars of
investment, and more billions to be epent, the
permanent repository st Yucca Mountain, Neva-
da, b neither sited nor assured of its permanent
statue. Can we be willing to trust the federal
government's assurances that the MRS site will
be temporary? Can we be paid enough or place
enough in trust to accept e permanent repository
that was intended to be temporary? It b my belief
(e) Can we take comfort from the DOE record
of nuclear facilities in the West? I think not
Can we be assured of continuing control or over-
sight of such a facility? Last month the House of
Representatives voted to exempt Yucca Mountain
from state environmental permitting because
DOE contended Nevada wee not cooperative.
Unless the Supremacy clause of the UJB. Consti-
tution b changed, Congress, for fiscal reasons or
preemptive reasons, can mandate new terms and
new controb es it deems expedient or simply not
accept the terms initially negotiated.
(d) Can we trust the federal government or the
sssuranos of negotiation to protest our eitisene'
interest? To do so would dieregard the geograph-
ical voting power in Congress and 100 years of
hietory and experience. We hashed such essur-
anees on issues like erasing fees, federal ■
royalty administrative costs, operations of dams
and waterways, and wolves, and yet we ere con-
tinually called upon to fight to retain those as-
surances because of e change in oirnimstsnnss
(fiscal or otherwbe) or e chengs in the attitudes
in Congress. Let ue not deceive ourselves - wears
being invited through continuing study to denes
with a 900-pound gorilla. Are we willing to fe-
nore the experience hietory would provide us lor
the siren eongof prnmbed economic benefits and
a policy that b dearly a moving target. As Gov-
ernor, lam not.
(e) Who can assure ue what risks we would
scespt that new businesses mey choose not to
locate in Wyoming or what the alteration of our
image ess state, our environment or our tourism
industry mey be from our willingness to emhrece
thb nuclear wests? The technical quantification
of the risk to eitisene end environment has not
been done by an independent body. It has been
done by the federal agency promoting the facility
and the economic report provided was basically
prepared by the group hired to design the facility.
Ie thb the federal fox in chares of the henhouse?
I em absolutely unpereuaded that Wyoming can
re|y on the assurances we receive from the fodor
el government. Even granting the personal in-
tegrity and sincerity of the individuab currently
epeaking for the federal government, there can be
no guarantees or even assurances that the fsdir
si government's sttitudee or policies will be the
same one, five, ten or 60 years from now. Wo
have seen the roller coaster ride of federal in-
volvement end attitudee. During the Arab Oil
Embargo, thb state fought against federal pro-
posab for an energy mobilisation board. That
board would have had authority to override state
end local laws to facilitate energy development.
Even the most ardent supporters of developing
Wyoming's energy resources were sppelled by the
(0 The MRS is a federal facility. It will be run
by the federal government. The Govern men!
Accounting Office Report of 8opUeahor 1901
concluded that an MRS would likely only reduce
the amount of on-sito storage capacity uttlitbs
would have to add not eliminate that need. The
Nuclear Regulatory Commission concluded, as
related in e letter to me dated January 16, 1003,
that epent fuel generated st nuolear plants can bo
stored safety end without significant o
tal impacts in reactor storage pools or i
dent epent fuel storage instsJIstions for at best
30 years beyond the licensed Hie for op ■ration
end that s permanent repository will likely bo
avelbbb thereafter. The House Interior end
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Insular Affairs Committee views on Um FY 1903
DOE budget stated, 'Converssry, the Subcommit-
tee believe* that the Monitored Retrievable Stor-
ies Program, no longer represents a useful or
necessary interim step in the high level waste
program.' Whils this position on the budget re-
quest was not adopted by the House Budget Com-
mittee, all of these view, reflect, at beet, the
tenuous nature of the MRS strategy and the
difficulty of relying upon the current policy of
the federal government.
Finally, sines there will be a great deal of spec-
ulation shout my motivation and my true intent
in taking this action, 1st me reduce the opportu-
nity for speculation. I an vetoing Phase II. I do
so with no great sense of satiafaction because
there are a substantial number of thoughtful,
well intentioned people in Fremont County end
throughout Wyoming who are firmly convinced
that the MRS ia valuable to, if not the savior of,
our future. I do not fault their position. I sim-
ply do not endorse the wisdom of ths policy
adopted by the federal government nor do I trust
ths federal government or the nuclear industry
to assure our interests es s state are protected.
I have great respect for this great State and faith
in ite future and I believe it ie better served with
a greater independence from the federal govern-
ment rather than more dependence. While fur-
ther discussion and study may be illuminating
and I am extremely reluctant to discourage public
discussion, I an now satisfied the federal govern-
ment cannot provide assurances or guarantees to
ths issues raised herein and originally raised in
my no objection letter or that even given those
assurances the voluntary acceptance of nuclear
wests is in ths interests of Wyoming. Given these
circumstances and my own reservations listed
above, it makee no sense to me es Governor to
put this State or its citizens through the agonis-
ing and divisive etudy and decision making pro-
cess of further evaluating the risks and benefite
of an MRS facility. Many have urged me to do
just thst but the ultimate decision would be no
easier and, I am convinced, no different.
For better or for worse, the process Congress
has now adopted places the decision making au-
thority to halt this process in the Governor. In
what I believe to be the interests of Wyoming I
choose to make the decision st this time.
With beet regards, I am
Very truly yours,
Mike Sullivan,
Governor.
Mr. JOHNSTON. I yield 4 minutes
to the Senator from Kentucky.
The PRESIDING OFFICER. The
Senator from Kentucky ie recognized
for 4 minutes.
Mr. FORD. Mr. President, this is a
milestone day for the U.S. Senate.
More than 2 years after the start of
the gulf crisis, we have finally re-
sponded to the primary cause of the
gulf war - oil. Mr. President, we put
the lives of hundreds of thousands of
brave American soldiers on the line
during the war with Iraq . The passage
of the energy bill by the U.S. Congress
should remind everyone that their
valor and sacrifice is not forgotten.
Mr. President, this bill has many
important features in the area of
energy efficiency and conservation as
well as energy production. The bill is
far reaching and complex. To save
time, I will limit my remarks to just a
few items.
The country has recoverable coal
reserves for more than two centuries.
The bill rightfully emphasizes the role
coal can and should play in this
Nation's energy production. With
such a large domestic resource and
the emphasis on clean coal technolo-
gies, there is no reason why coal
should not play an even greater role
in our goal towards energy
self-sufficiency.
The Nation cannot forget the re-
tired coal mine workers who worked
long and hard so that coal can provide
the Nation's energy needs. The bill
assures that their health benefits will
remain fully funded. I am glad that I
was able to contribute to these diffi-
cult negotiations.
We need to do all we can to con-
serve energy and improve energy effi-
ciency for residential and commercial
buildingB as well as appliances. We
need to develop alternative fuels and
their use in fleets. Electric vehicles
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hold tremendous promise. Further
research in electric vehicle develop-
ment and new sources of energy is
necessary. The bill covers these and
many other areas.
Mr. President, the bill recognizes
that we need to work hard to make
sure that our domestic uranium en-
richment industry does not become
another victim of foreign domination.
This industry must not go the same
way as consumer electronics and other
industries that are now totally domi-
nated by other countries.
This Nation is losing its competitive
edge. Half of our trade deficit is due
to oil imports. We cannot and should
not let this continue any more. For
the sake of this Nation's economic
security and its future, we must now
implement as soon as possible the
national energy policy bill.
Mr. President, this is a historic bill.
This Nation has never had a compre-
hensive energy policy. But we are
finally here through the hard work
and dedication of many Members of
the House and the Senate and their
staff. I would especially like to thank
the chairman of the Senate Energy
Committee, Mr. Johnston, for his
untiring and single-minded leadership.
Without his dedication and hard
work, we would not be here today.
The cooperation and dedication of the
ranking minority leader, Mr. Wallop,
has been equally outstanding and we
thank him for his leadership.
To reiterate, there is a piece in this
legislation for almost every segment of
our economy. Fifty percent of our
deficit in the balance of trade is ener-
gy. We need to be energy self- suffi-
cient. We are allowing one group to
hold up the entire comprehensive
package.
Mr. President, for 20 years I have
been working personally on dean coal
technologies. Our State put up $60
million and built one of the finest labs
to test new pilot programs in the
country. We were moving in the right
direction.
Along came the Reagan adminis-
tration and did away with President
Carter's moral equivalent of war, to
return us to energy self-sufficiency.
In that time, Kentucky has, by
struggle, three pilot projects, one ma-
jor one now about to complete a dem-
onstration program at Shawnee in far
west Kentucky - fluidised combustion
bed. A new pilot project will be start-
ed by the end of this month. And
with Government help we would be
well on our way, instead of struggling.
In this bill we have the uranium
enrichment lease, where it will become
a quasi-business operation that will be
able to be competitive. We wiU save
1,800 jobs. We will put the United
States back in competition with the
rest of the world. We will have the
AVUS. We will be doing thingi that
are right. And this bill gives us that
opportunity.
So if we say it is not good for my
State or it is not good for my State -
Mr. President, I believe this bill is
good for America.
Sure you struggle for a year or two.
You struggle for 3 or 4 - there are 6
hard years in this bill, in order to
transfer the uranium enrichment to a
private corporation. We have 20 years
of work on clean coal technologies in
this bill. And I do not want my col-
leagues - and I hope they will not - to
turn this piece of legislation down.
There is too much work, there is too
much hope. The future is ours in this
bill as it relates to energy.
We can work out other things If
you have problems, I have always
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found that sitting down together and
trying to compromise, like Henry Clay
did in the early days - we can make
thingB work around here. But to stop
a comprehensive energy package? We
have never had a comprehensive ener-
gy policy in this country. We tried
several times. This is the closest
thing we have ever had.
So, Mr. President, I urge my col-
leagues to vote for cloture on this
particular piece of legislation and give
us an energy policy. Let us help the
consumer. Let us help our business
people. Let us help our entrepre-
neurs. And let us save jobs in this
country, by this particular piece of
legislation and increase the job oppor-
tunities for the future.
I yield the remainder of my time.
Mr. JOHNSTON. Mr. President, I
yield 4 minutes to the Senator from
Texas.
The PRESIDING OFFICER. The
Senator from Texas is recognized for
4 minutes.
Mr. BENTSEN. Let me join in
strongly supporting the vote for clo-
ture on an issue of major importance
to our country. What we are talking
about is a constructive, effective na-
tional energy policy. This conference
report has already passed the House
by a massive vote, by a vote of some
363 to 60. So the responsibility now
lies with us - we have something to
accomplish.
The Senate's decisive approval of
this piece of legislation in July by a
vote of 93 to 3 reflected this
Chamber's urgent desire to enact
meaningful energy policies this year.
What happened to us in the gulf
war further emphasized the danger of
depending on the Middle East - a
politically unstable area - for the ener-
gy supplies of this country. We are
talking about a situation where, by
the year 2010, we will be 70-percent
dependent on foreign oil. That means
that we will have to have the equiva-
lent of 36 supertankers a day arriving
at our shores to deliver oil to us. We
are talking about a serious threat to
our economic future and an incredible
increase in our deficit in foreign trade.
The stabilization of our domestic
energy supply, the encouragement of
energy conservation, and the promo-
tion of renewable and alternative
sources of energy that are emphasized
in this bill are major steps forward for
the economic and energy security of
this country.
Look at the tax title of this package,
which was our responsibility in the
Finance Committee. It provides a
balanced package of incentives to
promote conservation, to encourage
the use of renewable energy and alter-
native fuel supplies, and to foster our
domestic production.
The conference agreement increases
the exclusion for employer-provided
mass transit benefits to $60 per
month and caps the exclusion for
employer-provided parking subsidies
at $155 per month. By tilting
employer-sponsored benefits toward
the utilization of mass transit, it as-
sists in further conservation. The
conference agreement also promotes
residential, commercial, and industrial
energy conservation by excluding from
customers' income the rebates that
the utilities offer them for utilizing
conservation measures.
The conference agreement bolsters
developmentof environmentally sound
renewable energies and alternative
fuels. It permanently extends the
10-percent investment tax credit for
solar and geothermal energy, and it
provides a tax credit for electricity
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produced from wind or biomass. That
ia coming from a Senator from Texas,
where oil and gas have been a major
part of our economy.
The future of our country is at
stake as the result of its increasing
dependence on foreign oil and foreign
energy. We have here in our hands
the ability to turn that around.
This conference agreement gives tax
incentives for vehicles that run on
domestically abundant, clean-burning
fuels such as methanol, natural gas,
ethanol, and electricity. It also in-
cludes provisions designed to expand
the use of ethanol and other alcohol
fuels for blending with gasoline.
And finally, the conference agree-
ment promotes domestic production of
oil and gas by providing minimum tax
relief for independent producers. The
minimum tax currently undercuts
exploration and development of U.S.
reserves and accelerates our depen-
dence on foreign oil.
Mr. President, I urge my colleagues
to send this much needed legislation
forward by invoking cloture on H.R.
776.
I do not think our country can af-
ford a delay in the benefits that ac-
crue to it under this legislation.
I congratulate the distinguished
chairman and ranking minority mem-
ber of the committee for the amount
of work that they have done on this
piece of legislation - and the staffs for
their contribution.
The PRESIDING OFFICER. Who
yields time?
Mr. JOHNSTON. How much time
remains, Mr. President?
The PRESIDING OFFICER. The
Smator from Louisiana has 17 min-
ASm and 13 seconds remaining; the
itemtec from Nevada has 15 minutes
*ntt 51 seconds remaining.
Mr. JOHNSTON. Mr. President, I
yield 2 minutes to the distinguished
Senator from Idaho.
The PRESIDING OFFICER. The
Senator from Idaho is recognised for
2 minutes.
Mr. SYMMS. Mr. President, conser-
vation of electricity ought to be the
cornerstone of our tax policy and the
cornerstone of our energy strategy.
H.R. 776 corrects a flaw in our tax
law by making utility conservation
rebates tax-free. This is one of many
good thingB in the legislation before us
today. The provision in the bill does
not go quite as far as my proposal, S.
S3, but it represents significant prog-
ress on this issue.
There are several other good provi-
sions in this legislation. For example,
the nuclear power option benefits in
many ways from H.R. 776.
First, nuclear licensing is signifi-
cantly reformed under the provisions
of the bill. A licensing process that
takes as long as 10 to 12 years today
is expected to usually last no more
than 6 or 7 years because of the
changes made in this bill. Utilities
can expect to spend resources on engi-
neers rather than lawyers and the
licensing process will reach a conclu-
sion, rather than lapse into periods of
uncertainty.
Second, uranium enrichment will no
longer be the Government's responsi-
bility. The uranium enrichment cor-
poration established by this legislation
will bring more free-market innova-
tion to the entire industry.
Third, the bill incorporates S. 1641,
a proposal by Senator Breaux that
I've supported for years regarding
nuclear decommissioning funds. The
IRS Code unnecessarily restricts how
these funds can be invested. This bill
lifts those restrictions so that fund
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managers can invest in more profit-
able securities. This provision will
help provide more resources for the
decommissioning of older nuclear
powerplants and it will reduce the
need for future rate increases for
customers who are served by nuclear
plants.
Fourth, significant progress is made
in this bill on spent fuel disposal.
Revision of the Environmental Protec-
tion Agency rules for acceptable radia-
tion exposure is long overdue. Cur-
rent EPA standards represent unreal-
istic paranoia about radiation risk.
The idea by Senator Johnston to bring
the National Academy of Science into
this debate is a good one. I am confi-
dent that the NAS will come up with
technologically feasible standards that
will adequately protect the environ-
ment and human health.
As I have said many times on the
floor of this Senate, we have the tech-
nology to safely dispose of spent fuel.
This bill adds the political courage to
do something about this obstacle - the
nuclear option.
Not only do we keep an environ-
mentally sound energy option by help-
ing nuclear power in this bill, but also
we will maintain a demand for better,
safer, and more efficient nuclear pow-
er technology. This will undoubtedly
benefit the premiere nuclear power
research laboratory in the world - the
Idaho National Engineering Laborato-
ry-
The bill does many other good
things, but in the interest of time, I
will just mention two other things in
H.R. 776 that particularly impress me,
as follows:
The bill encourages U.S. businesses
to use energy more efficiently without
imposing excessive commands and
controls on industry, and
It promotes the research, develop-
ment, and exportation of clean fossil
fuel, and renewable and
energy-efficient technologies made in
the U.S Jl
Mr. President, I compliment Sena-
tors Wallop and Johnston on the job
they did on the energy side of this bill.
And also I think the Finance Commit-
tee deserves commendation. However,
I have one very sad disappointment
that is not in the bill that the chair-
man is very well aware of. But I
would hope in the future this would
just be a temporary setback. That, of
course, is the bond issue on high-speed
rail. I will talk about this issue at
length in just a moment.
But I think it is important and
significant that in this bill we will now
be moving forward with the question
of nuclear waste disposal. We will be
imposing sound, solid environmental
protections for disposal of those prod-
ucts. We will be getting this country
moving forward so we can have a
nuclear alternative to foreign fossil
fuels, I think is most important.
Then on the tax side, I also say that
there is a great deal of encourage-
ment, now, for the conversation of
electricity. It will encourage people to
have many, many innovative ap-
proaches to energy conservation.
Nuclear licensing is significantly
reformed in the bill. Uranium enrich-
ment will no longer be the
Government's responsibility.
The proposal Senator Breaux and I
have supported for years, regarding
nuclear decommissioning funds, will
be corrected. The IRS code unneces-
sarily has restricted how these funds
could be invested. This bill lifts those
restrictions so that those funds man-
agers can invest more profitably in
securities.
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And, as I said, significant progress
has been made on the bill on spent
fuel disposal. So we can move for-
ward with Yucca Mountain and with
other facilities and complete the cycle
we have been working on. The
President's Office of Nuclear Waste
Negotiator has been continued.
I think the provisions in title Vm
have great potential because I believe,
once people become enlightened, they
are going to recognize that some of
the nuclear materials that are called
waste have great value for the future
for refitting; for reprocessing; and
reuse.
I know Senator Graham has spoken
on this. I will vote for cloture even
though I am extremely disappointed
that the high-speed rail amendment
we have worked on for several years,
which is so important for transporta-
tion policy in the United States, was
not included in this bill. We now have
a policy in the United States that
discriminates against private invest-
ment into high-speed rail. I think it is
a mistake. I think it is unfortunate it
was not put in this bill. We discussed
it on the Senate floor. We had a thor-
ough airing of it. We debated it, we
voted for it, and then it was dropped
in the conference.
I do not know what happened in
that conference. I am hopeful that in
the fiiture - 1 will not be here - but
that Senator Graham and others will
continue this fight and Senators from
ail the States affected in this country.
That is, all the States along the East-
ern seaboard, through the Midwest,
from Chicago, Milwaukee, down to St.
Louis, from Seattle, WA, to Vancou-
ver, BC, clear back down to Portland,
OR, and then to San Francisco, to Los
Angeles, back over to Las Vegas, all
these States and cities will benefit
from high-speed rail projects.
I hope they all will weigh in on this
matter with the Finance Committee
next year and see that we correct an
inequity in our Tax Code with respect
to the sale of tax-free revenue bonds
so we can get on with a more efficient
means to move the American people.
SYlfftlS HIGH-SPEED RAIL AMENDMENT
I am very disappointed that I will
leave the Senate without seeing this
provision become law. I believe re-
moving the volume cap requirement
for tax-exempt bonds issued to finance
high-speed rail could have had a dra-
matic impact on our future transpor-
tation and energy policy.
I am saddened that the energy con-
ference did not see the importance of
high-speed rail to our future i^ti^n^
energy strategy. High-speed trains
require approximately one-third of the
energy consumed by automobiles and
one-fourth of that used by airplanes.
A trip on high-speed rail would cut
hydrocarbon emissions by 90 percent,
carbon monoxide by 75 percent, and
nitrogen oxides by up to 75 percent
compared to travel by automobile.
It is my sincere hope that some of
my other colleagues will take up
where I left off . This is only a setback
for high-speed rail projects. Although
this provision was dropped this time,
I hope next year on another vehicle it
will become law.
My amendment has support from
both sides of the aisle. The adminis-
tration has spoken out in favor of
high-speed ran numerous times. Gov-
ernor Clinton the Democratic Presi-
dential nominee has stated:
» " mw high tpMd nil U»d I
gits offer weje to improve eoapotitfa
create Jobs, reduce pollution, eoabel
etee for tieeUo* dUieoe end
On|r with
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Washington out we encourage the kinds of in-
novative public-private partnerships neceeaary for
eucceee in such Urge infrastructure projects.
Perhaps next year the administra-
tion, no matter who occupies the
White House, will make this legisla-
tion one of their top priorities.
The exemption from the volume cap
to finance transportation systems is
not a new concept. Currently, air-
ports and seaports are exempted from
the State activity bond cap simply
because they are too expensive to fit
under any State cap. For precisely
the same reason, high-speed rail
tax-exempt bonds must be exempted
from the cap.
I am afraid that those who oppose
high-speed rail just want to keep out
competition. This time they were suc-
cessful but I am confident they will
not keep high-speed rail from becom-
ing a reality. It is true that
high-speed rail offers an alternative to
flying relatively short distances, but
competition leads to innovation which
is vital to our domestic and interna-
tional economic health. Protection
will lead only to stagnation which will
ultimately put us at a disadvantage.
I believe public/private partnerships
for these major infrastructure projects
is the wave of the future. The Feder-
al budget can no longer fully subsidize
these projects. Public/private partner-
ships involve a small amount of Fed-
eral participation, but this leadership
inspires billions of dollars of private
capital to be unleashed to finance the
needed high-speed rail infrastructure.
This is undoubtedly the most
cost-effective method of expanding our
transportation system.
High-speed rail will play a major
role in our future transportation poli-
cy. It is safe and efficient. The Unit-
ed States is the only industrialized
country in the world that has not
developed a high-speed rail system.
Right now, the British are working to
connect themselves to the continent
with high-speed rail, and to connect
that to an expanding European rail
system.
We are always talking about the
importance of the United States' in-
ternational competitiveness. Japan
has its bullet train and the entire
European Community is covered with
high-speed rail lines and working on
more. Is this yet another develop-
ment that the United States wants to
ignore - so that in 10 years we can say
we should have pursued high-speed
rail? I think not.
The U.S. transportation infrastruc-
ture needs to be greatly expanded
during the next century in order to
accommodate our population growth.
I believe high-speed rail is the key to
our future transportation infrastruc-
ture. High-speed rail offers a safe,
energy efficient, and environmentally
sound way to move people.
This legislation is good economic
policy, good transportation policy,
good energy policy, good environmen-
tal policy - and good tax policy, and I
hope my colleagues will take up where
I left off so that this temporary set-
back will not stifle the development of
this important transportation mode in
the United States in the near future.
Also, there are many issues, like
high-speed rail, that are not in this
bill. There is very little convention
resource development in this bill.
Future offshore oil drilling is greatly
restricted, as is oil exploration on the
northern coast of Alaska. Without
provisions for development of U.S. oil
resources, Congress is deciding that
U.S. jobs are not very important when
setting national energy policy.
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Despite all these concerns, the good
stuff in the bill outweighs the bad.
Some jobs will be created by develop-
ing energy conservation technology
and marketing it to the world. Alter-
native fuels will be used more than
ever before. For these other reasons
I talked about earlier, I urge my col-
leagues to vote for cloture.
The PRESIDING OFFICER. Who
yields time?
The Senator from Nevada is recog-
nized.
Mr. BRYAN. Mr. President, I yield
myself 10 minutes.
I want to restate the case. My col-
league and I, in forcing this vote on
cloture, did not intend to take down
the energy bill. Both of us voted for
that bill when it came before this
body. But what has occurred thereaf-
ter, as my colleague referred to, is a
legislative travesty. It is part of a
continuous modus operandi that af-
fects Nevada, to which I take great
exception.
In 1987, without having had the
opportunity of a hearing or of calling
witnesses, which is a chance to be
heard in the traditional legislative
process, a last minute deal - not moti-
vated by science, but by politics, the
muscle, if you will - stripped the Nu-
clear Policy Act of its original mission,
which was to search for the best site,
to now look only at Yucca Mountain.
Here again, at this last minute, we
face a similar proposition. Two funda-
mental things are occurring here that
go far beyond Nevada, yet we are
most directly affected. One is a
change in the public health policy
standard. Every piece of environmen-
tal legislation this Congress has enact-
ed, provides for a population-based
standard in determining the risk of
toxic agents, chemicals, and in this
case radionuclei. That has been the
universally accepted approach. Not-
withstanding all of the phony letters
that are waved around here, and all of
the assertions in the report language,
every one of us on this floor, every
Senator, knows you cannot change the
explicit language in a statute by a lot
of words uttered on the floor. It is
meaningless. And that is the effect of
what is happening to us - by changing
that standard.
That is not just an academic debate,
Mr. President. In effect, what it
means is that if Yucca Mountain were
ever developed, we in Nevada would
experience thousands and thousands
of additional cancer deaths, and thou-
sands of additional people who would
be potentially affected by some kind of
genetic damage.
So, Mr. President, when my col-
league and I get energized, please, I
implore you, think of the implications
of this. We are not trying to kill this
energy bill. We came to Senator
Johnston time and time again and
said, please do not do this. Please do
not do this to us. Why is it necessary?
The project manager in 1987, Mr.
Vieth, said the existing proposed stan-
dards, the ones temporarily remanded,
could indeed be met by the Depart-
ment of Energy by a fivefold order of
magnitude.
I ask unanimous consent that the
testimony of Mr. Vieth offered before
the Senate Energy Committee, June
29, 1987, be printed in the Record.
There being no objection, the mate-
rial was ordered to be printed in the
Record, as follows:
STATEMENT OP DONALD L. VIETH, PRO-
JECT MANAGER, WASTE MANAGEMENT
PROJECT OFFICE, NEVADA OPERATIONS
OFFICE, DEPARTMENT OF ENERGY
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Mr.
.KjmmiDomU
of the office that m
i of the mountains of
tha Yucca Mountain site in Nevada. I am pleased
to have this aeamrtunsfr to iw these idin-
ties. I wfll prmnl a brief hmtory of the site, a
dsstriptioa of tha site's mirifir technical msuss.
a current status of activities, and a wauy of
with the representative State
r for a samrt hmtory. la 1976,
DOB'S prHicimor. The Eoacijr Rasssrch and
Development Adminmtration. initiated tba Na-
tional Waate Terminal Stormy Program to devel-
op gaologic repositories, la April of 19T7t ERDA
expanded tba Nwrs program to focus on a wider
witty of geologic formations, including those at
tha Nevada Test Site.
By August of 1976, DOE focused its effort on
am potential sites in the southwest corner of the
NTS, including Skull Mountain, Calico Hills,
Jackass Flats, Little Skull Mountain, WaJuaoais
Mountain, and Yucca Mountain. Yucca Mountain
waa judged to have the bast overall prospects for
being considered a suitable repository site.
For the next three snd one-hslf years, the
NNWSI project performed a series of technical
activities that resulted in dots which provided
the beam for the identification of Yueca Mountain
as a potentially Acceptable site for the first repos-
itory under the Nuclear Waste Policy Act of
1962.
Now let me turn to tha site specific technical
issues and bow they are being sddrasssd. Tbs
requirement* for determining the suitability of a
site are outlined in the DOE siting guidelines, 10
CTTt Part 960, the NRC regulations, lOCFRPsrt
60, and the EPA standard, 40 CFR Part 191.
Data developed in response to these require-
monte during the initial site investigations have
established a fundamental understanding of the
site and identified site specific technical issues.
STATEMENT OF DONALD L. VIETH. PRO-
JECT MANAGER, WASTE MANAGEMENT
PROJECT OFFICE, NEVADA OPERATIONS
OFFICE, DEPARTMENT OF ENERGY,
BEFORE THE COMMITTEE ON ENERGY
AND NATURAL RESOURCES, US. SENATE,
JUNE 29, 1967
Yarn
uvea
it was
,1
theNRCandtheorail
of*
The Chairman. Mr. Vieth, as I asked Mr.
Anttonen earlier, with respect to your site, lot us
say that ws suspended activity on the other sites
and proceeded to characterise one site at a time.
There are sdvsntagas to doing that, of couras.
Now the disadvantage is that in esse tha first
site, wherevei it is. turns out to be unmritahls,
thaa you must go to the neat ana and there
would be a time delay. It has also been criticised
in that these might be soma pressure because of
tha time daisy to get it done.
Now. can you elucidate a little hit about the
degree of confidence you would have that tha site
would be suitable? Is there any way in the world
to toll? Do you think it is ssore likely that it
suitahls than non-suitable? Is three
i to characterise it, or should wa have
tan sites? Can you speak to that?
Mr. Vieth. Let ma try to put it in proper per-
sportive. We have looked at the site fairty thor-
oughly since 1977. I think we understand the
nature of the forces that are acting on the site. If
ana takes the information wo have now, and tries
to project the kinds of things thet are liable to be
dmrwvorad in the neat five or am years of site
characterisation, it is not conceivable to me that
wa would discover something on s major nature
that would cause us to change our mind shout it
I think that ws are comfortable in our analysis
that the site would be capable of meeting the
NRC requirements snd EPA requirements. The
pro rues— of doing the modeling snd the calcula-
tions thet estimate the radioactive rswasss from
the repository tells us that wa may be five orders
of msgnituds below a very conservative EPA
I think that wa are vary confident about the
potential for that piece of earth being able to
amlate the waate if it is placed there.
Now with regard to your question about the
philosophy shout how you go about picking and
choosing sites, 1 think there are a number of
other forces that ws have to deal with. Thia
issue goes back to as early as 1976 whan the
NRC waa initially writing its regulations. They
argued that in order to satisfy NEPA appropri-
ately, you had to consider st least three sites in
at least in two different gaologic media.
So that philosophy has hold for almost ten
years now, and if wa are going to deviate from
that, than we are going to have to go back and
look at some other broader factors lika NEPA
and so on, which wo sre still required to fulfill
under tha Nuclear Waste Policy Act.
The Chairman. NEPA would not suspend, or
would not override what ws would do. The ques-
tion is, would it be prudent to do booauee, aa I
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say, you save $2 billion, which is not insignifi-
cant oven in tho United States. The question is
is it prudent. In your view you would have a
high degree of confidence with respect to your
site, the Nevada sits, that you could provide its
ability to isolate the waste?
Mr. Vieth. I have a fairly high level of confi-
dence about the sits for which 1 an responsible.
Whether or not it b prudent as national policy,
I do not know whether or not I am the person to
that question.
The Chairman. Will you tell me about the
Ghost Danes Psult at Yucca Mountain? Is it a
limiting fault?
Mr. Vieth. The Ghost Dance Fault is a geologic
feature that runs on the eastern side of the spe-
cific block that we are looking at for the reposito-
ry. It is not s limiting fault from the point of
view of affecting the amount of radioactive waste
to be pieced in the site. It is simply s geologic
feature. We know where it Is. We know most of
it* characteristics. We do not eee it as a problem
from a aafety or operational point of view in the
repository.
There are other faults that bound the site euch
es Sotitier Canyon Fault, or the fault under Drill
Hole Wash, or the Imbricate Normal faults to the
east which do represent a limit. While they rep-
resent s boundary for the block of the repository,
Ghost Danes Fault does not.
The Chairman. There are other faults that
would act as a limit?
Mr. Vieth. Yes, there are.
The Chairman. And the limit in the law now I
think is 70,000 tons, at least in the plan. In your
view, would those faults which do limit the site,
would they permit 70,000 tons or more? Do you
have a view on thet?
Mr. Vieth. With the land thet we hsve now in
the conceptual design of the repository that has
been completed, ws are looking at an area of
roughly 1,660 acres. The 70,000 metric tons
calculated at 67 kilowatts per acre in terms of
heat load would fill an area of roughry 1,620
acres. We may have about 600 acres of addition-
al space for disposal of waste in excess of 70,000
metric tons.
If we looked at some other positive ways of
doing things, we can estimate thet up to 100,000
metric tons of waste could be plsoed in the 1,660
acres of land.
The Chairman. The 1,660 acres, is that the
limit es you know it now?
Mr. Vieth. Yes, but there is potential to ex-
panding to the area to the north, however, we
will not know that until wa ant underground and
look at the perceived fault that lays underneath
of Drill Hole Wesh.
Mr. BRYAN. Mr. President, let me
tell you how diabolical this is. The
Environmental Protection Agency has
been working with the DOE, and in a
letter dated September 11 to Mr.
Ziemer, they indicated: We are not
aware that you have any concerns
that we are not reasonably addressing
Come to us and tell us if you are.
What are they? These standards have
not been finalized, Mr. President.
There is opportunity in the adminis-
trative process for men and women of
good will, who may have differences of
opinion, to come forward and present
them.
What we are left with is an Envi-
ronmental Protection Agency that is
being muzzled. Make no mistake, the
effect of this legislation, the specific
language, is to limit, for the first time
to my knowledge in the history of the
Environmental Protection Agency, to
deprive the Agency from exercising its
best judgment and to be mandated to
adopt a standard that excludes the
population risk standard and limits
that Agency to whatever the recom-
mendations are.
Think for a moment what we are
talking about in terms of change to
public policy. You have people who
are not part of an agency at all, who
are not regulators. The way this is
crafted - 1 have to say that the draft-
ers of this get an A for cleverness, an
F for public policy, and an F for fair-
ness. But that is the effect of what
we are talking about.
Moreover, we change the fundamen-
tal premise of this by making it so
that a site now, if it is ever developed,
does not have to have sufficient stan-
dards so that site itself, the geological
formation, and the engineering stan-
dards built into the design, would pro-
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vide safety for public health for 10,000
years. Now we are lowering that. We
are saying; look, we are not going to
do that We are simply going to say,
look, we will have a night watchman
out there hired by the Department of
Energy for 10,000 years.
That is fundamentally wrong; Mr.
President. That is fundamentally
wrong. And I must say that, in my
view, the world's greatest deliberative
body, as the Senate of the United
States prides itself, is about to commit
a shameless, shameful act on the
State of Nevada by subjecting us to a
public health and safety standard that
is unique to the Yucca Mountain pro-
ject. Nowhere else is it found. No-
where else do we limit the EPA. That,
Mr. President, is what this debate is
all about. All of the other provisions
of the bill notwithstanding, to do this
at the last minute is simply wrong.
The Senate Energy conferees pro-
posed legislation during the final days
of the energy bill conference that
would radically revise the regulatory
environment for the Yucca Mountain
nuclear waste project, and turn the
program from a final repository for
the Nation's high-level commercial
nuclear waste to an ill-conceived facili-
ty that would require monitoring the
facility by the Secretary of Energy for
the next 10,000 years or more.
There are existing EPA standards
(40 CFR 191) for radiation releases
from a repository that the Yucca
Mountain site would have to meet.
The original regulations were remand-
ed to EPA in 1987 and the process of
repromulgating them has been contin-
uing since that time.
Now, in the last hours of this Con-
gress, legislation appeared in the ener-
gy bill which dramatically changes the
rules regarding Yucca Mountain, to
once again put the interests of the
nuclear power industry ahead of pub-
lic health and safety, as well as good
The differences between the existing
EPA standard and the proposed stan-
dard under the legislation include:
Prescribing that the new standard
will be based on exposures to the indi-
vidual versus the general public, and
by requiring the DOE to engage in
permanent site monitoring; Yucca
Mountain can be found safe, simply by
DOE keeping individuals far away
from the site, forever - or at least for
a time longer than that of recorded
human history.
The effect on the general population
of southern Nevada and elsewhere
could be dramatic; that is, many more
cancer fatalities in the public at large,
but as long as DOE keeps the maxi-
mally exposed individual away from
the site, the reference case, the site
could meet the standard.
By prescribing how EPA is to devel-
op a new standard based on exposures
to individuals versus to the general
public, the authors of the bill are dic-
tating to scientists and health experts
how to create health and safety stan-
dards; that is, legislating a standard
that should, and has in the past, been
based on science.
DOE has been attempting to per-
suade the EPA and the National
Academy of Sciences over the past
several months to change the EPA
standard the way in which this bill
does. However, both entities have
rejected DOE's arguments, as without
scientific or technical foundation. As
a result, DOE is using the energy bill
to legislate their agenda.
DOE testified before Congress, spe-
cifically the Senate Energy Commit-
tee, as long ago as 19S7, that the Yuc-
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4782
ca Mountain site could meet the exist-
ing EPA standard *fay better than 5
orders of magnitude/ resulting in part
in the original screw Nevada bill.
Since 1987 they have discovered, as
the Department of Energy has found
since beginning to deal with the com-
mercial nuclear waste issue in 1957,
that their statements as well as their
plans are optimistic and flawed. Once
again, they can succeed only by chang-
ing the rules.
This proposal, if adopted, would
place a greater health and safety stan-
dard at the Waste Isolation Pilot Pro-
ject (WIPP) in New Mexico, than for
Yucca Mountain, even though the
waste at Yucca Mountain would be
more lethal and longer lasting.
This new proposal continues a long
and sorry history of the Nation's at-
tempt to deal with the nuclear waste
issue. From the air premise of the
original 1982 Waste Policy Act, the
Congress has consistently moved back-
ward - first, to less fair in the 1987
amendments, and now, in 1992 to less
safe as well.
EPA's final rule 40, part 191, Envi-
ronmental Standards for the Manage-
ment and Disposal of Spent Nuclear
Fuel, High-Level and Transuranic
Radioactive Wastes, was promulgated
on September 19, 1985. This complet-
ed a long process, begun in the late
1970's, in which issuance of the pro-
posed rule was preceded by 24 work-
ing papers that were distributed for
comment from interested parties, and
numerous meetings were held to dis-
cuss the basic concepts and particu-
lars of the developing regulation.
Following petition for review by nu-
merous States and national environ-
mental organizations, the First U.S.
Circuit Court of Appeals issued on
Juty 27, 1987, an order of remand of
the final rule based on two substan-
tive issues and one procedural issue.
The procedural issues involved sub-
stantial change from the proposed to
the final rule in the ground water
protection approach. The substantive
issues remanded were first, the bask
for selecting a period of 1,000 years
for the individual protection standard;
and second, the rationale for selecting
a maximum dose standard for ground
water different from that which is
established in EPA's Safe Drinking
Water Act regulations.
Since the remand of 40 CFR, part
191, EPA staff have been reviewing
the issues of the remand, as well as at
least five other issues raised by DOE
and nuclear power industry represen-
tatives. The EPA has issued 4 working
papers for discussion in the course of
this review, has asked the EPA's Sci-
ence Advisory Board (SAB) to review
the technical basis for the release
standard for Carbon-14; and has
asked the National Academy of Sci-
ences National Research Council
Board on Radioactive Waste Manage-
ment (BRWM) to review the technical
basis of four additional issues of con-
cern to DOE and nuclear industry
interests. The reports from the SAB
and BRWM are pending, and expected
to become final near the end of calen-
dar year 1992. Following these re-
ports, EPA plans to proceed in a time-
ly manner to repromulgation of 40
CFR, part 191.
Included within the five issues to be
reported upon by the SAB and BRWM
in the near future are the technical
evaluations implicit in the directions
to the National Academy of Sciences
contained in the proposed language of
section 801 of the energy bill regard-
ing a risk basis for the EPA rule and
postclosure protection of i
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4783
tion at a repository.
Prior to issuance of 40 CFR, part
101, in 1986, the EPA committed
significant resources to development
of the regulation, as did the many
interested governmental, industry,
and public organizations who partici-
pated in its development. Since the
1987 court remand of the rule, EPA
and the interested parties have again
spent millions of dollars in attempting
to resolve not only the original issues
of the remand, but on issues newly
introduced by DOE and nuclear in-
dustry representatives. Introduction
of the new issues is largely in response
to compliance concerns raised by the
growing body of information regarding
both the Yucca Mountain site and
WIPP.
When President Reagan signed the
Nuclear Waste Policy Act on January
7, 1983, less than a week after I be-
came Nevada's Governor, our Nation
embarked on a costly scheme to re-
solve a vexing technological problem -
how to manage for hundreds of thou-
sands of years the most toxic and
harmful waste products that man has
ever created.
The premise of the 1982 Nuclear
Waste Policy Act was to evaluate a
variety of sites and different geological
formations so that the best solution to
the high-level commercial radioactive
waste disposal problem could be
found.
That act also contemplated a re-
gional balance so that no single area
of the Nation would be unfairly bur-
dened with the entire Nation's com-
mercially generated radioactive waste.
In the Nuclear Waste Policy Amend-
ments Act of 1987, signed by Presi-
dent Reagan on December 22, 1987, a
political decision was made to aban-
don the premise of the 1982 act and
to shift the national policy from a
balanced, scientific approach to target-
ing only one site - Yucca Mountain,
NV - for further consideration for a
repository location. This ill-conceived
policy - abandoning science for politics
when trying to solve a great scientific
problem - was tangible evidence of the
undue influence the commercial nu-
clear utility industry has had on the
repository program since its inception.
The DOE and nuclear industry
policymakers, however, have consis-
tently underestimated the resolve of
Nevada's citizens to oppose this
flawed proposal. Even more funda-
mentally, they were blind to the mer-
its of the State's technical arguments
that Yucca Mountain was a poor
choice to even study for a repository.
I have said many times the national
policy we are following is destined to
fail. If, as Nevada's scientists and
others strongly believe, Yucca Moun-
tain is ultimately proven to be unsuit-
able for storing radioactive waste,
more billions of dollars will have been
wasted, and the Nation will face an
environmental crisis of epic propor-
tions after the turn of the century
without even so much as a contingen-
cy plan.
As I have pointed out at every op-
portunity, all the existing program
has succeeded in doing is to waste
billions of dollars of utility ratepayer's
money. And unfortunately, like other
Federal Government failures of recent
years, the price tag on the repository
grows each time the plan is revised
and each time its cost is estimated.
We must remember that the origi-
nal 1982 act and 1998 repository date
opening were a reaction to a perceived
fuel storage crisis. Now, with the 12
or more year delay in the repository,
utilities are managing their waste
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storage needs in anticipation of the
fact that no repository will be avail-
able to solve their immediate problem.
A few reactors have already exceeded
their spent fuel storage pool capacity,
even after installing more compact
storage racks - reracking. A growing
number of utilities are purchasing and
planning on using NRC-licensed dry
cask storage units at reactor sites to
meet their interim storage needs.
The Nuclear Regulatory Commis-
sion has issued a revision of its waste
confidence rule which indicates that
at-reactor-spent-
fuel-storage can be safely and effec-
tively implemented for a period up to
100 years. Thus, the crisis that
prompted the 1982 act and its dead-
lines DOE was unable to meet has
now vanished with better technologi-
cal approaches gaining acceptance.
When this issue first was raised in
1983, 1 based my opposition to nuclear
waste storage at Yucca Mountain on
the fact that Nevada had done its
share and more for our country's
nuclear efforts. Since we produced no
high-level waste, it seemed inequitable
and unreasonable to ship the waste
products of other State's commercial
nuclear power generation across the
entire country to be stored for thou-
sands of years in Nevada.
Not just Nevada was threatened by
that prospect, but the transportation
of lethal wastes, generated mainly
east of the Mississippi, across thou-
sands of miles of our roads and high-
ways, through hundreds of communi-
ties, threatened millions of Americans.
It simply made no sense then, nor
does it make sense now. The risks are
too great.
The story has changed dramatically
after 6 years of scientific study by the
State. As our technical knowledge
increases, our initial concerns about
the suitability of the Yucca Mountain
site are being confirmed.
The geology, hydrology, volcanism,
and mineral potential at the site all
indicate it is unable to isolate these
lethal wastes from the environment
for the tens of thousands of yean it
will take for them to decay to less
dangerous levels of radioactivity.
The entire course of the Nation's
nuclear waste effort has resulted in
more than two decades of failures and
false starts, and apparently 1992 sadly
will not be the end of this continuing
saga of waste and failure.
While DOE blindly ignores expert
opinion and the facts which continue
to mount against Yucca Mountain,
the U.S. taxpayers and utility
ratepayers are footing the bill for
DOE's follies. Since the passage of
the NWPA in 1982, nearly $3 billion
have been wasted with no tangible
progress evident for solving a vecy
serious problem. Utility ratepayers
are paying over a million dollars a day
that DOE treats as its own largess.
I believe the time for a new institu-
tional approach to this problem has
arrived.
I yield the floor.-
The PRESIDING OFFICER. Who
yields time?
Mr. JOHNSTON. Mr. President, I
yield 3 minutes to the distinguished
Senator from Colorado.
The PRESIDING OFFICER. The
Senator from Colorado is recognised
for 3 minutes.
Mr. WIRTH. Mr. President, I thank
the distinguished chairman for yield-
ing. I will, in this moment of time,
say what enormous admiration I haws
for the chairman and the ranking
member of the committee. Their
persistence in keeping behind this,
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pushing it, pushing it, pushing it has
been absolutely remarkable. Not only
has there been great persistence, but
the product has been worth that.
I understand the concerns of my
very good friends and the wonderful
Senators from the State of Nevada.
They get an A for eloquence, an A for
effort, an A for advocacy for their
State, and I wish that we had in this
an A for agreement I am just very
sorry to see this kind of disagreement
between the committee and the two
Senators. I understand their position.
They have argued it very, very well,
and I have enormous and unflagging
admiration for them. I only wish we
were not in this position, but here we
are.
I think the Senator from Louisiana
has done everything that he can to
take care of this concern and at the
same time making sure that we are
moving ahead with the problem of
what we are going to do with nuclear
waste. That has to be done. We all
know that has to be done.
Leaving that aside, this is an ex-
traordinary change of policy in this
bill. It is wonderful shift from where
we have been going ever since the
dawn of the fossil fuel revolution. We
have begun to move in a different
direction, and that is absolutely posi-
tive. We have in here the most strin-
gent conservation standards that the
Government has ever agreed to with
the private sector after extraordinary
negotiations in which so many differ-
ent industry groups have been in-
volved. We owe them our thanks for
really sitting down and working this
out.
We are beginning to move toward
alternative fuels, and that is the right
thing for us to do, have a bridge par-
ticularly with natural gas. that plenti-
ful fuel that is so much cleaner and of
which we ought to be using a great
deal more. We are beginning to set a
strategy for backing out foreign oil,
which we must do. I think much of
the economic malaise in this country
comes from our continuing depen-
dence on foreign oil and our continu-
ing export of scarce American capital.
That cannot continue.
We have in this for the first time a
beginning of a balance between the
environment and energy policy. Be-
forehand, they have been all too often
mutually exclusive. People say, as the
President has said, unfortunately, you
cannot protect jobs and the environ-
ment at the same time. That has
been much of the debate in the past
about energy policy: You cannot have
good energy policy and care for the
environment at the same time.
For the first time we have linked
these two together in a meaningful
fashion and we are beginning to make
progress in that direction. Of course,
everything is not here that we would
like to have. It is not a perfect piece
of legislation by any means. But it is
a significant step in the right direc-
tion.
I urge my colleagues to vote for the
conference report. I think it is major
progress for us in this Congress.
Again, I thank the distinguished
Senators from Louisiana and Wyo-
ming, and I yield the floor.
The PRESIDING OFFICER. Who
yields time?
Mr. RED). Will the Chair inform
the managers of this legislation as to
the time on each side?
The PRESIDING OFFICER. Yes.
The Senator from Nevada has 9 min-
utes and 42 seconds, the Senator from
Louisiana has 8 minutes, 59 seconds.
Mr. REID addressed the Chair.
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The PRESIDING OFFICER. The
Senator from Nevada is recognized.
Mr. REID. In the early part of the
13th century a group of barons met
with King John in a place called
Runnymeade. The uprose for that
meeting was to have the king affix his
z - he could not sign his name - to a
document called the Magna Carta,
which has been the foundation for the
great English common law in many
respects the English system of parlia-
ment.
That meeting they had in the mead-
ows at Runnymeade has not only the
basis for the British common law but
it was carried over the ocean to the
United States and has been the basis
for things like trial by jury, but also in
it was much of what we call the legis-
lative process, the parliamentary form
of government, which we have devel-
oped into the form of government that
now directs us.
That document, the Magna Carta,
stand for fairness, equity, and justice,
as I believe this country stands, that
is, for fairness, equity and justice.
What is about to take place today
flies in the face of these standards of
fairness, equity, and justice.
What is being done to the State of
Nevada today could be done to you
tomorrow.
What is happening to the State of
Nevada today - and the junior Senator
from Nevada and this Senator cer-
tainly can count. We know what is
going to happen. Mr. President, this
is not the golden rule that is in action
today. It is something probably like
the ungolden rule. Do not do it to us
today, Mr. President, because tomor-
row they may do it to you. That is
what is going to happen.
Everyone should understand that in
this system now in operation in the
Senate today, that is, the oppression
of the majority is overpowering the
minority. Everyone here today in the
sound of my voice should understand
that it could happen to you tomorrow.
It could happen. Probably not, Mr.
President, to the powerful State of
Illinois, with numerous Members in
the House of Representatives, proba-
bly not to the State of California,
Texas, Florida, but it could happen to
most of the other States.
So I ask those Senators and staff
directors who are listening today,
those legislative directors, to under-
stand that what is going to happen to
the State of Nevada today is going to
happen to you tomorrow. That is too
bad. It should not happen.
I know I have learned a great lesson
today, one that I have always known,
that is, always do what you can to
make sure that the minority is not
overrun by the majority.
I hope we would all be cognizant of
the fact that is about to happen. I
think it is wrong.
Mr. JOHNSTON addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Louisiana.
Mr. JOHNSTON. Mr. President, I
yield myself 3 minutes.
Mr. President, I ask unanimous
consent that letters in support of this
legislation be put into the Record at
this point. Those letters of support
come from the American Federation
of Labor and Congress of Industrial
Organizations, AFL-CIO, signed fay
Robert M. McGlotten; from the Amer-
ican Council for an Energy-Efficient
Economy, signed by Howard S. Geller,
by the UAW, signed by Alan Reuther,
by the Business Executives for Na-
tional Security, signed by Tyros W.
Cobb; from the Electric Generation
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Association, signed by Carlos A. Riva;
from the Independent Petroleum As-
sociation of America, signed by Denise
Bode; from the National Coal Associa-
tion, signed by Richard L. Lawson;
from the Energy Consumers and Pro-
ducers Association, signed by B.L. Bud
Stewart, Jr.; from the American Gas
Association, AGA, signed by Mike Baly
HI; from the American Wind Energy
Association, signed by Scott Sklar, for
the Solar Energy Industries Associa-
tion; Larry Burkholder, for the Na-
tional Wood Energy Association; Mi-
chael Marvin, for the American Wind
Energy Association; and Donald
Liddell, for the Geothermal Resources
Association; from the Alliance To Save
Energy, signed by James L. Wolf; from
the National Association of Energy
Service Companies, by Terry E. Sing-
er; from the Polyisocyanurate Insula-
tion Manufacturers Association,
signed by Jared O. Blum; from the
Consolidated Natural Gas Company,
signed by George Davidson; from the
United Mine Workers of America,
signed by Richard L. Trumka; from
the Clean Coal Technology Coalition,
signed by Ben Yamagata; from the
Natural Gas Supply Association,
signed by Nicholas Bush; from the
North American Insulation Manufac-
turers Association, signed by Kenneth
D. Mentzer, from the National Associ-
ation of Home Builders, signed by Jay
Buchert; from Oryx Energy Company,
by Robert Hauptfuhrer, from the
National Association ofManufacturers
- this is a wire that is unsigned; from
the National Independent Energy
Producers, signed by Steven D. Bur-
ton; from the National Association of
State Energy Officials, signed by Car-
son D. Culbreth; from the National
Community Action Foundation, signed
by Charles Braithwait; from Knauf
Fiber Glass, signed by William Black.
Mr. President, the list goes on and
on. I ask unanimous consent that the
whole bunch of letters be printed in
the Record.
There being no objection, the letters
were ordered to be printed in the
Record, as follows:
American Federation of Labor
and Congress of Industrial
Organisations,
Washington, DC,
October 6, 1992.
Dear Senator
We understand that the Senate is scheduled to
vote on a cloture motion on H.R. 776, the Na-
tional Energy Policy conference report, when it
reconvenes Thursday, Oct. 8 following the Yom
Kippur holiday recess. With 60 votes needed for
cloture, the AFL-CIO urges your presence for the
vote and your support for cloture.
An important part of this legislation is the
Rockefeller amendment which shores up health
benefits for retired coal miners. More then
120,000 retired miners - covered by the UMWA
Health Benefit Funds - face the loss of their
health coverage without passage of H.R. 776.
In addition, this legislation will create tens of
thousands of jobs for the clean up of federal ura-
nium enrichment sites ss outlined in the Urani-
um enrichment Reorganisation Title.
The purpose of thst title is to create a
federally-owned corporation with responsibility
for operating, the two U.S. uranium enrichment
facilities and another which currently ia not
operating. These facilities are under the jurisdic-
tion of the Department of Energy (DOE).
AFL-CIO affiliated unions, including the
OCAW, USWA, Building and Construction Trade
unions and other affiliates have represented the
workers st thess plants for nearly 40 years.
Many basic worker protections are contained in
the uranium enrichment title, including transi-
tion language covering contractual matters such
ss the employee benefit package, hiring rights,
health care and pension benefits. Also included
are provisions protecting the collective bargaining
agreement during transition and ensures workers
coverage under OSHA, the Davis-Bacon Act and
the Service Contract Act.
The AFL-CIO strongly urges your support for
cloture and for pssssge of the H.R. 776 confer-
Sincerely,
Robert M. McGlotten,
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Director,
Department of Legislation.
American Council for an
Energy-Efficient Economy,
Washington, DC,
October 6, 1092.
Senator J. Bennett Johnston, Chairman,
Senate Energy Committee,
U S. Senate,
Washington, DC.
Dear Chairman Johnston:
We are writing to indicate our support for the
energy bill recently reported out of conference.
The bill contains many valuable energy efficiency
provisions which will save significant amounts of
energy, save consumers money, and reduce pol-
lutant emissions. The energy efficiency and
renewable energy portions of the bill will help to
move our nation towards a sustainable energy
future. We are urging Members of the Senate to
vote for cloture and final passage of the bill.
Sincerely,
Howard S. Getter,
Eiecutive Director.
International Union, United Automo-
bus^Aerospace &
Agricultural Implement Workers of
America-UAW,
Washington, DC,
October 7, 1092.
Dear Senator
As you know, the Senate ia scheduled to vote
tomorrow morning on a cloture motion on the
conference report on H.R. 776, the proposed
Comprehensive National Energy Policy Act. The
UAW supports the conference report on the ener-
gy bill, which contains a key amendment spon-
sored by Senator Rockefeller that would protect
the health care benefits for retired mineworkers.
Without this very important provision and with-
out enactment of H.R. 776, more than 120,000
retired mineworkers will loss their health
protections.
Accordingly, the UAW strongly urges your
support for both cloture and for passage of the
conference report on H.R. 776.
Sincerely,
Alan Reuther,
Legislative Director.
Business Executives for
National Security, Inc^
Washington, DC,
October 7, 1992.
Hon. J. Bennett Johnston, Chairman,
Committee on Energy and Natural Resources,
Dirksen Senate
Office Building, Washington, DC,
Dear Senator Johnston:
On behalf of Business Executives for National
Security (BENS), I would like to express our
continued support for the passage of HJL 776,
the National Energy Policy Act. We commend
you, your colleagues, and your staff for producing
a balanced conference report to H JL 776.
BENS represents over 1600 business leaders
from many industries across the nation in their
common goal to bring about more efficient man-
agement of our military and economic security.
Energy Security is s major component of this
effort, and H.R. 776 promises to make <
able headway in reducing national <i
foreign energy sources.
It is essential therefore, that the Senate vote to
invoke cloture on Thursday and vote on final
passage before recess. The alternative is business
ss usual, and an even more rapid increase hi
energy imports. We have therefore asked our
membership to urge their Senators to be in atton-
dance end vote favorably tomorrow.
Please do not hesitate to advise me if BENS
can be of further assistance in this matter.
Sincerely,
Tyru. W.Cobb,
President end CEO.
Electric Generation Association,
Washington, DC,
October 6. 1992.
Hon. Brock Adams,
US. Senate,
Washington, DC.
Dear Senator Adams:
On behalf of the members of the Electric Gen-
eration Association, I would like to express our
support for H.R. 776, the National Energy Secu-
rity Act.
The Electronic Generation Association is the
national trade association representing the entire
spectrum of the competitive wholesale lUctris
generation industry, including independent pow-
er producers, utility affiliates and suppliers ef
good and services to the industry.
Ws applaud the conferees' efforts to peas a
balanced comprehensive energy bill. The UD
represents s fair and equitable eomprosaiee of eU
interested parties. We urge your support of this
fins legislation and ask that you be present en
Thursday, October 8, to support the cloture vote
on the H JL 776 conference report and final pes-
sags. It ia vitally important that HJL 776 be
enacted into law and not allowed to die due to
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i of Um Stoat* not being present to voto
001 Thursday. Please support passage of H Jt 776.
Sincerely,
Carlos A. Riva,
President,
J. IfakowskJ Associates, Inc.;
President,
Electric Generation Association.
Independent Petroleum
Aeeocietion of America,
Waehington, DC,
October 6, 1992.
Hon. Bennett Johnston,
Hart Senate Office Building,
Waehington, DC.
Dear Mr. Chairman:
It is with great pleasure that I write today on
behalf of the 8,000 independent producers in over
thirty-three states to heartily endorse H.R. 776.
The Comprehensive National Energy Act of 1992.
With the loss of over 400,000 jobs in our indus-
try, 46,000 in the last year alone, domestic pro-
ducers are ready to be beck to work.
HJt 776 contains policy changes which will
result in a cleaner and safer environment while
providing for America's energy needs. The tax
title contains provisions which will promote
greater energy conservation, increase the use of
alternative fuels, enhance production of solar,
wind and gsothermal energy resources, and en-
courage domestic production of natural gas.
Clean burning natural gas is a critical part of
the energy equation as we continue to search for
safe and effective alternative energy sources.
The eliminstion of the alternative minimum tax
will free up a significant amount of capital which
can be reinvested in domestic natural gas produc-
tion.
We estimate that passage of the AMT relief
provision in H.R. 776 could mean that as many
as seven thousand new wells would be drilled in
each year and creating up to 46,000 new Ameri-
can jobs in the coming year.
We believe that domestic energy producers hold
the key to America's long term security and envi-
ronmental well-being. H.R. 776 provides the
means to allow America to become more efficient
and innovative in developing our indigenous
energy resources. H.R. 776 is vital for America's
energy future and we appreciate your leadership
in the development of this legislation.
Sincerely,
Denies A. Bode,
President.
National Coal Association,
Washington, DC,
October 2. 1992.
Dear Senator:
Approximately three years age the President
directed the Secretary of Energy to develop a
National Energy Strategy. Later that year the
United States became embroiled in a regional
conflict in the Middle East, in part, to assure the
continued availability of oil to the strategically
dependent nations of the world. Subsequently, in
furtherance of s National Energy Strategy, the
Administration forwarded a comprehensive legis-
lative proposal early in this Congress. Under the
leadership of key members of the House and
Senate, both bodies have developed and given
overwhelming bipartiean support to H.R. 776, the
Comprehensive National Energy Policy Act.
This legislation provides s comprehensive
strategy to provide a broad-based foundation for
further development and expansion of all domes-
tie energy sources, including American coal. The
bill is balanced and provides s framework for
simultaneously meeting our nation's energy,
economic and environmental objectives. It will be
en important atop toward reducing our strategic
dependence on imported energy while cresting
new jobs and keeping billions of energy dollars at
home rather than spending them on imported
We strongly urge your active support for expe-
ditious approval of the conference report on H.R.
776 prior to adjournment of the 102nd Congress.
Sincerely,
Richard L. Laweon.
Energy Consumers and Producers Association,
Seminole, OK,
September 60, 1992.
Hon. J. Bennett Johnston,
Hart Senate Office Building;
Constitution Avenue A 2nd St NE,
Washington, DC.
Dear Senator Johnston:
The enactment of comprehensive energy legis-
lation is long overdue. Hopefully, the ongoing
Senate/House conference on H Jt 776 will suc-
cessfully conclude its work and Congress will
pass sn acceptable energy bill this year.
At a time when jobs, sained or lost, are a large
part of a great national debate, it is important to
mention tltst the US. petroleum industry has
experienced more job loes by far than any other
employment sector - 876,000 lost in oil and gas
extraction alone (421,000 total) which represents
over 61% decline in work-force in the 1962-1992
period. Percentagewise, this compares to onry s
10% loss in textiles and even a 16% gain in vehi-
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de manufacturing during the same ten year peri-
od. On|y steal manufacturing at 88% had compa-
rable loam with vary larga puna mada by lum-
bar, ssrvice, ho—building, and govarnmant em-
ployment aactora according to the Bureau of
Labor Statistics data.
Thus, both the country and the industry need
passage of HJt 776 and it is i
year is out. American energy «
welcome passage of this bill sa well. It i
vasty improve the reliability of natural gee sup-
plies for many years to come.
The reform of the alternative minimum tax
provided in HJt 776 is by far the most important
(eature in the bill for independent producers and
this reform should result in increased drilling
activity. However, it will take much more than
this reform to restore the industry to its former
health. Our oil imports are far too high and
growing esch month which adversely effect our
balance of payments snd greatly influence both
military and foreign policies.
Whils HJt 776 will not cure ell the US. ener-
gy ilk, it is a very positive beginning snd your
help snd support for it will be greatly appreciat-
ed.
Sincerely,
E.L. Bud Stewart, Jr.,
President
American Gaa Association,
Arlington, VA,
October 2, 1092.
Hon. J. Bennett Johnston,
Chairman,
Senate Energy and Natural Resources Commit-
tee,
U-S-Senate, Washington, DC.
Dear Mr. Chairman:
The American Gaa Association strongly sup-
ports Senate passage of HJt 776 the Comprehen-
sive Notional Energy Policy Act of 1092. Our
nation neede an energy policy, snd should not
wait for a criaia to develop one. We especially
need to reduce our nation a dependence on im-
ported oil.
The provisions of HJt 776 will provide the
natural gss industry with signifiesnt opportuni-
ties, in areas such as natural gss vehicles, gas
research and development, integrated resource
planning, development of natural gss resources
in the Outer Continental Shelf and
high-efficiency electric generation. Increesed use
of natural gas will assist the nation in achieving
its energy security goals, and, as the clssnsst
burning fossil fuel, will eesast in achieving na-
tional environmental end <
tax
Further, we urgs that t
provisions be included in i
on HJt 776.
Thank you, Mr. Chairman, for your
and strong leadership in working to «■*
national energy policy.
Sincerely,
""" "Bar/ III.
American Wind Energy Assoc istion;
Solar Energy Industiiss
Washington. DC,
October 6, 1992.
Hon. J. Bennett Johnston,
Hart Senate Office Building,
US. Senate, Washington, DC.
Dear Senator Johnston:
On behalf of the American Wind Energy Jmse-
dation, Geothermal Resources Association, Na-
tional Wood Energy Association and Soler Ener-
gy Industries Association, we urgs your vote in
support of the Johnston motion to invoke cloture
on HJt 776, the Comprehensive National Energy
Policy Act, scheduled for Thursday, October 8.
HJt 776 provides much-needed tax equity •»
our notion's renewable resources through a
unique combination of production- and
investment-based tax credits. Further, it pro-
vides crucial transmission scesss lor rsniwoJsai
energy sources that could not otherwiee be fairy
utilised without access to the nation 'e ■Uctritsty
grid. Finally, through Title XII it allowe far
expanded joint venture programs snd enhsnesd
research and development for biomess, gsothsr
msl, solar and wind energy.
Ameries's emerging energy technologies are
facing increased international competition in
thess billion-dollar markets of the future. With
over 816 billion in private investment in thess
snd environmental coneequences of
renewable energy would be stammring.
HJt 776 ia vital to the sustained health of our
industries. Ws urgs your at tendance on Oct 8
end your support of the cloture motion.
Sinesrery,
Scott Skier.
Soler Energy Industries
Larry Burkholdor,
National Wood Energy
Association,
Michael Marvin,
American Wind Energy
Aeeociation,
Donald Liddell,
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Geothermal Rm purees
Ths Alliance To Save Energy,
Washington, DC,
October 6. 1992.
Hon. J. Bennett Johnston,
US. 8onoio, Chairman
Energy end Natural Raaouroaa Committee,
Hart Senate Office Building;
Washington, DC.
Dear Senator Johnston:
The Alliance to Save Energy strongry eupporte
passage of H JL 776, the Energy Policy Act of
1992. The hill eonteins meny significant provi-
sions thai promote energy efficiency, ranging
from efficiency standerds on products, to im-
proved building codes, to energy efficient mort-
gage programs. These provisions will improve the
environment, make bousing more affordable, and
enhance our competitiveness. The tax section of
the bill eonteins important provisions thst will
encourage the uss of renewable and efficiency
Many of the provieione in the bill on the ener-
gy 'supply side' are also of great value. We know
thai some of the provieione on the energy supply
side are controversial, end we do not necessarily
endorse them. Nevertheless, we believe the bill
is e comprehensive snd balanced one that doss
advance the national interest. Ws hope that it ia
speedily passed by the Senate snd signed by the
President.
Yours truly,
Jsmes L. Wolf,
Executive Director.
National Association of
Energy Service Co.,
Washington, DC,
October 2, 1992.
Hon. J. Bennett Johnston,
US. Senate, Hsrt Office Building,
Washington, DC.
Dear Senator Johnston:
As Executive Director of the National Associa-
tion of Energy Service Companies (NAESCO)
which rspressnte energy service companies, utili-
ties, snd manufacturers of energy efficiency
equipment, I em writing to urge expeditious ac-
tion on the conference agreement on national
energy legislation as reported. Our members are
particularly interacted in ensuring thst legists-
tive language aupporting the uss of
performance booed energy savings contracts by
the Federal government be enacted into lew. We
urge you not to support efforts to delay passage
of the legislation.
Very trury yours,
Terry E. Singer,
Executive Director.
Poryisoeyan urate Insulation
llanufecturera Association,
Washington, DC,
October 2, 1992.
Hon. Bennett Johnston,
Chairman,
Committee on Energy snd Natural Resources,
Seneie Dirksen Office Building,
Washington, DC.
On behalf of PIMA, we applaud your effort*
snd those of ths House snd Senate conferees for
reporting ths National Energy Strategy legisla-
tion, H.R. 776. We support the provisions which
enhance our nation's building energy efficiency
standards snd believe this country's consumers
snd homeowners will greatly benefit from the
Conference Committee's deliberations.
Sincerely,
Jsred O. Blum,
President.
Consolidated Natural Gas Co.,
Pittsburgh, PA,
October 6, 1992.
Hon. Arlen Specter,
Hart Senate Office Building;
Washington, DC.
Dear Senator Specter:
As you know, ths Senate will soon vote on the
conference report on the Energy Policy Act of
1992, perhaps after a cloutura vote on Thursday.
We strongly support the energy bill, particular-
ry those titles which address alternative fuel
vehicles snd reform of the Public Utility Holding
Company Act to facilitate the development of
We understand thst ths bill has strong support
in ths Senate, but we are concerned thst there
may be difficulty in assuring thst 60 Senators
wOl be available for the Thursday vote. We cer-
tainty hope that we can count on you to be there
on Thursday, and to do all thai you can to assure
passage of this important legislation.
Sincerely,
George A. Dsvidson, Jr.
Chairman and CEO.
United Mine Workers of America,
Washington, D.C.
October 6. 1992.
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Dear Senator:
As you know, the Comprehensive National
Energy Policy Act, H JL 776, contains a provision
securing the retiree medical benefits of over
200,000 beneficiaries of the United Mine Workers
Health Benefit Funds. Ths so-called Rockefeller
provision, supported by the Administration and
a bi-partisan majority of ths Senate, simply re-
quires that all current and past signatory coal
companies live up to the commitment they made
to provide retiree medics! coverage.
On behalf of the active and retired members of
the United Mine Workers of America, 1 urge you
to support the effort to end the filibuster on HJL
776 and to support ths conference report on final
Sincerely,
Richard L. Trumka.
Clean Coal Technology Coalition,
Washington, DC,
October 6, 1002.
Hon. Brock Adams,
US. Senate, Hart Senate Office Building, Wash-
ington, DC.
Dear Senator Adams:
On behalf of the Clean Coal Technology Coali-
tion, I am writing in support of ths coal-related
provisions contained in the National Energy
Policy Act and to ask for your support and lead-
ership in assuring that this Congress sets upon
ths Conference Report on HJL 776.
Among the items we are supporting are the
coal R&D program with its smphssis on ths de-
velopment end demonstration of nest generation
clean coal technologies; the technology trans-
fer/export promotion program for dean coal tech-
nologies; the PURPA 'avoided cost' exemption
provision for dean coal demonstration projects;
snd ths program to promote coal exporte. Theee
important mossurss are an integral part of sscur-
ing a national energy strategy designed to in-
eresss energy efficiency snd promote the com-
mercialisation of environmentally sound energy
technologies, while increasing US. eompetitive-
nees among international private power markets.
Ths Coalition firmry believes these provisions
are important to the creation of a compreheneive
national energy strategy, and we hope you will
encourage end eupport the adoption of the Con-
ference Re port to H JL 776 before the conclusion
of ths 102nd <
Sincerely,
.DC,
October 6. 1901
Hon. J. Bennett Johnston,
Hart Senate Office Building,
VS. Senate, Washington, DC.
Deer Senator Johnston:
The members of the Natural Gas Supply Asso-
ciation understand that dm Senate may be in-
quired to return to Washington on Thursday,
October 8 to vote on a cloture petition on EB.
776, the Energy Policy Act, snd then on final
pssssge of the Act. Theee votes may be ties only
votes on Thursday and may be the final votes to
occur in this Congress
Ths Association snd its members strongly snp-
port ths final passage of H JL 776. Of particular
interest to our msmbsrs are ths provisions that
introduce competition in electricity feneration
and introduce alternative fuels for use in vohi-
dee. Ws believe that theee provisions provide sn
opportunity for expanded use of natural gee, the
nation'o cleanest burning fossil fuel. These pre-
visions also provide significant benefits to our
nation's energy security, for the i
end for American energy <
We regret that disagreement over <
Executive Director.
Natural Gas Supply
provisions of ths bill may inconvenience i
of the Senate so shortly before the Mneimisr
elections. Nevertheless, we believe that tins
legislation is extremefy important to the names
snd may be one of the most important sobJsve-
mente of thie Congress. Ws encourege you to be
present for eny votes that ere neoasssry on
Thursday, October 6 and to vote for cloture snd
for final paeeage of HJL 776.
Sincerely.
NichleeJ.Bueh.
Clean Coal Technology Coalition,
Washington, DC,
October 6, 1901
Hon. J. Bennett Johnston,
VS. Senate, Hart Senate Office Building;
Washington, DC.
Dear Senator Johnston:
On behalf of the Clean Coal Technology CeskV
tion, I am writing in eupport of the i
provisions contained in the
Policy Act and to ask for your support and msaV
erehip in sssuring thst this Congress acts upon
the Conference Report on HJL 776,
Among the items we are supporting an Iks
coal R & D program with its ■mjmasm on the
development and demonstration of i
tion dean coal technologies;
trsnsfsr/siport promotion progri
technologies the PURPA 'svoidid cast's
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provision for clean cod demonstration projects
and the program to promote coal exports. These
important measures axe en integral pari of oocur-
ing a national energy strategy designed to in-
crease energy efficiency and promote the com-
mercialisation of environmentally sound energy
technologies, while increasing VS. competitive-
ness among international private power markets.
Ths Coalition firmly believes these provisions
are important to the creation of a comprehensive
national energy strategy, and we hope you will
encourage and support the adoption of the Con-
ference Report to H.R. 776 before the conclusion
of the 102nd Congress.
Sincerly,
Ben Yamagata,
Executive Director.
North American Insulation
Manufacturers Association,
October 6t 1992.
Hon. J. Bennett Johnston,
Hart Senate Office Building,
Washington, DC.
Dear Senator Johnston:
The National Energy Policy Act of 1992 is and
remains the top legislative priority of the North
American Insulation Manufacturers Association
('NAIMA'). The energy legislation - years of hard
work by countless individuals and organisations
both in the public and private sector - represents
America'a best hope for energy conservation,
national energy independence and reduction of
environmental pollution. NAIMA deeply appred-
stes the vision and leadership that you have
brought to these issues end this legislation over
the years. Now, ss the 102nd Congress winds
down, NAIMA urges you and your colleagues to
continue efforts to bring this legislation to s
successful conclusion. We recognise the obstacles
and the time constraints, and are deeply grateful
for your commitments and perseverance in the
face of all these difficulties.
NAIMA is s trade association of North Ameri-
can manufacturers of fiber glass, rock wool snd
slsg wool insulation products. NAIMA'a mem-
bers manufacture the vast majority of fiber gloss,
rock and slsg wool insulstions produced end used
in North America. NAIMA'a role is to promote
energy efficiency snd environmental preservation
through the use of fiber glass, rock snd slsg wool
insulation products snd to encourage ssfe pro-
duction snd use of these insulation products.
NAIMA member companies are: Celotas Corpora-
tion, CertainTeed Corporation, Knauf Fiber
Glass, Owens-Corning, Partek Insulstions Incor-
porated, Rock Wool Manufacturing Company,
Sloes Industries Corporation, U8G Interiors
Incorporated, VS. Mineral Products Company
and Western Fiberglass Incorporated.
Please advise me immediately if we can be of
any further assistance in this matter.
Sincerely,
Kenenth D. Mentser,
Executive Vice President.
National Association of Home Builders,
Washington, DC,
October 6, 1992.
Hon. J. Bennett Johnston,
Chairman, Senate Committee on Energy A Natu-
ral Resources,
Hart Senate Office Building,
Washington, DC.
Dear Chairman:
On behalf of the National Association of Home
Builders (NAHB), I am pleased to inform you of
our support for the conference report to H.R.
776, the Comprehensive National Energy Policy
Act.
Thia National Energy Strategy provides s com-
prehensive framework for both curbing energy
demand and enhancing the supply of energy
sources so ss to reduce our nation's dependence
on foreign sources. Recognising the time and
effort that you, your Senate colleagues snd staff
have dedicated to crafting thia far reaching legis-
lation, it is a monument to your dedication
NAHB realises that energy efficiency and
building standards are a key component to any
national energy strategy. NAHB believes that
the provisions in HJt 776 represent s fair bal-
ance between energy efficiency and affordable
housing. By mandating a private sector industry
code for federally assisted new homes that ia coat
effective, Congress is acknowledging the inherent
tension between increased energy efficiency and
housing affbrdability. it is our hope that this
legislation will go far towards resolving this is-
sue.
While NAHB supports an energy efficient
mortgage program for new homes snd is disap-
pointed that provisions were taken out in confer-
ence, we look forward to tackling this issue in
the next congress.
Again, we thank you and your staff for your
cooperation and good work.
Respectfully yours,
Robert 'Jay' Buchect.
ORYX Energy Co..
Delias, TX,
October 6, 1992.
Hon. J. Bennett Johnston,
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Hart Senate Office Building;
Washington, DC.
Dear Senator Johnston:
Perhape the moat crucial vote on whether thie
Congress will approve final energy legislation ie
expected to occur on Thursday, October 6.
We at ORYX Energy Co- believe thia bill makes
an important atep toward a more secure energy
future - and it will provide the basis for addition-
al necessary energy policy decisions by the nest
Congress and beyond. It should be supported.
It is critically important that you and your
colleagues be present to vote for cloture on the
energy bill this Thursday.
Thank you.
Sincerely,
Robert P. Hauptfuhrer,
Chairman and CEO.
National Association of Manufacturers,
Washington, DC,
October 2, 1992.
Hon. J. Bennett Johnston,
VS. Senate,
Washington, DC.
Ths National Association of Manufacturers
(NAM) aupporta the conference agreement to
comprehensive energy bill HJL 776. NAM urges
prompt consideration of the complete conference
report to HJL 776 - including the tax title. We
strongly oppose any effort* to block action on the
conference report before the I02d Congress ad-
journs.
Sincerely,
National Association of
Manufacturers.
National Independent Energy Producers,
October 6. 1992.
Hon. J. Bennett Johnston,
Chairman, Senate Committee on Energy and
Natural Resources, VS.
Senate, Hart Senate Office Building,
Washington, DC.
Dear Mr. Chairman:
The National Independent Energy Producers
(NIEP) writes to urge you to support s cloture
vote on HR 776 and final passage of this impor-
tant energy legislation. NIEP ie a leading trade
organization representing the independent power
industry.
The Senate will vote thie week to approve the
conference report on a landmark energy bill
which will promote efficiency and competition in
the electric power industry. Ths bill also eon-
tains important tax incentives for renewable
energy and conservation. If the conference re-
port ie filibustered in the dosing hours of this
Congress, sixty votes will be needed to send this
bill to the President
Thie bill represents three years of strong bipar-
tisan effort to improve this nation's energy ■con
omy. Any absentee on the day of the vote (which
could come up as early aa Wednesday sight) may
leave ue one vote short of cloture. Thank you for
your support of this important legislation.
Sincerely,
Steven D. Burton,
Chair, National Independent
Energy Producers.
National Association of
Stale Energy Officials,
Washington, DC.
October 6. 1992.
Hon. J. Bennett Johnston,
Chairman,
Committee on Energy and Natural Resources,
Dirksen Senste Office Building;
Washington, DC.
Dear Chairman Johnston:
On behalf of the National Association of State
Energy Officials (NASEO), we wanted to take
thia further opportunity to support the peeeesa
of HJL 776. We strongly support your efforts to
obtain passage this week.
This legislation ie a balanced initiative that
will increase our Nation 'a energy security, in-
crease energy effkiency, increase the use of alter-
native fuels and renewable energy, as well as a
number of innovative initiatives in the ■Uetrk
area and in a variety of other mattere. The tax
provisions will increase ths use of mass trenail,
energy efficiency, alternative fuels, rem sable
energy and production from certain oil and gas
properties.
ItwouMiiideedbeatrasss^iftheeompreiiasj
eive energy bill failed to pass at thia lata data.
Sincerely,
Carson D. Culbreth,
Chairman.
National Community Action Foundation.
Washington, Da
October 6, 1901
Dear Senator:
The passage of H JL 776 will not only i
more appropriate course has I
sustainable energy future but will i
produce expanded energy efficiency initial! was in
ths public and private sectors.
You may not be aware of HJL 776's i
provisions for the coneervation |
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improve low-income housing and reduce the en-
ergy burdens of the poor. Ths Conference Report
authorises program* which are designed to ex-
pand the partnerships between local low-income
weatherisaUon providers and utility conservation
programs. Over the decade, this should mean
expanded levele of energy efficiency investment
in the low-income residential sector.
Community Action agencies have been pioneers
in public/private residential conservation pro-
grams for low-income Americana and are eager to
expand these activities.
We urge you to be present on October 8, 1992
to support this important, and perhaps final,
contribution of 102d Congress.
Sincerely,
Charles Braithwsit,
President.
Knauf Fiber Glass,
Hon. J. Bennett Johnston,
186 Hart Senate Office Building,
Washington, DC.
Dear Senator Johnston:
The National Energy Policy Act of 1992 is and
remains the top legislative priority of the North
American Insulation Manufacturers Association
('NAIMA'). The energy legislation -years of hsrd
work £y countless individuals and organizations
both in the public and private sector - represents
America's best hope for energy conservation,
national energy independence and reduction of
environmental pollution. NAIMA deeply appreci-
ates the vision and leadership thst you hsve
brought to these issues and this legislation over
the years. Now, ss the 102d Congress winds
down, NAIMA urges you and your colleagues to
continue effort* to bring this legislation to s
successful conclusion. We recognize the obstacles
and the time constraints, and sre deeply grateful
for your commitment and perseverance in the
face of all thess difficulties.
NAIMA is s trade association of North Ameri-
can manufacturers of fiber glass, rock wool and
•lag wool insulation products. NAIMA a mem-
bers manufacture the vsst majority of fiber glass,
rock snd slsg wool insulations produced and used
in North America. NAIMA'a role is to promote
energy efficiency snd environments! preservation
through the uee of fiber glass, rock snd slsg wool
insulstion products snd to encourage esfe pro-
duction snd use of these insulstion products.
NAIMA member companies sre: Celotex Corpora-
tion, CertainTeed Corporation, Knauf Fiber
Glass, Owens-Corning, Psrtek Insulations Incor-
porated, Rock Wool Manufacturing Company,
Roxul Inc., Schuller International, Incorporated,
a subsidiary of Manville Corporation, Sloes In-
dustrie Corporation, USG Interiors Incorporat-
ed, US. Mineral Products Company and Western
Flberglsss Incorporated.
However, I'm not writing this letter in my
capacity ss President of NAIMA. I'm writing on
behalf of my company, Knauf Fiber Glass. Ws sre
s fsmiry owned company recognised ss s lesding
U.S. manufacturer of quality insulstion products
for industrial, commercial, HVAC, marine, and
residential applications. Sines our founding in
1978, we hsve become known ss the fastest grow-
ing fiber glass manufacturer in America, with
plants in several states. This growth attests to
our commitment to the importance of energy
conservation for Americas future.
Pleass advise me immediately if we can be of
any further sssistsnes in this matter.
Sincerely,
William Black m,
Sr. Vice President
Seles & Marketing.
SMACNA,
September 12, 1992.
Hon. Brock Adams,
U.S. Senate, Hart Senate Office Building, Wash-
ington, DC.
Dear Senator Adams:
On behalf of the Sheet Metal and Air Condi-
tioning Contractors National Association, Inc.
(SMACNA), supported by more than 6,000 con-
etruction firma engaged in industrial, commer-
cial, residential, architectural and specialty sheet
metal and air conditioning contracting through-
out the United Ststes, I urge your support for
ths House peseed version of ths small business
fair competition Isngusge contained in sections
181 snd 14 1 of Title I, Subtitle C, Psrt II of H.R.
776, The National Energy Efficiency Act of 1992.
If enacted, this important provision will promote
demand aide management (D6M) and energy
efficiency progrsms while preventing
anti-competitive and predatory practices by elec-
tric and gas utilitiss harmful to email business.
While the Senete version (Title VI, Section 6801)
sppliss to ths snti-competitive practices of elec-
tric utilities, gas utilitiss sre exempt from the
Senates well reasoned fair competition
protections.
SMACNA contractors employ hundreds of
thousands of construction workers snd hsve
maintained a tradition snd record of achievement
in energy conssrvstion snd energy efficient con-
struction. As s lesder in promoting energy effi-
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deney in heating, ventilating and air condition-
ing (HVAC) systems, SMACNA finds numerous
energy efficiency incentives and initiatives to
support in both the House and Sanata versions of
HJL 776. However, without tba House's strong
fair competition languaga gas utilities will bs
rawardad with dominance of energy efficiency
markets in energy equipment sales, supply, Mr-
vies and installation, especially where ratepayer
nt(D8M)isin
The National Energy bill, if enacted into law
would offer small business vast new market op-
portunities created by utility D6M and efficiency
programs. Without section 131 and 141 of Title
I of the House bill the current marketplace con-
frontation between small business and utilities
will continue to grow. California, Iowa, Wiscon-
sin, and a number of other states passed legisla-
tion to ban or strictly limit anti-competitive utili-
ty practices. Legislation is pending before dosene
of state legislatures to limit anti-competitive
utility intrusions into the private sector. Further,
there are major esses pending before the state
courte and public service commissions in Michi-
gan, Minnesota, New Jersey and other states.
Congress supports there important state efforts
by embracing energy efficiency efforts with ree-
npetitive restrictions protecting small
Bjy passing a fair competition compo-
nent to the energy bill the Congress would send
s strong signal to private sector smell businesses
that unfair utility competition by electric or gas
utilities will not be tolerated or sanctioned.
federal incentives for energy conservation are
important to increasing the energy efficiency of
our homes, public buildings, factories and busi-
nesses, SMACNA believee thet the privaU sector ,
not utilities, should continue to lead the way.
Please express your support for the House passsd
fair competition provisions to the Senate Confer-
ees on H.R. 776. Thank you for your support of
private sector i
To:
Stanley RKolbe, Jr.
October 6, 1992.
All NBCA Chapter Managers.
Bob White, Director, Government
Affaire.
Re: Urgent LsgisUtive Action Call.
Final pssssga of an energy bill, HR 776, ie
awaiting Senate action right now. The measure
would promote Demand Side Management pro-
grams by utilities. Pssssga would mean a $60
billion market for electrical contractors. The bill
NBCA'ei
quest, to prevent utilities from using tsnfair on
petitive tactics to do the work with their en
The measure is being filibustered bonuses of
unrelated provisions dssling with nuclear waste
disposal. The House fa sojourning today -ami It
has already passsd this measure. The Assists
expects to sojourn Thursday. It is ssssntmi that
the Senate cut off the filibuster, invoke cloture,
and act to pass HJL 776 before it
Please call, telegraph or fax your
today, urging them to support cloture on HJL
776 and then to support
This bill will provide for
conesrvetion initiatives which will help protest
our nation 'a energy independence, keep utility
rates st s reasonable level by preventing the need
for utilities to provide additional peek generating
capacity, and stimulate a new market in energy
conservation -related goods snd ssrvioss for indus-
tries hard-hit by the economic downturn of re-
cent years.
The timing on this is critical] Rapid
fa essential. If you can gat some of
bare to respond as well, the oflbrt will be
more effective.
t me know if you are able to i
ntacte, and what
Thanks for your help.
The Energy Bill, H.R. 776, ie essential for Urn
nation's safety end growth. Electrical oontrss-
tors strongly urge you to vote for cloture on the)
Energy BUI filibuster end quickly pass thfaneess-
Robert L. White,
Director, Government Affaire,
National Electrical Centimeters
Bsthssda,MD.
Alliance for Fair Competition,
MD.
r 6,1992.
Dear Senator:
The Alliance For Fair Competition <AFQ is
I of sudor national trade i
dent firms engaged in the sale and I
energy efficient apouancee si
contracting, energy fuels dfatribution, as wall ss
contracting in the electrical, plusebing. hsstaag,
snd air conditioning trades. Over 10,000 indrvid-
umbrellaof AFC.
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AFC and its member* era viUlly intereeted in
the prompt peeeege of The Comprehensive Na-
tionel Energy Policy Act, H.R. 776.
This legisletion b needed now. It represent*
ee balanced approach as is possible and, more
importantly it is acceptable to an overwhelming
majority of the members of Congress from both
parties. The House of Representatives has voted
for passage by a wide margin. The President
indicates he will sign the measure when it is sent
to him. Previous votes in the Senate indicate
there is substantial support for it passage.
After almost two years of constant debate, at
the subcommittee and committee levels, and on
the floor of both chambers, and after a Senate
filibuster last year, there is absolutely no reason
why the substantial benefits of this vital legisla-
tion should be denied to the American people any
longer.
The House of Representatives has acted re-
sponsibly in passing this measure. We hope the
Senate will show as much wisdom and act swiftly
to end debate and pass The Comprehensive Na-
tional Energy Policy Act.
Respectfully,
A. M. Ponticelli,
Executive Director, AFC.
MEMBERS OF THE ALLIANCE FOR FAIR
COMPETITION
Air Conditioning Contractors of America;
American Supply Association; Carolines Electri-
cal Contractors Association; Eastern Illinois
Chapter, NECA; Michigan Chapter, ACCA; Na-
tional Association of Plumbing, Hosting & Cool-
ing Contractors; National Association of
Wholesaler-Distributors; National Electrical Con-
tractors Association; Petroleum Marketers Asso-
ciation of America; Sheet Metal Contractors of
Iowa, Inc.; Sheet Metal and Air Conditioning
Contractors National Association; SMACNA Met-
ropolitan Detroit Chapter; Berico Fuels, Inc.;
Harry Cooper Supply Co.; and George Sumrow,
Houston Chapter, NECA.
Siemens Power Corp.,
Bellevue, VA,
October 8, 1992.
Hon. Dale Bumpers,
US. Senate, Senate Office Building,
Washington, DC.
Dear Senator
As the president of Siemens Power Corpora-
tion, I urge you to support passage of the Confer-
ence Committee Report on the nstionsl energy
strategy bill.
I understand that the bill may be prevented by
a planned filibuster from coming to a vote.
Please be in Washington this Thursday to cast
your vote to support the cloture motion to allow
debate on the bill to proceed. It would be dis-
graceful if the bill were allowed to die in the
closing hours of the 102nd Congress at the hands
of a few disgruntled Senators.
The energy bill, like all bills of comparable
national importance, b a compromise. But its
shortcomings should not blind us to the fact that
it would take the country a long way toward
cleaner, safer energy technologies and greater
energy efficiency.
America cannot continue to allow its depen-
dence on Middle Eastern oil to grow. It needs to
promote a range of alternative energy sources
that are cleaner than the current generation of
coal-fired plants and more acceptable to the pub-
lic than the current generation of nuclear plants.
We also need to develop technologies that enable
US. industries to improve their competitiveness
by using energy more efficiently. For all its flaws
in the eyes of its critics, the energy bill - unlike
the status quo - would accelerate progress toward
these goals.
You and your colleagues have spoken from
time to time of the need for action to change the
nation's unsustainable ways of getting and using
energy. The need for this change has not dimin-
ished since the most recent Gulf war. As the
opportunity for change now hangs in the balance,
we all might well ask ourselves: 'If not now,
when?'
Your active support of this legislation Is essen-
tial.
Very truly yours,
R. B. Stephenson,
President,
Chief Executive Officer.
Computer and Business Equipment
Manufacturers Association,
Washington, DC,
October 6, 1992.
Hon. J. Bennett Johnston,
Chairman,
Committee on Energy and Natural Resources,
Hart Senate Building,
Washington, DC.
Dear Senator Johnston:
The Computer and Business Equipment Manu-
facturers Association, CBEMA, appreciates all of
the work that you, your colleagues and your staff
have accomplished in conference on H.R. 776. We
want particularly to endorse the voluntary pro-
gram established In Section 196, 'Energy Effi-
ciency Information for Commercial Office Equip-
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We look forward to working with you and your
colleague* to ensure the effectiveness of e volun-
tary program for industry end the public at large.
tMnosverjr,
John L. PickiU,
President
International Natural Gas
Washington, DC,
October 6, 1992.
UA Senate, Hart Senate Office Building, Wmm-
,DC.
Hon. J. Bennett Jol
U A Senate,
Washington, DC.
Dear Senator Johnston:
I want to express INGAA's strong support for
passage of the Comprehensive Notional Energy
Policy Act Conference Report (Hit 776). We are
especially plssssd that the conferees approved
provisions to exempt independent power produc-
ere from the Public Utility Holding Company Act
Independent power ie expected to account for
between thirty-five and forty percent of all new
capacity brought on line through 2000. Passage
of PUHCA reform has always been the highest
priority for INGAAos it will increase competition
in the wholesale power generation market by
eliminating barriers to the growth of independent
power production and enhance opportunities of
natural gas in this market.
Thie legislation also eonteino provisions that
deregulate import* and exports of natural gas
from and to countries with which we have e free
trade agreement. It provides more opportunities
for natural gas use ss an alternative fuel. It
enhances natural gas research and development.
It also encourages additional drilling by eliminat-
ing the tax penalty for independent producers
under the alternative minimum tax and provides
tax deductions for dean-fuel vehicles. H.R. 776
is a balanced, constructive bill which has had
partisan support at every stage of ite consider-
The Senate will vote on cloture on this legisla-
tion on Thursday, October 8. I urge you to be
here to vote for cloture and pessags of thie im-
portant place of legislation.
Sincerely,
JeraM V. HaJvorsen,
President.
American Public
Transit Association,
Washington, DC,
September 30, 1992.
Hon. J. Bennett Johnston,
On behalf of the members of the American
Public Transit Association, and the million* of
transit riders nationwide, I want to thank you far
your effort* to increase the transit onmmiila
benefit to $60 per month. Having already pesssd
both chambers in the omnibus tax bill and now in
HJL 776, the energy bill, we deep
your support on this issue.
We understand the difficulties facing the t
gy bill conference in the waning hours of th*
102nd Congress end want to offer our help in
gaining final pessags of this important legisla-
tion. An increase in the monthly tax sismpt
transit benefit b good public policy and we look
forward to helping implement the new logmlsfisn
when it is signed into law.
Again, thank you for your support and please
call on us if we can assist you in passing HJL
776.
Cordially,
Jack R. Giletrap,
Executive Vice President.
Mr. JOHNSTON. Mr. President,
how much time remains?
The PRESIDING OFFICER. The
Senator has 5 minutes 14 seconds.
Mr. JOHNSTON. I yield to the
Senator from Wyoming.
ENERGY POLICY ACT OF 1992
Mr. WALLOP. Mr. President, one of
the most important challenges faced
by the 102d Congress was the estab-
lishment of a long-term, comprehen-
sive, and consensus-based energy
strategy for the United States. The
Energy Policy Act of 1992 accomplish-
es that task.
After an intense, 2-year effort, suc-
cess is near. Our conference agree-
ment reforms outdated energy policies
from the 1970's that were quickly
formulated during a time of crises and
shortages. This failed legacy, which
plagued us throughout the decades, is
finally corrected.
The Energy Policy Act of 1992 con-
tains the necessary reforms to i
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sustainable economic development in
a manner that reflects today's sensi-
tivity to global environmental con-
cerns. The conference agreement
before us responds to the challenge.
This agreement was forged through
the bipartisan efforts of the Senate
and the House of Representatives
working closely with the Department
of Energy and the White House. The
outcome speaks well for the legislative
process. Through accommodation and
compromise, the bill actually improved
as it proceeded through the confer-
ence.
The Energy Policy Act of 1992 pre-
pares America for the 21st century.
In response to an expanding national
and global economy, America must
rely on energy production as well as
increased efficiency and conservation.
The conference agreement redefines
our national energy focus in several
fundamental ways:
First, the conference agreement
contains a broad portfolio of energy
supply initiatives to foster an expand-
ed use of conventional energy supplies
such as natural gas, oil, coal, and
uranium - all of which we have in
abundance. Provisions are included to
enhance oil and gas production as well
as to foster greater use of solar,
renewables, and alternative trans-
portation fuels.
Second, the conference agreement
contains incentives which foster a
more efficient use of domestic sup-
plies. Provisions are included to pro-
mote energy efficiency in the utility
and transportation sectors of our
economy. Equally important, the
agreement requires the Federal Gov-
ernment to take important steps to-
ward this end. Federal agencies are
required to improve energy efficiency
in the buildings they own or lease,
and to switch to the use of alternative
fuels in their fleets.
Electric and gas utilities are encour-
aged to consider integrated resource
planning and demand side manage-
ment programs. Recognition also is
given to States who have already con-
sidered demand-side management
options.
In addition, the conference agree-
ment includes important reforms of
the 1935 Public Utility Holding Com-
pany Act. Competition will be en-
hanced by creating a new class of
independent power producers free
from corporate and geographic restric-
tions imposed by current law.
American utilities and entre-
preneurs will also be allowed to build,
own, and operate domestic and inter-
national independent power produc-
tion facilities without undue regulato-
ry entanglements. By ensuring the
freedom of U.S. companies to compete
both here and abroad, the conference
agreement will put American technol-
ogy, American equipment, American
industry, and American workers to
work building state-of-the-art, clean,
and efficient powerplants.
In the transportation sector - our
largest consumer of imported oil - the
conference agreement contains a
broad range of initiatives. Section
2021 calls for a broad, 5-year program
to reduce the transportation use of oil.
In addition, there are provisions to
accelerate alternative fuel vehicle
technologies as well as support for the
commercialization of electric and
electric-hybrid vehicles.
Provisions also are included that
require the use of alternative fuels by
Federal, State, and some private fleets
in metropolitan areas. According to
DOE these provisions could save as
much as 193,000 barrels of oil per day.
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Recognition is given to the interre-
lationship between this requirement
and the Clean Fuels Fleet programs
contained in the 1990 Clean Air Act
Amendments that takes effect in 1998
in 21 cities. The Clean Air Act Pro-
gram was designed to accelerate the
introduction of cleaner vehicles that
meet phase II emission requirements
through reliance on such clean fuels
as reformulated gasoline. This objec-
tive is preserved by the conference
agreement.
Before the fleet vehicle that are a
part of the Clean Fuels Fleet Program
could be brought under the coverage
of the Energy Policy Act, section
507(g)(3) requires the Secretary to
make certain findings that presume
compliance with applicable require-
ments of the Clean Air Act including
phase II emission standards. This
requirement recognizes the extensive
effort that has been launched by the
auto and fuel supply industries to
develop a system that can meet antici-
pated future Clean Air Act require-
ments through the use of reformulat-
ed gasoline. This may well conflict
with the requirements of the fleet
provisions of the conference agree-
ment.
In all candor, I am concerned about
the complexity of these private fleet
provisions. The drafting is confusing,
and the rulemakings are excessive.
This title alone contains at least 11
separate rule makings and 3 addition-
al requirements to promulgate regula-
tions. The Congress may well find it
necessary to revisit this section again
to address these ambiguities.
A third, and important area, is the
conference agreements support for
advanced nuclear power technologies.
Without nuclear power as a viable
energy option for the United States,
our dependence on imported oil will
threaten our Nation's economic
health and energy security.
The conference agreement enhances
the nuclear power option by enhanc-
ing the one-stop nuclear licensing
process already developed by the Nu-
clear Regulatory Commission and
provides for the development of ad-
vanced nuclear reactor technologies
Fourth, the conference agreement
provides for the transformation of the
Federal Government's uranium en-
richment enterprise into a federally
owned corporation that can be nursed
back into financial health and eventu-
ally sold to private investors. Provi-
sion is also made for the U.S. Enrich-
ment Corporation to purchase the
highly enriched uranium made avail-
able from the member States of the
former Soviet Union for use in the
business operations of the Corpora-
tion. The blending and conversion of
this material for use in commercial
reactors is going to take many years if
its impact on domestic mining and
other industries is to be minimised.
Provision thus is made by section
1408 for the development of least-cost
business plan. To be effective in mini-
mizing the domestic effect of this
program, the required major invest-
ments in conversion facilities are go-
ing to have to be recovered over an
extended period.
Fifth, the conference agreement
restructures Federal research and
development programs to establish
commercial applications as a principal
objective for Federal energy rssnsrrh,
development and demonstration pro-
grams. In the future, any demonstra-
tion program supported by the De-
partment of Energy must determine
the technical and commercial feasibili-
ty of new energy technologies.
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Because of the importance of indus-
try participation in such commercial-
ization efforts, the conference agree-
ment provides for a compulsory, fi-
nancial commitment from non-Federal
sources wishing to receive funding
support from the Department of En-
ergy. Such cost-sharing is essential to
the commercialization of new energy
technologies.
As a commercialization incentive,
the conference agreement extends the
provisions of the 1990 amendments to
Stevenson -Wydler Technology Innova-
tion Act of 1980 regarding the protec-
tion of intellectual property and other
sensitive information to any research,
development, demonstration and com-
mercial application activities 'under
the Energy Policy Act of 1992.
Sixth, significant initiatives are
included to assist U.S. manufacturers
in dealing with international competi-
tion. Provisions are included that
support the development and export
of advanced energy technologies.
Such programs can serve as a critical
component in the growth of the U.S.
economy.
Title 25 of the conference agree-
ment contains a number of provisions
which affect the coal mining segment
of our energy industry - some good,
some not so good.
One provision extends the Aban-
doned Mine Lands Fund until 2004 to
help offset the costs of the retired coal
miner health benefits fund and en-
courage the remaining and
revegatation of surface coal mining
operations. Also included in this title
are provisions requiring repair and
compensation for damages to residen-
tial dwellings resulting from subsi-
dence and replacement of drinking
water contaminated as a result of
underground mining. While the subsi-
dence provisions are not perfect, they
do address concerns expressed by
homeowners and the natural gas pipe-
line industry about the impacts of coal
mining on structures and other build-
ings.
In place of a Federal coal royalty
study that was dropped the conferees
agreed to a royalty reduction for lig-
nite coal in the Fort Union region of
North Dakota and Montana. This
reduction will benefit some Wyoming
coal miners who produce coal in the
Fort Union formation by giving them
more stability and security in plan-
ning their coal mining operations.
Independent oil and gas operators
will also benefit greatly from a provi-
sion included in this bill which makes
both the competitive and noncompeti-
tive lease terms 10 years. This provi-
sion is substantially different than the
original House language - language
which alleged collusion in the sale of
oil and gas leases. The final language
is more reasonable and will do much
to encourage competitive new lease
sales.
One of the more complex and con-
troversial items in title 25 that the
conferees agreed to is a provision in-
tended to promote coal-bed methane
development, a source of energy which
is marginally economic. Economics
aside, this provision embraces the
reverse of federalism: where irrespon-
sible State legislatures fail to act, the
Federal Government steps in to pro-
mulgate regulations and manage State
resources. Although the conferees did
provide for a strong opt-out clause
allowing States to avoid such a
broad-sweeping Federal mandate, I
will make every effort to notify the
appropriate Governors of the pratfalls
of such extreme Federal intrusion.
Mr. President, our country is fortu-
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nate to have a broad spectrum of
energy resource choices - coal, urani-
um, oil, gas, renewable*, and energy
conservation. I was pleased that the
conference agreement removed all
provisions dealing with Outer Conti-
nental Shelf moratoria or lease cancel-
lation. A credible energy policy
shouldn't make it a policy to frustrate
the production of domestic energy.
For a national energy strategy to be
effective it must provide sufficient
flexibility for all supply and demand
options to compete in the market-
place. The conference agreement sets
forth an energy strategy that will
further our national security, create
American jobs, help our balance of
payments, and lessen our dependence
on foreign energy markets and inter-
national cartels.
The Energy Policy Act of 1992 pro-
vides a long-term comprehensive and
consensus-based energy policy for the
United States. I recommend adoption
of the conference report.
UNITED MINE WORKERS RETIRED COAL
MINERS' HEALTH BENEFIT PROGRAM
Mr. WALLOP. Mr. President, one of
the most difficult issues we encoun-
tered in seeking the passage of what is
now called the Energy Policy Act of
1992 was the dispute over the United
Mine Workers Retired Coal Miners'
Health Benefit Program. That plan,
negotiated between the UMWA and
the Bituminous Coal Operators of
America as a labor contract benefit,
was in severe financial difficulties. A
proposal surfaced to create a new tax
on coal producers - including western
State coal companies which had no
involvement in the UMWA-BCOA
agreement.
This egregious solution was basically
dead on arrival. After lengthy discus-
sions, a compromise was devised
which became the Rockefeller amend-
ment to H.R. 776. This amendment
was adopted by the conference with-
out change. I did notice that the
chairman of the Ways and
Committee indicated that this
will be revisited by his committee in
the next Congress.
In the meantime, I did want to
provide for the Record a technical
explanation of the provision, and ask
that it be printed at the conclusion of
my remarks.
I would also ask that a recent paper
from the Congressional Research Ser-
vice on the use of abandoned mine
reclamation funds to pay for benefits
be included in the Record. I would like
to clarify a point in this report which
states that interest earnings would,
absent the Rockefeller amendment,
would be used for the fund's reclama-
tion activities, reduce future AML
fees, or make refunds to companies
paying the fees. But, any excess funds
would also be used to reimburse the
States for their, to-date, underfunded
share of the program. For instance,
Federal payments to my State of Wyo-
ming are millions of dollars in arrears.
One of my objectives regarding the
AML program is to seek full funding
of the State share. The most sensible
solution would be to allow States to
opt out of the Federal program if they
establish their own reclamation pro-
gram and fee. This is another issue
which will have to be revisited.
There being no objection, the mate-
rial was ordered to be printed in the
Record, as follows:
CONFERENCE REPORT
SUBTITLE (Q. - HEALTH CARE OF
COAL MINERS
Section 1942. Finding* and DecUrmtion of Policj
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The Coal Industry Retiree Health Benefit Act
of 1992 bee bed e complex end arduous history.
The Conference Agreement represents the efforts
of meny eoneerned Senstors end Congressmen
who worked together to conclude legislation to
provide the approximator/ 120,000 benefideries
in the United Mine Workers of America 1960 end
1974 Benefit Plane ('Plans') with continuing
health ears coverage. These multiemployer
benefit plane were created in collective bargain-
ing negotiations between the United Mine Work-
ers of America fUMWA*) and the Bituminous
Coal Operators Association ('BCOA*) end perpet-
uated in successive bargaining agreements.
Under those agreements, retirees and their
dependent* beve been promised lifetime health
care benefit*. In many cases the last employer of
e bene-ficiary b no longer in business, or no
longer has a contractual responsibility to provide
coverage. The need for legislative intervention
arose because mounting deficits in the Plane
threatened to curtail the flow of benefits absont
a legisletive solution. The Conference Report
makes provision for the continuetion of health
care coverage to the existing beneficiary popula-
tion.
The essence of the Conference Agreement ie
that those, companies which employed the retir-
ees in question, and thereby benefitted from their
services, will be assigned responsibility for pro-
viding the health care benefits promised in their
vsrious collective bargaining agreements. Thie
will be accomplished through s form u let ion
designed to allocate the greatest number of
beneficiaries in the Plane to e prior responsible
operator. For this reason, definitions ere in-
tended by the drafters to be e given broad inter-
pretation to accomplish this goal.
In addition to insuring the continuetion of
benefits for those individuals in the UMWA
Plane, the Conference Agreement insures thst
signatory employers will provide coverage to all
other eligible UMWA minora who ere retired or
who retire on or before September 30, 1994.
These UMWA retirees end their eligible depen-
dents slso ere assured of receiving the lifetime
health benefits promised under the collective
bargaining agreements, and their benefits will be
paid for directly by their own employer. Current
signatories, in conjunction with the UMWA, will
also set up s new, limited plan to provide e ssfety
net for benefit coverage ehould the laat employer
of any UMWA retiree in this group become
unable to provide coverage.
The legieletion does not sflect poet-September
SO, 1994 retirees and their dependente. Compa-
nies which employ people in thie category mey
bargain with the Union concerning the level end
duration of their health oars benefits upon retire-
Thie Conference Agreement came about ae e
result of the argumente advanced by the Plana,
the BCOA end the UMWA that absent legislation
the bsneficiariee could be without benefite be-
cause of deficits in those Plans. As the statement
of policy makes deer, the Conference Agreement
ie intended to remedy those problems, to allow
for sufficient operating assets and to provide for
continuation of a privately financed self-cufficient
benefit program. The purpose of the Conference
Agreement b to facilitate a private party solu-
tion, not create e new federal entitlement pro-
gram or establish s precedent for other federal
action.
On November 19, 1991, S. 1989 wss passed by
the Finance Committee, and wss sppended to HR
4210, the Demo-cratic tax package, which wee
vetoed on March 20, 1992. S. 1989 wee highly
controversial because it would neve taxed the
entire coal industry in order to pay for the health
care of UMWA retirees. This industry tax wss
the subject of contentious debate because those
companies with no relationship to the UMWA or
BCOA were to be taxed to subsidise the BCOA's
private promises. Ths claim that health care for
UMWA retirees ben industry-wide responsibility
b specifically rejected in the fine! Conference
Agreement, which imposes the cost of thie partic-
ular employee benefit program on current end
former signatory companies and their related
companies.
In addition, S. 1989 exempted any company,
other than a producer of bituminous coal, from
the payment obligation. The Conference Agree-
ment rejects thb concept in fevor of e definition
of responsible operator which includes every
entity related to the responsible operator which
continues in business, whether or not the related
company b in the coal mining industry. Broad-
ening the definition of responsible operator in
thb menner b the essence of the Conference
Agreement. It recognizee the financial interde-
pendence of these related entities, end b consis-
tent with the drafters' visw thst it b more appro-
priate to assign ths cost of providing these bene-
fite to ongoing business entities which hsve or
had s relationship with the signatory employer,
then to tax totally unrelated entities to fund the
contractually promised benefite.
Another important difference b the feet that S.
1989 provided for a government fund to adminis-
ter the payment of benefite to en open ended
beneficiary group. Thb concept b rejected in the
Conference Agreement, which provides ineteed
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for a privately financed and administered benefit
plan structure, with eligibility limited to theee
individuals actually receiving benefite from the
UMWA Plans on July 20, 1992. This formulation
solves the existing problem, but guarantees that
the Congressional solution will not provide an
avenue or incentive for abuse or for a continua-
tion of the existing flawed program.
Both earlier bills and the Conference Agree-
ment requires those companies which ones were
signatory to coal wage agreements with contribu-
tion obligations to resume paying for the cost of
providing benefits to retirees assigned to them,
even though those companies no longer have a
contractual obligation to do so under their cur-
rent relationship with the UMWA. The drafters
in both cases took into consideration the claim of
there so-called 'reach back' companies that they
had bargained out of their funding obligations.
It was determined, however, that an equitable
solution would require that such companies re-
main obligated to help fund the benefit program
which covers retired persons who worked for
those companies.
On March 6, 1992, the Senate Finance Com-
mittee reported out amendments to H.R. 4210,
once again including provisions for an
industry-wide tax to finance provision of health
care benefits to UMWA retirees. While the spe-
cific assessment formula differed, it was essen-
tially patterned on 8. 19S9. It was not passed by
the full Senate. The Congressional Record of
March 10, 1992 reflects the strong opposition to
that measure, and any measure that extends
obligations beyond the signatory companies and
their related companies as those terms are de-
fined in the Conference Agreement. The version
of the legislation similar to the Conference
Agreement was substituted for the version re-
ported by the Finance Committee, and represents
the solution which best accommodates the legiti-
mate concerns of the many interested parties.
SUBTITLE J. - COAL INDUSTRY HEALTH
BENEFITS
CHAPTER 99 - COAL INDUSTRY HEALTH
BENEFITS
SUBCHAPTER A. • DEFINITIONS OF GEN-
ERAL APPLICABILITY
Section 9701. Definitions of General Applicability
The terms 'current 1960 and 1974 UMWA
Benefit Plans and Pension Plane' refer to those
plane created by the UMWA and BCOA in collec-
tive bargaining. The 1960 and 1974 Benefit
Plans will, as of February 1, 1993, be merged into
a 'Combined Fund' which will begin providing
benefits on February 1, 1993.
The term 'coal wage agreement' means a col-
lective bargaining agreement between Urn BOOA
and the UMWA. Thie term includes every Na-
tional Bituminous Coal Wage Agriimsnf
(NBCWA). It was in the 1974 NBCWA that the
1960 and 1974 Benefit Plans were instituted.
These Plans are, in effect, snnnessnrs to and a
continuation of the employee health ears pro-
gram that was created in the 1960 NBCWA, and
carried forward in every agreement through
1974. In their privetc collective bargaining; the
UMWA and the BCOA agreed to provide UMWA
retirees lifetime health care benefits. Companies
signatory to coal wage agreementa similar to the
NBCWA are also obligated to contribute to the
Combined Fund.
Section (c), 'terms relating to operators,* en-
cumbers only those persons or entities which
actually signed a collective bargaining agreement
(the NBCWA or s similar contract) with the
UMWA with the obligation to provide I
They are referenced as 'signet*
throughout the Subtitle. However, because of
complex corporate structures which are often
found In the coal industry, the number of entities
made Jointly and eevarally liable for a signatory
operator's obligations under the definition of
related parsons is intentionally very broad.
In this regard, the term 'related person' m
defined broadly to include companies related to
the signatory operator. The Conference Agree
ment makes each such related person fuljy re-
sponsible for the signatory operator's t
to provide benefits under the Ant should
signatory no longer be in business,
fail to fulfill its obligations under the Ant. Thus,
the statute provides that related persons - mean-
ing (i)th<)ee within the oontroUed group of oorpo-
rations including the signatory operator, using s
60% common ownership test, (U) a trade or busi-
ness under common control with a signatory
operator, (Hi) one with a partnership interest or
joint venture with the signatory operator, or <W
in specific instances snnnessnrs to the ooliecties
bargaining agreement obligations of a signatory
operator - are equally obligated with ties signato-
ry operator to pay for continuing health cars
The 'time for determination of rslstinnehlps'
between signatory operators, routed persona, end
successors is July 20, 199* This dale wan fixed
to insure that parent corporations or other oati-
ties misted to a signatory compel
evade responsibility for the obligations 1
under the Conference Agreement by <
themselves of their ownership connection prior to
enactment. The only exception is If, as of Jury
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20, 1992, no signatory operator or related parson
remains in business. In such a esse, the relation-
ship shall be determined as of the time immedi-
ately before the signatory operator osssed to be in
business. The purpose of this provision is to
insure that every reasonable effort is made to
locate a responsible party to provide the benefits
before the cost Is passed to other signatory com-
panies which have never had any connection to
the individual (other than having been signatory
to a labor agreement which maintained the
UMWA Plans). Allocation of beneficiaries to an
entity or business which continues in business Is
the basic statutory intent. Thus, the Conference
Agreement's overriding purpose b to find and
designate a specific obligor for ss many beneficia-
ries in the Plans ss possible.
The term ' 1988 agreement operator' refers to
operators which are signatory to the 1988
NBCWA or a collective bargaining agreement
which contained health care contribution and
benefit provisions similar to those in the 1988
NBCWA. This definition recognises that many
companies have signed labor agreements with the
UMWA which require contributions to the
UMWA Plans, but which may differ from the
NBCWA in other respects.
'Last signatory operator' is s key term for
determining the obligor for provision of benefits
to each eligible beneficiary. The last signatory
operator is the Isst person or entity by whom the
eligible retiree wss employed in the coal industry.
The term 'assigned operator' b a broad term
including signatory operator, related person and
last signatory operator and means the obligor for
the purpose of provision of benefits to a retiree
and hb de pendente.
Because the statute b intended to provide the
greatest number of beneficiaries with health care
benefita paid for by a company which remains in
business and wss the retiree's signatory employ-
er, or b or was a person related to auch aignato-
ry, the term 'business* b broadly defined. Earlier
versions of UMWA retiree health care legblation
had restricted 'business' to the bituminous coal
mining business. The Conference Agreement
specifically states thst 's person shall be consid-
ered to be in business if such person conducts or
derives revenue from sny business activity,
whether or not in the coal industry.' Thus, even
if the signatory operator b no longer in the coal
mining business, or indeed sny business at all,
but it or a related person continues to derive
revenues from sny type of business or otherwise
hss assets sufficient to provide benefit coverage,
it will be deemed to be the sssigned operator for
provision of benefita required under thb Subtitle.
SUBCHAPTER B. - COMBINED BENEFIT
FUND
PART I - ESTABLISHMENT AND BENEFITS
Section 9702. Estsblbhment of the United Mine
Workers of America Combined Benefit Fund
Effective February 1, 1993, the Conference
Agreement merges the UMWA 1960 and 1974
Benefit Plans into a newly created United Mine
Workers of America Combined Benefit Fund.
Although the Combined Fund will be created
within 60 days of enactment, the Combined Fund
will not make benefit payments until the effective
date of thb merger. Until the February 1, 1993
merger, all current beneficiaries in the UMWA
1960 and 1974 Plans will continue to receive
their health care benefits from the exbting
UMWA Plans.
The Combined Fund shall be treated as tax
exempt under Section 601(a) of the Internal Rev-
enue Code and shall qualify as a Section
102(2)(5) plan under the Labor Management
Relatione Act, 1947, 29 US.C. 186(c)(6), an em-
ployee welfare benefit plan within the meaning of
Section 3( 1) of the Employee Retirement Income
Security Act of 1974, 29 U.S.C. 1002(1), and a
multiemployer plan within the meaning of Sec-
tion 3(37) of ERISA, 29 U5.C. 1002(37).
The statute makes provbion for the Combined
Fund to be administered by s Board of Trustees.
The Board has been constituted to ensure ub high
degree of impartiality in the administration of
the Combined Fund as possible. It b specifically
intended thet the Combined Fund not be a gov-
ernment corporation. The mechanism for select-
ing trustees b deeigned to ensure that those
companies with the largest financial obligation to
the Combined Fund are adequately represented
in the selection of trustees. Furthermore, the
Trustees' sole responsibility b to administer the
Combined Fund in the best interest of the benefi-
ciaries within the confines of the Act. The Trust-
see are not the representatives of the BCOA, the
UMWA, or any other group. Procedures, rules
and decbions effecting the Fund shall be estab-
lished ss needed by the Trustees, and shall not be
the result of or subject to, or affected by collective
bargaining between the UMWA and the BCOA.
Section 9703. Plan Benefits
Health benefita under the Combined Fund will
be substantially the same aa those provided pur-
suant to the terms of the 1988 NBCWA ss of
January 1, 1992. In addition, the statute makes
provbion for death benefits st the same level aa
those in effect on July 20, 1992 under the 1988
NBCWA. A msjor difference b thst, unlike the
UMWA Plans, the Combined Fund b designed to
require adherence to rigorous coot containment
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me— urea to control the rat* of utilization. The
Combined Fund will be a prepaid, managed care
program. The Trustees will adopt certain coat
containment atrategies like negotiating with
fgiating provider groups, soliciting the formation
of now provider net works, or taking other actions
as may be necessary to arrange for the most cost
•Tractive delivery of medical care to cover all
beneficiaries. It is recognised that, due to geo-
graphical location, such managed care arrange-
menta may not be feasible for ail beneficiaries.
Although the bsnafldarias tend to be concentrat-
ed mspecifkgeographicdaraee, cocas are located
in isolated rural areas incompatible with a
pre-paid, managed care program. The Trustees
will address these isolated instances on a
esse by-case basis. In each case the Trustees will
negotiate with providers and manage the
beneficiary's care utilization to assure not only
that benefits under the Combined Fund are being
delivered in a cost effective manner, but also that
the Combined Fund maintains finan-eial viability.
Significantly, the legislation provides that ben-
efit coverage may be readjusted if the amount of
money available to tha Trustees under the fi-
nancing aiTangaments in the statute is insuffi-
cient to continue benefits st current levels.
Whils the statute's intention ia to begin the pro-
vision of benefits from the Combined Fund st the
100 percent coverage levels specified in the 10SS
NBCWA, benefits are not locked in at this level.
While tha contribution level may be increased on
a yearly basis to match certain increases in the
health care component of the CPI, the Trustees
if necessary to i
The Trustees have full authority to develop
and administer a plan of coverage and the mocha-
nism for delivery of health care. All benefit eligi-
bility limitations in the current Plana shall be
continued under the Combined Fund. Tha pro-
gram should result in tha availability of uniform
coverage levels for all bsnafldarias. Sines the
drafters have envisioned that tha primary struc-
ture of benefit delivery will be through s pro-paid
tha imposition of cost
i the bsneficierios would
be considered by the Trustees onjy as s last re-
sort.
On|y sssignad operators are responsible for
paying the Combined Fund's cost of providing
benefits. The liability of each operator depends
upon tha number of bsnafldarias allocated to
that company under tha statute's assignment
provisions for allocating beneficiariea to aaaigned
opera tore, signatory operators and related per-
PART II -FINANCING
Section 9704. Liability of Assigned
Each sssignad operator will pay a |
tha Combined Fund consisting of three parts: a
health premium for ita assig
actuarially determined death 1
and a premium to cover ita pro-rata share of tha
health benefita allocable to iinassigned banoflda-
rias. Beneficiaries will be assigned to current
and past signatory operators, and tha Conference
Report makes clear that their related camp
are fully liable for the retirees and <
allocated to each assigned operator. It will bo the
responsibility of the Secretary of Health and
Human Services to calculate a yearly per Benefi-
ciary health premium, to be paid on a monthly
baaie. Premiums may be increased annually to
reflect certain increases in the 1092 medical
component of the Consumer Price Index. Provi-
sions are also mads for certain adjustments in
the event of changes in Medicare coverage so that
the benefita continue as supplementary. The
purpose of this is to insure that the rovsrege
available to benefldarias in 1992 ie not leeaooad
solery because of future changes in the scope of
benefit coverage under the Medicare program.
As s practical matter, not all beneficiaries can
be assigned to s specific last signatory operator,
related person or assigned operator for payment
purposes. This is because in some Instances,
none of those persons remain in business, even
aa defined to indude non-mining related busi-
nesses. Thus, provisions are made for uaas
eigned beneficiary premiums. In each plan year
each assigned operator will pay a premium ear-
marked to cover the health costs of those uaas
The amount of the iinassigned benaflriary
premium payable by each sssignad operator win
be calculated on the basis of the number of
beneficiaries e alienable to each operator as of
October 1, 1093. For example, a person who, cm
October 1, 1993, ie the assigned operator for 10
percent of all benefldarias in the Combined Fund
who can be sssignad to an operator (or related
person) still in businsss, will pay tan percent of
the total yearly premium cost allocable to uaas
signed benefidarias in the Combined Fund.
Likewise, this pro-rata calculation will he used
for future years. Although the percentage of tha
I operator on October I, 1093 \
remain fixed in future years, the statute i
provision for readjustment on an i
take into account the fact that, in the future,
sssignad operators (and related |
out of business and be 1
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ments to the Combined Fund.
The first plan ysar b an eight-month period
running from February 1, IMS through October
1, 1008. Thereafter, each plan year will be a
twelve month period from October 1 through
September 30. In the firat plan year the Secretary
of HHS will review the work history of each
beneficiary and will prepare the assigned opera-
tor allocation* which are required to be made by
October 1, 1008. During this period, the 1988
NBCWA signatories will pay all of the Combined
Fund's costs. Amounts will be paid based on the
percentage of the total of each company's contri-
bution* to the UMWA 1050 and 1974 Benefit
Plana made during the term of the 1988 Agree-
ment. The statute makes provision for adjust-
ments during the following plan year should a
company under-pay or over-pay its actual obli-
gations during this eight month period.
In recognition of the fact that unassigned bene-
ficiaries were not employed by the assigned oper-
ators at the time of their retirement, provisions
are made to subsidise the assigned operators4
payment obligations for the unassigned beneficia-
ries. The inclusion of such subsidies wss a key
component of the legislative compromise. One
such subsidy involves a transfer of assets from
the overfunded 1960 UMWA Pension Plan to the
Combined Fund. This money wss previously paid
into the pension plan by the signatory companies
and is actuarially determined to be in excess of
what is needed to provide pension benefits.
Thus, on February 1, 1998, October 1, 1994 and
October 1, 1996, $70 million will be transferred
from the 1960 Pension Plan to the Combined
Fund. This money may be ussd only to reduce
the amounts that sssigned operators would oth-
erwise hsve to pay to provide health benefits to
unassigned beneficiaries, and may not be ussd for
any other purpose.
Deficits currently exist in the UMWA Benefit
Plana. The 1988 signatories are solely and exclu-
sively responsible for paying off the amount of
any deficit which may exist on February 1, 1008,
when the UMWA Plans are merged into the
Combined Fund. The deficit must be paid off on
a pro-rata basis over a twenty-month period.
Transfers from the overfunded UMWA 1960
Pension Plsn and the Abandoned Mine Land
fund (discussed below) may not be used to pay off
the deficita.
Section 9706. Transfers
At Section (b) of he Conference Agreement,
provision b msde for monies to be transferred
from the Abandoned Mine Land Fund (AML
Fund) in an amount up to, but not more than,
$70 million per year beginning on October 1,
1906 and on October 1 of each subsequent plan
year. The AML Fund is funded by a cents per
ton tax imposed on all coal mining companies
under Title IV of the Surface Mining Control snd
Reclamation Act of 1077. As with the transfer of
excess assets from the UMWA 1060 Pension
Plan, thia money may be used solely for the pur-
pose of subsidising the cost of providing health
care to unassigned beneficiaries. The money
which is available from the AML Truet Fund b
interest earned on the corpus. The Conference
Agreement spseificsUy intends that no part of the
corpus of the Abandoned Mine Lands Trust Fund
be ussd for thb purpose. Thb subsidy wss criti-
cal to the compromise legislation and b not in-
tended to impact on budgetary scoring issues or
to suggest that any person which wss not signa-
tory to a coal wage agreement, or related to such
s signatory, has sny obligation or responsibility
under the Conference Agreement. It b expected
that, in future years, the amount of the yearly
AML transfer will decrease ss the total number
of unassigned beneficisriss in the Combined
Fund decreases.
Section 9706. Assignment of Eligible
Beneficiaries
The method of assignment of sligi-ble benefi-
ciaries wss ths source of much debate and con-
troversy prior to the Conference Agreement. The
con-ferees intend that the largest possible num-
ber of beneficisriee in the Plsns be assigned to s
specific or designsted company. Under the
statute, each eligible beneficiary snail be assigned
in the following order
First, to ths operator which wss signatory to
the 1978 or later coal wage agreement and which
most recently employed the retiree in the coal
industry for st least two years. Thb sssignmsnt
shall be based on s signstory operator and related
persons bsab. If thst signatory operator, in-
cluding related person, b still engagsd in any
business snd employed the miner for two years or
more, thst person becomes the sssigned operator
under the statute. Second, if the retiree wss not
sssigned on the basb of a two year employment
status, he will be sssigned to sny post- 1978 coal
wage agreement signatory, or related person,
which remains in business and which waa the
retiree's majority employer, even if such msjority
employment wss for s period less than two years.
Third, if no post- 1978 signatory (including relat-
ed parsons) remains in business, then the indi-
vidual will be sssignsd to the pro- 1978 signatory
which employed the individual for the longest
period of time, regardless of that length of ser-
vice. Finally, if no operator remains in business
under the formulations dsscribed above, that
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i an unsssigned beneficiary. In all
categories, tha raliraa'a dependents are to ba
treated in tha aama mannar aa tha ratirae for
pturpoaaa of determining tha aaaignad operator.
It ia emphasized that employment of a coal
industry ratirae in tha eoal industry by a signato-
ry operator ahall be traatad aa anploymant by
any related persons to such operator. For pur-
poses of calculating tha last employer and majori-
ty employer and two year employer, employment
with persona no longer in buoincoa (including
related persona) and persona during a period
during which such person was not signatory to a
coal wage agreement ahall be diaragarded.
Tha statute makes provision by which aaaignad
operatora may transfer the assignment of an
eligible beneficiary to a auccssaor employer pur-
euant to private contractual arrangements for a
purchase. An assigned operator may inform tha
Trustees of tha Combine Fund of the transfer of
its responsibility to make premium paymenta
under the Act to a third party and the Combined
Fund Trueteee will make appropriate accommo-
dations. However, even in such ease the assigned
operator remains the guarantor of the benefits
under the Conference Report. The Conference
Report's purpose is to assure that any benefi-
ciary, once aaaignad, remains the responsibility of
s particular operator, and that the number of
unaaaigned benaflciarias ia kept to an absolute
minimum.
The statute makes provision for record search-
aa an other necessary administrative functions by
the Secretary of HHS. Thia will enable the De-
partment to carry out ita responsibilities under
this section. In addition, it ia intended under the
statute that tha Secretary have the authority to
promulgate regulations governing the method by
which determinations of tha aaaignad operator
will ba made and setting out the review proce-
dures available to an assigned operator once such
determinationa are made. It is anticipated that
thia procedure will be time consuming and it ia
known that the corporate relationships in the
coal industry are often com pies. The Secretary
of HHS ia not intended to be overburdened by
atandarda of proof. As long ae the determination
ia baaed on accurate data and that reasonable
inferences are drawn under the circumstances,
the determination made by tha Secretary of HHS
ia intended to prevail.
The section on private actions provides that if
parties have commercial contracta relate to acqui-
sition or diapoaition of coal bearing properties or
facilities which delineate their respective respon-
sibilities concerning the obligation for provision
of retiree health care, the parties may enter into
private litigation to enforce such contracta for
indemnification or any other form of payout
allocation aa may be appropriate under their pri-
vate contract. Othai wise, this language doss not
create new private rights of action where they
would not exist in the absence of this provision.
PART HI - ENFORCEMENT Section 0707.
Failure to Pay Premium
The statute makes provision for assigned
operators to be penalised up to $100 par day far
failure to make required paymenta. The Seere-
tary may waive eufh penalty pay meats in certain
situations, for example, where tha failure as
make payments is for reasonable cause.
PART IV - OTHER PROVISIONS
Section 0708. Effect on Ponding Claims or
Thia section routes to ponding litigation in-
volving the UMWA Benefit Plane and certain
companies. The statute provides that It shall
control ail liability for contributions on or altar
February 1, 1008. For periods prior to that data,
the plan documents, collective bargaining agios
mente and litigation ahall determine respective
rights, duties and obligations. The Conference
Report shall not interfere with the results of
such litigation, nor be used to interpret such
litigation.
SUBCHAPTER C- HEALTH BENEFITS OP
CERTAIN MINERS
PART I - INDIVIDUAL EMPLOYER PLANS
Section 071 1. Continued Obligations of Individu-
al Employer Plana
' In aome instances, signatories to the 1078 or
subsequent coal wsgs agree moots provide retiree
health benefite from an individual employer plan
maintained pursuant to those coal wsgs sgiaa
moots. The statute makes provision for such
health benefits coverage to continue at Urn aaase
levels provided the lest signatory operator (and
any related person) remains in business Thus,
for example, 1088 NBCWA signatories which are
presently providing retiree health care through
an individual employer plan will be statutorily
obligated to continue such benofUa for Ufa with
respect to ail former employees who are already
retired, or who become eligible to retire by Febru-
ary 1, 1008, and who in fact retire on or before
September SO, 1004. Should tha lest signatory
operator pi nut of business, all related nompsaJss
are Jointly and eeveralry liable to oontinue Urn
retiree health cere benofUa for pre-October 1,
1004 retirees end their dependente. It is tha
intent of the drafters that provision of health
cere benefite to pro-October 1, 1001 retirees ha
specifically resolved by the legislstinn.
Health ears benefite for employees retiring
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■liar September 80, 1994 ere subject to collective
bargaining between their company and the
UMWA. Theee pereone are not guaranteed e
epecific level of benefit*, guaranteed funding of
any benefit* or provided benefit* under the Con-
ference Report. It te the intention of the drafter*
to close the UMWA 1950 and 1974 Benefit Plane
a* of July 20, 1991, and that a new private party
plan (discussed below) be created to provide fu-
ture coverage for ell other eligible UMWA miners
who retire before October 1, 1994, but who ere
not eligible for the Combined Fund because they
were not receiving benefit* from the UMWA 1950
or 1974 Plan* on July 20, 1991. Further, the
issue of benefit* for pre-October 1994 retirees
shell not be reopened. Thie was a matter of con-
siderable debate and controversy by the drafter*.
However, the etetue of all post-September 1994
retirees ie to be resolved by the coal operator*
and the Union in collective bargaining.
The reason for this legislation was the unique
nature of the coal industry and ita benefit plane.
Thie statute is not intended to be precedent eet-
ting for other industries, other benefit plans, or
other coal industry workers who msy retire in
the future.
PART n - 1992 UMWA BENEFIT PLAN
Section 9712. Establishment and Coverage of
1992 UMWA Benefit Plan
The queetion of the cut off date for determina-
tion of eligibility for benefit* under thie statute
wee an issue of concern to the interested parties.
The drafter* determined thet eligibility to receive
benefits from the Combined Fund would be
limited to individuals actually receiving benefits
from the UMWA Plane a* of July 20, 1992.
Queetion* remained a* to the coverage of retirees
after thst date. At the urging of the UMWA and
the BCOA, the drafters agreed to provide statuto-
ry authority and direction to the UMWA and the
BCOA to eeteblish e new fund called the 1992
UMWA Benefit Plan to cover those persons who
retire between July 20, 1992 end October 1,
1994. To be eligible for coverage under the 1992
UMWA Benefit Plan the retiree (end hi* eligible
dependent*) must: (i) have retired prior to Octo-
ber 1, 1994, and (ii) not be able to qualify for
receipt of benefit* from the Combined Fund. Thie
fund ie expected to be e bridge to cover employees
who heve not yet retired but who ere retiring
within e very short time after the Conference
Report's effective date. It ie expected that this
population will not be large.
The 1992 Fund will include ell eligible retirees
who retire prior to October 1994 (assuming they
were eligible to retire by February 1, 1993) who
would have been eligible to receive benefit* from
the UMWA 1950 or 1974 Plan* but for the enact-
ment of this legislation. Any person eligible for
benefite from the 1992 Fund shell be allocated to
ouch essigned operator or related person which
remain* in business and that assigned operator
shall be aseeesed premiums sufficient to guaran-
tee benefite to such eligible beneficiaries. Theee
premiums, which shell be paid by all 1986 signa-
tory operators, shall consist of (i) an annual
prefunding premium for each eligible beneficiary
attributeble to it, and (ii) a monthly per benefi-
ciary premium for all eligible beneficieriee whose
l*st signatory operator (including related per-
sons) is no longer in business, and (iii) the provi-
sion of security to insure future compliance with
these payment obligations. Theee aasessmente
•hall bs applied uniformly to each 1988 leet sig-
natory operator on the beeie of the number of
eligible and potentially eligible beneficieriee at-
tributable to it. Additionally, any last signatory
operator which is not a 1988 signatory but which
he* e retiree assignable to it under this plan
shall be assessed e monthly per beneficiary pre-
mium for each euch eligible retiree and his de-
pendents.
The 1992 Fund trustees may implement man-
aged care programs, but have lea* discretion and
authority to deviate from the benefit structure
and benefit levels in effect under the prior
UMWA Plane than do the trustee of the Com-
bined Fund.
SUBCHAPTER D. - OTHER PROVISIONS
Section 9722. Sham Transactions
This provision is modeled after, and should be
interpreted consistent with Section 4212(c) of
The Multiemployer Pension Plsn Amendments
Act of 1981, 29 U.S.C. 1392(c). Section (b).
Amendmente to Surface Mining Act
The Conference Report makes provision to
accomplish the transfer of interest payment*
from the Surface Mine account to the Combined
Fund. After the initio! transfer of $210 million,
beginning in 1996, up to $70 million per year of
interest will be transferred from the Surface
Mine account to the Combined Fund. If the
Trustees determine that the benefite for unas-
signed beneficiaries will be less than $70 million
in any year, only the amount needed will be
transferred. The Conference Report also extends
the Surface Mining Control and Reclamation Act
of 1977 through September 30, 2004. The statute
makes no employer other than a signatory opera-
tor or related company responsible for payment
of benefite. The provisions allowing use of AML
money ere restricted to the use of interest from
thet Fund end will not effect budgetary scoring.
It is intended thet thie money be used solely end
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exclusively for the benefit of undesigned benefi-
cieriee to the Combined Fund.
(CRS Report for Congress, Sept. 10. 1992)
COAL INDUSTRY: USE OF ABANDONED
MINE RECLAMATION FUND MONIES FOR
UMWA 'ORPHAN RETIREE* HEALTH
BENEFITS
(Nonna A. Noto, Spedalist in Public Finance
Economics Division)
Financing the retiree health benefits now
provided by the United Mine Workers of America
(UMWA) 1960 and 1974 Benefit Plans would be
substantially revamped by the Coal Industry
Retire Health Benefit Act of 1992. This proposal
was included as subtitle C of Title XX the reve-
nue provisions of H.R. 776, the National Energy
Security Act of 1992, as passed by the Senate on
July 30, 1992. The coal industry retire health
benefit proposal was not included in the version
of H.R. 776 approved by the full House and
consequently remains a difference for the confer-
ence committee to resolve.
One component of the proposal is to transfer
interest earnings on the balance in the Aban-
doned Mine Reclamation Fund, popularly re-
ferred to as the AML (Abandoned Mine Land)
Fund, to help finance UMWA orphan retiree
health benefits. The success of this approach
requires maintaining a large unspent balance in
the AML Fund. This report examines the impli-
cations of the AML interest transfer proposal in
terms of Federal budgeting policy, spsnding on
reclamation activities, and the incidence of the
financing burden on different parts of the coal
industry.
The report begins with a brief background on
the problems facing the UMWA Health Benefit
Plans and the alternative proposals advanced in
the 102nd Congress to provide some financial
relief. The second section summarizes the main
financing elements in the H.R 776 plan for coal
industry retiree health benefits, pointing out
major differences from the current system. The
third section provides a brief description of the
AML program. The fourth section explains the
budgetary implications of spending the interest
credited to a special fund within the U.S. Trea-
sury. The fifth section shows how the AML
interest transfer proposal would divert monies
away from their designated purpose of land
reclamation. The sixth and final section mea-
sures the relative burden of the AML tonnage
fees by type of coal and geographic region, in con-
trast to alternative forms of taxes on the coal
industry. Appendix 1 presents more detailed
State-by-SUte statistics on the financing distribu-
tion. Appendix 2 summsriios the varioue logiota-
live proposals introduced in the 102nd Congress
to help finance UMWA orphan retiree health
BACKGROUND ON THE UMWA HEALTH
BENEFIT FUNDS
Curently, the basic financing mechanism for
the UMWA Health Benefit Funde is a per pro-
duction hour contribution made by coal compa-
nies that are etili 'signatory* to the National
Bituminoua Coal Wage Agreement (NBCWA), the
main collective bargaining agreement between the
United Mine Workers and employers represented
by the Bituminous Coal Operators4 A— ociation
(BCOA). Thia hourly contribution pays for health
benefits covering beneficiaries of three types:
those directly associated with the signatory
companies, 'reachback orphans' associated with
companies previously signatory and still in busi-
ness, and 'true orphans' associated with compa-
nies previously signatory but no longer in busi-
ness.
The coal companies that are still fuUy signato-
ry to the bargaining agreement have complained
that for every dollar they have been paying into
the UMWA 1960 and 1974 Health Benefit Funds
for their own retirees and dependents, they pay
an additional three dollars on behalf of 'orphans'
of other companies. These companies have
suggested that they can no longer afford to bear
the full costs of the orphans on their own.
Altogether, the Funds service approximator/
120,000 beneficiaries. l
[Footnote* at end of article.]
Like most retiree health benefit plans in the
United States, the UMWA 1960 and 1974 Benefit
Funds were intended to operate on a currant
year, pay-as-you-go basis. No attention was
given to prefunding. The Benefit Funds were
established as multiemployer plans, again based
on the common assumption that while come
employers in the industry group might go out of
business, other companies would emerga to take
their place.
What went wrong? Output of the coal industry
as s whole has been growing. Total tonnassj
produced in the VS. rose from 699 million teas
in 1978 to 1,029 million tons in 1990. *Simulta-
neouery, however, the nature of the industry was
changing dramatically, shifting from undsr
ground mining toward higher productivity sur-
face mining operations. Much of the new growth
in the coal industry has occurred outside the
reach of the UMWA, BCOA, and NBCWA. Virtu-
airy no new mines have been opened under the
National Bituminoua Coal Waga Agreement sines
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the mid- 197(k. In 1978. the Bituminous Coal
Operators of America had ISO member compa-
nies; fagr 1992, the number had dropped to IS or
14. The share of domestic tonnage covered by the
NBCWA fell from approximately 80 percent dur-
ing the 1960s, to 66 percent in 1978, and 80
percent in 1990. UMWA-reprceentad surface
mines in the Western States signed separata
agreements with employers that did not require
full contributions to the UMWA Benefit Funds.
The UMWAeJeo signed separate agreements with
other major coal companies, permitting them to
reduce their payments to the Benefit Funds.
The coal companies that remained signatory to
the NBCWA and full contributors to the UMWA
Benefit Plans were thus left to bear the health
care costs of retirees from many companies that
had gone out of business or ceased to contribute
to the Funds. In addition, as a result of separate
court decisions, the UMWA Benefit Funds were
held responsible for paying benefits for some
retirees, but the former employers were not held
responsible for continuing to contribute to the
Funds. Overall, the BCOA contribution rates
were not sst high enough to fully cover outlays of
the Funds, despite several court-ordered tempo-
rary rate increases. As a consequence, in recent
years, the UMWA Benefit Funds havs been oper-
ating at a deficit; the cumulative deficit of the
combined funda as of Juns 80, 1992, wss estimat-
ed to be approximately $100 million.
The basis public policy question is who should
pay for the health benefits promised to 'orphan*
retired United Mine Workers and their related
beneficiaries if specific former employers cannot
be held responsible. Should it be only the cur-
rent and former signatories to the bargaining
agreement or should othsr parts of the coal in-
dustry provide some relief? Should the general
public bear responsibility for orphan retirees
through Federal or State health care programs?
Shaky retiree health benefits are not unique to
the coal industry. Many other retiree groups
have recently been orphaned or abandoned by
their former employers with regard to health
benefits. Pan American Airlines and Eastern
Airlines are well-known examples, but thee are
many others. * Other multiemployer benefit
plana, such as those in ths rail and steel indus-
tries, also face a shrinking contribution base.
It is noteworthy that many beneficiaries of ths
UMWA Health Benefit Plans are eligible for
health benefits under two Federal programs.
Many retired miners, as well as spouses and
widows, sre eligible for Medicare. According to
statistics presented in early 1992, 88 percent of
the 1960 and 66 percent of the 1974 Benefit
Fund beneficiaries were Medicsre-eligible. 4 In
addition, about 71 percent of retired miners (but
not dependents) receiving UMWA health benefits
are also covered under the medical-care portion
of the Black Lung Disability program. Thus, the
potential issue for most orphan beneficiaries
involved in the coal industry esse is not being
without any health insurance coverage at all.
Rather, the issue - for those retired miners and
dependents old enough to qualify for Medicare -
is s Medigap policy with prescription drug cover-
age ( ° But many older Americans • in addition
to coal industry retirees - sre affected by the fact
that Medicare does not cover 100 percent of their
health care costs.
There may be good reasons for the Congress to
address ths issue of retiree health benefits on s
comprehensive nationwide basis, rather than an
industry-specific basis. But a major overhaul of
the Nation's health care financing system is
unlikely in 1992. Meanwhile, the coal industry
faces an imminent time deadline. The current
bargaining agreement between the UMWA and
the BCOA, known as the 1988 Agreement, is
scheduled to expire after February 1, 1998. There
has been concern that the failure to resolve in
advance of contract negotiations the issue of how
to finance orphan retires health benefits could
lesd to s strike by the miners and/or a refusal by
BCOA employers to continue to support health
benefits previously promised to retire miners and
Several proposals were introduced in the 102nd
Congress for financing coal industry retiree
health benefits. This report focuses on aspects of
those proposals that involve taxing the coal in-
dustry to help pay for 'true orphans.'
The initial proposal by Senator Rockefeller
(Ths Coal Industry Retiree Health Benefit Act of
1991, S. 1989) for financing orphan retiree
health benefits wss based on uk industrywide tax
of $.76 per production hour on domestic coal and
an equivalent tax of $.16 per ton for imported
coal. This proposal drew etrong protests from
coal companies never signatory to the National
Bituminous Coal Wage Agreement who argued
that they had no part in promising ths retiree
health benefits at issue and should therefore not
be required to pay.
A revised financing proposal (included in H.R.
4210, the Tsx Fairness and Economic Growth
Act of 1992) was to tsx only bituminous coal
production, at $.99 per hour for coal mined East
of the Mississippi River, $.16 per hour in the
West, and $.26 per ton for imported bituminous
coal. The version of Hit 776, the national ener-
gy legislation, approved by the Senate Finance
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Committee included * similar proposal with
slightly higher rates.
The bituminous coal tax proposal was an at-
tempt to target the tax more precisely on the part
of the coal industry that could be considered
most responsible for the promised UMWA retiree
health benefits. Historically, UMWA representa-
tion wss most likely in underground coal mines,
located in the East, and involving bituminous
coal. The bituminous coal tax proposal exempted
Western subbituminous coal and lignite produc-
tion and taxed Western bituminous at a much
lower rate. However, s large fraction of Eastern
bituminous mining hss not been affiliated with
the UMWA or the NBCWA. These non-signatory
companies strongly objected to the proposed tax.
Both the proposal to tax all coal production
and the proposal to tax only bituminous coal
production • whether or not the companies had
ever been signatory to the NBCWA • had met
opposition in the Senste and were threatened
with a presidential veto.
Meanwhile, in the House of Representatives,
there wss s proposal to transfer $60 million per
year from the Abandoned Mine Reclamation
Fund, first introduced by Rep. Rahall as HJL
4344, and subsequently included in HJL 776 ss
approved by the House Committee on Interior
and Insular Affairs, but not included in H.R. 776
ss approved by the full House. It wss a revissd
version of this AML transfer proposal - tied to
the interest earninep of the AML fund and in-
creesed to $70 million per year • that was includ-
ed in H.R. 776, the National Energy Security Act
of 1992, as approved by the full Senate. °
THE FINANCING MECHANISM PROPOSED
IN H.R. 776
Under the proposal in the full Senate version
of H.R. 776, the basic financing mechanism for
UMWA retires health benefits would switch from
ths current per-production-hour contribution to
s per-benefidary premium. Wherever possible,
responsibility for individual bsneficiaries would
be assigned (by ths VS. Secretary of Health and
Human Services) to a previous employer still in
business • whether a current signatory or a
'reschback' company. The net total premiums
due on behalf of the remaining unassignsd bene-
ficiaries (the true orphans) would be allocated to
the signatory and reschback companies in pro-
portion to their "applicable percentage1 of ell
assigned bsneficiaries.
Thsss aggregate premiums due on behalf of the
unsssignsd bsnsficisrias would be reduced by
transfsrs from other soursss of $70 million each
fiscal year starting in FY93. The first three
transfer. (February 1, 1993, October 1, 1993, and
1994) would come from the i
i of the UMWA 1 960 Pension Fund. Start-
ing October 1, 1996, the annual transisrs would
come from the interest sarninaa of the AML
Fund. The AML interest transfer proposal is
linked to the extension of the AML tonnage leas
on coal. The legislation would extend the AML
feea another nine years, from their schsdulsd
expiration on Sept. 30, 1996, until Sept. 30, 2004.
For any single fiscal year the amount that
could be transferred from the AML Fund may not
exceed the amount of expenditures that the trust-
sss of the new United Mine Workers of America
Combined Benefit Fund estimate will be spent tor
health eye on behalf of the "unsoeignsd' bsosft-
ciariee. ' Furthermore, the amount to he trans-
ferred at the beginning of each fiscal year is de-
fined in the legislation aa the amount of interest
estimated to be paid to the AML Fund during
that coming fiscal year, plus the amount by
which that interest amount is less than $70 mil-
lion. The cumulative amount of this supplement
to interest that may be transfsrrsd for all fiscal
years cannot exceed the amount equivalent to all
the interest earned and paid to the AML Fund
for fiscal years 1993, 1994, and 1996 - years be-
fore ths transfsrs are to begin.
The proposal eddressss the problems eeenrieted
with ths defined group of miners who have al-
ready retired or are soon to retire. It doss not
offer any protection for miners who will retire
after September 30, 1994.
To a large extent, the proposal would codify
into Federal law the recent trend in support
commitments that have been made under the pri-
vate bargaining agreement between the UMWA
and ths BOCA, and which ths courts have been
trying to enforce. Originalry, the UMWA
multiemployer health benefit plan was intended
to service, without differentiation, both
nonorphan and orphan retirees. That polky
changed with the 1974 bargaining sgreimsnt
(NBCWA) and ths establishment of the asperate
1960 and 1974 Benefit Funds.
The 1960 Fund wss to ssrvics all those wise
retired prior to December 31, 1976, both
nonorphans and orphans. (Today, approximately
half of the beneficiaries of the 1960 Fund are
orphana, and half nonorphanej For those retir-
ing in 1976 or later years the 1974 Fund wen to
ssrvics only those oonsidsred orphans.
Nonorphans were to receive their retiree health
benefits directry from their last employer cs least
aa that smploysr remained in hi win sss, The
Senats's HJL 776 proposal would make a very
strong effort to identify former employers ami
hold them financially responsible for
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The UMWA multiemployer plane were initially
financed by a contribution aaeeieed per ton of
coal production. Thie wee supplemented in 1974
and totally replaced in IMS by a contribution
aaeeeaed per hour of coal production work. A
company's contributions to the multiemployer
plane were thus made in eome proportion to its
current production activity, whether measured by
coal output or labor input This was in some
sense s measure of current 'ability-to-pay.'
The H Jt 776 proposal would allocate the pay-
ments due on behalf of 'unsssigned' or orphan
beneficiaries on the basis of s company's 'applica-
ble percentage,' defined aa the number of benefi-
eiariee sssigned to that company divided by the
total number of assigned beneficiaries. Thus
companies with the largest number of current
beneficiaries of their own would also bear the
largest burden for orphans. Signatory companies
which had no current assignsd beneficiaries
would not be required to contribute (after the
first plan year of the new program).
As s source of subsidy for orphan retirees, the
proposal identified two sums of money that have
already been collected from the coal industry: the
surplus assets in the UMWA 1960 Pension Fund
and the balance in the Abandoned Mine Reclama-
tion Fund. The ability to tap thoee monies would
mean that orphan retiree health benefits could be
subsidized without having to levy additional pri-
vate (BCOA) fees or Federal taxes on the coal in-
dustry. The remainder of this report focuses on
the AML transfer proposal, especially its implica-
tions for Federal budgeting and its incidence on
the coal industry.
BRIEF DESCRIPTION OF THE AML PRO-
GRAM 8
The bulk of HJt 776 relating to coal industry
retiree health benefits (section 20143(a)) would
amend the Internal Revenue Code of 1986. In
contrast, the section (20143(b)) providing for
transfers from the AML Fund would involve an
amendment to the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1232)
CSMCRA).
SMCRA established the abandoned mine land
reclamation program, taxing current coal produc-
tion to restore mined land that had been left too
compromised for other productive use. Monies
collected from tonnage fees on coal were to be
allocated among the various coal mining States to
reclaim landa mined and abandoned prior to
August 3, 1977, the date the Surface Mining
Control and Reclamation Act (P.L. 96-37) was
enacted. Surface mining conducted after that
date waa expected to meet Federal reclamation
standards implemented through State regulatory
programs.
In recognition of funding limitations. Congress
in SMCRA establiahed priorities for the use of
AML money. First priority goes to mining aban-
donments that could present imminent danger to
public health and safety. Examplee of priority
ons projects include open mine ahafte or subsi-
dence (underground boies from mining) under
schools or other public buildings Any remaining
AML funda are designated to eliminate environ-
mental hazards and finally, at the lowest end of
the scale, mining scars considered aesthetically
offensive. Abandoned mine sites around the
country havs been ranked according to a national
priority list.
Under current apending allocation rules, AML
fee collections are split in half. One half returns
to the State of origin, and the other half is used
for a variety of Federal programs, most under the
authority of ths Secretary of the Interior. The
Western States have already dealt with most of
their high-priority abandoned areas. Much of the
Federal half of the money hss come East to pay
for AML projecta addressing remaining
high-priority public health and eafety hazards.
This interregional subsidy hss been s contentious
issue for Western mine operators. 9
The Omnibus Budget Reconciliation Act of
1990 (P.L. 101-603, section 6003) suthorized the
collection of the AML reclamation fees through
September 30, 1996, thereby extending the fees
peat their echeduled expiration in 1992.
BUDGETARY IMPLICATIONS OF SPEND-
ING INTEREST
The growing balance in the AML Fund attract-
ed the attention of those searching for a 'costless'
revenue eource to subsidize orphan retiree health
benefits. This section first presents data on the
balances and interest expected to be available in
the AML Fund. It then explains the costs of ths
proposal in terms of Federal budget accounting.
As shown in table 1, in FY91, $243.3 miUion in
revenues were collected for the AML Fund from
tonnaen fees on coal; appropriations for the
reclsmstion programs were $199.0 million. The
unappropriated balance available for future
reclamation expenditure waa expected to rise
from $629.4 million st ths beginning of FY91 to
$796.0 million by the end of FY93.
Part of the growth in the balance after FY91 is
the result of s provision included in the Omnibus
Budget RsconcilisUon Act of 1990 (OBRA90, sec-
tion 6002) which provided that the AML could
henceforth earn interest on the cumulated bal-
ance in its special fund with the 133. Treasury.
During FY92, the first year of such interest earn-
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inge, the AML Fund was expected to be credited
$40.4 million in interest income. Interest earn
ings of $46.2 million were projected for FY9S.
10
TABLE 1 • ABANDONED MINE RECLAMA-
TION (AML) FUND BUDGET, FISCAL
YEARS 1991-93
(In thousands of dollars)
1991
1992 1993
actual
est. est.
Balance, start
of year
629,407
674,211 664,866
Receipts
AML fees
243,769
238,100 240,100
Interest
40,368 46,164
Subtotal,
receipts
243,769
278,468 286,264
Appropriation
198,966
.187,803-166,161
Balance,
end of year
674.211
664,866 794,979
Source: US. Executive Office of the President.
Budget of the United States Government, Fiscal
Year 1993. Washington, VS. Govt. Print. Off.,
1992. (Released Jan. 29, 1992). p. Appendix One
-686.
As long as the AML Fund could maintain such
s large balance, nearly $60 million could be
transferred out of the Fund annually (to orphan
retiree health benefits or any other purpose)
without appearing to decrease the Fund's balance
and without imposing new taxes on the coal in-
dustry. This apparently 'costless' way to subsi-
dise orphan retiree health benefits pro-vides s
powerful appeal to its pr-oponents. But would
the proposed AML transfer really be 'costless?'
Neither the H.R. 4344 nor the H.R. 776 AML
transfer proposals would impose any additional
taxes on the coal industry in order to help fi-
nance the orphan retiree health benefits. But
both would extend the current AML fees intend-
ed to pay for reclama-tion programs. According
to Congressional Budget Office cost estimates for
H.R. 776, the proposed extension of the AML fees
beyond FY96 would cover the mandatory authori-
sation of outlays for UMWA retiree health ben-
efits. Thus, in a technical sense, the proposal
does not violate the deficit-control accounting
established by the Budget Enforcement Act of
1990 (BEA) (Title XIII of OBRA90.P.L. 101-608).
In the economic context of the unified Federal
budget, however, the interest-transfer proposal
would constitute an increase in deficit spending.
The interest to bs credited to the AML Fund does
not reflect new, additional revenue to the Federal
Government, only a debt of the general fund to
the AML Fund. The interest earnings of the AML
fund are by no means 'free money' awaiting use
in the VS. Treasury. Indeed, there is realty no
cash balance Bitting in the AML Fund.
In this era of large annual deficits in the con-
solidated VS. budget, the VS. Government
spends every dollar it collects in taxes and other
receipts - and more. A particular special fund (or
trust fund) may show s surplus in its budget
account if the receipts credited to it (collect ions
from the public plue interest credited by the
Government) exceed the outlays from the fund
for that year. In s cash accounting eenee, howev-
er, any excess of collections from the public over
outlays for that particular program are spent to
cover other activities of the Government in that
fiscal year. The surplus collections are in effect
borrowed from the special fund by the general
fund. If the special fund surplus were not avail-
able, the general fund would otherwise have to
borrow that amount from the public by issuing
Treasury debt and pay interest on thst debt.
Prior to FY92 the general fund was receiving
an interest-free loan represented by the balance
in the AML Fund. The payment of interest to the
AML Fund (as s result of the provision in
OBRA90) now acknowledges the time value of
the money already paid in by coal opera-tors in
the form of AML tonnage fees but not yet spent
on reclamation activities. If either the Fund's
annual interest earnings or cumulative balance
are spent, however, that spending would have to
be financed on a current-year basis by new reve-
nues, cuts in other spending, or new debt. This
budgst rule applies whether the spending is for
orphan retiree benefits or any other purpose,
including AML activities.
The proposal to spend the interest credits of
the AML Fund entails three additional prohltsaa.
First, it is unduly complex in order not to violate
the deficit-control provisions of the Budget En-
forcement Act, which is to remain in fores
through fiscal yesr 1996. In essence, H.R. 776
suthorixee the spending of all of the interest
earned by the AML Fund for fiscal years FYB9
and beyond, but the proposed transfers of $70
million per yesr to the retiree health benefits
fund would not begin until FY96. The intersst
earned for fiscal years 1993-96 would bs drawn
upon to supplement the difference between the
interest earned each year beginning with FYB9
and $70 million.
Second, the ability of the proposal to pro vine
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revenues for UMWA or-phan retire* health bene*
fits depends on maintaining a Urge, unspent bsl-
enee in the AML Fund. It ie not etenderd budget
policy, however, for most trust funds or spedsl
ffundstointentkmsibr'sit'onslsj^beJsnes. "
If there is no con-vindng resson defending s
Urge belsnee, there is frequently pressure to cut
or suspend addition*! fee collections until the
belsnee is spent down to sn acceptable level. In
some esses, it has been written into the authoris-
ing legislation that the continuation of the fee is
contingent on the fund balance being below a
certain level. For similar reasons, coal mining
companies could object to paying further AML
tonnage fees ss long ss the balance in the AML
fund remains high.
During the late 1980s, the Reagan and Bush
Administrations were criticised for holding back
on expenditures from the trust funds (especially
the Highway Trust Fund and the Airport and
Airway Trust Fund) in order to help offset the
defldt in the Government's general fund. Under
continuing pressure to contain the consolidated
deficit, trust fund and special fund balances have
been permitted to build, end some of the caps
triggering the reduction or removsl of charges
have been raised or eliminated by legislation.
The monies, however, ere left to accumulate for
future use by the particular fund on its own
programs.
Third, in net budgetary terms, the proposal b
equivalent to removing the interest-earning capa-
bility granted to the AML Fund by OBRA90 ( 12
(for fiscal years other than 1992) and authorizing
a payment of up to $70 million per year from the
general fund of the VS. Treasury to the UMWA
Combined Benefit Fund, for fiscal years begin-
ning in 1966.
CRS is not aware of any other example in the
Federal budget where the interest earnings of s
spedsl fund or trust fund are dedicated to anoth-
er program. In the absence of the proposed
transfer legislation, the interest earnings would
otherwise accrue to the AML Fund and be avail-
able for future appropriation to the Fund's own
reclamation activities, reducing future AML fees,
or making refunds to companies which had paid
fees in the past.
In sum, the AML interest transfer proposal
offers s solution to the immediate problem of bow
to finance health benefits promised under past
UMWA bargaining agreements to miners who
hove already retired (and their dependents) but
whose former employers are not around to pay.
The proposal represents s compromise acceptable
to the Bush Administration and members of the
Senate who bad opposed alternative proposals to
levy a new tax on the coal industry, including
many companies that had never been signatory to
the National Bituminous Coal Wage Agreement.
This proposal does not involve s nsw tax or fee.
Rather, it extends the current AML fees pest
their scheduled expiration at the end of FY96.
The success of the proposal is based on the •*-
sumption that future appropriations for reclama-
tion activities will not exceed fee collections end,
conss quently, that s large, interest-earning bal-
ance will remain in the AML Fund. The proposal
would draw upon the interest earnings to pay for
orphan retiree health benefits.
On the downside, this analysis suggests that
ths AML transfer proposal would have real bud-
getary costs for ths U.S. Treasury that may not
be readily apparent. The interest transfer provi-
sion is unduly complex in order to circumvent
restrictions imposed by the Budget Enforcement
Act. The straightforward authori-xation of a
transfer to orphan retiree health bonefits within
the limits of annual AML fss collections would
better honor the spirit of the pay-as-you-go pro-
visions of ths Budget Enforcement Act.
The proposal violates usual standards for truat
fund or spedsl fund management. Diverting
monies specifically raised for one purpose to
another program raises additional questions of
incidence on both the bonefits (spending) side
and on ths taxing dds. Ths AML transfer pro-
possl has implications in terms of the diversion
of spending benefits from reclamation activities
to orphan retiree health care and the distri-
bution of the financing burden on the coal in-
dustry. These incidence issues are discussed
further in the following two sections of the re-
port.
DIVERSION FROM RECLAMATION EFFORTS
The fact thst there is s large and growing
balance in the AML Fund does not mean thst the
money ie not needed by the AML program. Ans-
lysts of the AML program say that even if all the
Fund's receipts were spent, this would not be
adequate to finance all of the high priority pro-
jects thst remain in the Esstern States. All AML
project grants, induding those covered under the
60 percent State allocation, are subject to annual
congressional appropriation. In brief, the Admin-
istration has not been requesting - and the Con-
gress has not been appropriating • monies for
reclamation activities st ths ssme pace that AML
fees sre being collected. For FY98 the Adminis-
tration requested sn appropriation of $166 mil-
lion; the House Appropriations Committee recom-
mended $168 million; and ths Senate Appropria-
tions Committee recommended $ 191 million. All
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are far lees than estimated AML fse collections of
$240 million (see table 1).
This proposal in affect authorizes the transfer
of interest earned on monies collected on behalf
of reclamation activities for the purchase of
health care for UMWA orphan retirees. The
beneficiaries of these two functions are quite
different.
The specific structure of the AML interest
transfer plan under the Senate's H.R. 776 pro-
posal holda a potentially more adverse impact on
reclamation activities than would a straightfor-
ward authorisation (such »m that originally pro-
posed on the House side). Because it would be
depending on the interest earnings of the AML
Fund, the UMWA Combined Benefit Fund stands
to receive more, the less the AML Fund spends
on reclamation and consequently the larger the
AML Fund balance. Under a straightforward
authorization from the AML program, the orphan
retiree benefit fund would receive its transfer but
would not otherwise benefit from s curtailment
of reclamation activities. If the AML Fund's
contribution were set ss s percentage of reclama-
tion expenditures, the orphan retiree program
would benefit only if reclamation activity took
SPECIAL AML FREE STRUCTURE
The interest earnings of the AML Fund, aince
they simply reflect the time value of the contribu-
tion to the fund, are attributable to coal produc-
ers in proportion to AML fees previously paid to
the Federal Government but not yet apent. Tap-
ping AML fund monies has the effect of applying
the tax structure specifically designed for the
abandoned mine land reclamation program to
another, very different program purposes.
The AML, tonnage fee is much higher on
surfacs-mined (nonlignite) then
underground-mined coal, presumably reflecting
their differing responsibility for environmental
damage to the land. The AML fees are levied at
the lesser of 16 cents per ton for
underground-mined coal and 36 cents per ton for
surface-mined coal, or 10 percent of the value of
the coal at the mine. 13 For lignite the rate is
the lesser of 10 cents per ton, or 2 percent of the
value of the coat at the mine. Thia distribution
may not be as appropriate for financing orphan
retiree health benefits which are presumably
more closely related to the number of employees
used in production.
Rerying on the AML fee structure would place
a larger share of the burden on surface-mined
coal and coal mined in the Western States than
would a contribution based on coal production
hours. A uniform tonnage fee would also place a
greater burden on Western coal than an hourly
fee, though not quite to the degree thai the AML
fees do. The proposal to tax bituminous coal
production hours would be at the other extresae,
placing nearly all of the burden on Eastern coal.
As shown in table 2, surface-mined coal ac-
counted for 71 percent of estimsted AML fees
(column 1) compared with 60 percent of UJS. coal
tonnage (column 2) in 1090. In contrast,
underground-mined coal accounted for 26 percent
of estimsted AML fess compared with 41 percent
of tonnage. Lignite accounted for on|y 4 percent
of AML fees but 0 percent of tonnage.
TABLE 2. - PERCENT OF ESTIMATED AML
FEES COMPARED WITH PERCENT OF VS.
TONS MINED, BY TYPE OF MINING AND
REGION, 1990
Percent of
Percent of
estimsted
U£.tons
AML fees
mined
1990
1990
Type of mining:
Underground
26
41
Surface
71
60
Lignite
4
9
VS. total
100
100
Regional breakdown:
East of Mississippi
66
61
River
' West of Mississippi
44
39
River
Source: Calculations by CRS. See appendix table
A.2.
One might expect that because nearly all West-
ern coal b surface- mined (91 percent In 199(0
Western States would pay a much larger share of
AML fees than their tonnage repre-eenta. But
this b largely balanced by that fact that almost
ss much surface (non-lignite) coal b mined East
of the Mississippi River ss West. As a result.
Western coal contributes on|y a slightly larger
share of estimated AML fees than its snare of
tonnage - 44 percent of foes compared with 99
percent of tone in 1990. Conversely, Eastern
mining accounted for 66 percent of the AML fess
compared with 61 percent of tons.
14
COMPARISON WITH AN HOURLY CHARGE
Because they operate at higher rates of labor
productivity, surface mining in
Western surface mining in particular, «
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at a much higher rata relative to underground
mined coal whenever coal production ia charged
on a per ton rather than a per hour basis. This
difference is magnified under the AML fee struc-
ture which charges a higher rate per ton for
surface compared with underground- mined coal,
aa shown in the top part of table 3. Measured
alternatively, a uniform fee per hour would place
a higher burden per ton on Eastern than West-
ern coal, simply because of differences in average
productivity between the regions, aa shown in the
bottom part of table 3.
TABLE 3. - PER HOUR EQUIVALENT OP
AML TONNAGE PEE AND PER TON EQUIV-
ALENT OP A $ 1 PER HOUR FEE, BY TYPE
OF MINING AND REGION
on Eastern bituminous coal than Western. The
proposals based on hourly rates would have
placed a larger share of the financing burden on
Eastern coal than the AML transfer proposal.
Becauee each proposal would raise a different
amount of total revenue, it could be misleading to
compare the nominal tax rates directly. ( *° In-
stead, table 4 compares four financing mecha-
nisms baaed on the share of total revenue (or the
share of each dollar raised) that would be paid on
coal production from the regions East and West
of the Mississippi River. Table 4 builda upon the
regional breakdown estimated at the bottom of
table 2 for AML fees and a uniform per ton fee.
••• TABLE DATA UNAVAILABLE «
Produc-
Equivalent
tivity
Fee
feel
per
(average
(Iper
hour
tons per
ton)
(col
. 1
hour)7
x col
.2)
AML Fees
Underground
mining
East2
2.46
0.16
0.37
West3
4.01
.16
.60
US. total
2.64
.16
JX
Surface mining
East2
3.32
.36
1.16
West5
I&26
.36
4.29
US. total
5.04
.36
2.0*
Uniform Fee of
$1 per Hour4
East2
2.73
.37
1.00
West3
10.41
.10
1.00
US. total
3.83
.26
1.00
* Average tons produced per miner per hour in
1990 for underground and surface mining, in
States East and West of the Mississippi River.
US. Department of Energy. Energy Information
Administration. 'Coal Production 1990.' T. 23, p.
63 and T. 28, p. 68.
2 East of the Mississippi River
3 West of the Mississippi River
Underground and surface mining
The original Rockefeller financing proposal (S.
1989, H.R. 4013) was to levy a uniform charge on
the entire US. coal industry of $0.76 per produc-
tion hour. A revised proposal was to levy an
hourly tax, but only on the bituminous coal por-
tion of the industry, and at a much higher rate
CRS estimates that under the bituminous coal
proposal (with exemptions for aubbituminoua and
lignite coal and a $0. 16 per hour rate for Western
bituminous coal compered with $ 1. 18 for Eastern
coal), Eastern coal would pay 99 percent and
Western coal only about 1 percent of the reve-
nues paid by the domestic coal industry. ( *° A
straightforward hourly fee would place 86 per-
cent of the burden on Eastern coal, and 16 per-
cent on Western. By comparison, under a uni-
form tonnaga fee, Eastern coal's share would bo
61 percent, and Western coal's 39 percent. Un-
der the AML tonnaga fees, Eastern coals share
is slightly lower, 66 percent; conversely, Western
coals share Is slightly higher, 44 percent.
AML fees are collected from the entire domes-
tic coal industry. Thus, it b relevant to compare
the incidence of the AML interest transfer pro-
posal with other proposals advanced to tax the
coal industry on bohalf of the orphan retirese.
Given that ths nature of US. coal production has
shifted dramatically from underground to aurface
mining and from Eastern to Western mining, sny
industry wide tax will necessarily place some
burden on coal companies that were never in-
volved with today 'a retirees. Even if and when it
ia decided that the entire coal industry should
bear some of the financing burden, it b not easy
to say thet some categories of non-signatory oper-
ators should pay a much higher charge than
others.
Comparing the four financing mechanisms, the
tax on bituminous coal production hours would
be st one extreme in piecing nearly all of the
burden on Eastern coal. In contrast, AML ton-
nags fees place the highest share on Western
coal. A uniform hourly fee - either alone or in
combination with a uniform tonnage fee • would
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Amendment to serve ee e substitute for Title XIX,
the revenue provisions of H JL 776, the Compre-
hensive Nstionsl Energy Act, ss Approved by the
Committee on June 16, 1992. The tsz financing
mechanism was again to be a tax on bituminous
coal, but the initial rates on Esstern and import-
ed coal were higher than in HJL 4210. The new
proposed Eaatern rstes were $1.18 per hour for
calender years 1992 and 1999; $1.19 for 1994 and
1995; and $1.20 for 1996. The per ton premium
on imported coal was set initially At $0.89 per
ton. The rate on Western bituminous coal re-
mained at $0.16 per hour. The bituminous coal
fees were expected to raise approximately $206
million per yesr as of FY92.
This version slso specified the amount of the
'reachback premium' to be paid into the Coal
Industry Retiree Benefit Fund by s previous
employer or last signatory operator to whom an
orphan miner could be 'attributed.' The annual
Amount of the premium, applicable by calender
year, would bo $1,216 in 1992; $2,632 in 1998;
$2,745 in 1994; $2,978 in 1995; $8,216 in 1996;
and $8,479 in 1997 and thereafter. The premi-
ums were expected to raise $89 million per yesr
aeofFY92. *°
S. 2560, SENATOR BOREN
The bill introduced by Senator David L. Boren
of Oklahoma on April 8, 1992, proposed s trans-
fer, without tax penalty, of excess pension assets
from the 1960 Pension Plan to erase the deficits
in the 1960 and 1974 Benefit Plans; establishing
strong withdrawal liability provisions for compa-
nies which completely or partially withdraw from
the UMWA Benefit Plans; and adopting a manda-
tory cost containment program for the Benefit
Plana. S. 2650 emphasised the guarantee of fu-
ture funding by signatory companies through an
increase in contribution rates as soon ss s deficit
is recognized. It did not propose any new, outside
funding source.
H.R. 4344, REPRESENTATIVE RAHALL
The origins] AML transfer proposal was intro-
duced by Representative Nick Joe Rahall, II, of
West Virginia, on Feb. 27. 1992. as H.R. 4344. It
would hsve extended the abandoned mine recla-
mation fees from 1995 to the year 2007 and
transferred $50 million each fiscal year to the
'Coal Industry Benefit Fund.'
21
H.R. 776. THE NATIONAL ENERGY POLICY
ACT, FROM THE HOUSE COMMITTEE
ON INTERIOR AND
INSULAR AFFAIRS
A similar AML transfer proposal was included
in the version of the National Energy Policy Art,
HJL 776, as approved by the House Committee
on Interior and Insular Affairs on April 8, 1992.
This version would have extended the AML fees
from 1995 to the year 2010 and transferred $50
million per year from the AML Fund to a 'Coal
Industry Retiree Benefit Fund.1
Neither HJL 4844 nor the Interior Committee
bill mentioned the interest earnings of the AML
Fund, although supporters pointed out that there
earnings could make the transfer proposal appear
nearly costless. Also, neither bill provided for the
creation of a benefit fund, which would he out-
side the jurisdiction of the Interior Committee.
The original AML transfer proposal was intsndid
to supplement the Rockefeller plan set forth in 8.
1989 and included in HJL 4210 which would
havs established s Govsnunent-sponsorod Cos!
Industry Retires Health Benefit Corporation.
H.R. 776, FULL HOUSE VERSION
The AML transfer provision was not included
in the version of HJL 776 reported by the Rules
Committee to the full House for floor action in
May 1992, in accordance with a recommendation
by the House Wsys and Means Committee. **
HJL 776, THE NATIONAL ENERGY SECU-
RITY ACT OF 1992, FULL SENATE VEfcV
SION
A variation of the Rahall proposal became part
of the financing mechanism in the 'comprosaiss'
version of the Rockefeller plan, approved am an
amendment to H.R. 776 on the Senate floor on
July 29, 1992. The Coal Industry Retiree Health
Benefit Act of 1992 was included ss subtitle C,
sections 20141 to 20148, of Title XX, the revenue
provisions of H.R. 776, the National Energy Se-
curity Act of 1992, ss pessed by the 8enate on
July 80, 1992. In section 20148(h) of the bill. Urn
amount that could bs transferred each yesr from
the AML Fund was set at $70 million, and the
amount of the transfers was specifics Uy linked to
the interest earnings of the AML Fund as de-
scribed in the body of this report.
The version of the Rockefeller plan included m
the Senate-passed H.R. 776 also proposed a new
configuration of the health benefit funds, into
two new funds, both privsts • the UMWA Com-
bined Benefit Fund and the 1992 UMWA Benefit
Plsn. Beneficiaries would bs sssigned to the
Combined Fund if they were already receiving
benefits ss of July 20, 1992. Miners tend related
beneficiaries) retiring after Ju|y 20, IMS, mat
before September 30, 1994, who would othsrwwa
bs covered by the 1974 Fund because their em-
ployer went out of business, would be covered by
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the new 1002 Fund.
This proposal represented a bipartisan compro-
mise within tha Senate, principally batwaan San-
alar RoekafaUar of West Virginia and Senator
Wallop of Wyoming; and with tha Bush Adminis-
tration. Tha prior RoekafaUar proposals to tax all
coal production or to tax only bituminous coal
production, whether or not tha companies had
ever been signatory to the NBCWA, had met
opposition in the Senate and were threatened
with a presidential veto. Thia version placed a
much stronger emphasis on identifying reachbaek
employers and collecting a per beneficiary premi-
um from them.
CONFERENCE COMMITTEE
Because the Coal Industry Retiree Health Ben-
efit proposal was included in the Senate version
but was not included in the version of H.R. 776
approved by the House, it remains s difference
for the conference committee to resolve when it
meets in September 1992.
FOOTNOTES
*■ Beneficiaries include both ths retired miners
and their dependents. Throughout this report,
the term retires or orphan is often uoad as a
substitute for beneficiary and ia intended to en-
compass both ths retired miners and their depen-
dents, unless otherwise noted.
2 VS. Department of Energy, Energy Infor-
mation Administration. Office of Coal, Nuclear,
Electric and Alternate Fucle. 'Coal Data: A Refer-
ence.* DOE/EIA-0064<90), Nov. 1991. Wsshing-
ton, 1991. T. 20, p. 67.
3 For ths findings of s GAO survey of 40
bankrupt firms, see US. General Accounting
Office. 'Effect of Bankruptcy on Retiree Health
Benefited GAO/HRD-91-116, Aug. SO, 1991.
Washington, 1991. Cited in 'EBRI's Benefit Out-
look.' October 1991, p. 16-17.
• Testimony presented aa Funds Exhibit 16.
'McGlothlin v. Connors.' VS. District Court for
the Western District of Virginia (Abingdon Divi-
eion), April 2, 1992. Cited in the Memorandum
opinion by Judge Williams accompanying tha
preliminary injunction order preventing the
UMWA Benefit Trust* from either suspending
health benefits or threatening to do so, p. 34.
° Pharmaceuticals account for approximately
40 percent of the expenses of the UMWA Health
Benefit Trusts. Testimony presented ss Funds
Exhibit 17. McGlothlin v. Connors. Cited in the
Memorandum opinion by Judge Glen M. Wil-
liams, p. 36.
° These legislative proposels are explained in
more detail in Appendix 2.
7 At some point in the future, the $70 million
per year transfer is expected to cover ail of the
easts for orphan retirees, thereby relieving signa-
tory and reachbaek companies of any additional
responsibility to pay premiums on behalf of true
orphans. Eligibility for the UMWA Combined
Benefit Fund would be essentially dosed to new
beneficiaries ss of Jury 20, 1992. Consequently,
the obligations the UMWA Combined Benefit
Fund are expected to decrease each year in the
future as a result of elderly beneficiaries dying;
younger retirees, spouses, or widows becoming
Medicare-eligible; andyoungdependenta reaching
sge22.
° Duane A. Thompson, Analyst in Energy
Policy, Environment and Natural Resources
Division, Congressional Research Service, con-
tributed to this section.
9
The regional dichotomy in remaining
high-priority hazardous sitae b what lies behind
the proposal made by Arch Mineral Corporation,
in response to the Cos! Comnusaion report, to
eliminate the Federal AML fee and program, and
let Statec which still have AML problems set up
their own program. This would eliminate the
cross-State subsidise, and create 'tax room' in
those States (primarily Western States) that have
already dealt with their high-priority abandoned
areas. The inference is that Western coal pro-
ducers would be more willing to support a new
Federal tax to help orphan retiree health benefits
if their AML taxes were reduced. It also would
be more straightforward budget practice to design
s asperate fee for orphan retiree health benefits.
*° Ths other Federal fund supported by coal
tonnage taxes owes a large debt to the VS. Trea-
sury. Ths Black Lung Disability Trust Fund has
been operating in deficit each year since it began
in 1978. To balance ita books, the trust fund has
received advances from ths general fund of the
VS. Treasury, to be repaid from future revenues
of ths trust fund. Through FY86, interest wss
charged to the trust fund each yesr on the cumu-
lative balance it owed to the general fund. The
general fund in turn made additional advances to
help cover thoss interest obligations, thereby
increasing the trust fund's future interest and
repayment obligations.
Since 1936, revenues from ths Black Lung
tonnage taxes on coal have approximately
matched the trust fund's current outlays for
Black Lung benefits. But the exams tax revenues
have not been adequate to make interest, let
alone principal, paymente on the deficit that
accumulated in the trust fund from FY79
through FY86. Ths Comprehensive Omnibus
Budget Reconciliation Act of 1936 forgave the
interest payments due from the trust fund to the
general Treasury for fiscal yeare 1936-1990. Con-
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amendment to serve ee e substitute for Title XIX,
the revenue provisions of HJL 776, the Compre-
hensive Nations! Energy Act, es approved by the
Committee on June 16, 1992. The tax financing
mechanism was again to be a tax on bituminous
coal, but the initial rates on Eastern and import-
ed coal were higher than in HJL 4210. The new
proposed Eastern rates were $1.18 per hour for
calendar years 1992 and 1993; $1.19 for 1994 and
1995; and $1.20 for 1996. The per ton premium
on imported coal wes set initially at $0.39 per
ton. The rate on Western bituminous coal re-
mained at $0.16 per hour. The bituminous coal
fees were expected to raise approximately $206
million per year as of FY92.
This version also specified the amount of the
'reechbeek premium' to be paid into the Coal
Industry Retiree Benefit Fund by s previous
employer or last signatory operator to whom an
orphan miner could be 'attributed.' The annual
amount of the premium, applicable by calendar
year, would be $1,216 in 1992; $2,632 in 1993;
$2,746 in 1994; $2,978 in 1996; $3,216 in 1996;
and $3,479 in 1997 and thereafter. The premi-
ums were expected to raise $89 million per year
asofFY92.
20
S. 2660, SENATOR BOREN
The bill introduced by Senator David L. Boren
of Oklahoma on April 8, 1992, proposed a trans-
fer, without tax penalty, of excess pension assets
from the 1960 Pension Plan to erase the deficits
in the 1960 and 1974 Benefit Plans; establishing
strong withdrawal liability provisions for compa-
nies which completely or partially withdraw from
the UMWA Benefit Plans; and adopting a manda-
tory cost containment program for the Benefit
Plans. S. 2660 emphasised the guarantee of fu-
ture funding by signatory companies through an
increase in contribution rates ss soon as a deficit
is recognised. It did not propass any new, outside
funding source.
HJL 4344, REPRESENTATIVE RAHALL
The original AML transfer proposal was intro-
duced by Representative Nick Joe Rahall, II, of
West Virginia, on Feb. 27, 1992, as H.R. 4344. It
would have extended the abandoned mine recla-
mation fees from 1996 to the year 2007 and
transferred $60 million each fiecal year to the
'Coal Industry Benefit Fund.' 21
HJL 776, THE NATIONAL ENERGY POLICY
ACT, FROM THE HOUSE COMMITTEE
ON INTERIOR AND
INSULAR AFFAIRS
A similar AML transfer proposal was included
in the version of the National Energy Policy Act,
HJL 776, as approved by the Houee Committee
on Interior end Insular Affairs on April 8, 1998.
This version would have extended the AML fees
from 1996 to the year 2010 and transferred $60
million per year from the AML Fund to a "Coal
Industry Retiree Benefit Fund.1
Neither HJL 4344 nor the Interior Committee
bill mentioned the interest earning of the AML
Fund, although supporters pointed out that those
earning could make the transfer proposal appear
nearry costless. Also, neither Mil provided for the
creation of a benefit fund, which would he out-
side the jurisdiction of the Interior Committee
The original AML transfer proposal was intended
to eupplement the Rockefeller plan eet forth in a
1989 and included in H.R. 4210 which would
have established a Government-sponsored Coal
Industry Retiree Health Benefit Corporation.
HJL 776, FULL HOUSE VERSION
The AML transfer provision was not included
in the version of H.R. 776 reported by the Rules
Committee to the full Houee for floor action in
May 1992, in accordance with a ronommondatjaii
by the House Waye and Mesne Committee. **
HJL 776. THE NATIONAL ENERGY SECU-
RITY ACT OF 1992, FULL SENATE VER-
SION
A variation of the Rahall props
of the financing mechanism in the 'a
version of the Rockefeller plan, approved as an
amendment to HJL 776 on the Senate floor on
July 29, 1992. The Coal Industry Retiree Health
Benefit Act of 1992 was included as subtitle C,
sections 20141 to 20143, of Title XX, the revenue
provisions of HJL 776, the National Energy Se-
curity Act of 1992, aa passed by the 8enate on
July 30, 1992. In section 20143(b) of the bill, the
amount that could be transferred each year from
the AML Fund was est st $70 million, and the
amount of the transfers wesepeeuValry linked In
the interest earning* of the AML Fund as de-
ecribedin the body of thie report.
The version of the Rockefeller plan included in
the Senata-peesed H.R. 776 abo proposed a new
configuration of the health benefit funds, into
two new funds, both private - the UMWA Com-
bined Benefit Fund and the 1992 UMWA Benefit
Plan. Beneficiaries would be assigned to the
Combined Fund if they were already raeerring
benefits as of Jury 20, 1992. Miners tend related
beneficiaries) retiring after Jury 20, 1902, but
before September 30, 1994, who would «
be covered by the 1974 Fund be.
t out of buetness, would he covered by
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ths new 1992 Fund.
Hue piopoMl repress ntsd sbipsrtissn compro-
mise within the SmmU, principally between Sen-
ator Rockefeller of West Virginia and Senator
Wallop of Wyoming; and with the Bueh Admhiie-
tration. The prior Rockefeller propoaale to tax all
coal production or to tax onjjr bituminoue coal
production, whether or not the companies had
ew bean signatory to the NBCWA, had met
opposition in the Senate and were threatened
with a presidential veto. This version placed a
much stronger emphasis on identifying reachback
employers and collecting a per beneficiary premi-
CONFERENCE COMMITTEE
Because the Coal Industry Retiree Health Ben-
efit proposal was included in the Senate version
but was not included in the version of H.R. 776
approved by the House, it remains a difference
for the conference committee to resolve when it
meets in September 1992.
FOOTNOTES
1 Beneficiaries include both the retired miners
and their dependents. Throughout this report,
the term retiree or orphan is often used ss a
substitute for beneficiary and is intended to en-
compass both the retired miners and their depen-
dents, unices otherwise noted.
2 US. Department of Energy, Energy Infor-
mation Administration. Office of Coal, Nuclear,
Electric and Alternate Fuels. 'Coal Data: A Refer-
ence.' DOE/EIA-0064(90), Nov. 1991. Washing-
ton, 1991. T. 20, p. 67.
3 For the findings of a GAO survey of 40
bankrupt firms, see U.S. General Accounting
Office. 'Effect of Bankruptcy on Retiree Health
Benefited GAO/HRD-91-116, Aug. SO, 1991.
Weshington, 1991. Cited in 'EBRI'e Benefit Out-
look.' October 1991, p. 16-17.
* Testimony presented as Funds Exhibit 16.
'McGlothlin v. Connors.' US. District Court for
the Western District of Virginia (Abingdon Divi-
sion), April 2, 1992. Cited in the Memorandum
opinion by Judge Williams accompanying the
preliminary injunction order preventing the
UMWA Benefit Trusts from either suspending
health benefits or threatening to do so, p. 34.
6 Pharmaceuticals account for approximately
40 percent of the expenses of the UMWA Health
Benefit Trusts. Testimony presented es Funds
Exhibit 17. McGlothlin v. Connors. Cited in the
Memorandum opinion by Judge Glen M. Wil-
liams, p. 36.
° These legislative proposals are explained in
more detail in Appendix 2.
7 At come point in the future, the $70 million
per year transfer is expected to cover ell of the
easts far orphan retirees, thereby relieving signa-
tory and reachback companies of any additional
responsibility to pay premiums on behalf of true
orphane. Eligibility for the UMWA Combined
Benefit Fund would bo essentially dosed to new
beneficiaries ss of Jury 20, 1992. Consequently,
the obligations the UMWA Combined Benefit
Fund are expected to decrease each year in the
future es s result of elderly beneficiaries dying;
younger retirees, spouses, or widows becoming
Medicare-eligible; end youngdependente reaching
age 22.
« n.
Duane A. Thompson, Analyst in Energy
Policy, Environment end Natural Resources
Division, Congressional Research Service, con-
tributed to this section.
' The regional dichotomy in remaining
high-priority hazardous sites is what lies behind
the proposal made by Arch Mineral Corporation,
in response to the Coal Commission report, to
eliminate the Federal AML fee and program, snd
let States which still have AML problems set up
their own program. Thie would eliminate the
cross Stats subsidies, snd create 'tax room' in
those States (primarily Western States) that have
already dealt with their high-priority abandoned
areas. The inference ie that Western coal pro-
ducers would be more willing to support s new
Federal tax to help orphan retiree health benefits
if their AML taxes were reduced. It also would
be more straightforward budget practice to design
s oepercto fee for orphan retiree health benefits.
*° Ths other Federal fund supported by coal
tonnage taxes owes s large debt to the U.S.Trea-
eury. The Black Lung Disability Trust Fund has
been operating in deficit each year sines it began
in 1978. To balance its books, the trust fund has
received advances from the general fund of the
US. Treasury, to be repaid from future revenues
of ths trust fund. Through FY86, interest was
charged to ths trust fund each year on the cumu-
lative balance it owed to the general fund. The
general fund in turn made additional advances to
help cover those interest obligations, thereby
increasing the trust fund's future interest snd
repayment obligations.
Since 1966, revenues from the Black Lung
tonnage taxes on coal have approximately
matched the trust fund's current outlays for
Black Lung benefite. But the axesss tsx revenues
have not been adequate to make interest, let
alone principal, payments on the deficit that
accumulated in the trust fund from FY79
through FY86. The Comprehensive Omnibus
Budget Reconciliation Act of 1966 forgave the
interest payments due from the trust fund to the
general Treasury for fieeal years 1966-1990. Con-
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aequentfy, for than years, the trust fund wes
sole to balance it* accounts with relatively small
advances from the general fund.
With this grace period ever, the trust fund
owed $324 million in interest for FY91 and an
estimated $344 million for FY92. To help cover
most of this interest expense, the annual advanc-
es from the general fund to the trust fund were
increased - to $217 million for FY91 and an esti-
mated $339 million for FY92. The cumulative
advances that the Black Lung Disability Trust
Fund owed to the general fund was $3,266 billion
at ths snd of FY91 and is projected to grow to an
estimated $3,609 billion by the end of FY92.
" Some situations where accumulating a
balance may be appropriate include the Social
Security Trust Fund or pension funds designed
on an actuarial basis; where capital expenditures
are 'lumpy' (to be spent infrequently, in large
amounts); where there are technological or proce-
dural problems delaying the implementation of
the program (as in the case of the new air traffic
control system); or where reserves are being built
up to protect against potential future liabilities.
** Of approximately 100 special fund ac-
counts in the VS. Treasury, only 16 receive
interest or earning* on investments. VS. Gener-
al Accounting Office. Special tabulation. Wash-
ington, Aug. 1 1, 1992.
In contrast, the excise taxes that finance
the Black Lung Disability Trust Fund excise tax
rates havs been set twice as high on
underground-mined as surface-mined coal. The
current rates are $1.10 per ton of
underground-mined coal and $0.66 per ton of
surface-mined coal, not to exceed 4.4 percent of
the price for which the coal is sold.
14 The Eastern coal -mining States include
Alabama, Illinois, Indiana, Kentucky, Maryland,
Ohio, Pennsylvania, Tennessee, Virginia, and
West Virginia. The Western coal-mining States
include Alaska, Arizona, Arkansas, California,
Colorado, Iowa, Kanaaa, Louisiana, Missouri,
Montana, New Mexico, North Dakota, Oklahoma,
Texas, Utah, Washington, and Wyoming.
'" The $0.76 per hour industrywide tax was
projected to raise approximately $166 million per
year; the $0.16 and $1.18 per hour taxes on bitu-
minous coal, $210 million per year; and the AML
transfer proposal, $70 million per year.
16 In 1990, only 9.6 percent of VS. bitumi-
noua coal tonnage wss mined West of the Missis-
sippi River. Because its productivity is typically
higher, Weatern mining ia likely to have account-
ed for an even smaller share of hours involved in
bituminous coal production. Furthermore, West-
ern bituminous production hours would have
been taxed at less than one-eighth the rate of
Eastern hours ($0.16 compared with $1.1$ per
hour).
17 The Secretary of Labor's Advisory Goes-
mission on United Mine Workers of America
Retiree Health Benefit* Coal Commission Re-
port. A Report to the Secretary of Labor and the
American People. Washington, November 1990.
p. 60-69.
18 Coal Commission Report, p. 66-66. The
report waa reprinted and its findings were dis-
cussed in: VS. Congress. Senate. Coal Commis-
sion Report on Health Benefits of Retired Coal
Miners. Hearing before the Subcommittee on
Medicare and Long-Term Care of the Committee
on Finance. S. Hrg. 102-624, 102d Con*, 1st
Sees., Sept. 26, 1991. Washington, VS. Govt.
Print. Off., 1992.
19 VS. Congress. Senate. Committee on Fi-
nance. Technical Explanation of Senate Finance
Committee Amendment to H.R. 4210, with Mi-
nority Views, Family Tax Fairness, Economic
Growth, and Health Care Access Act of 1992. S.
Pit. 102-77, 102d Cong.. 2d Sees., Mar. 6, 1992.
Washington, VS. Govt. Print. Oft, 1992. p. 390.
20 Revenues estimates from: U-S. Congress.
Senate. Committee on Finance. Technical Expla-
nation of the Amendment to Title XDC of HJL
776 (Comprehensive National Energy Act). S.
Prt. 102-96, 102d Cong., 2d Sees., June 16, 1992.
Washington, VS. Govt. Print. Oft. 1992. p. 39.
21 H.R. 4344 also would have denied the 60
percent State-of-origin share in the allocation of
AML monies. This change was not included in
subsequent versions of the proposal.
** VS. Congress. House. Committee on Ways
and Means. Press release )23-A. Washington,
May 1, 1992. Also, VS. Congress. Joint Commit-
tee on Taxation. Markup of Revenue-Related
Provisions of H.R. 776 ('Comprehensive National
Energy Policy Act') and Additional Energy Tax
Provisions. Scheduled for a Markup by the House
Committee on Wsys and Means on Apr. 29, 1992.
JCX-16-92, 102d Cong., 2d Sees, Apr. 26, 1992. p.
13.
PRICING PROVISIONS
Mr. WALLOP. I would like to en*
gage the chairman of the
House-Senate conference committee
on H.R. 776, the chairman of the
Committee on Energy and Natural
Resources, in a coUoguy regarding the
pricing provisions contained in title
VII of the conference report.
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It is my understanding that the
conferees rejected codifying exisitng or
past FERC decisions regarding the
pricing of electric transmission servic-
es. Is that the Senator's understand-
ing?
Mr. JOHNSTON. Yes; that is the
case. The language in the conference
report does not endorse or reject pres-
ent or past FERC decisions. It sets
forth a new set of pricing principles -
within the just and reasonable stan-
dard of the Federal Power Act - to
guide the FERC in future pricing
decisions.
Mr. WALLOP. It is my understand-
ing that these principles would re-
quire that the FERC - consistent with
the other requirements under section
212(a) - allow a transmitting utility to
recover all costs incurred in connec-
tion with transmission services provid-
ed pursuant to an order under section
211. Is that the Senator's understand-
ing?
Mr. JOHNSTON. Yes; it is. The
conference report requires that the
costs that may be recovered include,
but not be limited to, all costs in-
volved in providing the transmission
service, including those of any en-
largement of transmission facilities, as
well as any other economic costs of
performing a wheeling transaction.
This could include the pro rata
share of the cost of existing facilities
used to provide the transmission ser-
vice. Such costs must be verifiable,
but it is not necessary that the costs
be incurred at this time the transmis-
sion rate is set. FERC may allow the
recovery of projections of future costs,
including opportunity costs, based
upon the historical experience of the
transmitting utility.
However, all cost recovery under
new FPA section 212(a) is still beund
by the requirement that rates, charg-
es, terms and conditions must be just
and reasonable and not unduly dis-
criminatory or preferential.
Actual benefits to the transmission
system of providing the service may be
taken into account, namely document-
ed operational cost savings However,
except to the extent to which they
receive benefits, native customers
should not be required to pay for facil-
ities that would not have been con-
structed but for a mandatory wheeling
order.
Mr. WALLOP. Do the pricing provi-
sions of new FPA section 212(a) apply
only to FERC-ordered transmission
pursuant to section 211, or do they
also apply to the pricing of transmis-
sion pursuant to other authorities
under the FPA?
Mr. JOHNSTON. The conference
report does not exclude their applica-
tion beyond section 211. As a matter
of policy I see no reason why these
new pricing principles should not be
applied by the FERC to other trans-
mission orders. It would make good
policy sense to do so.
Mr. WALLOP. Would you agree
that subsection 212(a) is a complete
substitute for the transmission pricing
provisions of the original
House-passed bill, and as such will
have the full force and effect of Feder-
al law on the basis of the plain mean-
ing of the statutory provision adopted
in the conference report? And would
you also not agree that the pricing
provisions in the original
House-passed bill, and the associated
legislative history, cannot be invoked
to interpret pricing provisions of the
conference report?
Mr. JOHNSTON. I agree. Subsec-
tion 212(a) is a complete substitute for
the House passed transmission pricing
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4824
provisions and, as a matter of law, has
the full force and effect of its plain
meaning. I do not believe that the
Senate would have accepted any form
of mandatory transmission access
without the complete substitution of
the conference report for the original
House-passed pricing language. That
view is reflected in my September 9,
1992 proposal to the Committee on
Conference. Consequently, it would be
wrong to assert that subsection 212(a)
merely rephrases or otherwise codifies
the original House-passed pricing
provisions.
Mr. WALLOP. Does the distin-
guished floor manager agree that the
provisions of subsection 212(a) do not
require, nor allow any subsidization of
transmission services by the native
load customers of the transmitting
utility?
Mr. JOHNSTON. I agree that sub-
section 212(a) will not allow nor re-
quire, to the extent practicable, any
subsidy by the native load customers.
The intent is to ensure that transmit-
ting utilities and their customers do
not subsidize the provision of trans-
mission services for others and that
transmitting utilities are fully com-
pensated for use of their transmission
system. That is precisely why the
conference report adopts a complete
substitute for the House-passed pric-
ing provision to assure that there will
be no subsidy of transmission services.
With respect to current law, I
should express my own disagreement
with FERC's apparent policy which
considers all enlargement of transmis-
sion capacity, other than radial lines,
to provide system benefits. The result
of this policy is that in cases of en-
largement, the new transmission user
pays the higher of embedded costs or
enlargement, but no more. My quar-
rel with this formulation is that there
are undoubtedly instances in which a
system enlargement only benefits the
new transmission customer within any
foreseeable planning horizon. In such
instances, the new transmission cus-
tomer should pay for the enlargement
and make an appropriate contribution
to existing fixed costs of the system in
return for use of such system. I do
not know how frequent these instanc-
es are; they can be determined only on
a case-by-case basis. In any case cur-
rent FERC policy has categorically
rejected the notion that a transmis-
sion user can ever be required to pay
the costs of enlargement, plus an ap-
propriate contribution to existing
fixed costs. I believe that this policy is
wrong.
Mr. WALLOP. In several recent
decisions, including the Northeast
Utilities case and the Penelec decision,
the Federal Energy Regulatory Com-
mission applied a very narrow ap-
proach to the costs which a transmit*
ting utility can recover from a trans-
mission customer. I believe this ap-
proach causes native load customers
to subsidize transmission services
provided to others.
Does the chairman agree that this
act does not endorse the Northeast
Utilities decisions or other recent
Commission decisions regarding pric-
ing policies for transmission services?
Mr. JOHNSTON. I agree. The
conference report neither endorses
nor rejects these decisions.
Mr. WALLOP. The intent of the
retail wheeling and sham transactions
provisions of the conference report is
to prevent directly, or indirectly, what
amounts to a retail sale effectuated
through a FERC order. Does the
distinguished floor manager agree?
Mr. JOHNSTON. I agree. Let me
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4825
explain further.
In new section 212(h) of the Federal
Power Act, FERC is prohibited from
requiring retail wheeling - that is, the
transmission of electric energy directly
to an ultimate consumer. The Com-
mission is also prohibited from requir-
ing what can be called sham wholesale
wheeling - that is, transmission of
electric energy to an entity for resale
to an ultimate consumer in instances
in which the substance of the transac-
tion amounts to retail wheeling be-
cause the wholesale sale to the entity
is in fact a subterfuge intended to
circumvent the ban on retail wheel-
ing. Such a subterfuge would occur,
for example, if a large industrial cus-
tomer of a utility - say the XYZ Steel
Co. - interposed a paper purchasing
corporation in front of it - say the
XYZ Steel Power Procurement Corp.
- and claimed that such corporation
was a legitimate wholesale purchaser
entitled to a transmission order under
section 211, or other sections of the
Federal Power Act, because the corpo-
ration would in fact resell any
wheeled power to the large industrial
customer. Under section 212(h)(2)
such an order is prohibited.
Section 212(h)(2) prohibits both
transmission to an entity for resale
and transmission for the benefit of an
entity for resale subject to certain
additional criteria. The for the bene-
fit of language is intended to prevent
extended interposition of paper pur-
chasing corporations in front of the
initial one - i.e. the XYZ Steel Power
Procurement Corp. in the above ex-
ample. Without the 'for the benefit
of language, the XYZ Steel Co. in the
above example would simply be able to
interpose the XYZ Electric Purchasing
Corp. in front of the XYZ Steel Power
Procurement Corp., which would
stand in front of the XYZ Steel Co.,
and still be able to circumvent the ban
on mandatory retail wheeling.
It is important to note, however,
that the 'for the benefit of langauge
does not reach behind the 'entity'
referenced in section 212(h)(2). Thus,
to the extent that such an entity de-
sires to deliver electric energy to an
ultimate customer to whom the entity
was providing electric service on the
date of enactment, as permitted in
conjunction with a wholesale wheeling
order under 212(h)(2)(B), such deliv-
ery cannot be compelled by means of
an order issued under section 211 or
any other provisions of the act. To put
it another way, a transmitting utility
can only be required under the Feder-
al Power Act to deliver transmitted
electric energy to an entity described
in section 212(h)(2). At that point
such an entity may either deliver such
electric energy to ultimate consumers
over transmission lines that it owns or
controls or - in the case of a retail
customer that it was serving on the
date of enactment - it may be able to
achieve such delivery by means of
retail wheeling provided by another
party. Such retail wheeling, however,
must be provided voluntarily by such
party or perhaps under State law. In
no case can such retail wheeling be
compelled under any provision of the
Federal Power Act.
This point is of more than abstract
interest. I am aware of certain ar-
rangements by electric utilities with
paper municipal utility agencies oper-
ating in the electric utilities' service
territories under which the electric
utilities agree to wheel limited
amounts of low-cost energy, when
available, to ultimate consumers of
such municipal utility agencies. Un-
der these arrangements, the wheeling
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utilities retain the legal obligation to
serve these ultimate consumers and
therefore are the providers of electric
service to such consumers. Because
the wheeling of electric energy in
these cases is not to any entity speci-
fied in section 212(hX2XA) but rather
to ultimate consumers, these retail
wheeling arrangements cannot be
compelled under section 211 or any
other provisions of the Federal Power
Act.
Mr. WALLOP. I thank the chair-
man. I want to clarify one more
point.
With regard to the application of
the traditional 'just and reasonable'
standard in the context of section
212(a), would you agree that the prop-
er interpretation is that - as articulat-
ed in the Jersey Central Power &
Light decision of the U.S. Court of
Appeals for the D.C. Circuit - these
transmission rates are bounded by a
zone of reasonableness. And, that
zone is defined at the lower end by a
prohibition against confiscatory rates
as to the electric utility and at the
upper end by a prohibition against
exorbitant rates to consumers. Does
the Senator agree?
Mr. JOHNSTON. Yes; I agree.
OIL PIPELINE REGULATORY REFORM
PROVISIONS
Mr. WALLOP. Mr. President, I rise
to discuss the Oil Pipeline Regulatory
Reform provisions - Title XVm • of
the Energy Policy Act of 1992.
The Oil Pipeline Regulatory Reform
Title of the Energy Policy Act of 1992
addresses ratemaking for the Oil pipe-
lines regulated by the Federal Energy
Regulatory Commission pursuant to
the applicable provisions of the Inter-
state Commerce Act. This jurisdiction
was transferred from the Interstate
Commerce Commission in 1977, when
the Department of Energy was found-
ed by the Congress.
This legislation does not change the
substantive standards of the appli-
cable provisions of the Interstate
Commerce Act. What it does, instead,
is essentially three thingB.
First, section 1801, titled 'Oil Pipe-
line Ratemaking Methodology*, calls
on the FERC to develop within 1 year
a simplified methodology for setting
common carrier oil pipeline rates.
They are to be generally applicable in
2 years, thus giving the Congress the
opportunity to examine the methodol-
ogy and to consider further legislation.
No particular methodology is mandat-
ed by this requirement Nor is there
a substantive change in the standards
of the Interstate Commerce Act; this
provision relates solely to methods for
compliance with existing law.
Second, Section 1802, titled
'Streamlining of Commission Proce-
dures', provides for the present and
future changes in the procedures for
handling oil pipeline rate cases. It has
four subparts.
First, within 18 months, the FERC
must consider and adopt regulations
governing: (a) what, if any, informa-
tion will be required to be filed by a
pipeline prior to charging increased
rates; (b) what notice and informa-
tion, if any, will be given to the public
of an impending rate increase; (c)
which members of the public, if any,
will have standing to protest pipeline
rate increases; (d) which grounds of
protest, if any, will be considered by
the Commission; (e) when, if ever,
staff will be able to seek initiation of
proceedings to challenge oil pipeline
rates; and (f) provision of an opportu-
nity for pipelines to respond to pro-
tests. With two exceptions, there are
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no specific procedural changes from
the status quo mandated by this sec-
tion. First, with respect to the last
item mentioned above, an opportunity
for the pipeline to respond to protests,
is mandatory. Second, the Commis-
sion is ordered to establish alternative
dispute resolution procedures as part
of the process.
Second, in addition to the
rulemaking, the Commission must
identify and transmit to the Congress
any suggestions for procedural reform
that require legislative authority.
Third, effective immediately, any oil
pipeline will have the ability to termi-
nate FERC consideration of the legali-
ty of rates brought into question by
either protests of rate increase filings
or complaints against existing rates.
The former will be accomplished by
allowing the pipeline to withdraw its
rate increase filing and refunding any
additional rates collected, thus restor-
ing the prior rate without risk of fur-
ther reduction through Commission
review. The latter will be accom-
plished by compelling dismissal of
further consideration of an oil
pipeline's rates when the complainant
has been satisfied by settlement or
otherwise induced to withdraw the
complaint.
Fourth, under section 1803, titled
'Protection of Certain Rates,' the
Congress declares that under certain
circumstances certain rates of oil pipe-
lines are 'grandfathered' under the
Interstate Commerce Act and cannot
be examined by the Federal Energy
Regulatory Commission, except under
certain limited circumstances. The
grandfathering applies only to rates
that have not been challenged by the
Commission or any protestor or com-
plainant within a year of date of en-
actment. Thus, all pipelines with
pending rate and complaint proceed-
ings will not have their rates
grandfathered.
The grandfathered rates can only be
challenged in certain enumerated
changed circumstances or if there is
undue discrimination in an existing
rate. If a pipeline with grandfathered
rates seeks a rate increase, only the
increase can be addressed by the Com-
mission, not the underlying
grandfathered rate, in the absence of
these limited exceptions.
Section 1804 is definitional only.
In sum, the legislation prevents
FERC consideration of some existing
rates, provides for the future consider-
ation of how best to set oil pipeline
rates and how best to proceed with
pipeline rate cases, and presently pro-
vides for procedures for oil pipelines
to terminate Commission investigation
of their rates when they either with-
draw rate increase filings and refund
or when they induce complainants to
withdraw complaints.
All of the applicable standards of
the Interstate Commerce Act remain
intact, and the Commission is given
the opportunity to choose between a
continuation of the present procedure
for regulation or a different method
and procedure of regulation, applica-
ble primarily to those pipelines who
wish to seek increases in rates. For
those pipelines who elect to stand on
present rates, the Commission is
largely barred from reexamination of
their rates.
ELECTRICITY PROVISIONS
Mr. WALLOP. Mr. President, I rise
to discuss the electricity provisions of
the Energy Policy Act of 1992.
TITLE VII - ELECTRICITY
OVERVIEW
84-335 O- 94 -21
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One of the most exciting features of this legis-
Ution is that it will allow American utilities and
entrepreneurs to build, own, and operate domes-
tic and international independent power produc-
tion facilities without undue regulatory entangle-
By ensuring the freedom of VS. companies to
compete both domestically and internationally,
this legislation will put Americans to work build-
ing state-of-the-art, dean, and efficient power
plants.
By allowing American technology, American
equipment, American industry, and American
workers to build new powerplants, Jobs will be
created and our economy will benefit signifi-
cantly.
By encouraging the construction of needed new
powerplants, this legislation will materially
benefit our energy future.
GENERAL DISCUSSION
The Electricity Title (Title VII) of the Energy
Policy Act of 1992 (Hit 776) is divided into two
subtitles: Subtitle A addresses Public Utility
Holding Company Act (PUHCA) reform; Subtitle
B addresses transmission access.
Both the Senate and the House of Representa-
tives passed legislation that was melded into the
Conference Report on Hit 776. Thus, the full
legislative history of the Senate-passed bill, S.
2166, must be taken into consideration when
interpreting the Congesskmal intent of H.R. 776,
particularly with respect to the PUHCA reform
With respect to PUHCA reform, the original
House bill was far narrower than the Conference
Report. The House would have prohibited entire-
ly affiliate transactions, even if the state public
utility commission were to consent. The Senate
position was to allow affiliate transactions if
authorised by the relevant state public utility
commission. The Senate position was adopted by
the Confe-rencc Report.
The Senate position was to retain existing law
with respect to trans-mission access. It was felt
that the Federal Energy Regulatory Commission
(FERO had adequately authority under existing
law to address these matters. Thus, S. 2166 did
not include any provisions addressing transmis-
The House of Representatives felt otherwise.
The original House pssssd bill included
far-reaching transmission access provisions, in-
eluding pricing. These were rejected by the
House- Senate Conference Committee, and thsre-
fore do not sppsar in the Conference Report.
In comparison to the original House bill, the
Conference Report adopts a much mors limited
and narrow modi-ficaUon to existing law with
respect to transmission access The key dif-
ferences between the Conference Report and the
original House bill are the transmission authority
being discretionary rather than mandatory, and
the total absence of mandated open access trans-
mission. The Conference D>ouDJtteeeJso rejected
on its merits the transmission pricing langusge
(section 212(b)(2)) of the original House bill.
Under the Conference Report, trimmissinn
access (including enlargement of facilities) is to
be ordered by the FERC only on a ssss by sssa
basis. It is to occur onry upon request by a third
party, and not upon the FERCs own motion.
Moreover, the FERC is to order wheeling onry if
it makes a determination that the specific or-
dered transmission is in the public interest.
Ths Conference Report did not give the FERC
the authority, the discretion, or the mandate to
bring shout sweeping changes in the way ths
electric utility industry operates, or to i
turs ths electric utility industry. The vast ■
ity of ths activities of the electric utility industry
era subject to state public utility rnmmissinn
jurisdiction, and that has not been changed by
this legislation.
The FERC is expected to uss their new powers
carefully and wisely. These ere matters far too
significant to the health, welfare, safety and
economy of this Nation to be dealt with lightly.
It would be a mistake to take the presence of
transmission access provisions in the Conference
Report as a sign of change in position on my part
or that of ths Senate. I would have strongry pre-
ferred PUHCA reform without any t
access provisions, as was tl
However, in order to obtain the very significant
benefits of PUHCA reform contained in the Sen-
ate bill, it wss Mcsssary to accept some of the
House transmission access provisions. On bal-
ance, I am satisfied with the overall outcome of
the Conference Report.
Now for s more specific discussion of dm Im-
portant provisions contained in the Conference
Report on ML 776.
SUBTITLE A - EXEMPT WHOLESALE GEN-
ERATORS GENERAL DISCUSSION
The purpose of Subtitle A is to i
minimize federal regulation to
non-utilities who want to own aa
'exempt wholesale generator' (EWG), which bio
generate power exdusivefy for the purpose ef
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SECnON-BY-SBCT!ON DISCUSSION
Section 711. Public Utility Holding Company
Act Reform
Nsw PUHGA Mctioo 32(a)(1) require. tha
FERC to make a deter-mination that a facility is
an 'eligible facility.' Tho FERC is required to
make thia dstsraination within 60 day* of tha
raeaipt of tha application. Additionally, tha
FERC Bust promul-gate general ruloa imple-
menting thia requirement within one year after
tha data of tha enactment
With respect to the implementing rules, I
expect them to be sample and straightforward. I
would even encourage the FERC to develop rules
to provide for 'self-certifying;' somewhat akin to
QF self-certification under PURPA.
By a plain reading of the provisions, it is clear
that the role the FERC ie to play in thia process
ie ministerial in nature. The bill i
abun-danthy clear in several ways.
First, the bill itself sets forth clear
biguoua guidelines for deter-mining which enti-
ties are eligible to be an EWG and what consti-
tutes an eli-gible facility. Thus, the Final rule
need merely restate the statutory provisions in a
similarly straight-forward manner. No further
elabora-tion by the FERC ia needed, war-ranted,
or desired.
Second, the FERC'a determination that an
entity is an EWG, and tha communication of that
fact to the Securities and Exchange Commission
(SEC), are also ministerial acta that will require
little, if any, exercise of discretion by the FERC.
Again, the FERC needs only to apply the teat
which ia spelled out with absolute clarity in new
PUHCA section 32(e)(1).
Finally, these provisions were sdded to the bill
largely as a means of allowing the FERC to
accumulate a minimum of data about EWGs, and
not as a means of granting of FERC
nonratemaking jurisdiction over EWGs. For all
thess reasons, the FERC should exercise maxi-
mum regulatory restraint and facilitate the
development of EWGa, consistent with the intent
of Congress.
New PUHCA section 32(g) permit* registered
holding companies to acquire and hold the secu-
rities of EWGs, so registered companies may
compete on an equal basis with other market
participant*. Registered companies will remain
aubject to SEC scrutiny regarding the issuance or
guarantee of securities and other matters. It is
the intention that s registered company may hold
an EWG at the registered company level, or
through another of its aubeidiaries (e.g., a subsid-
iary which also engages in development and own-
ership of qualifying facilities, or othsr permitted
The reference in new PUHCA sec-
tion 32(g) to s registered company soquiring or
holding the securities of an EWG m meant to
include a registered company holding euch secu-
rities through s subsidiary.
Similarly, new PUHCA section 32(g) permits s
registered company to acquire or hold the securi-
ties of an EWG without SEC consent, but under
new PUHCA subsection 32(a)(1) an entity does
not becomes EWG until it has filed in good faith
at the FERC. It ie not the intention to require a
registered company (or its subsidiary) to obtain
SEC approval to form a company, which would
then file at the FERC, in order to permit the
regis-tered company to then hold the EWG sscu-
rities without further SEC consent. That would
be a significant regulatory impediment to equal
participation by registered holding companies.
Rather, it ia the intent that the language in new
PUHCA subsection 32(g) which states that a
registered company may 'acquire and hold' the
securities of an EWG ia meant to include a regie-
tend company's formation of an entity for the
purpose of filing st FERC for EWG status, with-
out SEC sction or approval prior to the forma-
tion. Of course, SEC approval would still be
required for the formation of entities which ere
not for the purpose of filing for EWG status.
New PUHCA section 32(h)(6) requires the SEC
to promulgate rsgulstions thst will ensure that
the financial integrity of a registered holding
company ie not adversely impacted by invest-
ment* in EWGs. It is expected thst the SEC will
make every possible effort to promulgate final
rsgulstions prior to ths six month desdline. Ths
SEC should give this mstter the highest priority.
I un acutely aware of the need to provide certain-
ty for registered holding companies and potential
investors in ths development of EWG projects.
Thus, during ths period the regu-lstione are
under consideration and sftsr publication of such
rsgulstions, ths SEC should spprove sctions of s
registered holding company that are consistent
with the guidelines and protections sstablishsd in
this subtitle.
Until final rsgulstions ere in piece, the SEC ie
expected to put in piece interim rsgulstions to
avoid a regulstory gsp that would inadvertently
prevent registered holdingcompaniee from partic-
ipating in wholesale electric generation, even for
the briefest of times. Interim regulations dearly
can satiety the statutory requirement for rsguls-
tions within six months.
Nsw PUHCA section 32(h) provides ths stan-
dards under which s registered company may
seek SEC approval of the iesuence or sals of
securities by s registered company to finanos an
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EWG. New PUHCA subsection 82(h)(6) provides
for the promulgation fay the SEC of regulations
that srs to provide occurence that the registered
company actions will not adversely impact a utili-
ty subsidiary or its customers. The intent of
these provisions is to assure thst the riek, if any,
of any EWG ienot borne by the operating compa-
ny subsidisriss <i.c, thoss subsidiaries which
provide retell electric eervice to consumers), and
is not borne by thoss companies' ratepayers.
Of course, where the operating company enters
into a contract with an EWG, there may be some
possibility of an effect on the rating of debt by
rating agencies, and there may be normal com-
mercial risks regarding contractual terms. It is
not the intent to preclude all risk, but rathsr to
assure thst ths relationship between the regis-
tend company and the EWG does not increase
ths risks that otherwise ere borne in the ordi-
nary course of business, nor to transfer thoss
risks unreasonably to ratepayers. The SEC has
appropriate discretion in considering the issues
and promulgating ths regulations to take the
steps ressonsbry necessary to protect operating
New PUHCA section S2(k) imposes conditions
on transactions between an EWG and an affiliat-
ed utility. I believe thet theee will assure thst
beneficial affiliate transactions with an EWG will
occur, while providing s clear mechanism to pre-
vent abuse. It ie the intention thst beneficial
EWG transections be allowed.
New PUHCA section 82(k) alao requires an
affiliated utility to obtain the consent of ths state
rnmmiert™ or commissions with jurisdiction over
its retail rates before it msysnter into s contract
with an EWG. It ie the intent to permit a utility
to enter into a contract, with its effectiveness
contingent upon state consent. It is also ths
intent of this provision that only ths affiliate
utilities which srs entering into the contractual
arrangs-msnt with ths EWG will be required to
obtain consent. Particularly in the context of the
operation of integrated systsms by ths registered
companies, or other power pools, where capacity
and energy belonging to or under contract to one
utility can be dispstchsd to serve the load of any
member of the system or pool, it ienot the intent
of this provision to require consent from every
commission of every member which might at
some point bs served by the output of the EWG.
The intent of this provisioo is to require the
consent of the retell commissions of thoss utili-
ties which are bound by a direct contract with
the EWG. Of enures, whsre the affiliated utility
eells only on a wholesale beam, and has no retail
rata corn-mission, no separata stats approval will
be required.
SUBTITLE B - FEDERAL POWER ACT;
INTERSTATE COMMERCE IN ELECTRICITY
GENERAL DISCUSSION
The original Houss pesssd bill contained provi-
sions that would have given the FERC ownplng
nsw powera to order electric utilities to traneamit
('wheel') electricity for other wholeness power
generators (sven if not requested), and would
have mandated that the FERC uee those powers
unless there was an overriding public interest
finding not to do so.
The Senate biU intentionally contained no
transmission ecosss provisions.
The proponents of the Houss mandatory trans-
mission scosss provisions argued that wholesale
power markets are not competitive and that
mandatory wheeling ie therefore necessary to
promote competition and to spur efflcssnt uss of
capacity. Thst argument and line of analysis is
deeply flawed.
Experience has shown that wholossls markete
in electricity are todey intensely competitive.
Indeed, ths present system of free markst trans-
mission transactions works well. A great deal of
voluntary transmission is ongoing. Many electric
utilities have already voluntarily bseosae sn open
access transporter, and many others ere now in
the process of becoming s transporter. This is
occurring where the utility finds that doing so
will benefit ratepayer, and stockholders without
Jeopardising reliable eervice.
Overall, no record has been developed to map-
port ths need for major changes with respect to
FERC-ordered transmission scorns To Urn
extent that transmission scosss is not willingly
being provided, the FERC should review Ms
transmission rates to determine why they are not
providing adequate economic inosn-tivee far
utilities to voluntarily offer transmission. If the
FERC priced transmission in a way whieh
etteour-sgsd utilities and others to wheel, there
would never had been . call for the
FERC-ordered transmission scceee contained in
Subtitle B.
After careful consideration of the merite of the
original Houee transmission <
the Conferees rejected all of
far-reaching ones. For e*a_^ ...w
would have authorised and directed the FERC to
require 'tariffs of general applicability/ Hum
mandating for electric utilities the equivalent of
the FERC'e open scosss transmission prom-sea
for natural gas pipslinco (FERC Orders No. 4St»
600, and 636). That wan rejected by tW Cornier
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ft oo its mcto- there ia do physical similarity
■ trsnssssmion and electric power
■ that could wanrot equivalent appli-
cation. The Conference Committee eleo reacted
on its merite the trenemimeon pricing fanguogs
(section 212<bMZ» of the origineJ Houee hill, end
inetend edopted a wholly different cot of pricing
struetion or snlarsnsesnt of i
acJtitieedireettyi
The Conference Report provides the! the FERC
i (end sosocistod
at of facilities) onry upon application,
on|y on e rase by esse besis for en individual
applicant, and onr/ if such traimmiesion ie found
by the FERC to be in the public interest. It is
most important to note that this is to occur only
upon request by a third party, and not upon the
FERC's own motion. Moreover, the FERC is to
order wheeling (and sosociatcd enlargement of
facilities) only if it makes a determination that
the specific order transmission is in the public
The public interest determination by the FERC
is to be based on a set of specific findings related
to the particular requested transmission transac-
tion. Consequently, the Conference Report gives
the FERC no authority to require utilities to
provide a tariff of general applicability in re-
sponse to an order sought by an applicant, nor
any mandate or direction to do so using any pro-
vision of existing law. In my opinion, neither the
amendments made by this Act nor existing law
give the FERC any authority to mandate open
secern transmission tariffs for electric utilities.
The original House bill also specified that the
FERC must require ss a condition precedent for
any market rates for wholesale power sales, and
for any approval of any merger or consolidation
by an electric utility, that the utility provide
'tariffs of general applicability.' Open access
transmission, in other worde. Again, the Confer-
ees also rejected those provisions on their merits.
While granting the FERC the discretion to
order wheeling transactions upon request under
certain limited circumstances, ths Conference
Report intends this to be s procedure of last
resort for those who cannot otherwise obtain
wheeling services voluntarily. To this end, the
Conference Report requires s 60-day negotiation
period before an application for a wheeling order
may be filed, and sets forth ths procedures for
requests for transmission ssrvices in nsw FPA
section 213.
The Conferees nsrrowed the scope of the
House transmission provisions in several impor-
tant respects. For example, by changing 'shall' to
'may* ths Conferees gsvs ths FERC maximum
discretion not to order wheeling, and ths con-
Under the amendments to ths FPA mads by
this Act, ths burden of proof for FERC-ornered
wheeling (and any seen rie ted enlargement) re-
mains on the applicant To determine whether
or not it would be in ths public interest, the
FERC must look st all relevant factors, including
the potential adverse impact of the ordered
wheeling and construction on ths utility ordered
to wheel and its customers, ss well ss on other
interconnected utilities and their customers.
Although it may be difficult for the FERC to un-
dertake such an investigation in order to reach a
decision, it still must do so before it can order
wheeling. Hiis requirement of lew can not be
Qjspenssd with.
One thing that the legislative history makes
perfectly clear. In no ease is ths FERC autho-
rised by this nsw trsnsmission authority to order
trsnemission where the result is to displace ongo-
ing trsnemission. FERC is given no authority to
decide that the requested trsnemission hss s
higher value than an ongoing transaction. The
FERC ie given no authority to invalidate, undo or
otherwise displace an existing transmission ar-
rangement. Thet is why I was very concerned
shout the use of the word 'unduly' in the section
21 1 provisions of ths original House psssed bill
and insisted that it be stricken. The Conference
Report mskee it perfectly clear that the FERC
can not order trsnemission where the result is
displacement.
I want to note my deep displeasure that in the
past, ths FERC hae all too often used its review
authority to delay - and in effect deny • deals
that were voluntarily negotiated at arm's-length.
Moreover, the FERC has rejected freer/ negotiat-
ed arms-length agreements between the parties,
even where no other party protested, and instead
substituted its judgment as to what ths parties
ought to agree to. This is occurring for no ap-
parent reason other than that ths FERC pre-
ferred different results than the ones ths parties
negotiated. This occurred recently in the Peneiec
esse.
These is no policy or public interest reason
why the FERC should second- guess and frus-
trate arms-length transactions between indepen-
dent businessmen, particularly when no other po-
tentially effected interest raised objections.
FERC is not charged by law to determine the
predss outcome of each and every transaction
ovsr which it hss some jurisdiction. The FERC
hss s great deal of discretion and latitude in
determining what comports with the 'just and
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reasonable' standard of tba Federal Power Act
Anna-length agreomento can be givan consider
able defaranea by tba FERC.
Baeauaa tba Conference Report provides offee-
tiva proeaduraa for parties to obtain wheeling
orders at FERC-reguIatod teres and conditions,
the FERC should allow freer/- negotiated trans-
mission sgreesasnta to be performed without
interference from the FERC. Thie would further
the Conference Report's goal of 1
the FERC continues its unwarranted mtsrlstsmss
I would encourage the FERC at the earliest
moment to begin to employ a 'market screen'
test, not unlike that which the Antitrust Division
of the UA Department of Justies spoke about in
the United Illuminating esse. Where effective
competition exists, there remains no valid public
policy reason for the Federal government to in-
tervene in privately negotiated activities.
Although the Conferees were ultimately not
able to include provisions in the Conference Re-
port to govern so-called regions! transmission
groups, that should not be taken aa any indica-
tion that the Conferees affirmatively rejected the
beneficial value of such groups. I strongly sup-
ported including such provisione.
During the House Sonata Con-ferenes there
were three different regional transmission ssanrl-
ation proposals made: twa by the Senate, and one
by a group of consumer and trade assodetione
representing all interests and elements of the
electric power industry.
One by Senator Johnston appeared in hie pro-
posed amendments dated September 9, 1092; one
by me waa included in a sussquent Senate offer
to the House; and one waa a con aenaua proposal
aa between the Edison Electric Institute, the
American Public Power Association, the National
Rural Electric Cooperative Association, Transmis-
sion Access Policy Study Group, Large Public
Power Council, Western Association for
Transmission Systems Coordina-tion, and the
Interregional Transmission Coordination Forum.
Unfortunately, due to the lack of tune the
Conference Committee wss not sole to take thie
matter up and decide which of the three propos-
ab to include in the Conference Report. In addi-
tion,! waa conakJoring offering an amendment to
authorise individual arms-length transactions
with s minimum of FERC intervention, to ad-
drasstbe situation in Penelec, but I did not do so
also because of the press of business during the
Conference. It ie my expectation that Congress
will revisit thess issues next year to develop en-
abling legislation, perticuUriy if FERC fails to
Because of the importance of there msllms, I
am placing these proposals into the publk record
to fore the besai of futura debate. Accordingly,
I ask unanimous consent that they be printed at
the end of my statsment aa appendices one
through three.
In summary, whim the end result of the Con-
ference Report may not be what each of us would
neve written if we had the sole authority, it pro-
videe for a delicate balance between providing for
the naada of those searing trasmmissimi and
protecting the intereete of the utilities, end their
customers, that will have to provide the ordered
SECTION-BY-SECnON DISCUSSION
Section 721. Amendments to Section 211 of
Federal Power Act
Section 721 amends FP A section 21 1 to provide
that the FERC 'may' order transmission ssrvinsa
Tbs original Houai pasaid bill used the word
'shall'; tbs Conference Committee affirmatively
substituted the word 'may' so ss to provide the
FERC with full discretion to protect the public
interest.
Subsection (2) removes the specific crmsria
from existing section 211<aX2> and from the
original House BUI. To order wheeling, the FERC
must now make two findings: one, that the order
meets the requiremsnte of section 212 of the
FPA; and two, that wheeling ie 'othcrwieo in the
public interest.'
The Conference Report envisions that the
FERC will consider sll the relevant ciroumotoac
ss before deter mining whether to require trans-
mission services. While the FERC must make
specific findings about reuebUity and rates, terms
and conditions, it must also consider the likeli-
hood and economic visbillty of the proposad
in order to assure the transmitting
have a reasonable opportunity to
ment The FERC may not issue a smssling ordsr
(including associated construction) if the i
suant to existing Isw, and if
to deny the utility a i
recover its investment, either in trasmmmsimi or
generating facilities.
The FERC must also ooneider the impact of
the requested wheeling on the eustomara of the
utility, the reliable functioning of the elestrls
system in general, the eustomara now ranaiving
^xtt\ t mission ssrvicss, end the similar oouso-
qusnees to inter-connected utilities ami their
Moreover, the FERC must also asm-
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aider the relevant particular circumstances, such
aa whether the peraon requeating transmission ia
a QF or * Federal or atata government- owned
entity (foreign aa well aa domestic), and ehall
take into account all apeeial advantagaa theae
entitiea already enjoy in determining whether a
tranamiaaion order ia warranted.
Section 721 amende exietingeeetion 211 of the
FPA in aeveral respects. In aubaection (1) it
extends the cleae of thoaa authorised to apply for
a wheeling order beyond electric utilities, geo-
thermal producer* and power marketing agendea
to include 'any other peraon generating electric
energy for aale or resale'. Tine manifeata Con-
greaaional intent to continue to limit the FERC'a
authority to wholeeeJe tranaactiona only.
The amended aubaection 211(a) specifies that
a specific entity may apply for an order by the
FERC requiring a transmitting utility to provide
transmission services (includingany enlargement
of transmission capacity necessary to provide the
services). The intent of this new transmission
authority ia solely to provide a way to effectuate
the third-party requested transmis-sion without
adversely effecting a utility's existing and future
firm and non-firm transections.
This does not give the FERC the authority, on
its own motion, to order tranamiaaion and the
enlargement of tranamiaaion facilities;
FERC-ordered transmission is to occur only in
direct response to the request of s third party,
and only to the extent of that request. Moreover,
thst such s request baa been made does not give
the FERC the authority to go beyond thst which
is necessary to satisfy the services requested by
the spplicsnt.
The transmitting utility's obligation under any
such order to both transmit and to build would
be relieved if the transmitting utility is unable to
obtain the necessary authorisations, including
any needed enlargement, pursuant to otherwise
applicable Federal, state and local laws, including
those related to environmental protection, siting,
determinations of need, permits and approvals, aa
well aa any necessary property rights. The neces-
sary approvals will vsry widely from state to state
and locality to locality, but all relevant approvals
are encompassed, regardless of whether they are
in the form of environmental approvals, construc-
tion reviews, certificates of convenience and ne-
cessity, rights of eminent domain, or any other
appli-cable Federal, state or local requirement.
Thia arises out of a desire to let the states retain
existing jurisdiction over these matters.
The requirement for a 'good faith effort' does
not mean that a utility must completely exhaust
every con-ceivsble administrative, legal or finan-
cial remedy before being excused from the order;
but a utility must make a reasonable attempt to
obtain the necessary property rights and approv-
als.
The FERC would not be able to enforce such
an order to provide transmission services, nor
impose the new monetary penalties contained in
new FPA section 726, where all of the required
authorisations under other- wise applicable Feder-
al, state and local law have not been obtained for
the ordered services or enlargement of tranamia-
aion facilities.
It is also the intent of this provision that the
FERC exercise this authority in auch a way aa to
aaaure thst the transmitting utility ia not trapped
between inconsistent local, state and Federal
orders or requirements. For example, where a
atata will not permit expansion of the system, the
FERC can not require the tranamiaaion to occur
if there would be a diminution in reliability or
loaa of the ability to make economy or coordina-
tion tran-eactions to the benefit of customers, or
where other existing arrangements would havs to
be terminated.
Similarly, if the effect of the ordered transmis-
sion were to lead the utility to terminate or cut
back on ongoing or contracted-for trans-mission,
the FERC can not issue the wheeling order, or
must vacate one which had been issued. More-
over, the FERC cannot use a general public inter-
est determination to override the statutory
excuse!, particularly by ordering a reallocation of
the existing grid, or to curtail economy purchases
or off system sales.
These limitations on ordered wheel -ing were
edded, in part, to solve the so called 'immutable
constraint' issue thst hss created controversy in
a number of esses at the FERC. Under the provi-
sions of the Conference Report, the FERC cannot
legally reinatituta the so-called 'hammer clause'
of the Utah Power & Light- PacifiCorp merger
(46 FERC 61,096, order on rehearing, 47 FERC
61,209 (1989), remanded on other grounds, Envi-
ronmental Action, at al. v. FERC, 939 F.2d 1067
(D.C. Cir. 1991)), or through a FERC proceeding
reallocate existing transmission capacity aa waa
envisioned in the order overruling the Adminis-
trative Law Judge in the Northeast Utilities-
Public Service Company of New Hampshire esse
(66 FERC 61,269 (1991)).
In sddition, in its rehearing order in Northeast
Utilities (66 FERC 61,070 (1992) petition for
review pending, Northaaat Utilities Service Com-
pany, at al. v. FERC, No. 92-1 166 (let Cir. filed
Feb. 10, 1992)) the FERC, when it instituted its
new tranamiaaion pricing scheme, left unclear
how it would handle an immutable oon-etraint.
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The intent of this provision in the Conference
Report is to resolve that problem.
Subsection 21 Ha) requires an applicant to have
made a request for voluntary transmission servic-
es from the utility at least 60 days prior to filing
an application. Obviously, any such request
must be bona fide under the applicable utility
tariff, and must be pursued in good faith. A pro
forma or frivolous request, or a request that did
not satisfy reasonable information requirements,
would not satisfy this requirement, and under
those cir-cumstancee, and the FERC should dis-
miss the application for an order under section
211.
New FPA section 21 1(b) denies the FERC au-
thority to mandate wheeling if it fails to make s
finding that a wheeling order would not 'unrea-
sonably impair the continued reli-ability' of af-
fected utilities. When reliability issues are
raised, thie is an affirmative requirement for the
FERC to make; the FERC cannot simply assume
that ordered transmission would not impair reli-
ability. The burden of proof is on the applicant,
not on the utility who has been requested to
wheel.
The original House bill directed the FERC to
consider the impact of wheeling orders on the
reliability of the utility providing the service, but
it left reliability of other connected systems vul-
nerable. The Conference Report broadened the
FERC'e con-siderstion to the systems 'affected'
by the order. New FPA section 21 1(b) states that
wheeling orders may not 'unreasonably impair
the continued reliability of electric* service. The
FERC thus must protect the reli-ability of all the
affected inter-connected utility systems and the
power pool/control area. Further, the FERC must
ensure that any impair- men t in reliability will be
completely reesonable (e.g. an acceptable, de roi-
nimie reduction in the amount of excess capacity
or facility redundancy).
This phrase 'unreesonably impeir the contin-
ued reliability* aleo requires ths FERC to refrain
from mandating wheeling if the affected or trans-
mitting utility's excess transmission capacity
margins are depleted to the point where it can no
longer engage in emergency transactions, or meet
daily and seasonal need, including a reasonable
reeerve, or contract for short-term purchases of
power in reeponse to such things as planned and
unplanned plant outages, or where it would lose
the ability to keep the lights on in situations
such as when a natural disaster takes out a large
substation.
New FPA subsection 21 1(g) requires the FERC
to give 'consideration to consistently applied
regional or national realiability standards, guide-
lines or criteria' in its sseesessent of reliability
prior to issuing an order. I want to ssaphssiis
that when conducting that assess meat, ths
FERC must ensure that reliability k meeeured in
terms of continued conformance with regional
and national reliability standard*. Reliability ie
of paramount importance, and is 'unreesonabrjr
impaired' under the statute when thsss stan-
dards are not met While a transam
may result in enhanced competition, <
efficiency or projected price relief, thsss ere not
a trade-off for reliability of service,
Reliability has been the hallmark of the U.S.
electric utility system, and the FERC must act
carefully in issuing wheeling orders so ee to have
no adverse impact. As was noted during the
Conference, consumers deserve to have electricity
when they want it; reliability of our nation's
electric service stands as ths envy of the world
and in administering this section, the FERC
should do nothing to degrade the system. I can
not envision any circumstance under which the
actual impairment of reliability would be consid-
ered to be in the public interest pursuant to ths
FPA.
Stated another way, if reliability ooncerns ere
raised the FERC as a practical matter should not
issus an order under section 210 or section 211
unless it affirmatively finds that such order
would preserve the reliability of affected electric
systems. Anything lees than full reliability would
constitute an unreasonable impair-mont, and
would be inconsistent with the clear statutory
mandate of the FPA es amended by this Act
While the FERC order requiring provision of s
new transmission service might reduce) to some
limited extent the existing reserve capacity of the
transmission system or the margin or redundan-
cy in transmission facilities, the overall reliability
of each of the affected systems must be preserved.
It would be manifestly unreesonabls and clearly
not in the public interest for the FERC to issue
an order that did not achieve that result.
Subsection (4) removes the phrase 'preserves
existing competitive relstionships' from existing
FPA section 211. This can not be construed es
intending to give the FERC authority or a man-
date to restructure the electric utility industry.
Rsther, this change in existing FPA section 211
ie necessary solely to allow the FERC to provide,
upon requeet, additional traneesieekm service
opportunities to utilities and non -utilities and
non-utility generators seeking to compete for
power sales in the bulk power market.
It ie not the intent of the Gmferenee Report to
allow wheeling to be ordered for phantom coo-
tracts, or contracts which lack sufficient certain-
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ty or economic viability, so that the transmitting
utility (and other affected utilities) are left at
substantia] risk of recovering the associated
costs. For example, where the requested service
would require enlargement or expansion of the
system, the FERC must consider and receive
sufficient assurance that transmission of the
underlying power purchase or some failure of the
requesting party to complete the transaction
would not leave the utility without a means to
recover the costs of enlargement or expansion.
The FERC has an affirmative obligation to
assure that the costs of transmission for others
are not borne by either retail customers or share-
holders of ths transmitting utility. In making
the determination as to whsthsr or not to issue
such order, the FERC has a legal obligation to
enaure that the utility has a reasonable opportu-
nity to recover its investment. Thus, the utility
will not face the prospect of stranded investment
in either transmission or generation facilities as
a result of a FERC transmission order (which
may include ordered enlargement of transmission
facilities).
Section 722. Transmission services
This section provides for s wholesale transmis-
sion order undsr section 211 st rates, charges,
terms, and conditions which permit the recovery
by such utility of all the coats incurred in connec-
tion with tranamiasion servioss and necessary
associated services. For s more comprehensive
discussion of pricing under the FPA as amended
by this Act eee Attachment 4.
Where the FERC orders wheeling, the rates,
terms and conditions for transmission services
must allow a transmitting utility to recover all
coats incurred in connection with tranamiasion
services provided. The Conference Report pro-
vides that the appropriate share of such costs
shsll include, but not be limited to, all costs of
sny enlargement of tranamiasion facilities and
the economic costs of performing s wheeling
transaction, including the pro rata share of the
cost of existing facilities ueed to provide the
tranamiasion service. Such costs must be verifi-
eble, but it is not necessary thst the costs be
incurred st ths time the transmission rate is set.
An order shsll allow the recovery of reasonably
projected future costs, particularly opportunity
costs, based either upon the historical experience
or existing and planned arrangements of the
transmitting utility, so long as an evidentisry
basis exists. Actual benefits to the transmission
system of providing the service mey be taken into
account, such aa documented operational coat
savings Speculative benefits to the tranamiasion
system, such aa the mere existence of facilities
thst would not have been constructed but for s
mandatory wheeling order, are not to be credited
against the costs incurred in connection with the
These pricing provisions encompass ths 'just
and reasonable' standard, but provide more de-
tailed requirements for the FERC to appry in
order to assure thst when the FERC mandates
transmission service (including enlargement of
facilities), as opposed to reviewing voluntary
arrangements, it does not force the transmitting
utility or its customers to subsidise ths provision
of theee services. When the government msn-
dstee use of privets property it must provide ade-
quate compensation. These provisions sre flexi-
ble enough to sllow incentives for transmission
services, including msrkst-baaed pricing in com-
petitive bulk power markets.
Ths 'just and reasonable' standard referenced
in section 212(a) haa been well articulated by the
VS. Court of Appeals for the D.C. Circuit in its
Jersey Central Power & Light decision (8 10 F. 2d
1 168, 268 U 3. App. D.C. 189 (D.C. Cir. 1987) (en
banc)). Here the Court noted that rates are
bounded by a 'zone of reasonableness', which is
defined st the lower end by s prohibition againat
confiscatory rates as to ths electric utility end st
ths uppsr snd by s prohibition againat exorbitant
rates to consumers.
Ths specific pricing directions of new FPA
section 212(e) will govern the establishment of
the rate for the ordered transmission services, ss
long ss ths resulting rate is within the sone of
reasonableness snd is not otherwiss unduly die-
criminatory or preferential. The FERC ie autho-
rised onry to adjust the rate to comport with
those specific pricing directions snd aa may be
necessary to bring it into the sone of reasonable-
ness, or to mitigate the undue discrimination or
undue preference. Thus, under section 212(a)
ths FERC would be allowed and required to allow
the transmitting utility to recover all costs in-
curred in connection with ordered transmission
services, as is specified in the subsection.
FERC's existing precedent in reviewing
arms-length transactions for energy snd capacity
give great weight to privately negotiated agree-
ments, subject to third party rights to Ills s com-
plaint undsr FPA sections 206 snd 206. Thst
well- estabiiahed principle, long-known as
Sierra-Mobile Doctrine, should also be the basis
of FERC's review of voluntary tranamiasion sr-
rsnssmsnts. Hie Conference Report, in putting
stress on ths need for voluntary transmission
arrangements, gives ample opportunity for the
FERC to appry properly that Doctrine to volun-
tary, arms-length transactions. Ths FERC
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should limit its intervention to only tbon cir-
eumstsness whore tbo publie interest dearly
compels it to do so.
In order to promote the economically efficient
use of transmission sad generation systems,
rates, charges, terms and conditions and trans-
mission services must include all costs associated
with performing a transaction, including costs of
foregone alternative uses for the facilities.
In esses where the relevant market for deliv-
ered bulk power ie competitive, the market price
will best reflect the true value of the use of facili-
ties end promote the economically efficient allo-
cation of resources. In such cases, a
market based rate will fall into the 'tone of
reasonableness' sad therefore can be deemed to
be Just and reeeonsbls, and meet all the other
requirements of new FPA section 212(a). This is
true whether the FERC ie approving transmis-
sion rates for a section 211 order or under sny
other authority under the FPA.
The Conference Resort requires the FERC to
fully review in each requested transaction the
costs that will be incurred, to the degree they can
be reasonably defined or proven in accordance
with normal FERC procedures, and to assure, si
a minimum, the! ell the costs incurred are recov-
ered. In allocating costs, the FERC must assure
thet the parties which cause costs to be incurred
will bear these costs, and to assure that no party
will bear more costs than those from which it ie
receiving benefit. Just and reasonable rates,
rms and conditions under this section
I promote economic efficiency in the trans-
mission and generation of electricity.
Market-based rates can mast this requirement
where the marketplace ie workabjy competitive.
New FPA section 212(a) deals with transmis-
sion pricing. The overriding effective ie to en-
courage utilities to offer trsnsseissioa voluntarily.
If FERC were to continue current rate making;
which calls for overage ag
as the basis for pricing, it could, and in the fu-
ture, will increasingly result in utilities not re-
u>mkcosuc/ thst service. Moreover, it fails to
give the transmitting utility and its
sny incentive to offer tra
For example, for systems built years ago, the
average system costs include facilities built in the
era when sites, material and labor cams relatively
cheap. In contrast, new lines ere much more
expensive end more difficult to site. Thus, if the
transmitting utility can charge only average sys-
tem embedded costs, the customer is not bearing
the trus costs of the transaction. The utility
might, if allowed by its stats pommissinn.
thet loss up through its native load is*, resi-
causs the nsw tins raises the i
which the utility charges them. That type of
subsidy by the native load customers constitetm
bed economic, social sad public policy. It slso
inhibits state cosamissions from apereviag caa-
Withi
see*
smxlmi serves
bis under this Conference Report, the
Offering third party t
have another harmful effect on native load If act
i thel
cannot use its facilities to buy cheeper power
then it generates, or to sell sassss power to oth-
ers. Both result in native load paying too much
(either directly for more expensive fuel or indi-
rectly beeauss ofteyetsm seise lower native load
rates). Either way, the utility, which owes Its
first duty to its native load, ageJa wffl be loss
Ukery to offer transmission ssrvicss For that
very reason, the FERCe recent excision la the
Pencisc cess (60 FERC Paregreph 6 MIS < 1909)
caused the utility to withdraw Ms offer of service
to the cosjsnsrator . Theussof thotsfm'soctMox-
ic costs' in nsw FPA section 212(a) requires
FERC to permit recovery of there costs from the
party seeking trsnsmisxion ssrvicss without the
artificial limits imposed hi Poesies.
Finalr/, a customer rsquostlag trsasomsmion
supelisr. Yet thet supplier spent money ea fastM-
ties end expected to recover there c
customer bow Issving the eyet
dressed directly by the FERC la hat
orders, this 'stranded investsm
become more ecu to beeauss under this legislation
ss utilities will no longer have the samrotloa to
(embedded) costs must be recovered if the FERC
New EPA section 2 12(a) states the <
principle thst the FERC must 'permit the i
cry by (the transmitting) utility of all
incurred' in providing the ssrrl
ed). Moreover, the costs else Include times far
'neceseary associated ssrvicss. ' la this way, the
trenssmlsxioa customer wut pay Ibr aU costs the
utility incurs ea thst customer's behest to a
way of illustration, the section hats: (1) the ap-
propriate share of legitimate, verifiable and ess-
nomkcosuof|>rovidUiigtheesrvio*
approceiem chore of eseaaeimicoetB. That
of the existing
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utility undertakes on behalf of that entity. In
short, the transmission customer must pay its
own way and the third party transmission ser-
vices will not be subsidized by native load cus-
tomers under any circumstances.
This question, how to allocate costs between
native load customers and third parties, has be-
deviled the FERC ever since the rehearing order
in the Northeast Utilities ease and the compan-
ion Northeast Utilities opportunity cost ease (68
FERC 61,069)). The FERC had held in the
penelec case (60 FERC 61,313 (1922), rehearing
rejected (September 18, 1992)) that even where
transmission results in higher fuel charges to
native load, the utility can only recover those
costs if they exceed embedded cost. In the facts
of that case they never would. Therefore, the
FERC, while ostensibly holding the native load
harmless, has in fact made that class of customer
bear higher fuel costs that the transmission cus-
tomer created. Under the Conference Report,
that will not be allowed.
In fact, just recently the FERC issued an order
in which it reversed one of the esrly Northest
Utilities cases, to be detriment of native load. In
a follow-up filing to the Northeast Utilities merg-
er, the company chose to bill the customer so -
called 'out of rate' charges (the costs to the New
England Power Pool of running more expensive
generation because of constraints in transmission
created by new third party transmission services)
for every hour in which those costs exceeded
embedded costs. Ths Commission majority re-
fused, on the grounds that ths company must
compute the running costs for the 10-28 years of
the transaction. In effect, because out-of-rate
charges will occur on a less than regular basis,
the FERC again has limited the utility's trans-
mission rates to embedded costs sven though the
utility still must pay the out-of-rate charge to
NEPOOL on a monthly basis and thereby subsi-
dize third party transmission customers again.
Similarly, the FERC in Penelec held that with
regard to expansion costs, a utility can charge
only the 'higher of those costs of the embedded
cost rates ('In no event may the utility simul-
taneously charge the wheeling customer an incre-
mental cost rate and an embedded coat rats.*).
This does not allow the transmitting utility to
recover all of its costs.
To eliminate this obvious unfairness, new FPA
section 212(e) makes clear that the utility shall
recover 'all costs.' In sddition, it says the appro-
priate share of the existing 'and' the expanded
system. 'All costs' therefore should include, at a
minimum, the appropriate share of the costs of
the existing system and any costs for enlarge-
ment of the existing system, costs incurred due to
the curtailment, dispatch, re-dispatch, or other
alteration of current generation or transmission
operations to accommodate the new transmission
customer, and any other reasonably ascertainable
uncompensated burden imposed on the utility or
its native load customers.
Finally, I wiah to emphasize the 'including but
not limited to' language is intended to allow the
utility to recover at least ths costs listed in the
section. If, however, the FERC finds that 'all'
costs included other items as well, it must allow
full recovery of costs the section does not hat
The stranded investment issue is slso encom-
passed by this language. The Conference Report
requires the FERC to allow a utility to recover
coats 'properly allocable'to the transmission cus-
tomsr from that customer, and not from the
transmitting utility's existing customers. There-
fore, if an existing customer for electricity from
s utility changes suppliers and become a trans-
mission customer, that customer must pay for
the stranded investment. While not a complete
protection (for situations in which the customer
departs from a utility not involved in transmis-
sion), at least the Conferees have provided pro-
tection for the most common situation.
Also, if a utility has expended funds to provide
new transmission service using existing facilities
or to enlarge the facilities to provide the service,
end the applicant for the section 211 order does
not sceept the services, the applicant, and not the
utility or its native load customers must bear the
responsibility for those costs.
Ths provision in the Conference Report that
requires 'rates shall promote the economically
efficient transmission and generation of electrici-
ty .. .' neede explanation. In a recent United
Illuminating case (60 FERC 61,214 (1992))), the
FERC over-rode the competitive process that had
led a utility and a supplier to negotiate rates not
based on costs. The Department of Justice joined
in petitioning for rehearing, arguing that the
FERC sold sdopt existing judicial precedents of
market efficiency when dealing with
market-based rates. The FERC on rehesring
dodged the issue and found that in the narrow
facts of the case, the utility could have its deal.
Adding the modifier 'economi-calry' to the word
'efficient' calls to the FERC's attention that the
science of economics has developed sophisti-cated
doctrine on market efficiency. The FERC should
draw on that knowledge in its eases and nssds to
identify situations where FERC can reasonably
withdraw from trana-action-by-timnsaetaon re-
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It is noteworthy that the second sentence of
emended FPA subsection (cMD includes the
phreee 'Except ee provided in eeetion 210, 211,
214 or thie eeetion . . . .' Thet exception fn^k*r
deer the intent thet the provieione of those sec-
tione do, in feet, constrain the authority of the
FERC to order tranonuoeion eervicee under thoee
end other provieione of law. Theee emended
eectione of the FPA opacify the circumstancee,
term, conditions, rates end procedures eesoeieted
with any mandatory transmission services or-
dered by the FERC.
At the same time, however, if for some reason
not baeed on thie legislation the FERC condudee
thet it bee a legitimate claim of authority to re-
quire tranemission eervicee under eeetion 203 or
eeetion 206 (which I do not believe they do), the
FERC should adopt the pricing criteria and stan-
dardeinduded in amended FPA sections 211 and
eeetion 212 beeauee they provide the dear intent
of Congress with regard to any non-voluntary
tranemission eervicee. The FERC should not,
therefore, establish other criteria and standards
for use in eeetion 203 or eeetion 206 eases where
it betievee it bee a legitimate claim of authority.
It would make no policy sense for the FERC to
have two different regimes. Nothing in the FPA
ae amended by thie Act prevents the FERC from
New FPA subsections 212(g) and (h) prohibit
retail wheeling both directly, and indirectly
through so-called sham transactions. In its ef-
forte to prohibit retail wheeling, the original
House bOI unintentionally created a large loop-
hole. The Conference Report instead provides s
much more complete end cempreheneive ban on
retail wheeling. Ae s result, the FERC'e authori-
ty is strictly limited to transmission services
provided for the delivery of bulk power supplies
to legitimate wholesale customers.
The Conference Report requires that the trane-
mission service suthorised by the FERC order
may not lead to retail wheeling; regardless of the
terminology used in the transmission request or
FERC order. Thus, the FERC has no authority
to order or authorize a utility to provide trans-
mission services where the practical result of the
order will be to by-pass the utility's retail service
end deliver wholesale power to a retail customer.
The FERC must ensure that, in a particular fact
pattern in an individual case, it does not allow or
approve transections thet dearly ere nothing
more than an indirect sale to an ultimate con-
sumer formulated for purposes of drcumventing
the statutory prohibitions. Theee provisions give
the FERC full authority to prohibit transactions
that technically might arguably most criteria for
a wholesale sale or t
the underlying intent and effect is to provide
retail service to en ultimete nonoumor. The
FERC already has taken such action in the area
of municipalization for purposes of obtaining
open access tranemieeion eervicee for othcrwiss
ineligible retail customers (such es industrial
facilities) in the Entergy transmission ease. I
expect the FERC to proceed in a similar manner
to reject all forms of transmission trsnssrtittns
where the substantive result m savvies directly or
indirectly for en ultimate nonoumor.
The Conference Report, ineerte a new Section
212(h) into the FPA, prohibiting Urn issemnos of
an order conditioned upon or requiring wheeling
directly to en ultimete consumer. An order may
not require wheeling to any entity that would eell
the power to be wheeled to en ultimate nonoumor
unless the entity fits into s list of categories of
power selling entities, and owne trassmuesion or
distribution facilities. The only eseeption to the
requirement thet the wheeling entity own facili-
ties is s grandfathering provision for persons
that fit into the list of categories that arc provid-
ing electric service to en ultimete nonsumer on
the date of enactment of thie legislation.
The grandfathering clause is intended to allow
the FERC to continue, but not expend, existing
retail wheeling arrangement* If a utility is cur-
rently wheeling a small fraction of a retail
customer's energy requirements from another
power producer, the other power producer is not
providing 'electric eervice' under thie ■ubsection.
Ths grandfathering provision would not allow
the FERC to order the utility to wheel a greater
portion of the energy requirements of the retail
customer, or to order the utility to wheel rspsri-
ty, or wheel to fadlities of such parson not now
receiving such power. Consequently, the legal
effect of the provision is to msintsin the statue
quo on s tn nasi lesion apedfic basis with regard
to the amount, source, and delivery point of the
exieting power ssls contract for its current term.
By requiring FERC to consider who 'benefits*
from a wheeling transection, the Conference
Report requires ths FERC to prevent what is in
asssnra retail wheeling even though the tech-
nlcslities of s wholesale wheeling tranaactlon arc
otherwise met Thus, the FERC must present
'form* from prevailing over 'substancs' in order
to frustrate clever attempts to ensmm in retail
wheeUngthjough'shamtraneedione/TheFEHC
should be ssndtivs to proposed
which in form nv
a ssls for resale but which ere, in <
stance, a retail ssls to an and i
New FPA section 212(g) oxn
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tag cUU Uwi concerning service territories to
remain in full force end effect end nothing bete
can affect that. New FPA subsection (h) etatee
that no older ieeiied under the FPA (not juet the
new wheeling authority) shall require directly or
indirectly wheeling for a retail customer. That
includes merger orders or rete orders. This di-
rectly answers 'no* to the D.C. Circuit's remand
in Environmental Action, which held that the
FERC must consider whether to allow retail
wheeling in order to offset anti-competitive ef-
fecta of a merger.
Sham transactions occur when the retail cus-
tomer that wants the wheeling sends someone
else to apply for it. Retail customers would do
that to circumvent the ban on retail wheeling.
Therefore, the Conference Report states that
wheeling 'for the benefit of a retail customer
fails under the ban. By the samo token, legiti-
mate existing co-operativs or municipal wholesale
sellers or Federal Power Marketing Agencies may
apply for and obtain wheeling that lowers the
rates of their retail customers. A very important
part of new FPA section 2 12(h) also allows states
or localities under state law to ban retail wheel-
ing.
SECTION 723. INFORMATION REQUIRE-
MENTS
This section sdds s new FPA section 213 which
is much more fair and reasonable than the origi-
nal House bill.
Subsection (s) requires thst the parties must
have a reasonable opportunity to negotiate. Not
earlier than 60 days of the receipt of a bona fide,
complete request and longer if the parties agree,
the utility muet explain to the customer why the
transaction cannot occur, in an acceptable man-
ner, rather than on the terms the requester
wanted.
Subsection (b) establishes the information
requirements the FERC muet prescribs by rule,
reducingeubetsntially the requirements original-
ly proposed by the Houee. The new language
simply states 'information . . . which is adequate
to inform potential customers. State regulatory
authorities, and the public of potentially available
transmission capacity and known constraints.'
This leaves to the FERC rulemaking process the
decision on whet form these information require-
ments ehould take. However, the FERC cannot
by rulemaking reimposs the information require-
ment provisions of the origins! House Bill, which
the Conferees now have rejected with prejudice.
It is intended and expected thst the informa-
tion requirements would not be onerous or bur-
densome, but rather will require only such infor-
mation as it is reasonably practicable to provide,
so that the FERC, State Commissions and other
interested parties have a reasonable basis upon
which to set.
ATTACHMENT 1
(Proposal by Senator Malcolm Wallop (R-WY)
Voluntary Regional Transmission Associstions)
The Federal Power Act is amended by adding
the following:
'Section 2 16. Voluntary Regional Transmission
Association.
'(a) A voluntary regional transmission associa-
tion may file with the Commission a copy of the
agreement establishing such association, and may
ssek from the Commission certification of such
agreement.
'(b) Upon application, and after notice and
opportunity for comment, the Commission shall
certify sny agreement that includes provisions »m
specified in subsection (e). In considering certifi-
cation, the Commission shall ssek the views of all
atate regulatory authorities of the relevant re-
gion, and other interested and affected parties.
'(c) Upon complaint to the Commission by a
member of the association alleging violation of
the agreement (after an unsuccessful, good faith
attempt at dispute resolution), the Commission
may determine sfter a hearing that the agree-
ment ie not being implemented in accordance
with its terms. In making this determination the
Commission shall accord substantial deference to
the results of sny binding dispute resolution.
Upon making audi determination, the Commis-
sion shall provide a reasonable time for the asso-
ciation to change or implement its agreement in
response to the Commission's order.
'(d) Any rate, charge, classification, rule, regu-
lation, practice, or contract demanded, observed,
charged, or collected for transmission service in
accordance with an agreement, whether based on
cost or non-cost factors, ie considered just and
'(e) An agreement for a voluntary regional
transmission association shall include provisions
consistent with the public interest thst:
'(1) sllow any wholessie seller or wholesale
purchaser in the region to become s member;
'(2) permit wholessie transmission service for
members of the sssociation within snd through
the region on terms, including price, thst are not
undury discriminatory or preferential;
'(3) provide the basis on which sny rats,
charge, classification, rule, regulation, practice,
or contract demsnded, observed, charged, or col-
lected for transmission service shall be deter-
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'(4) allow the futiira transmission requiremente
for ojIiuIsssIii electric energy ssiss and purr hssss
by members to be included in plana, which ahall
ho updated periodically, for enlargement, cubjoct
to applicable federal, state, and local law, of
tranamieaion capacity for any member who agree*
to pay the reaaonable coata of tienemiaiion ear-
vice*, including the coata of any enlargement of
traimmhwinn facilities;
«(6) allow all wholeeale aellera and wboleeale
purcbaaera who are membera to plan for and
reserve trenemimion capacity for firm and
non-firm power tranooctiono to the extent ef
available agisting capacity, aa aupplemented by
good faith effort* to enlarge tranamieaion capaci-
ty to provide requeeted service in the future;
•(6) provide for a dispute resolution procedure,
which may include binding arbitration, for mem-
bera which protecta the due process right* of the
parties; and
'(7) allow members, st their sole discretion, to
provide voluntary transmission services to a
requesting non member on a voluntory basis not
subject to review by the Commission under any
other provision of this set.
•(f) If an agreement of a voluntary regional
transmission associstion is in effect, with i
to membera of the associstion the Commission
shall not: (i) accept an application for an order
21 1(a) ordering such member to
i service; or (ii) condition its
approval of a merger on the provision of trans-
mission cervices; or Oil) condition the esereiee of
its rato jurisdiction on the provision of tranemie-
Sections of the Federal Power Act ie emended
by adding the following at the end thereof:
'(26) The term Voluntary regional tranemis-
'(A) open to all transmitting utilities and
bolessls buyers and sellers in s region, and
•(B) which ie intended to develop a voluntary
'(i)i
'(U) enlargement of trenemimion capacity, and
'did rates, terms, and conditions for tranemis-
ATTACHMENT 2
(Proposal by Senator Malcolm Wallop (R-WY)
for Authorising Voluntary Transmission Agree-
ments)
The Federal Power Act is emended by adding
si the appropriate place the following.
*8sction . An agreement or contract relsting to
the rales, terms, or conditions for transmission
services, between unaffiliated entities shall be
filed with the Commission ami be effective as
between the parties thereto, provided that this
subsection ehall not affect the right ef any pereen
or state commission under portion 106 of this
Act.'
ATTACHMENTS
(REGIONAL TRANSMISSION GROUPS)
The conssnsus document reached by reassess*-
tativee of (EEI, APPA, NRBGA, TAPS, LPFG»
WATSCO, ITCF.
groups, EGA) to i
groups provides for the following:
I. Authorises FERC to approve an RTG if it
finds the RTG's Governing Agreement is just end
ressonsble, not unduty proforontlol or disrrimins
tory, and ie otherwlee oonsmtcnt with Part D
(electrical) of the Federal Power Act, and that Ik
A. Provides for msssbersnip of sufficient sins
and scope to provide transmission serviess in a
reliable and efficient menner.
B. Allows any entity which m subject to, or
eligible to appty for, an order under See. 211 to
join the RTG.
C. Imposes the affirmative obligation to provide
transmission cervices to members (non mnmbms
retain all rights under 8ec211and See. 212) ami
to enlarge trai
D. Requires members to onordlnsts I
eion planning on a regional basis smi to i
transsumion planning inforssation to snswra that
all known transsmsmion needs of the region sre
' E. Includes sovernanaa proeeduree to ensure
due process and fair treatment of all ssssshsrs.
F. Provides for a fair dispute resolution pro-
cess, which in certain dreumstsness smy include
voluntary binding arbitration. (Conssnt to stums*
in binding arbitration cannot be a condition of
oiembersyportheeserakwofenyrisiitefBSsm-
borehip.)
G. Requires that all rates, charges, terms), smi
conditions shell be consistent with Sec 211 ami
subject to Sec Sec 206 and 206V as emsressjsss.
H. Commission Authority over RTQet
The Commission msy require mm inssrssation
ae it deem* i
sry,imps
tditio
ate
tent with the public interest, i
certification of the group, and
soids any action (ssospt ss othm wiss siwvassd in
binding arbitration) far inrnsilitisiy with dm
Federal Power Act and the RTG's \
not to seek Cosmmlsslon review ef an
award. The Cosmmlsslon shall accord
deference to any eoemiou rendered by an I
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pendent third party snd band on an adequate
record. The Commies ion also •hall give a rebut-
labia presumption that any action by an RTG, or
action of a mombor not contested by anothar
mambar, m within tha acopa of the Agreement.
m. Fadaral Entitiaa:
Federal power marketing authoritieaara autho-
rized to participate in RTCe, subject to certain
restrictions, and to engage in binding arbitration.
IV. Ssvinsa Proviaion:
FERC certification of an RTG shall not affect
State siting, environmental, or utility regulatory
authority which could otherwiee be lawfully exer-
cieed over member* of the RTG. Conforms sav-
ing* clauae in Sec. 212(e)(1) and (2) relating to
antitrust to include this section.
REGIONAL TRANSMISSION GROUPS
Section 216. Regional Transmission Groups
(a) Commission Certification -
(1) On application, the Commission shall certi-
fy a regional transmiesion group ORTO if it
determines, alter notice and opportunity for
hearing, that audi RTG 'a Governing Agreement
('Governing Agreement') (and any revision there-
of) iejuet, reasonable, ie not unduly discriminato-
ry or preferential, is otherwiee consistent with
this Part, and meets the following specific re-
quirements:
(A) ths Governing Agreement provides for
membership of sufficient scope, end s region of
sufficient size, (not inconsistent with determina-
tions, if any, made under eection 202(a)), to pro-
vide transmission services consistent with this
Pert and with reliable, efficient, and competitive
wholeeale power markets;
(B) the Governing Agreement allows any entity
which ie subject to, or eligible to apply for, an
order under eection 211, and which has an inter-
eet in tranemission eervices in the region, to join
the RTG;
(Q the Governing Agreement (i) imposes on
member transmitting utilities an affirmative
obligation to provide transmission eervices to
other members on a basis that is consistent with
(snd no lees comprehensive then) sections 211,
2 12, snd 213, including sn sffirmstivs obligation,
(except aa provided in eection 211(d)(1)(C)), to
enlarge transmission capacity when needed to
provide requested transmission service; snd (ii)
requires members to maintain electric system
reliability, ss measured by continued confor-
mance with generally applicable and recognised
guidelines;
(D) The Governing Agreement requires mem-
bers:
(i) to coordinate in a timely manner transmie-
sion planning on a regional basis; snd
(ii) to share transmission planning information
as provided for in the Governing Agreement, and
on request; with the goals of (1) ensuring that
members' forecasted loads, resources snd require-
ments for transmission services, and as provided
in the Governing Agreement the known require-
ments of non-members, within, into, out of, and
through the region are accommodated in a rea-
sonable and efficient manner, consistent with
applicable state utility, siting, and environmental
regulation; (2) ensuring efficient utilization,
ezpanaion and coordination of interconnected
transmission systems; and (3) planning for trane-
mission needs of members to enable reasonable
and efficient utilization of their power supply
resources.
(E) the Governing Agreement includee gover-
nance and decision-making procedures that are
fair, are structured in a manner that takes into
account the interests of all members, and are
consistent with this Part;
(F) the Governing Agreement includee one or
more dispute resolution procedures which pro-
vide fair and equitable process for all members,
snd which provide for the timely resolution of
any dispute; provided, however, that a member
shall not be required to limit Commission review
ss provided in subsection (b)(2) ss a condition of
RTG membership or of ths exercise of any right
of RTG membership; and
(G) the Governing Agreement includee a re-
quirement that the ratee, charges, terms and
conditions applicable to transmission service
provided by members that are not public utilities
to other members shall be consistent with the
requirements of section 212(e), shall be filed with
the Commission, and if the Governing Agreement
so provides, may be subject to suspension and
refund as if subject to sections 206 and 206.
(2) A Governing Agreement amy establish ser-
vice priorities when transmission capacity ie
constrained and may provide for reciprocal trans-
mission ssrvicee that extend beyond the RTG's
region snd for other arrangements consistent
with sections 211, 212, snd 213.
(3) Ths Commission, in certifying sn RTG, may
impose such terms and conditions ss it finds
necessary to ensure the RTG's Governing Agree-
ment conforms with paragraph (1) and m consis-
tent with the public interest under this Psrt. The
RTG shall have 60 days to notify ths Commission
whether it accepts or rejects a Commission osrtif-
ication order under paragraph (1) of this subsec-
tion. The Commission shall not certify sn RTG
under this section if each state commission that
has retail rate jurisdiction ovsr RTG i
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the region files * notice of disapprove! of the
Governing Agreement with the Commission un-
der the procedures established under paragraph
(1) of this subsection. Hie Commission may not
impose ss a condition of certification a require-
ment that a member must accept a planning
decision of the RTG. A member's decision, if
permitted by the Governing Agreement, not to
accept a planning decision shall not relieve, af-
fect, or qualify in any way that member's obliga-
tions to provide transmission service or enlarge
transmission capacity pursuant to the Governing
Agreement,
(b) Commission Authority Over RTGs •
(1) On complaint or on its own motion, the
Commission may at any time:
(A) require an RTG, or a member thereof, to
submit such information as the Commission
determines by rule or other to be necessary or
appropriate to carry out this section;
(B) modify or revoke the certification of an
RTG if it finds that the Governing Agreement, or
actions, taken thereunder, do not meet the re-
quirements of subsection (a); and
(O determine whether any action taken under
the Governing Agreement (including any agree-
ment among members or the resolution of any
dispute) by a member or by the RTG or action
under a filed rate implementing the Governing
Agreement, is inconsistent with, or beyond the
scope of, such Governing Agreement or filed rate,
or is otherwise inconsistent with the
Commission's certification order, or is unjust,
unreasonable, unduly discriminatory or preferen-
tial, and on that basis: (i) remand the action to
the RTG for timely modification consistent with
the Commission's determination; or (ii) as the
Commission determines is necessary or appropri-
ate, set aside the action, or issue an order to
comply with the Governing Agreement or filed
rate. In taking action under this subparagraph
(O, the Commission shall give a rebuttable pre-
sumption that any action by an RTG, and any
action by a member (or agreement among mem-
bers) that is not contested by another member, is
within the scope of and consistent with the Gov-
erning Agreement or filed rate. For purposes of
any proceeding under paragraph (IXC), decisions
rendered on an adequate record by an indepen-
dent arbitrator in accordance with the Governing
Agreement and dispute resolution procedure thst
assures due process for members shall be accord-
ed substantial deference by the Commission. For
purposes of this subparagraph, the term 'filed
rate' means a rate referred to in subsection (b)(4)
(B) or (Q that is filed and effective (not subject
to refund) under section 206 or any rate de-
i (a)(lMG) that is in <
(2) If a member consents, on a rasa by rest
basis, not to seek Commission review under para-
graph (IMC) of a final resolution of a dkputa, the
Commission may not, on the basis of a c
or protect filed by, or on behalf of, such i
respecting such dispute, including any e
among members (or any arbitration award) that
resolves such dispute, except on the grounds
available to a court oaorcieing Jurisdiction over
the matter under applicable contract law Cor
sections 10 and 1 1 of Title 9, United States Code
in the cans of an arbitration award).
(8) A member of a certified RTG may not spot/
for an order under section 211 requiring another
member of such RTG to provide transmission
services within the RTG's region unless the
RTG'a dispute resolution i
to provide s final resolution of a <
to auch services within s i
fied in the Governing Agreement. A transmitting
utility that is s member of an RTG is exempt
from the application of section 219(a) with re-
epect to other members of the RTG. The Commis-
sion may not compel sny entity to be s meaaber
of an RTG. Any member may withdraw from an
RTG, provided, that auch member's withdrawal
is in accordance with the Governing Agreement.
No member shall be subject to other provisions of
this Act solely by reason of compliance with a
Governing Agreement approved by the Commis-
sion. Nothing in this section shall prohibit an
eligible applicant for tranemission service that is
not s member of an RTG from exercising sny
rights under this Psrt with respect to such RTG
or sny member thereof.
(4) Section. 206 and 206 shall apply to (A) the
Governing Agreement (including, but not limited
to, any rates, terms and conditions specified
therein for transmission services by public utili-
ties) end any changes in the Governing Agree-
ment, (B) any initial rates, terms and conditions
not specified in the Governing Agreement for
transmission services by public utilities under the
Governing Agreement, and (Q any changes in
such rates, terms and conditions. The Governing
Agreement may not require that any dispute
resolution procedure under subsection (aMIXF)
roust be utilised with respect to such rhsnaea,
unless such procedure applies to changes under
both sections 206 and 206. A meaaber seeking a
change in the Governing Agreement may be re-
quired to first seek such change under the Gov-
erning Agreement.
(c) Federal Entities •
A Federal agency or instrumentality to which
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section 211 applies may be a memoer of an RTG
and may subset legal and factual disputes with
rospscl to a mattar ariaing under an RTG's Gov-
arninff Agreement to tha RTG's dispute resolu-
tion mochsnism, indudinf binding arbitration
which conforms to the requirements of subssc-
tion (b), except that:
(1) the establishment and review of rates and
other teraas of transniission service provided by
the Federal Columbia River Transmission System
shall be consistent with section 212(i); and
(2) notwithstanding subsection (b)(2), the Com-
mission shall review and approve or set aside any
binding arbitration decision.
(d) Other Law - (1) Certification of an RTG
under this section shall not affect State siting;
environmental or utility regulatory authority
that could otherwise be lawfully exercised over
members of such RTG.
Also make the following conforming changes to
section 212(e) (1) and (2) in the Johnston/Sharp
compromise, circulated on September 28, 1992 at
4:41 pm:
On page 21, line 10, add cross reference to new
section 216 dealing with regional transmission
groups.
On page 21, line 13, add cross reference to new
section 216 dealing with regional transmission
groups.
On page 21, line 16, add cross reference to new
section 216 dealing with regional transmission
groups.
On page 21, line 16, add insert before the peri-
od ', except that nothing herein ehall foreclose
any claim or defense under those lews which may
be applicable.'
PROPOSED REPORT LANGUAGE
By federal law, the Tennessee Valley Authority
is subject to certain service territory limitations.
Section 21 1Q) seeks to accommodate these limits
in an equitable manner. The conferees intend
that governing agreements among utilities affect-
ed by that section may not require their members
to provide service inconsistent with that section.
ATTACHMENT 4
Section 722 of the Conference Report amends
section 212 of the Federal Power Act (FPA) to
include a new aubsection (a) entitled, 'Rates,
Charges, Terms, and Conditions for Wholesale
Transmission Services/
Subsection 212(a) is s complete substitute
adopted by the Conference Committee in lieu of
the transmission pricing provisions of H .R. 776,
es passed by the House of Representatives. Thus,
the legislative history of the House bill's trans-
mission pricing provisions are no guidance when
interpreting Congressional intent of this section.
Subsection 212(a) requires the FERC to permit
s transmitting utility, suteect to an order requir-
ing wholesale trsnemlssion services under section
212, to recover through its associated rates,
charges, terms and conditions all the coots in-
curred in connection with the transmission ser-
vicee and neceeeary associated services. Thus, by
Isw, the transmitting utility must be permitted to
recover all costs incurred; those coots may in-
clude, but are not limited to, an appropriate
share of the legitimate, verifiable and economic
costs (including taking into account any benefita
to the transmission system of providing the
transmission ssrvices) and of the costs of any
enlargement of transmission facilities
It is important to note that this requirement
on the FERC is not otherwise constrained or
limited by existing FERC precedents or by the
later provisions in subsection 212(a). By dear
operation of this provision, the FERC must per-
mit such recovery by the transmitting utility of
all costs incurred, even if that would have the
effect of reversing existing FERC precedents.
Thus, the later eentencec in subsection 212(a) do
not frustrate in any way that dear statutory
requirement. In fact, the last sentence of the
subsection makes dear beyond sny reasonable
doubt that costs incurred in\providing the trans-
mission services will be recovered from the appli-
cant and not from a transmitting utility's native
The atatement that auch rates, charges, terms
and conditions also will 'promote the economical-
ly efficient transmission and generation of elec-
tricity and ehall be just and reasonable, and not
unduly discriminatory or preferential' does not in
any way legally reduce the mandatory require-
menta imposed on the FERC to permit auch re-
covery of all incurred costs by the transmitting
utility and to ensure that the costs are recovered
from the applicant and not from the native load
customers. To the contrary, the Conference
Report specifically defines for the FERC and any
reviewing court exactly what costs must be per-
mitted to be recovered (i.e., all costs incurred, as
described in the subsection) and expressly from
whom the costs must be recovered (i.e., from the
applicant for a section 211 order, as provided in
the subsection, and not from the native load
customers of the transmitting utility).
Consequently, the FERC's otherwise applicable
discretion to set rates, charges, terms and condi-
tions under the FPA will of necessity be much
mors narrow.
The FERC's promotion of economically efli-
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cient tnurauMfon and generation and the
FERC'e review under Um traditionally otherwiee
free-etending 'just and reasonable, and not undu-
ly discriminatory or preferential' standard in
othar eectione of the FPA will tharafora bo deiim-
itad by tha express statutory direction to the
FERC eontained in the aforementioned portions
of the subsection.
FERC cannot invoke tha promotional hortatory
Isngussm, nor the otherwise traditionally free-
standing 'just and reasonable' standard to limit
in any way the recovery by the transmitting utili-
ty of costs specified in the subsection or to im-
pose those costs on native load customers in
contravention of the prohibition at the end of the
subsection. Rather the promotional language and
the 'just and reasonable' standard can only be
considered and invoked by the FERC to the ex-
tent that they lead to a result completely consis-
tent with such cost recovery and such cost re-
eponeibility.
With regard to the application of the tradition-
al 'just and reasonable' standard in the context of
section 212(a), the proper interpretation is that
- as articulated in the Jersey Central Power eV
Light decision of the US. Court of Appeals for
the D.C. Circuit • transmission rates are bounded
by a tone of reasonableness. That tone is defined
at the lower end by a prohibition against confis-
catory rates ee to the electric utility and at the
upper end by a prohibition against exorbitant
rates ee to consumers. Consequently, the FERC
under section 212(a) would be required to allow
the transmitting utility to recover all costs in-
curred in connection with ordered transmission
services (as set forth in the subsection), while
ensuring that the resulting rate will not be con-
fiscatory as to the transmitting utility, nor exor-
bitant as to the wholesale transmission appli-
cant/customer • always, of course, ensuring also
that the native load customers of the transmit-
ting utility do not subsidise these ssrviess in any
That formulation of the relationship between
the traditional 'just and reasonable' standard and
the specific pricing directions or the FERC con-
tained in section 212(a) is critical because, in the
absence of the specific pricing directions, FERC
would have somewbet greater discretion in net-
ting the rates within the sons of reasonableness
under otherwise applicable lew. That discretion
is intentionally constrained by the specific pricing
directions provided by Congress, with the result-
ing rate being in the sone of reasonableness.
Generally, the FERC preeervei competition and
protecte consumers against aicossivo rates
through its traditional ratemaking authority
conferred by section 206 of the FPA. Section 206
requires that all rates charged for the transmit
commerce be 3ust and rossonshls,' and that any
such rate not be found just and reasonable is
unlawful. Neither the FPA nor ite legislative
history defines what is meant by the statutory
parses 'just and reasonable.'
While the FERC Mstorlcalry has accepted ratae
under eection 206 based upon the supplier's
cost-of-eervicee, the FPA doss not, by its own
terms, require electric rates to be east based.
Instead, the eourte have held that the FPA re-
quires that the ratemaking methodology ess-
ployed eerve s legitimate statutory objective, and
produce s rate that falsi within s 'sone of reason-
ablsnoss,' which is 'bounded at one end by the
investor interest against confiscation and at the
other by the consumer interest against exorhitent
rates,' ss stated in Jersey Central Power and
Light Co. The Supreme Court in Wisconsin v.
FPC, also baa held that no single method need be
followed by the FERC in considering the justness
and ressonableness of rates.
The Supreme Court in FPC v. Hope Natural
Gee Co. also has made dear that under the statu-
tory standard of 'just and reasonable' H is the
result reached, and not the method sxtploysd,
which is controlling. That is true, because it is
not theory, but the impact of the rate order
which counts, such that if the total effect of the
rate order cannot be said to be unjust and t
sonable, judicial inquiry is at an end.
quentry, under the genera) statutory i
the FERC has some discretion to rery on a sab of
factors in determining whether a rata is just end
ressonable, i *., in determining whether 'the end
result' constitutes 's reasonable balancing, basse)
on factual findings, of the investor interest In
maintaining financial integrity and senses to
capital markete and the consumer interest In
being charged non-explorative rates,' in the
words of the Jersey Central court.
In determiningjust and reasonable raise under
the Natural Gee Act and the Natural Gas Policy
Act, the FERC has consistently considered rele-
vant non-cost factors, while relying on the caste
of one or mors sailers. Courts rsviewing the
FERC'a decisions have generally affirmed the
FERC'eeelection of particular cost methodologies
and rate structures ss being permitted by the
ressonable exerdee of the FERCs discration
under the genera) statutory standard. Notably,
the eourte have not mandated the use of histnri
eel cost methodologies and have affirmed the
FERC's use of replacement cost ss s proper basis
for establishing just and i
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Courts in a long series of esses hsve allowed
the FERC to rery on fsctors other then the ever-
egs embedded cost of service end hsve been will-
ing to siTord the FERC considersble latitude in
approving rates under the 'just and reasonable'
standard. Indeed, the D.C. Circuit Court in
Town of Norwood v. FERC recently affirmed
marginal cost pricing under FPA section 206,
accepting the FERC'a rationale that rates based
on marginal coat promote economically efficient
investment and consumption decisions and not-
ing the agreement aa well of the leading authori-
ties in ths field of public utility regulation.
In addition to cost -based methods thst diverge
from embedded cost pricing, the courts hsve
approved a variety of non-coat bass fsctors in
determining s just and reasonable rate, which
embody other public interest considerations, such
ss increasing supply, managing demand, influenc-
ing industry structure and achieving price stabili-
ty
In new subsection 212(e), the Congress hss
determined thst the tranamitting utility should
recover all costs incurred for the transmission
services from the applicant and that the native
load customers should not subsidies thst service
in any way. As s result, Congress by statute has
provided the express Congressional directions for
the FERC to adopt ss s pubic interest factor in
its rstemsking methodology under section 212(e).
As discussed, thst statutory direction ia wholly
consistent with the judicially eatablished inter-
pretation of the traditional just and reasonable
standard. Consequently, the FERC does not
hsve the legal authority to adopt a different ap-
proach to sstting rates for transmission services
ordered pursuant to section 211.
Furthermore, the 'not unduly discriminatory
or preferential' limitation would enable the
FERC to respond to s specific fsct pattern in an
individual cess where the rate wss ths product of
action by the transmitting utility which provided
an unjustified preference to a transmission cus-
tomsr (ss in an affiliate deal) or an unjustified
discrimination sgainstsn unaffiliated competitor.
Under such case-specific circumstances, ths
FERC would be authorized to msks sn sppropri-
ste adjustment to the rate otherwise required by
the specific pricing directions in section 212(a) to
mitigate ths effect of the undue preference or
undue discriminstion ss to thst particular cue-
tomer in the individual case. So, on balance, the
specific pricing directions will always govern the
establishment of the rate for the ordered trans-
mission services, ss long ss the resulting rats is
within ths sons of reasonableness, and in the
abssnee of esse specific undue discriminstion or
undue preference. And, additionally, FERC is
only suthorized to adjust ths rats resulting from
thoss specific pricing directions, ss necessary to
bring it into ths sons of reasonableness (if it
would otherwiss be confiscatory or exorbitant) or
to mitigate the undue discriminstion or undue
preference with regard to that particular custom-
er.
It also is important to note that the determina-
tion by Congress that ths native load customers
of the transmitting utility not subsidise the third
party trsnsmission services is not legally suscep-
tible to sttsck ss unduly discriminatory or undu-
ly preferential. Under this statute, third-party
transmission customers are not similarly situat-
ed, and are not entitled to identical treatment, as
ths native load customers. Furthermore, holding
native loed customers harmless from costs for
which they are not responsible is fully consistent
with traditional notions of cost causation and
would not otherwise be subject to allegations that
such a principle is unduly discriminatory.
Congress here hss determined that it mresson-
able to eneure that the native load customers do
not subsidize the cost of providing trsnsmission
service to third parties. Such a pricing require-
ment in subsection 212(a) that is designed to
eliminsts subsidies and produce s mors efficient
allocation of transmission capacity surely cannot
be viewed ss unduly discriminstory. Similarly,
an applicant cannot, in the face of that Congres-
sional determination, argue that allowing, the
transmitting utility to recover ell costs in provid-
ing the service (ss provided in the subsection)
unduly discriminates against the third-party
transmission customer.
Further, the provisions of subsection 212(s) do
not require, nor allow, any subsidization of trans-
mission services by ths native load customers of
the transmitting utility snd, to that extent, they
would lead to a different result thsn ths balanc-
ing of ths three principles incorporated in the
original House provision, which wss drawn from
ths FERC trsnsmission pricing principles in ths
Northeast Utility-Public Service of New Hamp-
shire merger esse. Indeed, thst Is precisely why
the Conference Committee rejected the House
passed provisions snd the Conference Report
adopts s compute substitute for the House
passed pricing provision • to sssure thst there
will be no subsidy of trsnsmission services, re-
gardless of what otherwise might be the result
under the Northeast Utility principles adopted by
FERC.
In thst same regard, the provisions) of subsec-
tion 212(a) cannot be interpreted to authorize the
FERC under any existing esse precedent to im-
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pose any limitation on the recovery by the trans-
mitting utility of all eosts incurred in connection
with the transmission services, as specified in the
subsection, or to require nstive load customer* to
bear such costs, as prohibited by the subsection.
Rather, the plain meaning of these provisions of
subsection 212(e) must control their interpreta-
tion and any existing FERC case precedent is
irrelevant for that interpretation.
The Conference Report, by comparison to the
purposed intent of the original House provision,
does not attempt in any way to codify one or
more FERC precedents. Quite the contrary, the
Conference Report by the plain meaning of its
express terms makes the Congressional determi-
nation about the recovery of costs incurred by
transmitting utilities in providing wholesale
transmission services pursuant to the provisions
of section 211, ss amended by this legislation.
Consequently, under ell applicants Supreme
Court decisions on statutory construction, the
Congressional determination in subsection 21 1(e)
cannot be mede subject to interpretation under
any existing FERC order, let alone made subordi-
nate to the determinations in any FERC order.
Additionally, the statutory provisions require
that recovered costs include, among others, an
appropriate share of legitimate, verifiable and
economic costs which would allow for typical rate
case projections of future costs that will be in-
curred in providing the mandated transmission
services. It ia well settled end judicially affirmed
Federal rate making practice that the transmit-
ting utility would use s 'test year* calculation of
costs to set its future rates. Thst practice would
specifically allow for and include projections of
economy sales and purchases, out-of-rate charges,
and other opportunity charges based on the test
year data and experience. Thet long standing
rate making practice would not be affected by the
adoption of subsection 212(e), even though the
Congress in the Conference Report has specified
a more precise cost recovery standard.
Therefore, the term 'appropriate share' cannot
be interpreted to swallow that more precise stan-
dard by means of some eweeping claim that there
are generally available 'system benefits' that
offset in large measure the costs of ths transmis-
sion service, such thst nstive load customers bear
the cost responsibility in place of the applicant
So-called 'system benefits' cannot be used as s
cost-avoidance tactic by the applicant or a method
to shift costs to the nstive load customers.
Furthermore, the FERC cannot impose on the
transmitting utility ths burden of proof to show
that there is no system benefit in order to obtain
any recovery of the costs in connection with
transmissioa services, and then only to the strict-
ly limited extent that such proof is persuasive, as
ths FERC attempted to do in the recent Ohio
Edison cess. Rather, the transmitting utility
would file s rate cess including all costs deter
mined by Congress in subsection 212(a) to be
recoverable, and then the applicant would bs
required to provide persuasive evidence that a
portion of those coots had a demonstrable system
benefit that ahould be shared by all customers,
including both the applicant and native load
customers. The FERC, on the basis of substan-
tial evidence, would then have to find that the
portion of costs associated with thst system bene-
fit was appropriately allowable to all rate payers.
HYDROELECTRIC PROVISIONS
Mr. WALLOP. Mr. President, I
would like to make a few observations
about the conference agreement relat-
ing to the hydroelectric provisions.
While I think the statutory lan-
guage dealing with the definition of a
fish way under section 18 of the Feder-
al Power Act is clear on its face, there
were some comments made during
House consideration which should be
clarified.
Congressman Dingell at one point
stated with reference to FERC's pro-
posed fishway definition that it deals
only 'with fish movement in one direc-
tion.' While this statement is true as
to FERC's initial definition - in Order
533, 56 FR 61154, May 20, 1991 -
FERC hugely broadened its definition
in response to requests for rehearing
by Federal and State fish agencies - in
Order 533-A, 57 FR 10809, March 31,
1992. The expanded definition recog-
nized that fishways can be for up-
stream and downstream passage, and
broadly interpreted them as facilities
necessary for the life cycle of a fish
species. It is important to emphasize,
however, that at all times the defini-
tion was confined to physical struc-
tures.
Congressman Dingell later stated
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that FERC's definition 'presumed to
limit the aoope of the section 18
fishway prescription by administrative
action at FERC
As the agency with responsibility for
implementing the Federal Power Act,
and with lead authority over the li-
censing of non-Federal hydroprojects
under the FPA, it is entirely appropri-
ate for FERC to be interpreting the
reach of section 19 of the FPA. As
manager of the licensing process,
FERC has every right - indeed duty -
to set reasonable conditions or bounds
on the participation of other agencies
in the process, especially when the
FPA or other statutory authority is
ambiguous as to the extent of that
authority. FERC did a thorough and
careful job in crafting its regulatory
definition, looking at historical under-
standing by fishery biologists of what
constitutes a fishway. FERC also
carefully, and in a balanced way, re-
sponded to comments filed in reaction
to its proposed definition. While Con-
gress is vacating the definition - large-
ly in response to reactions to the ini-
tial proposed version - Congress is
doing so without prejudice to the defi-
nition.
Congressman Dingell also stated
that: 'FERC has tried to impose its
own will on how and what a fishway
proper and other project facilities.' In
addition to my previous comment, I
would note that FERC must be able
to make the distinction between
fishway facilities and other project
facilities. Otherwise, a fishway agency
would be able to exercise unbridled
authority over projects, to the exclu-
sion of any FERC control over the
projects. But FERC is the agency
responsibe for implementing the FPA
and for licensing hydroprojects.
Congressman Dingell also men-
tioned the view of the Department of
Commerce that 'DOC believes * * *
the baseline from which project im-
pacts are measured * * * is the carry-
ing capacity of the relevant fishery
habitat without the project.'
To the extent fishery agencies pro-
vides fish-related recommendations
for existing projects, the Senate and
House conferees who worked on the
Electric Consumers Protection Act of
1986 make dear that FERC is not to
ignore the existence of the project in
determining what conditions are ap-
propriate to impose on the projects.
To quote page 22 of the ECPA confer-
ence report, 'In exercising its responsi-
bilities in relicensing, the conferees
expect FERC to take into account
existing structures and facilities in
providing for these nonpower and
nondevelopmental values.' So as to
'10(j) conditions' and other fishery
recommendations, the quoted DOC
statement is not true - the baseline
for existing projects is not 'preproject.'
Citing DOC correspondence, Con-
gressman Dingell stated that 'fishway
prescriptions can typically include
stream flows, project shutdown peri-
ods, and other non-structural mea-
sures needed to ensure protection of
migrating anadromous fish' - also
Congressman Studds stated that 'an
appropriate fishway might consist of a
spill over a spillway, controls on tim-
ing of project operations or project
features such as gate openings; project
shutdown as an alternative to the
construction of a fish screen or where
fish screen is not practicable; the safe
passage flow over a barrier such as
waterfall in a project area; * * *•
The statutory language in the con-
ference report of H.R. 776 specifically
rebuts these wildly expansive interpre-
tations of the definition of a fishway.
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The report language specifically says
that fishways are 'limited to physical
structures, facilities, or devices * * *
and project operations and measures
related to such structures, facilities,
or devices • • •■ - section 1701(b). The
point was to limit fishways - those
items that can be prescribed under
section 18 - to physical structures
designed principally for the safe pas-
sage of fish, and such flows needed to
ensure the effectiveness of those
structures. There is no fair way to
read this language to include stream
flows or project shutdown or spillway
flows or project operations more
broadly. Furthermore, to do so would
be to eviscerate FERC's authority
over the licensing process under part
loftheFPA.
The PRESIDING OFFICER. Who
yields time?
If no one yields time, the time will
be taken.
The Senator from Nevada is recog-
nized.
Mr. BRYAN. Mr. President, let me
take another minute.
All that we have gone through for
the last 2 hours is so unnecessary. I
wanted to vote for this bill. I voted
for it before. But when you get sand-
bagged at the last minute with no
opportunity for people to present a
case, to make it out, to be fairly
heard, you have no real alternative
but to do this.
I realize that from my colleague's
point of view this appears to be a
Nevada specific issue. But as I said at
the outset of the debate, if they can
do this to us today on a very popular
bill that people want to vote on, they
can do it to your State tomorrow.
I think that the precedent that has
been established is an extremely dan-
gerous one. To change a public health
and safety standard without one bit of
testimony is absolutely incredulous
and irresponsible. There is no predi-
cate for doing that.
The last time the issue was consid-
ered, in 1987, the DOE Administrator
said the existing standards that were
proposed in the eighties and tempo-
rarily set aside by the court could be
met by fivefold. That is in the Re-
cord. I made it a part of the Record in
the testimony by Mr. Vieth.
Let everyone understand that what
we are talking about here is profit,
money, and greed, not public health
and safety, not fairness. We are sub-
jected to this because the nuclear
power industry is unwilling to provide
health and safety standards which the
Environmental Protection Agency
believes are necessary to protect local
health and safety.
As our colleague, the senior Senator
from Florida, set out, this today, we
are going to lose. I understand how
the votes are going.
Let me suggest to the nuclear power
industry, it is a r^yrrhic victory. What
community in the world, what group
of people in the world who ere
openminded on the question of nucle-
ar power, would begin to enter into
any kind of an understanding onjy to
be told in midstream that the stan-
dards are going to be changed, that
the rules of the game are going to be
changed, simply because it may be too
expensive to provide all the public
health and safety standards that ere
necessary.
Mr. President, I yield the floor. I
reserve whatever time I have left.
Mr. JOHNSTON. Mr. President,
make no mistake about it, by this
cloture vote by unanimous consent we
have one cloture vote which will de»
termine the fate of this legislation If
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this cloture vote goes down, with it
goes the support of the President, the
support of Mr. Clinton, the support of
the House, of the Senate, the Demo-
crats, the Republicans, for the most
comprehensive energy legislation ever
proposed.
Mr. President, with respect to this
radionuclide issue, I make four quick
points.
First of all, this is not an issue that
arose in the middle of the night that
came into the conference committee.
It was placed into this bill by the
House of Representatives which set a
standard. There exists no standard
for radionuclide release, none at the
present time. The previous standards
were remanded to the Environmental
Protection Agency, and the House set
that standard.
This was in the conference. It was
discussed in the Congressional Record
in an open colloquy between myself
and the Senators from Nevada. It was
discussed privately.
Mr. President, this is not a
middle-of-the-night issue. It is an
issue that has hung around for a long
time. It is a $3.2 billion issue because
if you had to comply with the previous
standards, according to the DOE, it
would take $3.2 billion to design con-
tainers without any effect on human
health.
Mr. President, the fix that the con-
ference committee came up with is the
right fix. What the conference com-
mittee said is there exists, recognizing
that there exists no standard now - it
commissioned the National Academy
of Sciences, the most distinguished
scientific group in the world, to come
up within a period of 1 year with a
study on radionuclides and on the
ability to keep people out of the site.
The Environmental Protection
Agency based on that study then is to
come up with the standards.
Mr. President, the National Acade-
my of Sciences will make a report on
the science, not on the policy, and the
EPA will make a policy judgment.
The National Academy of Sciences
through their president says it will
not be their role to fix the standard
but rather to give advice with respect
to the science, and the EPA says that
this will be helpful to them. The re-
port of managers says it does not in
any way restrict the discretion of the
Environmental Protection Agency.
Mr. President, how in the world
anyone can disagree with having a
scientific standard studied by the
National Academy of Sciences, their
advice given to EPA, and EPA make
the policy judgment, how anybody can
object to that, I do not know unless
the motive is as opposed to human
health --
The PRESIDING OFFICER. The
Senator's time has expired.
Mr. JOHNSTON. Mr. President, I
urge my colleagues to vote for cloture.
It is our last chance on the energy bill.
Mr. BRYAN. Mr. President, very
briefly, the Senator from Louisiana is
correct. The House brought to the
conference committee this issue.
What the House intended to do was to
republish the standards that had been
temporarily set aside by the court in
1987, if memory serves me correctly.
That standard was based upon the
population standard. We accept that,
no problem. That represented no
fundamental change in the law. What
he is talking about is changing the
program and also the public health
standard. It is also contended here
that the EPA has full authority and
full discretion.
Mr. President, look at the plain
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language of the statute. All of the
oratory, all of the words, all of the
letters cannot change the plain intent
of the statute. The statute says the
EPA will be bound to come up with
whatever the recommendations are of
the National Academy of Sciences. We
do not object to the National Academy
of Sciences making recommendations.
But we surely ought to object, as a
body, to having the National Academy
of Sciences, which is not a regulatory
body, it is comprised of some private
citizens, some public citizens, and to
have them, in effect, gag, bind, and
muzzle the EPA even though the EPA
may feel that a much different stan-
dard would be appropriate for Yucca
Mountain.
That is what we are talking about,
health and safety, fundamental policy
changes that have never been consid-
ered in public but rather done very
surreptitiously in the conference, with
only very few people there, with no
testimony, and no opportunity to be
heard.
I urge my colleagues to oppose the
cloture petition.
I yield the floor, and I yield back
any time I may have.
CLOTURE MOTION
The PRESIDING OFFICER All
time has expired.
Under the previous order, the clerk
will state the motion to invoke clo-
ture.
The legislative clerk read as follows:
CLOTURE MOTION
We, the undersigned Senator*, in accordance
with the provisions of rule XXII of the Standing
Rules of the Senate, hereby move to bring to a
close the debate on the conference report on H.R.
776, the National Energy Policy Act:
George Mitchell. Daniel K. Akaka. Edward M.
Kennedy, J. Bennett Johnston. Daniel K. Inouya,
JefTBingaman, Timothy E. Wirth, Wei
Bill Bradley, Lloyd Bentsen, John ]
Claiborne Pell, Jay Rockefeller, lfeJaofcsi Wefts*,
Charles S. Robb, David L. Borao.
VOTE
The PRESIDING OFFICER. The
question is, Is it the sense of the Sen-
ate that debate on the conference
report accompanying H.R. 776\ the
Energy bill, shall be brought to a
close?
The yeas and nays are required.
The clerk will call the roll
The legislative clerk called the rofl.
Mr. FORD. I announce that the
Senator from Tennessee (Mr. Gore),
the Senator from Vermont (Mr.
Leahy), and the Senator from North
Carolina (Mr. Sanford), are necessari-
ly absent.
Mr. SIMPSON. I announce that the
Senator from Missouri (Mr. Bond),
the Senator from North Carolina (Mr.
Helms), the Senator from Vermont
(Mr. Jeffords), the Senator from Wis-
consin (Mr. hasten), and the Senator
from Alaska (Mr. Murkowski), are
necessarily absent.
I further announce that, if present
and voting; the Senator from Alaska
(Mr. Murkowski) would vote 'Nay.'
The PRESIDING OFFICER (Mr.
Adams). Are there any other Senators
in the Chamber desiring to vote?
The yeas and nays resulted - yeas
84, nays 8, as follows:
(ROLLCALL VOTE NO. 266 LEG J
YEAS $4
Adams Akaka
Bentsen Biden
Boren Bradley
Brown Buiipen Buidkk.
Joeelyn Burns Bjyrd
Coats Cochran
Conrad Craig
D'Amsio Danforth
DeCondni Dixon
Dole
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Ford
Fowler
Garn
Glenn
Gorton
Gramm
Graaeley
Harkin
Hatch
Hatfield
Heflin
Hollingi
Inoirjre
Johnston
Kaaaabaum
Kennedy
Kerrey
Kerry
Kohl
Lautenbarg
Lavin
Liebanaan
Lott
Lugar
Mack
McCain
McConnaU
Metienbeum
MikubU
Mitchell
Nfckiea
Nunn
Packwood
Pell
Praaaler
Pryor
Riegie
Robb
Rockefeller
Roth
Rodman
Sarbanea
fliaw
Saymour
Simon
Simpson
Smith
Specter
Stevens
Symm*
Thurmond
Wallop
Warner
Wirth
Wofford
NAYS -S
Bryan
ChaJee
Durenbaraer
Graham
Moynihan
Raid
Shalby
Wellatone
Bond
NOT VOTING - 8
Bonda Gore
Jeffbrda Kaaten
Leahy Murkowaki Sanford
The PRESIDING OFFICER. On
roilcaU number 266, the cloture mo-
tion on the conference report to H.R.
776, the yeas are 84, the nays are 8.
Three-fifths of the Senators duly cho-
sen and sworn having voted in the
affirmative, the motion is agreed to.
Mr. JOHNSTON addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Arkansas.
PELLETIZED WASTE PAPER
Mr. BUMPERS. Mr. President, I
would like to engage the distinguished
chairman of the Energy and Natural
Resources Committee in a colloquy
concerning a relatively new technology
which, consistent with the energy
bill's goal of promoting the develop-
ment of renewable energy technolo-
gies, will have a positive impact on
reducing both our Nation's reliance
on fossil fuels and the problems i
ated with solid waste disposal and
recycling. Ashley County, AR has un-
veiled a visionary new program that
will turn discarded paper into fuel
pellets for existing industrial boilers.
The county is constructing a rural
recovery facility capable of traditional
product- to-product recycling as well
as waste paper recycling into fuel
pellets. Waste from area homes and
businesses will be collected and sepa-
rated. The glass, plastic, and market-
able papers will be recycled, while the
nonmarketable paper will be pellet-
ized. A local pulp and paper mill in
the county is committed to providing
a market for all of the pellets pro-
duced in this facility. The pellets will
be sold at a profit, benefiting the local
taxpayers.
like many local governments across
the Nation, Ashley County is facing
new recycling and landfilling regula-
tions and few existing options to meet
its needs. Its 25,000 residents gener-
ate nearly 40 tons of trash daily, all of
it sent to a single landfill. Bypelletiz-
ing low-quality paper once destined
for that landfill, Ashley County will
transform 25 percent of its daily waste
into energy. When combined with
recycling efforts, this initiative will
triple the lifespan of the county's
landfill. In short, they are going to
turn waste paper into energy.
This kind of innovative,
market-based program can transform
the paper that is disposed of in land-
fills every year into clean, renewable
fuel and can be a strong contributor
to America's energy independence.
Pelletized paper fuel is priced competi-
tively with coal and other solid fuels
when considering the avoided cost of
landfilling the waste paper. When you
stop and consider that, in spite of
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massive investments in new recycling
mills, roughly 40 percent of what is
found in landfills is paper, it is easy to
see that the paper recycling market,
in particular, must be expanded to
include alternative uses for
low-quality waste paper. Contaminat-
ed by coatings, glues and other impu-
rities, this discarded paper includes
such things as cereal boxes, maga-
zines, colored paper and junk mail - a
mix of low-grade paper few recyclers
want.
In addition, Mr. President, 50 mil-
lion tons of pelletized paper would
provide the energy equivalent of 153
million barrels of crude oil - enough to
light every home in Arkansas for ap-
proximately 68 years. Some industri-
alized States with critical landfill
woes, now trucking their waste into
other States, could find the pelletizing
option especially attractive. Their
existing industrial boiler capacity and
their population concentration offer
great potential to fuel a new market.
Waste paper pellets can be sold as a
supplemental fuel to virtually any
industrial facility or utility powered by
a solid fuel boiler. The estimated
market demand for recovered waste
paper fuel is more than five times the
projected supply.
As one of the first joint efforts to
explore new recycling options for
waste paper fuels, Ashley County's
project offers a practical model for
communities nationwide. By reaching
beyond existing disposal options, we
have an opportunity to put alterna-
tive energy into paper recycling. In
doing so, we will be buying time, and
saving space, for America's landfills.
Mr. JOHNSTON. I agree with the
Senator. The use of pelletized waste
paper as an energy resource could
have significant benefits, such as re-
ducing our Nation's reliance on non-
renewable fossil fuels and reducing
the demand for space in our landfills.
JOINT VENTURES
Mr. FOWLER. As the chairman
knows, several years ago I authored
the Renewable Energy and Energy
EffiriencyTechnology Competitiveness
Act (Public Law 101-218). This impor-
tant legislation leverages Federal
funds to support research, develop-
ment, and demonstration of renewable
energy and energy efficiency technolo-
gies. The legislation has already had
an impact on the ability of the renew-
able energy and energy efficiency in-
dustries to commercialize their tech-
nologies and services.
One of the clear goals of the Renew-
able Energy and Energy Efficiency
Technology Competitiveness Act was
the specific allocation of funds for
renewable energy and energy efficien-
cy joint ventures. These joint venture
programs had a threefold purpose: To
improve the coordination of technolo-
gy development between Government
and the renewable energy and energy
efficiency industry, to facilitate tech*
nology transfer to the private sector;
and to enhance the ability of domestic
renewable energy and energy efficien-
cy firms to compete with foreign en-
terprises.
Mr. JOHNSTON. I was pleased to
assist the Senator from Georgia in his
landmark renewable energy legislation
and to incorporate provisions into the
Energy Policy Act that provide the
Secretary with greater flexibility to
implement the joint ventures program
under Public Law 101-218.
Mr. FOWLER. During Senate floor
debate on the fiscal year 1982 Energy
and Water Appropriations bill last
July, the chairman and the distin-
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guiahed ranking minority member of
that subcommittee, Senator Hatfield,
engaged in a colloquy as to how these
joint ventures should be funded. At
that time, the chairman stated that it
was your belief that funds in the fiscal
year 1992 energy and water appropri-
ations bill could be used for the joint
ventures established under Public
Law 101-218.
Mr. JOHNSTON. That is correct.
Mr. FOWLER As a result of that
colloquy between the Senator and Mr.
Hatfield, representatives of the Solar
Energy Industries Association met
with Secretary Watkins and his staff
at the Department of Energy. It is my
understanding that during this meet-
ing the Department committed to $4
million reprogramming of fiscal year
1992 nonrenewable energy funds.
The Department of Energy recently
sent Congress a reprogramming re-
quest to fund, among other things,
the joint ventures program in Public
Law 101-218. But, I am deeply trou-
bled to report, that the portion of the
reprogramming package dealing with
joint ventures was never implemented
since the Department proposed to tap
into a funding source that was not
feasible. Since the Department's ini-
tial reprogramming request, industry
representatives and officials of the
National Association of State Energy
Officials have tried, in vain, to per-
suade the administration to send us
an acceptable reprogramming request
for these joint ventures.
Mr. JOHNSTON. I understand that
the Advisory Board on Renewable
Energy and Energy Efficiency Joint
Ventures has issued a report to the
Department that laid out criteria and
implementation policies for carrying
out an effective program. As a result
of this report, the Department formal-
ly requested authorization to use a
percentage of core renewable R&D
funds under the fiscal year 1993 ap-
propriations for carrying out a limited
number of renewable energy and ener-
gy efficiency joint ventures.
Mr. FOWLER. The intent of the
original legislation was not to rob core
Federal research programs in order to
finance commercialization programs.
On the contrary, the intent was to
supplement world class research and
development activities with commer-
cial applications that increase U.S.
exports and create jobs here in the
United States.
In order to fund the important pro-
grams in Public Law 101-218 and H.R.
776, the Energy Policy Act of 1929, I
urge the administration to make every
effort to fund these initiatives. I ask
my colleagues to join with me in urg-
ing the administration to help us
bring these renewable energy and
energy efficiency technologies to the
marketplace and create new jobs right
here at home.
Mr. JOHNSTON. The renewable
energy and energy efficiency provi-
sions in H.R. 776 are built on the
foundation laid by Public Law
101-218, I join my colleague from
Georgia in urging the administration
to request an appropriate reprogram-
ming to carry out the program estab-
lished by Public Law 101-218.
Mr. UEBERMAN. Mr. President, I
rise today to express my overall sup-
port for the energy bill, despite some
concerns I have about the legislation.
I am supporting this bill because it
includes significant provisions on en-
ergy efficiency, global warming, and
renewable energy. In the words of
James Wolf, executive director of the
Alliance to Save Energy in a letter
dated October 5, 1992, to Chairman
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Johnston: These - the energy efficien-
cy provisions - will improve the envi-
ronment, make housing more afford-
able, and enhance our competitive-
ness.' Howard Geller, the executive
director of the American Council for
an Energy Efficient Economy states in
a letter dated October 6, 1992: The
bill contains many valuable energy
efficiency provisions which will save
significant amounts of energy, save
consumers money, and reduce pollut-
ant emissions. The energy efficiency
and renewable energy portions of the
bill will help to move our nation to-
ward a sustainable energy future/
Representatives of the renewable en-
ergy industries stated in a letter also
dated October 5: 'America's emerging
energy technologies are facing in-
creased international competition in
these billion-dollar markets of the
future. With over $15 billion in pri-
vate investment in these energy sourc-
es in the past decade, the economic
and environmental consequences of ig-
noring renewable energy would be
staggering. H.R. 776 is vital to the
sustained health of our industries.'
I am also going to vote for cloture
because of what this energy bill does
not include.
Most importantly to me, this legisla-
tion does not include language which
would open up the Arctic National
Wildlife Refuge to oil and gas drilling.
We fought a hard battle over whether
the oil possibly under the Nation's
premier wildlife refuge was needed to
help ease our dependency on foreign
energy supplies. I believe we made a
sound decision that whatever oil
might be there would not be enough
to reverse our trend toward dependen-
cy on foreign oil. We decided that we
needed to look elsewhere - and we did
- toward energy efficiency and new
technologies. The Congress wisely
decided not to spoil the last remaining
arctic and subarctic ecosystem of its
kind in the world.
There are, however, several provi-
sions of the legislation which concern
me, and I want to note my reserva-
tions.
First, I share the concerns of my
colleagues and friends, Senators Bry-
an and Raid regarding the Yucca
Mountain provisions. My concerns are
both procedural and substantive.
These provisions were not contained
in either the House or Senate bills
and there have been no hearingi on
the provisions. We do not know the
views of the scientific community or
other experts on the Yucca Mountain
provisions. The failure to hold hear-
ings is particularly meaningful be-
cause the legislation takes a new ap-
proach to setting standards: The Na-
tional Academy of Sciences is delegat-
ed the authority to make findings and
recommendations to EPA and NRC
regarding standards for the protection
of public health and safety. The legis-
lation also sets criteria for the setting
of standards which are a departure
from current law. If these provisions
had come before the Congress in a
separate bill without the Environment
and Public Works Committee holding
a hearing, I would not have supported
them. But they are here attached to
an energy bill which I have worked
on, been privileged to contribute to,
and feel represents, on balance, a
major accomplishments of this 102d
Congress.
Second, I have concerns about the
ramifications of the Coal Industry
Retiree Health Care Act. While the
goal of this provision, ensuring that
retired mine workers receive the
health care benefits they
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undoubtedly important, I am con-
cerned that the provision will severely
and unnecessarily harm a number of
coal companies and their employees.
As I indicated when I spoke on the
Senate floor on this issue in July, I
remain concerned about the ramifica-
tions for those companies that previ-
ously were signatories to a
BCOA-UMWA agreement and now
have separate agreements with the
UMWA. In the case of the Pittston
Co., headquartered in the State of
Connecticut, they had negotiated a
separate agreement with the UMWA
which included a provision covering
payments for retirees. The language
that has been included in the energy
bill abrogates that negotiated collec-
tive bargaining agreement, the result
of a painful 14-month long strike. I
do not think that Congress should be
in the business of abrogating collective
bargaining agreements, except in the
rarest of circumstances. Congressio-
nal interference in the collective bar-
gaining process, working to retroac-
tively alter the terms of contract,
could have troubling long-term reper-
cussions. If both sides believe there is
always the option to turn to the Con-
gress to alter a contract, what incen-
tive is there to negotiate in good
faith?
I am also concerned that this provi-
sion will pose serious economic diffi-
culties for those companies which
export most of their coal. These com-
panies cannot pass these additional
costs through on the international
market and continue to compete,
while those coal companies that sell to
domestic utility companies have con-
tracts which allow them to pass
through Government-mandated costs
to consumers. Last year, Pittston
exported approximately 70 percent of
the coal it mined. These exports are
critically important to our country's
economic strength, particularly at a
time when we should be bolstering,
not undermining, our companies'
capacity to do business abroad.
I hoped that there would be an
opportunity in conference to amend
this proposal to include an export
credit for those payments mandated
by the provision, which would not
have impeded the goal of caring for
the retired mine workers. Unfortu-
nately, the bill as reported out of con-
ference does not contain an export
credit. As noted above, it is difficult
for companies to compete on the in-
ternational market if they are bur-
dened by excessive Government fees
or taxes. If these companies cannot
continue to export coal it is their em-
ployees who will suffer, as well as the
rail and port employees who currently
move this coal around the United
States and overseas.
I congratulate Senators Ford,
Rockefeller, and Byrd for their tireless
efforts to reach a compromise to en-
sure that innocent retirees are pro-
tected. I certainly support their goal.
I do hope, however, that early next
year we will make an equally strong
effort to ensure that the funding
mechanism devised for the program is
equitable and will not result in compa-
nies being driven out of the export
market and perhaps out of business.
Third, I supported on the Senate
floor a different approach to nuclear
licensing which involved more public
participation.
Now, Mr. President, let me now
turn back to some of the key provi-
sions of the bill which I strongly sup-
port.
First, I am especially pleased about
the provision in this bill which estab-
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toshes a system for corporations to
register current emissions of green-
house gases and allows them to record
reductions in greenhouse gases for
inclusion in a national data base.
This provision will allow Government
to recognize the achievements of
American businesses who are taking
steps to reduce the emission of green-
house gases. Major utilities, natural
gas producers, appliance manufactur-
ers, forest companies, and others have
taken voluntary steps to stop the
growth of greenhouse gas emissions.
Under this provision, these companies
can request the Federal Government
to approve their reductions for inclu-
sion in the greenhouse data base.
This provision was drawn from S.
1605 of the House bill, proposed by
Congressmen Cooper and Synar, and
it is derived from the Carbon Dioxide
Offsets Efficiency Act, which Con-
gressmen Cooper and Synar intro-
duced in the House, and which I in-
troduced with Senator Chafee in the
Senate. I congratulate Congressmen
Cooper and Synar and their staff for
outstanding work in building a coali-
tion of support from both the environ-
mental and industrial community. I
also extend my appreciation to Sena-
tors Johnston and Wirth and their
staff, particularly Leslie Black Cordes
and David Harwood, and to the Envi-
ronmental Defense Fund for its help
in developing and advancing this pro-
posal. I was pleased to join them in
playing a role as an advocate of this
provision.
This is a relatively simple proposi-
tion. But it's an example of how envi-
ronmental legislation is good for both
the environment and American busi-
nesses. As as editorial in The New
Republic' states: "This measure could
allow the United States to meet Rio'a
first-round greenhouse goals more
quickly than first thought - and with
scant dislocation.' Let me give some
examples of how the provision could
benefit American industry.
Last spring, Mayor Bradley of Los
Angeles announced that the Los An-
geles Department of Water Power and
the Southern California Edison Co.
had pledged to reduce carbon dioxide
emissions by 20 percent by the year
2010 with at least half of those reduc-
tions to be achieved by the year 2000.
The program will actually reduce
carbon dioxide emissions by more than
40 percent when compared with pro-
jected levels. The chairman of South-
ern California Edison stated in mak-
ing this commitment:
Taking prudent, reasonable economic stops to
reduce C02 •missions ar* warranted by currant
scientific understanding of the potential flbr
global warming. Ws believe our actions mak»
good environmental, scientific, and
Other companies, such as the AES
Corp. and New England Electric, have
made corporate commitments to offset
greenhouse gas emissions. Working
with the World Resources Institute
and other conservation groups, AES
has designed carbon sequestration
projects to offset its carbon released
from new power plants. New England
Electric has announced a plan to low-
er or offset its air emissions by 46
percent by the year 2000, including a
net reduction of approximately 3 mil-
lion tons of carbon dioxide.
Under S. 1605 of this energy bill,
companies engaged in these voluntary
activities will be able to demonstrate
that the Federal Government should
approve their reductions for inclusion
in the data base.
I believe this provision removes a
disincentive facing U.S. firms seeking
to reduce voluntarily their greenhouse
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gas emissions. Without this provision,
those firms will not have an official
data base which can be used by these
firms to demonstrate achieved reduc-
tions of greenhouse gases. The simple
accounting mechanism removes this
disincentive by recognizing positive
steps to reduce greenhouse gas emis-
sions.
The provision also preserves Ameri-
can competitiveness as the United
States seeks to meet its international
obligations under the Rio agreement
and potential future agreements.
Historically, the United States has
struggled to demonstrate that past
achievements deserve credit as inter-
national emissions levels are negotiat-
ed. With this section, our negotiators
will be able to demonstrate conclusive-
ly the real reductions by' U.S. firms.
The conferees streamlined some of
the details of the program, giving
more discretion to the Administration
in implementation. Proper implemen-
tation is critical. Since the United
States has committed in the Rio con-
vention to report our actions for inter-
national review, I am confident that
the agencies will implement these
programs appropriately.
I am also pleased that the public
will be given a full opportunity to
participate in this new program.
Clearly, the value of this program for
many firms is the recognition for
making real, bona fide reductions in
greenhouse gases. Public input in the
development of guidelines and in the
review of reduction claims lends sub-
stantial credibility to the reduction
claims and consequently, adds to the
value of a firm's participation. Of
course, I recognize and agree with the
Conference Committee's interest in
protecting vital trade secret informa-
tion from public disclosure. However,
it is clear that this provision affords
the public an opportunity to review
emission reduction claims within these
understandable trade secret con-
straints.
Second, this legislation takes large
leaps forward in the field of energy
conservation in many sectors, includ-
ing the Federal Government,
commercial and industrial equipment,
buildings and utilities. In the letter to
Senator Johnston mentioned above,
James Wolf, executive director of the
Alliance to Save Energy, further stat-
ed:
The Alliance to Save Energy strongly supports
passage of H.R. 776, the Energy Policy Act of
1992. The bill contains many significant provi-
sions that promote energy efficiency, ranging
from efficiency standards on products, to im-
proved building codes, to energy efficiency mort-
gage programs. These provisions will improve
the environment, make bousing more affordable,
and enhance our competitiveness. The tax sec-
tion or the bill contains important provisions that
will encourage the use of renewable and efficien-
cy resources.
One important omission in the ener-
gy efficiency area is auto fuel economy
standards and I hope we will pass
legislation in that area next Congress.
I would like to note particularly the
provisions on Federal Government
energy conservation drawn in part
from S. 417, legislation I introduced at
the beginning of the Congress requir-
ing the implementation of energy
conservation measures with payback
periods of 10 years or less.
The Congressional Office of Tech-
nology Assessment estimates that the
Federal Government spent nearly $4
billion in fiscal year 1989 for energy in
Federal facilities. OTA further esti-
mates that commercially available,
cost-effective measures including high
efficiency lighting and carefully oper-
ating heating; ventilating; and
airconditioning systems could save 25
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percent of that cost without any sacri-
fice in comfort or productivity.
Yet our own Federal Government
has failed to implement conservation
measures in its facilities that would
ultimately save the taxpayers billions
of dollars. There is really no excuse
for that. OTA points out that ineffi-
cient and costly lighting is still com-
mon throughout the millions of
square feet of office space owned or
leased by the Federal Government
and its contractors. The Department
of Energy has admitted that just re-
ducing Federal lighting energy needs
by 25 percent would save taxpayers up
to $930 million per year.
The legislation also requires the
Secretary of Energy to promulgate
regulations for the use of energy per-
formance contracts with which the
Federal Government can tap private
sector funding for Federal Govern-
ment energy efficiency improvement.
I included similar provisions in S. 417.
For the past 15 years, State and local
governments have been retrofitting
government buildings with energy
conservation improvements without
any capital investment. Our friends at
the State and local government levels
have been taking advantage of benefi-
cial public-private partnerships.
These arrangements can mean that a
private energy company can come in
and make a contract with a Federal
agency to install and pay for energy
conservation measures. The Federal
agency would not be required to make
any expenditure and the amount the
Federal Government has to pay for
electricity would be immediately re-
duced because of the energy conserva-
tion measures. Private companies can
recoup their investment from energy
savings resulting from the energy
improvements.
The provisions on Federal Govern-
ment energy conservation are as dose
to a win/win situation as I can imag-
ine and should go a long way toward
ensuring that the Federal Govern-
ment is a model energy consumer. We
should set an example in energy effi-
ciency for the rest of the country to
take note and follow. I want to com-
mend Senators Johnston and Wirth
and their staff, Alan Stayman and
David Harwood, for their outstanding
work in putting together this title. I
would also like to extend my congrat-
ulations to the Alliance to Save Ener-
gy and the American Council for an
Energy Efficient Economy for success-
fully working with industry to reach
agreement in so many areas.
Third, I strongly endorse the provi-
sions in the legislation which will
improve the hydroelectric regulatory
process, specifically those which recog-
nize the importance of the State's role
in balancing the protection of river
and parkland resources with the need
for energy. These provisions are par-
ticularly important to the State of
Connecticut. I'm pleased that FERC
will now be required to give extra
weight during the hearing process to
the decisions States have already
made concerning protection of rivers
and parks.
Finally, other provisions in the leg-
islation, including those ensuring:
First, States are not restricted from
regulating the disposal or incineration
of radioactive waste regardless of the
actions of the Nuclear Regulatory
Commission; second, strengthened
protection for whistleblowers at feder-
ally licensed facilities; and third, tax
exclusions for utility conservation
rebates, are also important to my
constituents.
They say that politics is the art of
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compromise, and the same could be
said of this bill. While I have objec-
tions to certain provisions in this bill,
which I have addressed here, on the
whole, I think this bill is made of
sound measures which will work to
enhance our Nation's energy policy
enormously and I congratulate all
those who labored to bring it forward.
Mr. RIEGLE. Mr. President, I rise
in support of the Comprehensive Na-
tional Energy Policy Act because of
the provisions contained in title VII of
this Act. Title VII contains significant
amendments to the Public Utility
Holding Company Act and amends the
Federal Power Act to broaden access
to the electric transmission facilities
in this country. It is important to
note that PUHCA is a securities stat-
ute under the jurisdiction of the
Banking Committee, which I chair. I
have spoken on this legislation previ-
ously and will not repeat all of my
remarks today. There are a few
points that I do want to make.
Title 7 is intended to accomplish a
restructuring of the utility industry to
promote greater competition for the
benefit of energy customers. By keep-
ing the energy market competitive,
the United States can maintain and
improve its place in the global econo-
my by making low cost reliable electric
power available to industry. Residen-
tial consumers also benefit by ensur-
ing low cost reliable power - electricity
is one cost families cannot avoid. We
must take steps to ensure that the
necessities of life are affordable for
U.S. families. Title m accomplishes
these goals by simultaneously easing
the regulatory burden on electric gen-
erators and improving access by all
utilities to the country's electric
transmission grid.
There are international implications
to the bill before us today. New sec-
tion 33 of PUHCA will allow U.S.
companies, utilities and nonutilities,
to enter the utility business - that is
generation, transmission, and distri-
bution - outside the United States is
without complying with the provisions
of PUHCA. I believe this provision will
allow the United States to complete
globally in the utility area - an indus-
try that the United States is consid-
ered preeminent. There are also indi-
cations that U.S. companies - and U.S.
labor - to produce the massive materi-
als needed for energy generation,
transmission, and distribution. I sup-
port this provision as a means of im-
proving U.S. international competi-
tiveness and producing more jobs in
the United States.
I worked hard with my friend, the
chairman of the Energy Committee, to
ensure that this amendment con-
tained strict consumer protection
provisions so that ratepayers of a
domestic utility would not bear the
risk of a foreign investment by the
utility company serving that ratepay-
er. I think that we have achieved this
goal. Section 3d contains stringent
firewalls that prevent a public utility
from using its assets or resources for
the benefit of an affiliated foreign
utility company. In some instances, a
subsidiary of a public utility is also
prohibited from assisting an affiliated
public utility.
Both the State public service com-
missions and the Federal Government
have a role in the regulation and over-
sight of investments in foreign utility
companies. Section 33 contains a
careful balance between State and
Federal regulation, and appropriate
regulatory structures for registered
holding companies and exempt hold-
ing companies.
84-335 O - QA - 9?
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I want to say a word about State
regulation. Holding companies that
are exempt from PUHCA are prohibit-
ed from becoming affiliated with a
foreign utility company unless that
appropriate State commissions certify
to the SEC that the State commission
'has the authority and resources to
protect ratepayers subject to its juris-
diction and that it intends to exercise
its authority.' I hope and expect that
State commissions will carefully ana-
lyze their statutory authority and
resources before making such a certifi-
cation. Domestic ratepayers are rely-
ing on these State regulators to pro-
tect the ratepayer from risks that may
be associated with foreign invest-
ments. Further, if the State's juris-
diction is changed, or there is a
change in circumstances such that the
State commission no longer has the
resources to support the certification,
the certification may be withdrawn.
Having said this, however, the State
should not use their certification au-
thority for purposes outside the scope
of the statutory language. A State
should not refuse to submit a certifi-
cation or withdraw a certification
already filed to gain leverage over a
utility on issues entirely unrelated to
issues connected with investments in
foreign utility companies. Further,
such certification goes to the State's
jurisdiction and intention to exercise
its jurisdiction - it is not a
case-by-case certification required for
specific transactions but rather a
certification applicable to all utilities
under that State's jurisdiction.
Similarly, under section 33, the
Securities and Exchange Commission
is directed to promulgate rules or
regulations regarding registered hold-
ing companies' acquisitions of inter-
ests in foreign utility companies.
These regulations must provide for
the protection of the customers of a
utility company associated with a
foreign utility company as well as the
maintenance of the financial integrity
of the registered holding company
system. These are responsibilities
that the SEC is well suited to per-
form, especially in light of its investor
or protection responsibilities in the
financial system. If the SEC requires
additional resources to fulfill these
obligations, I know they will make the
appropriate requests. As chairman of
the Banking Committee, I will contin-
ue to work with the SEC to ensure
that the Commission effectively dis-
charges its responsibilities,
I want to take this opportunity to
clear up any ambiguity about the
timing of registered holding company
investments in foreign utility compa-
nies. Subsection (cXD makes dear
that a registered holding company
may invest in foreign utility compa-
nies 'as of the date of enactment of
this section.' Clearly, the SEC will not
have promulgated its rules or regula-
tions about such investments immedi-
ately upon enactment of this section.
Thus, there will be a time period dur-
ing which registered holding compa-
nies may invest in foreign utility com-
panies in the absence of SEC rules or
regulations. I note, however, that
even during the time period between
the date of enactment and the issu-
ance of SEC rules or regulations, reg-
istered holding company financing is
fully regulated under subsection (cX2)
and the consumer protection provi-
sions of subsections (f) and (g) ftiQy
apply.
The conferees decided to allow the
existence of this regulatory gap be-
cause there are immediate, and fleet-
ing, market opportunities for UA
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companies. Around the world, coun-
tries are privatizing and upgrading
their energy networks, often seeking
bids from U.S. companies to build and
maintain these systems. We do not
want to impose Government barriers
to these historic opportunities.
Nonetheless, it is expected - and
Congress will demand accountability -
that the registered holding companies,
which are extensively regulated on
such matters as the issuance of securi-
ties, will use this leeway carefully and
responsibly. Further, I anticipate that
the SEC will publish temporary or
proposed rules or regulation which,
though not binding, would be followed
by the registered holding companies.
I urge the SEC to move as quickly as
possible on this matter.
While section 33 is important, we
must remember that international
activities by utilities is permitted un-
der current law. Specifically, under
current law, the Securities and Ex-
change Commission has authority to
permit, on a case-by-case, utility func-
tions outside the United States. Fur-
ther, new section 32 of PUHCA allows
exempt wholesale generators located
outside the United States to engage in
both wholesale and retail generation.
The provisions of section 33 supple-
ment these foreign options for utility
operations and do not in any way
limit the ability to pursue the SEC
approval under current law or the
EWG course. We must remember
that the purpose of section 33 is to
facilitate foreign investment, not bur-
den it. In order to enhance our com-
petitive posture in the worldwide en-
ergy market, persons proposing to
invest in foreign jurisdictions may rely
on any lawful exemption, as subsec-
tion (d)(1) makes clear.
There has been some discussion
regarding the meaning of section
32(h)(6). The chairman of the Energy
Committee has indicated that under
section 32(h)(6) the SEC may, prior to
the promulgation of final rules, issue
proposed or temporary rules, and
registered holding companies may
operate pursuant to those proposed or
temporary rules until final rules are
effective. The SEC and affected per-
sons may continue to rely upon and
proceed on the basis of such tempo-
rary or proposed rules if the promul-
gation of final rules is delayed beyond
the 6-month deadline contained in
section 32(h)(6). As chairman of the
Banking Committee, which has juris-
diction over the Public Utility Holding
Company Act, I concur with this in-
terpretation.
In closing, I want to commend the
senior Senator from Louisiana for his
leadership on this issue. Over the last
2 years, there have been times where
he and I disagreed on fundamental
aspects of PUHCA reform, such as the
need for transmission access and
strong provisions to prevent
self-dealing and cross-subsidization
between a utility and an affiliated
EWG. Yet, we have always worked
together, found our common ground
and achieved policy results that are in
the broad public interest. I would be
remiss if I did not single out William
Conway of the Energy Committee
staff for his dedication and intelli-
gence. Without Bill's efforts, we
would not be here today. Mr. Chair-
man, he is a credit to you and the
Energy Committee. With that, I offer
my congratulations and my support
for this legislation.
(At the request of Mr. Dole, the
following statement was ordered to be
printed in the Record:)
Mr. MURKOWSKI. Mr. President,
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today we will vote to invoke cloture on
the National Energy Policy Act of
1992. I do not believe the legislation
before this body represents a balanced
approach to a national energy strategy
and therefore I cannot support the
motion to invoke cloture.
This legislation does not offer any
major incentives for the domestic oil
and gas industry, an industry strug-
gling for survival in America.
This legislation does not include
language that would authorize envi-
ronmentally sound exploration and
development on the coastal plain of
the Arctic National Wildlife Refuge.
During the conference negotiations
of the so-called national energy strate-
gy almost all of the provisions impor-
tant to Alaskans were stripped from
the bill.
Cancellation and buyback of North
Aleutian Basin oil and gas leases was
passed out of the Senate but stripped
from the bill before us.
Two important ANWR/industry
provisions to study the economic im-
pact of opening the ANWR coastal
plain to oil and gas exploration and
development were passed out of the
Senate but stripped from the bill.
Funding for Arctic research was
passed out of the House but stripped
from the bill.
A provision to prevent the TAPAA
fund from being the exclusive remedy
for claims arising out of the Exxon
Valdez oilspill was passed out of the
House but stripped from the bill.
A provision to make Alaska OCS
subject to ANILCA 810 subsistence
review was passed out of the House
but stripped from the bill.
A provision to allow subsistence
claims against the TAPAA fund was
passed out of the House but stripped
from the bill.
Revenue sharing for State and local
governments from OCS revenue shar-
ing was passed out of the House and
Senate but stripped from the bilL
And $50 million in Exxon Valdex
settlement funds to be directed for
land acquisition in Prince William
Sound was passed out of the House
but stripped from the bill.
The energy bill conference was very
frustrating since the Alaska delegation
came so fax and then could not roach
agreement with the conference leader-
ship on the many issues of importance
to Alaskans.
This energy bill fails Alaskans on
too many critical issues and I cannot
support it.
The major provisions have been
stripped. There is no Bristol Bay
buyback, there is no protection for the
rights of the fisherman and subsis-
tence of Prince William Sound, and
there is no subsistence review of the
OCS. This so-called energy bill belong
to the special interest of the lower 48.
The facts are on the table.
I am deeply disappointed with the
results of the energy bill conference.
The House and Senate Democratic
leadership's failure to address the
rights of Alaska fishermen and subsis-
tence users, and the failure of the
conferees to accept legislation to pro-
tect the future of Bristol Bay leaves
me with only one option.
I did not sign the conference report
on the National Energy Policy Act
and I will not support this legislation
on the Senate floor.
Mr. STEVENS. Mr. President, the
Senate version of the national energy
bill contained three site specific ex-
emptions for three small hydroelectric
projects from jurisdiction of the Fed-
eral Energy Regulatory <
Alaska.
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These FERC exemptions were
adopted by the Senate based on testi-
mony from the Department and
FERC that the purpose of FERC juris-
diction is to ensure that projects
which have an effect on interstate
commerce are regulated and integrat-
ed into interstate systems of power
distributions. Furthermore, the De-
partment of Energy and FERC testi-
fied in favor of a complete exemption
from FERC jurisdiction for any pro-
ject which generates power of 5
megawatts or less. Based on that
testimony, the Senate adopted these
three exemptions for the Alaska pro-
jects at the request of Senator
Murkowski.
In conference, a compromise provi-
sion, section 2407, was adopted that
retained the FERC jurisdiction, but
granted FERC authority to exempt
these three projects. This exemption
authority requires FERC to act within
6 months on an application for exemp-
tion. The application must be for a
project which generates no more than
5 megawatts of installed capacity and
may include terms and conditions
which FERC finds necessary after
consultation with specifically named
fish and wildlife management agen-
cies.
Mr. President, I want to personally
thank the distinguished chairman and
ranking member of the Senate and
House Energy Committees. It was
with their help that this compromise
provision was adopted. They under-
stood the special nature of these three
projects and worked with us to come
up with this solution. This provision
will ensure that these three projects
will receive the expedited consider-
ation they deserve.
The project in Juneau with prelimi-
nary permit No. 10681-000 has an
application for ancillary hydroelectric
facilities to be constructed with a dam
which will be built for another pur-
pose, the creation of a tailingB dam
pond. The actual impoundment will
be built with or without the hydro
facilities. That impoundment will be
approved as part of the ongoing
NEPA EIS process which governs the
opening of a mine at Juneau known
as the Alaska- Juneau mine. The EIS
for mine construction including the
dam itself has been prepared by BLM.
The FERC law and procedure pre-
vented the consolidation of the EIS
and a FERC licensing procedure - in
effect requiring a second EIS for the
hydro license even where the actual
facilities are very minor compared to
the dam's actual construction. This
exemption application process will
prevent a second multiyear permitting
process conducted by FERC particu-
larly since all of the same resource
and fish and wildlife agencies are
consulting agencies as part of the
mine and dam construction EIS.
The other two projects are less than
1 megawatt plants - one to provide
electrical power to three remote Na-
tive villages of niiamna, Newhalen,
and Nondalton and the other to pro-
vide electrical power to the private
nonprofit Sheldon Jackson College
from an existing dam near Sitka.
The one thing all three of these
hydroelectric projects have in common
is that they will all replace the use of
diesel fuel for electrical power genera-
tion. The only result of the failure to
grant the exemptions will be the use
of fossil fuels in an environment in
which a dam has already been con-
structed or where only a small
amount of water is being diverted.
Mr. HATFIELD. Mr. President,
many times in the last 20 years, the
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U.S. Congress has been called to ac-
tion by the need to reduce America's
dependence on fossil fuels. Like the
energy crises of the 1970's, the Per-
sian Gulf war of 1990 and 1991 cata-
pulted the need for energy security
back to the forefront of public con-
cern. This interest, however, has been
short-lived. No visible energy crisis is
at hand. No lines are forming at gas
pumps across our Nation. In fact, gas
prices remain at just a little over $1
per gallon - a price which is virtually
unchanged since the mid-1980's.
So what's all the fuss about? Why is
a national energy strategy so impor-
tant? gas is cheap and abundant, and
concern about energy remain buried
at the bottom of public opinion polls
across the Nation. Education, health
care, child care, and crime are the
current priorities of people's lives.
And while all of these areas are immi-
nently significant in the lives of Amer-
icans, a future crisis over our Nation's
lack of a diversified energy infrastruc-
ture still looms large, even in the
shadow of a war which was fought
and won for access to oil.
In response to the impending threat
of a new energy crisis, the Congress
and the Bush administration em-
barked on a journey to boldly move
America's energy policies forward. In
1989, Secretary of Energy Jim
Watkins took the helm at the Depart-
ment of Energy with the promise to
shake things up and streamline the
bureaucracy. Shortly after accepting
his new post, Admiral Watkins and his
staiFheld hearings all across the coun-
try with the goal of developing a Na-
tional Energy Strategy. After 2 years
of research and development this
strategy was sent to Congress and the
public.
Even before the admiral released
his plan, however, my esteemed col-
leagues from the Senate Committee
on Energy and Natural Resources,
Bennett Johnston and Malcolm Wal-
lop, were developing a national energy
plan of their own. As the committee
considered the Johnston/ Wallop pack*
ags in early 1991, a unique partner-
ship formed with the administration
and a highly credible energy plan was
eventually developed by the Senate
and the House of Representative*.
Our Nation cannot afford to allow
this energy plan to slip through the
cracks during the last days of the
102d Congress. Certainly, every Sena-
tor cannot support each and every
title in this bill. I, too, have a number
of concerns regarding the bill, includ-
ing its streamlined nuclear licensing
provisions and its lack of increased
corporate average fuel economy stan-
dards. Nonetheless, I will support the
bill because it is good for our Nation's
energy security. Its implementation
will help reduce our Nation's depen-
dence on foreign sources of oil by en-
couraging investment in clean, effi-
cient, renewable energy technologies,
expanding energy efficiency and con-
servation programs, and pushing for
the diversification of domestic energy
use and domestic energy exploration.
The national energy strategy bill
conference report also contains several
provisions specifically designed to
improve energy efficiency and water
conservation in the Pacific Northwest.
One such provision permits the
Bonneville Power Administration to
enter into agreements with the Secre-
tary of the Interior and the Secretaiy
of the Army to directly fund energy
efficiency improvements and operation
and maintenance costs at «-*•»*«»§
Columbia River hydrofarilrtaea this
provision will benefit the Pacific
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Northwest in a number of ways.
First, it will help increase the reliabili-
ty of existing Corps of Engineers and
Bureau of Reclamation hydroprojects.
Second, it will allow BPA to produce
more energy with less water, thus
leaving more water in rivers and
streams for fish. And finally, the
provision will save the Pacific North-
west ratepayers $400 million in energy
costs over time.
America's future depends on the
wise stewardship of our domestic en-
ergy resources and our unwavering
commitment to a balanced energy
plan. The U.S. Congress has before it
the opportunity to change the course
of American energy use from a history
of consumption to one which balances
conservation, energy efficiency, and
renewable energy development with
the wise use of domestic, energy re-
sources. I am confident Congress will
meet this challenge today and in the
future.
Again, I thank the chairman and
ranking member of the Energy Com-
mittee and look forward to passage of
the conference report on H.R. 776.
Mr. BUMPERS. Mr. President, it is
with some reservations that I rise
today in support of the Energy Policy
Act. Approximately 1 1/2 years ago
when we started the process in the
Senate Energy Committee of putting
together an energy bill, I was hopeful
that Congress would finally enact a
comprehensive national energy policy
that would, first, significantly reduce
our Nation's reliance on foreign sourc-
es of oil, second, promote energy con-
servation and the development of
renewable, environmentally sound,
sources of energy, and third, produce
real competition in our energy mar-
kets for the benefit of consumers.
While the bill we have before us today
is certainly a step in the right direc-
tion, I am disappointed that we were
unable to do more to resolve some of
our Nation's energy problems.
Mr. President, I would like to take
this opportunity to comment on sever-
al provisions of the bill:
ALTERNATIVE FUELS
The transportation sector is the
biggest source of oil consumption in
the United States. One of the most
promising titles of the bill promotes
the use of alternative fuel vehicles.
We have a chance to make a real dent
in our reliance on foreign oil through
the use of alternative fuels such as
natural gas, ethanol, methanol, elec-
tricity, and propane. The use of these
fuels would have the benefit of not
only reducing oil consumption, but
also would reduce carbon dioxide
emissions and global warming, while I
am disappointed that more of the
Senate bill's - more comprehensive -
alternative fuel title could not be re-
tained in conference, I am hopeful
that the bill's provisions will spur the
production and use of alternative fuel
vehicles.
ENERGY EFFICIENCY AND RENEWABLE
RESOURCES
Perhaps the greatest contribution
which Congress can make toward our
national energy security is the promo-
tion of energy conservation. The po-
tential benefits, in terms of energy
savings and the reduction in the emis-
sion of pollutants related to the com-
bustion of fossil fuels, is enormous.
The energy bill taps into a small, but
significant, part of this potential
through the establishment of certain
energy efficiency standards for the
Federal Government, office buildings,
and homes. I hope that we can build
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on this in the future to meet our en-
ergy efficiency potential.
The use of renewable resources for
the generation of electricity has simi-
lar benefits. Currently, less than 10
percent of the electricity produced in
the United States comes from renew-
able resources. I believe that we can,
and, if we are serious about reducing
our reliance on foreign oil and fossil
fuels, must substantially increase this
percentage. The energy bill's produc-
tion incentives and research and de-
velopment provisions will certainly
lead us toward that direction.
ELECTRICITY
When Congress began consideration
of the energy bill, I had certain reser-
vations about amending the Public
Utility Holding Company Act
(PUHCA) to permit utility holding
companies to own exempt wholesale
generators (EWG's). However, as time
went on, I became convinced that, if
done correctly, the promotion of
EWG's could increase competition in
wholesale electric generation, thereby
reducing rates for consumers. Addi-
tionally, I came to believe that true
competition in electricity generation
could not occur if those generators
without transmission facilities did not
have the ability to transmit their
power where needed. On the whole, I
believe the energy bill creates the
potential for real competition which
will benefit ratepayers.
However, the ability of customers of
utility subsidiaries of holding compa-
nies registered under PUHCA to real-
ize these same benefits remains very
precarious. The 1988 U.S. Supreme
Court ruling in the Mississippi Power
& Light case made uncertain the abili-
ty of State regulatory commissions
with retail authority over subsidiaries
of registered holding companies to
oversee certain transactions between
holding company affiliates While the
so-called Pike County doctrine enables
State regulators to oversee utility
wholesale purchases, it is uncertain
whether similar authority applies to
State regulators of registered holding
company subsidiaries. I had hoped
that we would be able to resolve this
problem by authorizing State regula-
tors of registered holding company
utilities to oversee holding company
resource planning. However, the regis-
tered holding companies were able to
put a stop to this effort.
In addition, Mr. President, I want
to express my grave concerns about a
provision in the bill permitting utility
investments in foreign utility ven-
tures. A provision included at the
11th hour in the conference commit-
tee with very little debate, would
amend PUHCA to permit utilities and
utility holding companies to invest in
foreign utility companies. For utilities
and utility holding companies which
are not associated with a registered
holding company, each affected State
regulatory commission would have to
certify that it has the authority to
protect ratepayers from the adverse
impacts of these foreign investments
and that it intends to do so. However,
customers of registered holding com-
pany utilities would not be similarly
protected. Instead, these State com-
missions are permitted only to file
comments with the Securities and
Exchange Commission (SEC) which
must decide whether consumers will
be protected.
While allowing utility companies to
engage in foreign investments, with
the proper consumer protections,
might not be a bad idea, the process
with which this provision was indud-
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ed in the energy bill exemplifies why
the American people are so angry with
Congress. No hearings were ever held,
neither the House nor the Senate ever
debated, or voted, on the provision,
and the proponents of the provision
waited until the final day of the ener-
gy bill conference to reveal their in-
tentions. Mr. President, this is not a
minor change in the law. For 57
years, registered utility holding com-
panies were required to focus their
activities primarily on providing reli-
able and economic electric service to a
single region of the country. This
provision permits holding companies
to put their ratepayers at significant
risk through their participation in
foreign investments. Most notably,
ratepayers in the 23 States where
registered holding companies operate,
including my State of Arkansas, have
been put in a perilous position. The
SEC, an agency which has continuous-
ly proven itself unwilling to protect
ratepayers has been made the sole
source of consumer protection. I in-
tend to introduce legislation next year
which will ensure that ratepayers are
adequately protected from utility for-
eign investments.
NATIONAL ENERGY STRATEGY
Mr. DOLE. Mr. President, I am
pleased we have reached agreement
on this important domestic initiative
- the National Energy Policy Act.
Many of us who were here in the Sen-
ate remember the oil embargoes of the
1970*8 and the catastrophic impact
they had on our economy. This legis-
lation will help move us in the right
direction - toward the goal of greater
emphasis on domestic energy sources.
It is critical we do everything we can
to protect and expand our domestic
petroleum industry - particularly
small stripper well producers who
have found themselves facing aban-
donment of their producing wells at
an alarming rate.
It is equally critical that we do all
we can to encourage and produce
domestic sources of alternative fuels
like ethanol, natural gas, and propane
to provide domestic substitutes for
imported fuels.
Mr. President, I believe several
provisions that I sponsored within this
legislation will contribute to our do-
mestic energy security.
My provision to give the President
the authority to acquire oil from do-
mestic stripper well properties for
storage in the strategic petroleum
reserve, if the President finds that
declines in the production of oil from
domestic resources pose a threat to
national energy security, is an impor-
tant step toward preserving this in-
creasingly abandoned domestic pro-
duction.
In Kansas, 5,000 producing stripper
well properties were abandoned in the
last 3 years - production that is lost
forever. About three of every four
producing wells nationally are stripper
wells; 55 million barrels of oil each
year is produced in Kansas from
45,000 stripper wells. We can no lon-
ger afford to ignore the importance of
this domestic resource.
Likewise, it is well known that bil-
lions of barrels of oil are locked in the
ground because they are either eco-
nomically or technologically unable to
be recovered.
My provision to establish a
midcontinent energy research center
- envisioned for the University of Kan-
sas Energy Research Center - will aid
in the development of petroleum re-
covery techniques and help reduce our
foreign dependence on oil Programs
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that the center will focus on will in-
clude reservoir management, ad-
vanced recovery methods and develop-
ment of new technologies. It is the
goal of the center to get this type of
technology and research support di-
rectly to the driller.
I am also pleased that the conferees
included my alternative fuels research
initiatives. Under the act, the Secre-
tary shall select certain commercial
application projects including ethanol
byproduct processes. It is important
that this type of research be carried
out so that the development of addi-
tional uses for ethanol and improved
techniques that broaden the market
for these domestically produced fuels
and byproducts further our goal of
energy self-sufficiency.
Mr. President, there is much we can
be proud of within the energy bill. Of
particular interest are the sweeping
changes that were adopted affecting
the electric utility industry. We are
entering a brave new world of new
competition that will be stimulated by
the provisions of this bill. This new
age of independent power producers
that will now be able to build, own,
and operate powerplants and sell elec-
tricity on a wholesale basis to utilities
and municipalities anywhere in the
United States, will certainly change
the electricity generation business in
the future.
I am confident that the conferees
took into account the competing inter-
ests and needs of various groups such
as municipal electric systems and
rural electric cooperatives to see that
they were adequately protected under
the newly emerging electricity title. I
know that in Kansas, much attention
was given to this title by our Kansas
electricity producers. I appreciate the
good faith effort by representatives of
Western Resources, Kansas City Pow-
er & Light, Sunflower Electric Coop-
eratives, Kansas Electric Cooperatives,
Kepco, Kansas Municipal Utilities,
Kansas Municipal Energy Agency,
Utilicorp and other producers to pro-
duce a dialog that I believe guided the
committee toward its final result.
I will continue to monitor this pro-
cess closely - particularly as FERC
implements the actions of Congress -
to see to it that these Kansas electric
producers are treated fairly in the
future.
Mr. President, it has been a long
process. I commend my colleagues on
the Energy Committee, particularly
Senator Johnston and Senator Wallop,
for the outstanding job they did with
this legislation.
The tax provisions of this confer-
ence agreement include employer
provided transportation benefits, in-
centives for dean fuel vehicles, credit
for electricity produced from renew-
able resources, the repeal of the alter*
nate minimum tax for depletion and
intangible drilling costs for indepen-
dent producers and royalty owners, a
permanent investment credit for so-
lar, geothermal, and ocean property,
proportionality for alcohol fuels and
the tax exempt financing for environ-
mental enhancements of Hydroelectric
generating facilities.
This list reflects the sound, bal-
anced approach taken by the Senate
during consideration of the energy
bill, as was indicated by the 93-to-3
vote for that bill. The adoption of this
conference report will mean an energy
policy balanced between all fuel eourc-
es whether renewable or not, and
balanced between environmental pro*
tection and national energy security.
I would like to say a few words
about the alternate minimum tax
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provision for independent producers.
The oil and gas extraction industry
has the highest effective tax rate of
any industry in the country - over 70
percent. This rate, coupled with the
fact that oil and gas extraction is a
highly capital intensive and risky
venture has led to the devastation of
that industry, increased imports and
the resulting increased trade deficit.
This provision is not only fair, it is
absolutely essential for economic as
well as energy policy.
Finally, the proportionality for etna-
nol provision is an effort to update
the Tax Code to reflect the changing
market mandated by Congress with
the adoption of the Clean Air Act
Amendments of 1990. When the ex-
emptions and credits for ethanol were
first enacted, no one thought the Con-
gress might some day write a prescrip-
tion for motor fuels. We did in 1990,
and this provision is what I would call
an almost technical change for etha-
nol due to changes mandated by the
Congress.
THE COAL INDUSTRY RETIREE HEALTH
ACT
Mr. ROCKFELLER. Mr. President,
the agreement is now honored - 44
years ago, John L. Lewis wired those
words to the coalfields of West Virgin-
ia, Kentucky, Alabama, Pennsylvania,
Ohio, and other States. With those
five words, Lewis brought to an end
the strike leading to implementation
of the coal miner health benefit and
pension funds. When the coal miner
health benefit legislation before the
Senate today is signed by the Presi-
dent of the United States, I will send
that same five-word message to the
coalfields - at long last, the agreement
will be honored.
This has been a long road, and we
have not reached the end of it. As
long as there are people in America
who are sick or injured and needing
care, our efforts must continue. But
we have reached a milestone.
Coal miners have been in the van-
guard of the fight for decent health
care because illness and injury have
been so endemic to coal mining. For
decades, the fight for good health care
has been central to labor relations in
the coal industry. The current health
program derives from the one estab-
lished when President Truman seized
the mines in a 1946 strike in which
health care was a central issue.
In the 1950*8, a great compact was
reached between labor and manage-
ment in the coal industry. A commit-
ment to provide health care and pen-
sion benefits was the keystone in the
arch of that understanding. In return
for health and pension security, labor
agreed to mechanization of the mines,
which led to elimination of 300,000
jobs in Appalachia alone. It is largely
the retirees of that vast industrial
restructuring whose health care is in
jeopardy today. Those coal miners
created the might of modern industri-
al America. They did not fail their
country. I am proud to say today that
their country will not fail them.
In the fall of 1989, health care was
again a central issue in a coal strike.
That led to my introduction of my
first bill to prevent collapse of the
trust funds that provide health care
for retired coal miners. Over the
years, the dwindling base of contribu-
tors resulting from bankruptcies and
the failure of some companies to keep
paying into the funds, along with
exploding health care inflation, put
the health trust funds in jeopardy.
Then Secretary of Labor Elizabeth
Dole appointed a mediator to assist in
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settlement of the strike. When the
settlement was reached, she an-
nounced appointment of a commission
to recommend a long-term solution to
the crisis of the health trust funds.
Secretary Dole explained that dur-
ing negotiation of the settlement of
the strike, which involved a single
company, 'it became clear to all par-
ties involved that the issue of health
care benefits for retirees affects the
entire industry.' 'A comprehensive,
industrywide solution is desperately
needed,' she said.
The Dole Commission submitted its
report in November 1990. The Com-
mission observed that health benefits
are an emotional subject in the coal
industry, not only because coal miners
have been promised and guaranteed
health care benefits for life, but also
because coal miners in their labor
contracts have traded lower pensions
over the years for better health care
benefits. The Commission said it
firmly believes that the retired miners
are entitled to the health care benefits
that were promised and guaranteed
them and that such commitments
must be honored.
The Dole Commission recommended
a legislative solution to the crisis in
the retired coal miner health trust
funds and proposed various options.
In a statement in the Congressional
Record of March 13, 1992, 1 and other
Senators supporting legislation ex-
plained at length why a legislative
solution is necessary. Briefly, collective
bargaining cannot work when compa-
nies are not around to bargain with,
because they are bankrupt or have
walked away from their responsibili-
ties, sometimes through legal loop-
holes created by a crazy quilt of court
decisions. Moreover, what many peo-
ple seem not to realize is that the
orphan retirees whose last employers
are gone face the prospect that when
the collective4>arguning agreement
expires ear|y next year, no one will be
responsible for their health care. The
shrinking funding base and spiraling
costs make the continuation of the old
program unworkable. The legislative
task has been to assign responsibility
for funding in the best way possible,
realizing that there is no perfect solu-
tion.
In the fall of 1991, after hearings on
the Dole Commission report, I intro-
duced legislation, S. 1969, based on
the Commission's recommendations,
A version of that legislation was
passed in March of this year as part of
a larger tax package which was vetoed
by the President. Although the veto
was based on various aspects of the
tax package, the administration did
oppose the approach Congress took on
the coal health problem. Subsequent-
ly, the administration joined in discus-
sions with me and other Senators and
we reached an accommodation reflect-
ed in the present approach. The
funding mechanism in this approach
is the one proposed by the arimintstra-
tion and on which the administration
insisted. The accommodation was
embodied in legislation that passed
the Senate as part of the omnibus
energy bill on July 29, 1992.
While the approach taken by this
measure is significantly different from
S. 1989, it is within the scope of the
basic alternatives recommended by
the Dole Commission. Instead of in-
cluding a broad industrywide tax, the
basic funding mechanism of this legis-
lation generally requires premium
payments from those for whom the
retirees worked. These are the re-
sponsible companies. Some interests
dtyected to the tax; others to the
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so-called reach-back approach of the
present legislation. Both approaches
are defensible and rational. The deci-
sion ultimately rested on the best
basis for consensus in the legislative
process.
Under both bills, companies with
retirees still in the existing health
funds would pay for their own retir-
ees. The key difference between the
two bills relates to the funding of
health benefits for the orphan retir-
ees. In general, under the current
program, these are the people whose
last employer is out of business. Un-
der the earlier bill, the tax would have
funded those benefits. Here, in gener-
al, the responsible coal operators and
related companies will fund the bene-
fits. The two existing health trust
funds will be folded into a new, com-
bined fund, in general for current
orphans and nonorphans of the exist-
ing funds. Additionally, a new 1992
fund will be required to provide for
certain other retirees, including those
who might be orphaned by future
bankruptcies or liquidations.
Even this brief narrative shows the
long history of the promise of decent
health care for retired coal miners
that we address today. But no short
narrative can do justice to a bargain
in which coal miners gave their lives
in return for decency. The bargain
goes beyond any labor contract. The
bargain goes even beyond the deal in
which the companies mechanized the
mines in return for benefits.
The real significance of the bargain
has to do with the kind of commit-
ment that our country makes to those
who have sacrificed for the good of
everyone. In 1947, John L. Lewis
explained it this way to a congressio-
nal committee.
If we must grind up human flash and bona in
tba industrial machina wa call modern Anurias,
than bafors God I assart that thosa who eonsuma
tha coal and you and I who benaflt from that
aarvios bacauae wa live in comfort, wa owe protec-
tion to those men first, and we owe security to
their families if they die.
Many of the retirees whose health
care is at stake today were born in the
early decades of this century. Their
active days in the mines were in the
1930's and 1940's and 1950's. They
remember the days of the pick and
shovel and dynamite, when cave ins
were not uncommon and methane
explosions often brought sudden disas-
ter. No wonder that health care be-
came the ultimate labor issue in the
coal industry.
The commitment to good health
care for retired coal miners has been
threatened. But in its time, the old
system represented a great achieve-
ment. We need to understand that
because today we need again the spirit
that gave rise to that achievement.
When they were created, the health
trust funds transformed health care
in the coalfields. The 1946 agreement
establishing the funds required a sur-
vey of medical conditions in the
coalfields and the retiree health pro-
gram set to work responding to condi-
tions the report found deplorable.
Among other things, the program es-
tablished hospitals and a rehabilita-
tion program that combed the
coalfields to identify the thousands of
miners who had been crippled, with
broken backs and severed limbs. At
rehabilitation centers, they received
the best treatment that modern medi-
cine could offer.
The program under the health fund
also made great strides for improve-
ment of overall medical care in coal
mining communities. For example, the
average age of a coal miner at death
in 1947 was 10 years less than the
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national average for males. In a few
yean, thet difference was erased. The
longevity of miners had increased fay a
remarkable 30 percent.
Three years ago, almost to the day,
I took the floor of the Senate to intro-
duce the first legislation on this issue.
Referring to the transformation of
health care in the coalfields, I said
that we had come too far, and the
road has been too long, for us to turn
our backs on past achievements. The
success for health care in the
coalfields was an achievement of
which all Americans can be proud. It
provides a record of decency and of
support for human dignity that is a
model for the industrial world.
And I can now say, with gratitude,
the Congress did not turn its back. It
has been a long and sometimes con-
tentious road to this moment. There
were strong differences among many
parties regarding the best solution to
this problem. No one, however, chal-
lenged the right of these retirees to
good health care. The issue was al-
ways the difficult one of how to pay
for it This could be expected to pro-
duce a classic legislative battle. But
in the ultimate accommodation that
saves health care for retired coal min-
ers and their widows and dependents,
we have not only a victory for the coal
miners, but also for the country.
The national significance of this
legislation can be seen in its impact on
health care delivery in many States.
The retired coal miners and their
widows live in virtually every State of
the Union. The trust funds contribute
millions of dollars to the economies of
many States. If allowed to continue
unchecked, the financial difficulties of
the trust funds could seriously erode
health care delivery in West Virginia
and the coal counties of States like
Alabama, Colorado, Illinois, Indiana,
Kentucky, Ohio, Pennsylvania, and
Virginia, and many others. And the
well-being of health care providers •
doctors, hospitals, and pharmacies,
dependent on payments from the
funds - could be badjy damaged.
Also of national significance is the
impact of this legislation on the stabil-
ity of the coal industry and our entire
economy. We cannot go backward on
decency in our industrial life. An
effort to turn the clock back on our
progress in industrial conditions
would be sadly misguided. Industrial
strength can onry rest on a foundation
of mutual respect and mutual sup-
port. Continuous industrial chaos and
recriminations are a recipe for indus-
trial decline. In the midst of the 1089
coal strike over health benefit cutoffs,
I said that such a cutoff viewed as a
tool of economic conflict had touched
off a firestorm, with the flames
threatening to engulf employers and
employees alike, threatening to de-
stroy the well-being of thousands and
the position of the U.S. coal industry
in global markets.
It was, in part, to avoid this kind of
industrial chaos that coal industry
labor relations were established 40
years ago on the rock of the UMWA
pension and health trust funds. If
that rock had been allowed to crum-
ble, the consequences would have been
felt far beyond the retired miners
whose health benefits were in jeopar-
dy. That thought has been ever pres-
ent in my efforts to bring this matter
to an amicable conclusion. I have
remained ever mindful of the expira-
tion of the industrywide collective
bargaining agreement early next year.
Tha grounds for this bill are solid.
After years of study and debate and
exploration of various alternatives to
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resolution of a contentious issue, Con-
gress and the administration have
concluded that action is necessary. It
is necessary in the name of decency
for the retirees and to avert disrup-
tion in the coalfields and the conse-
quent threat to commerce and the
national interest. Congress has con-
cluded that the health funds' ability
to continue to meet commitments to
retired miners is in serious jeopardy
and that a statutory funding obliga-
tion should be imposed.
Congress has long recognized the
importance of domestic coal produc-
tion to the national economy. Indeed,
the action taken in this bill to restruc-
ture the financing of coal retiree
health benefits follows years
of unparalleled governmental involve-
ment with the industry, including
involvement in the industry's retire-
ment benefit programs. The health
program was created originally in an
agreement between the Secretary of
the Interior and the UMWA during a
period when President Truman had
seized the mines. An early trustee of
the funds was the late distinguished
Republican leader, Senator Styles
Bridges of New Hampshire.
Over the years since the original
agreement, die Federal Government
continued to play a significant role in
regulating the coal industry and in
the provision of benefits to its retirees.
In fact, the trust funds that are the
subject of this bill have long been
governed by provisions in both the
Internal Revenue Code and the Em-
ployee Retirement Income Security
Act designed specifically for and gen-
erally applicable only to them. It is
important to emphasize, however,
that the relief crafted in the bill is
tailored narrowly to address the prob-
lem, imposing obligations on a speci-
fied group of businesses that
connected ultimately to the commit-
ment to provide health care. And the
bill offers protection to a specified
class of beneficiaries.
I have often observed that this
health care program arose out of a
period of conflict decades ago and that
we have passed through a contentious
legislative battle to reach the present
accommodation. But it is also impor-
tant to commend the labor and indus-
try statesmanship both then and now
that produced accommodation. The
press notices have often gone to those
who complained about the burdens of
providing benefits in an era of raging
health care inflation. But commenda-
tion should go to the many companies
that have met their commitments and
that have said they would willingly
meet their obligations under this legis-
lation.
Beyond the legal arguments about
past contracts and arcane points of
legislative drafting, as everyone who
has had anything to do with this prob-
lem ultimately comes to understand,
this is a moral issue. In its editorial
on the 1989 strike over health benefits
for coal miners, Business Week said
the company 'should stand by its
promises' and called that a matter of
moral obligation.
Through government and private
cooperation, four and a half decades
ago, America achieved a victory in
health care, in industrial statesman-
ship, in decency for hard-working
people, and in the mutual pledges that
form the foundation of our country.
Today we renew those mutual pledges.
We do not build without a foundation.
We build on the efforts of those who
have come before. As we survey the
landscape of America today, we see a
desperate need for renewal and reviv-
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al of private and public statesman-
ship. We see a need for the revival of
commitment to the strength of the
Nation and to decency for those who
have met their commitments and
brought abundance and comfort for
the rest of us.
Today, as the Senate approves this
legislation, we do so knowing that we
build on the struggle and efforts of
others. With this legislation, we also
renew and restore a commitment from
the past. Time and change threatened
that commitment, but the U.S. Senate
and the American people can be proud
that the threat did not prevail. Today
we can say of those on whose efforts
we build, what the words of an old
hymn say: 'What they dreamed be
ours to do, hope their hopes and seal
them true.'
In concluding, I wish to express my
gratitude to my distinguished senior
colleague from West Virginia, Senator
Byrd, whose assistance in this legisla-
tive effort was indispensable. I am
deeply grateful for his support and his
wise counsel. I also want to thank
Senator Ford for the tremendous
assistance he provided, without which
our success would have been impossi-
ble. And I thank Senator Wallop for
his cooperation, which was so impor-
tant in reaching a final accommoda-
tion, and I thank the many other
members of Congress who helped us.
And finally, I wish to thank the staff
of all of these members and the tech-
nical and drafting staff who worked
tirelessly to help pass this legislation
which will be so important to the
retirees, to the coal industry, and to
the Nation.
At this point, I would like to com-
ment for the record on a few technical
points. All references hereafter are to
the new sections added to the Internal
Revenue Code by the bill. The term
'signatory operator,' as defined in new
section 9701(cXU, includes a successor
in interest of such operator. Under
section 9703(b), the combined fund
shall enroll each beneficiary in a
health care services plan - whether or
not maintained by the combined fund
- which undertakes to provide benefits
on a prepaid risk basis. Under this
provision, the Fund will arrange for
services through means such as con-
tracts with health maintenance orga-
nizations, preferred provider arrange-
ments, and individual practitioners in
an effort to minimize the cost and
eliminate the risk to the fund, while
providing the coverage referred to in
the bill. The bill does not preclude
the fund from providing benefits
through contracts of insurance or by
direct payments for services, or
through its own entities, such as
health maintenance organizations or
preferred provider arrangements,
where the trustees determine that
such contracts or other arrangements
are either more advantageous or in
instances where it is not feasible to
provide benefits through other means.
For example, the fund is permitted to
continue providing benefits directly,
after the bill becomes effective, while
it is considering what is the best man-
ner to deliver services in the future.
The provisions requiring increased
premiums to cover shortfalls do not
require such increases if a shortfall
was caused by excessive expenditures
for health care services plans main-
tained by the combined fund. Instead,
the overall maximum limitation for
the following year will be reduced by
the amount such excessive expendi-
tures cause the combined fund's total
expenditures to exceed the maximum
limitation for the prior year. In the
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new section 9703(b) (2)(A)(ii), the
reference to aggregate payments is to
payments from premiums or from
amounts treated as increases under
subparagraph (C). In subparagraph
(CXi), amounts described under sec-
tion 9704(i) (lXDXii), would be treat-
ed the same way as transfers de-
scribed in section 9705.
In addition, no increase would be
made under subparagraph (C)(i) for
transfers or payments used for death
benefits. In section 9704(b)(2)(A)(i),
the aggregate amount of payments is
the aggregate amount of payments
made and to be made from the 1950
UMWA Benefit Plan and the 1974
UMWA benefit plan for health bene-
fits - less payments by the plans for
Federal program benefits but includ-
ing administrative costs - for the plan
year beginning July 1, 1991, for all
individuals covered under such plans
for such plan year. In section
9704(i)(l)(D)(ii), in the case of a 1988
agreement operator which made or is
making contributions under subpara-
graph (B), any remaining unpaid con-
tributions under subparagraph (B)
and the premium of such operator
under subsection (a) are what are
reduced. At various places in the bill,
such as in section 9711(b)(1) and sec-
tion 9712(b)(2), individuals must be
receiving benefits by certain dates or
must have retired by certain dates in
order to be entitled to benefits under
the bill. For purposes of these provi-
sions, an individual is considered to be
receiving benefits or to be retired if he
is fully eligible for and has applied for
benefits. An individual will not be
considered ineligible for benefits mere-
ly because he has yet been determined
to be eligible.
Additionally, an individual will be
considered to be receiving benefits or
to be retired as of a specified date if
he is receiving benefit prior to such
date, and such benefits are subse-
quently temporarily suspended. The
1992 plan and last signatory operators
subject to the bill's requirement relat-
ing to individual employer plans may
utilize certain managed care systems
and cost containment rules, but they
must be approved - and upon request
of an operator or a settlor of the 1992
plan, an existing or future system or
rule will be reconsidered - by a medi-
cal peor review panel. The require-
ment for initial approval does not
preclude the 1991 plan or a last signa-
tory operator from implementing - or
from continuing to maintain - rules
and programs that are permitted and
implemented under the 1988 NBCWA,
but any new managed care system
that would limit beneficiaries' access
or potentially affect quality of care
would require review by a panel.
In addition, any new cost contain-
ment rule not agreed to by the
UMWA would be subject to review by
a panel. In section 9712(b)(2)(B), the
determination is made without regard
to whether the last signatory operator
or any related person remains in busi-
ness. In section 9712(d), the reference
to 'eligible and potentially eligible
beneficiaries' means, with respect to
any 1988 last signatory operator, the
individuals receiving benefits from the
UMWA 1992 benefit plan who are
attributable to such operator, and the
individuals receiving benefits from an
individual employer plan maintained
by such operator who are entitled to
receive such benefits under section
9711(a) or (b). In section 9712(d)(3),
the payments continue to be made for
as long as the signatory operator - or
any related person - remains in busi-
ness. Benefits required to be provided
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under the chapter are to be provided
without regard to the continued exis-
tence of any coal wage agreement.
The bill provides that both the com-
bined fund and the 1992 Plan will be
fully exempt from all tax under the
Internal Revenue Code. In addition,
because the bill requires various pre-
miums and other payments to both
the combined fund and the 1992 plan,
all such premiums and payments are
deductible without limitation. As has
historically been the case, retiree
health benefits provided by the pro-
gram would be secondary to benefits
paid under other governmental pro-
grams, except as otherwise provided
by law. it is anticipated that the com-
bined fund and the 1992 plan will
have at least the same rights to coor-
dinate benefits with other benefit
plans and programs as the UMWA
benefit plans have exercised in the
pasts.
COAL MINERS RETIREE HEALTH
BENEFITS TITLE
Mr. BENTSEN. Mr. President, as
manager of the tax title of the energy
bill, I rise to explain an issue that has
come to my attention with regard to
the coal miners retiree health benefits
title of the bill.
The bill requires all coal companies
that have ever been signatories to a
coal wage agreement to pay premiums
to fund retiree health benefits for the
miners and their dependents. The bill
also declares that affiliates of any
such coal company are jointly and
severally liable for the premiums owed
by the company. Under the bill, the
time for determining affiliate status is
as follows: If the coal company was in
business on July 20, 1992 - whether or
not as a coal company - affiliate status
is to be determined on that date. On
the other hand, if the company
not in business on that date, then
affiliate status is to be determined as
of the day immediately before the
company ceased to be in business.
The idea behind these rules is that,
if a holding company has a subsidiary
that was once a signatory to a coal
wage agreement, and if, through that
subsidiary, the holding company is
conducting a business - whether or
not a coal business • on July 20, 1992,
it is appropriate to ask the holding
company to be jointly liable for the
premiums due from the subsidiary.
The question arises, however, whether
a different result would obtain same
assets of the subsidiary, but through a
different affiliate, such as a sister
corporation to the subsidiary. In oth-
er words, in that case, the subsidiary
would have transferred some of its
assets to the sister corporation before
the test date of July 20, 1992.
Mr. President, it is clear that the
result should be the same in both
cases. To treat the two cases differ-
ently would elevate form over sub-
stance and reward asset shifting with-
in an affiliated corporate group.
When HHS implements this legisla-
tion and begins the task of determin-
ing which former signatories to coal
wage agreements are in business, we
expect the agency to take the
commonsense approach of determin-
ing how the assets of such companies
are deployed in an affiliated group of
companies. If some of the assets of
the signatory company are used in the
group in a business activity, then the
signatory should be considered to be
in business for purposes of section
9701(c)(7) of the legislation.
Mr. ROCKEFELLER. Mr. Presi-
dent, as the original author of this
legislation, I agree entirely with the
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chairman of the Finance Committee.
We do not intend for the legislation to
be interpreted in a wooden manner.
Clearly, where assets of a signatory
company are used by an affiliate in a
business activity, that signatory com-
pany should be considered to be in
business.
Mr. BENTSEN. Mr. President, a
related question arises with respect
to the specific definition of 'in
business9 included in the legislation.
Under the bill, a company is consid-
ered to be in business if it 'conducts
or derives revenue from
any business activity, whether or
not in the coal industry.' That defini-
tion has alternative tests: a company
is considered to be in business if it
either conducts a business activity or
'derives revenue from' a business
activity. As is apparent from the
existence of the two tests, the inten-
tion of the legislation is to define the
term 'in business9 broadly.
In general, the intention of the
legislation is that where a company
retains a valid charter, owns valuable
properties, and has even a minimal
level of activity, the company normal-
ly would be considered to be in busi-
ness. Activity as a lessor of property
would constitute a sufficient level of
activity to meet that test.
Even in cases where a company is
not considered to conduct a business
of its own, if the company has leased
any of its property in return for the
right to receive royalties based on the
use of the property in a business oper-
ated by the lessee, the company would
be considered to 'derive revenue from'
the business activity conducted by the
Mr. ROCKEFELLER. Mr. Presi-
dent, again I agree with the chairman
of the Finance Committee. The lan-
guage of the statute is purposely
broad. Certainly, a company would be
considered to be in business if it con-
tinued to own significant properties
and has leased some of those proper-
ties so that it may derive revenue
from the business operation of the
leased properties by the lessee.
Mr. FORD. Mr. President, I have
worked closely with the Senator from
West Virginia in the drafting of the
provisions of the bill relating to health
benefits for retired coal miners and I
have worked closely with the chair-
man of the Finance Committee as he
and his committee considered these
provisions. I agree that their inter-
pretations of the bill are correct for
purposes of determining when a com-
pany shall be considered to be in busi-
ness notwithstanding transfers by sale
or lease of business assets prior to the
test date of July 20, 1992.
Mr. AKAKA. Mr. President, I rise in
support of the conference report on
the energy bill.
The bill before us is a comprehen-
sive package of energy initiatives de-
signed to ensure that commercial and
residential energy consumers have
access to a reliable supply of energy at
reasonable prices. It is a good bill,
and it deserves the support of the
entire Senate.
My colleagues, this is an historic
moment. Not since the days of the
OPEC oil embargo has Congress con-
sidered legislation as comprehensive
as the bill before us today. Enact-
ment of this bill will ease our depen-
dence on foreign supplies of energy
and promote an energy future for
America that is more secure.
This may be an energy bill, but it is
also a good bill for the environment.
A major emphasis of this legislation is
conservation and increased energy
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efficiency. Among other things, the
bill would establish energy efficiency
standards for electric motors, lights
and shower heads, establish efficiency
standards for commercial heating and
cooling equipment, encourage utilities
to take steps to reduce demand for
energy, improve energy efficiency of
buildings, and; require the single larg-
est user of energy - the Federal Gov-
ernment - to set an example for the
rest of the Nation by using energy
more efficiently.
We would never have succeeded in
producing this landmark bill had it
not been for the wisdom, leadership,
and determination of the chairman of
our committee, Senator Bennett
Johnston, and ranking Republican,
Senator Malcolm Wallop. The process
of assembling this bill began nearly 2
years ago, and without the unyielding
commitment of our committee leader-
ship, we would never be presenting a
conference report on the Senate floor
today.
There were times when many
doubted we would complete an energy
bill during the 102d Congress. Despite
a fast start and early markup by our
committee, there were fears that our
inability to reach agreement on issues
such as CAFE standards might sink
the bill. I also remember the disap-
pointment many of us felt last No-
vember when the bill appeared dead
after the Senate failed by a wide mar-
gin to invoke cloture and cut off a
filibuster.
There were the long, hot days this
past summer when we waited for the
House to pass its bill. We waited for
the tax component of the bill to be
assembled, then we waited and waited
for House conferees to be appointed.
But our bill could never be derailed,
thanks to the leadership of our able
chairman and ranking Republican.
Gentlemen, I salute you.
I also want to pay tribute to the
fine staff of the Energy and Natural
Resources Committee. Mr. President,
we have a staff on our energy commit-
tee that knows no equal. They ware
the g)ue that held this 1,300 page bill
together, and I know I speak for the
entire committee when I say how
grateful I am for their dedication and
fine work.
I note with regret that the bill does
not contain a number of provisions I
had proposed that are important to
Hawaii. Hawaii faces some severe
energy problems. We are one of the
most import dependent States in the
Nation. I had hoped that the confer-
ence agreement would address this
problem with a solution I had crafted
to provide emergency SPR access for
Hawaii. The bill does not solve
Hawaii's problem, but we will address
that issue another day. I look forward
to working with the committee to
resolve this issue during the 103d
Congress.
In closing, this is a good energy bill
and deserves the support of the full
Senate.
UNITED MINE WORKERS OF AMERICA
(UMWA) HEALTH BENEFIT TAX RELIEF
Mr. WARNER. Mr. President, I rise
today to address H.R. 776, the Nation-
al Energy Strategy Act. Implementa-
tion of the comprehensive energy
policy embodied in this legislation m
significant to our efforts in reversing
this Nation's growing dependence on
imported oil.
It is for this reason that I support
many of the legislation's worthwhile
provisions including: Reform of the
Public Utility Holding Company Act
(PUHCA); initiatives to improve the
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4879
efficiency of homes, offices and utili-
ties; provisions to foster the develop-
ment and production of renewable
sources of energy; and provisions
which promote the use of alternative
ftiels.
However, as with the passage of the
original Senate version on August 12,
I continue to have the gravest con-
cerns regarding the need to strength-
en the financing provisions of the new
United Mine Workers of America
(UMWA) retiree health benefit plan.
With the passage of H.R. 776, the
community of 120,000 UMWA retirees
and their families truly have reason to
rejoice. I am proud that Virginia is
home to 10,000 members of this com-
munity, and I wish to assure them
that the security of their hard-earned
health benefits has been my first pri-
ority.
In an unprecedented effort, the
Congress and the White House have
joined together to craft and include
mandatory financing provisions to
restore the solvency of the ailing un-
ion retiree health plan. The present
supporters of the health plan, the
Bituminous Coal Operators Associa-
tion (BCOA), are greatly burdened
with its costs and, in fact, have been
contributing on a deficit basis for
sometime.
The BCOA and the UMWA signed a
collective bargaining agreement nearly
4 years ago which spelled out their
retiree health insurance obligations.
Due to a combination of reasons, it
has proven to be woefully inadequate.
Recognizing the shortfall in funding,
and faced with their inability to honor
their obligations to the retired union
membership, the BCOA and the
UMWA have turned to the Federal
Government.
As early as 1989, Federal relief leg-
islation was initiated in the Senate
suggesting an industrywide coal pro-
duction excise tax. Up to and until
this summer, different versions of the
tax were still proposed, but on an
unequal and inequitable basis. East-
ern and Western States were taxed at
different rates and, indeed, some
States were exempted altogether.
The Federal election summer of
1992 arrived with turmoil in the
coalfields. Only a Federal court order
stood between the retirees and a cut
off of their health insurance. Anxious
to avoid labor unrest, the White
House sent its domestic policy team
up to Capitol Hill to craft a new and
improved funding scheme for the re-
tired union miners.
A period of arduous negotiations
commenced. A comprehensive plan
emerged, mandating contributions by
not only present but former BCOA
members as well. In general, dating
back to 1950, the former employer of
the longest duration will be assigned
the health costs of the retiree. For
the many thousand retirees whose
former employers have ceased to exist,
these orphans will be assigned to pres-
ent and former BCOA members on a
prorated basis.
The costs of the mandatory premi-
ums alone will approach $100 million
per year. This refers only to that
portion of the plan to be paid for by
present and former employers. An-
other third will be transferred from
the UMWA pension fund, and yet
another third eventually come from
interest earned by the industry sup-
ported Federal abandoned mine lands
(AML) fund.
A great deal of time and effort has
been expended thus far on behalf of
the retired union membership. It is
their welfare which has been the de-
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riding factor. The Congress and the
White House have truly joined hands
in assuring that the promised benefits
will be continued. We have reached a
point, however, in which I believe the
promise falls short.
The companies which must comply
with the mandate have not been pro-
vided with an appropriate, corre-
sponding measure of tax relief. Many
of the companies are marginally prof-
itable at best, and the costs of the
mandate will throw them into bank-
ruptcy.
Imagine an American coal company,
struggling to contain the growth of its
health and labor costs. Imagine that
this company is in the highly competi-
tive coal export business where it is
impossible to pass on extraordinary
business costs. Then imagine that
this company has a contract with the
United Mine Workers of America and
employs 2,000 miners - the largest
individual coal operation in my State.
Mr. President, I have described the
Pittston Coal Co. of Lebanon, VA; an
operation whose health costs could
increase tenfold under this bill. There
is no question that the livelihood of
2,000 UMWA members and their fam-
ilies is at stake. It is ironic, is it not,
that 2,000 union mining jobs may be
sacrificed for the benefit of union
retirees.
If this company and all the compa-
nies which will be newly burdened are
not provided with offsetting tax cred-
its, die retiree health funding problem
will only be exacerbated. What possi-
ble benefit could there be for UMWA
retirees in the demise of many of the
companies which have been mandated
to pay for their benefits. In the end,
the premiums will be thrown back on
those presently paying them, albeit
with the aforementioned Federal sup-
port.
Mr. President, I implore my col-
leagues on the Finance Committee to
fully complete this funding package.
A number of States and valued corpo-
rate constituents will otherwise suffer
as a result. The message is clear •
Federal mandates which go beyond
any real market basis must be accom-
panied with Federal relief.
I am encouraged that in the confer-
ence on H.R. 776, House Ways and
Means Chairman Dan Rostenkowaki
stated his intention to review the
Senate provisions at the earliest op-
portunity next year. Similar senti-
ments were expressed as well by Con-
gressman Jake Pickle. It seems clear
that there must be a package of per-
fecting amendments if the UMWA
retirees are to have a workable fund-
ing scheme.
I have been advised that one area
which must be examined, if only to
avoid future litigation, is the question
of constitutionality.
Mr. President, in order to lend to
the process, I ask unanimous consent
that an analysis on the constitutional-
ity of the provisions be inserted in the
Record at this point. This construe-
tive study was provided by the Hon.
Charles J. Cooper, former Assistant
Attorney General of the United States
for the Office of General Counsel, and
now a partner in the firm of Shaw,
Pittman, Potts & Trowbridge.
Shaw, Pittman, Potts & Trowbridge,
Washington, DC,
September 26, 1992.
Pursuant to your request, we have dona a
preliminary rsvisw of potential constitutional
challenge to tha Coal Industry Rstirsa Hearth
Cars Act of 1992. As ws understand it, tha US
essentially requires any current or past signals
riss to the National Bituminous Coal Wags
Agreement, and any related entities, to niuisis
lifetime health benefits to UMWA retirees. Most
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notably, these signatory companies must finance
the health care costs for all beneficiaries assigned
to them, even though s substantial percentage of
these beneficiaries were never employed by the
responsible company.
Our preliminary analysis indicates that the
portion of the proposed legislation mandating the
provision of health benefits to persons not previ-
ously employed by the responsible coal company
would be quite vulnerable to a challenge under
the Taking and Due Process Clauses of the Fifth
Amendment. While our brief review has not un-
covered any Supreme Court decision directly on
point, we believe that the proposed legislation is
inconsistent with the basic purposes of the Tak-
ing Clause, as articulated by the current majority
of the Court. Support for this view can be found
in cases striking down analogous government
confiscation schemes, as well as in the reasoning
of cases upholding other government- mandated
income redistribution programs.
The Supreme Court has repeatedly emphasised
that the basic purpose of the Taking Clause is 'to
bar Government from forcing some people alone
to bear public burdens which, in sll fairness snd
justice, should be borne by the public as a whole.'
Armstrong v. United Slstes, 364 \JS. 40 (1960).
See also First English Evangelical Luthern
Church of Glen dele v. Los Angeles County, 107
S.Ct. 2370 (1987); Penn Central Transportation
Company v. New York City. 436 VS. 104, 123
(1978). Unlike other legislation which has been
found to satisfy the Fifth Amendment, the pro-
posed bill does not 'regulate' any industry by
establishing price ceilings or imposing require-
ments concerning workers' health, safety or min-
imum compensation. Rather, it simply transfers
private property from s few selected coal compa-
nies (and their related entities) to individuals
who were never employed by the companies.
Since the coal companies are not in sny way
responsible for any non -employees' health prob-
lems and did not benefit from their labors, there
is simply no reason for those companies to now
assume financial responsibility for those individ-
uals in their retirement. If Congress believes the
public welfare demands that these individuals re-
ceive health benefits, the burden of providing
those benefits should be distributed equally
among the public through a uniform tax scheme,
not by imposing s specific financial burden on a
few. This is the basic command of the Fifth
Amendment.
The Supreme Court in the past has invalidated
markedly less radical income redistribution
schemes under the Due Process and Taking
Clauses. Moot notably, in Railroad Retirement
Board v. Alton R. Co., 895 VS. 330 (1936), the
Court struck down as violative of the Due Pro-
cess Clause a congressional statute that
'arbitrarily' required employer-financed pensions
for former employees who were not in the employ
of the railroads at the time of enactment, but had
been so employed within the year. Under this
precedent, the proposed legislation would seem to
be invalid in its entirety, even as it applies to
past or current employees of the responsible coal
companies. However, although Alton has never
been overruled, it is shaky precedent that is gen-
erally viewed as a holdover from the Lochner
substantive due process era and has been strictly
limited to its particular facts by more recent
cases, such as Usery v. Turner Elkhorn Mining
Co., 428 VS. 1, (1976), and Connolly v. Pension
Benefit Guaranty Corp., 476 VS. 211 (1986). In
those cases, the Court upheld, against Taking
and Due Process challenges, the retroactive impo-
sition of pension and retirement benefits on,
respectively, operators of coal mines and compa-
nies that had voluntarily opted into a
government-guaranteed, multi-employer pension
plan. Thees cases, then, would seem to foreclose
an argument that forced payment of retirement
benefits to prior employees of the coal companies
is unconstitutional. Nothing in those cases,
however, would prevent a Taking and/or Due
Process challenge to a statute requiring coal
companies to assume financial obligations for
beneficiaries that were and are complete strang-
ers to these companies.
The Supreme Court in both Connolly and
Turner Elkhorn reasoned that the Fifth Amend-
ment does not preclude 'legislation readjusting
rights and burdens' unless it is wholly 'arbitrary
and irrational.' Connolly, 476 VS. at 223; Turn-
er Elkhorn, 428 VS. at 18-20. This finding of a
permissible constitutional purpose, however, was
premised on the view that requiring these compa-
nies to pay health benefits was reasonable be-
cause 'the purpose of the Act is to satisfy a spe-
cific need crested by the dangerous conditions
under which the former employes labored - to
allocate to the mine operator an actual, measur-
able cost of his business.' Turner Elkhorn, 428
VS. at 19. See also Connolly 476 VS. at
226-228.
This does not suggest any legitimate basis for
requiring a company to pay benefits to an indi-
vidual whoss work it has never benefitted from
and on whom it has never imposed a burden.
Thie point is mads explicit in Justios O'Connor's
concurrence in Connolly. '(DmposiUon of this
type of retroactive liability on employers, to be
constitutional, must rest on some basis in the
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employer's conduct thai would make it rational
to treat the employees' expectations of benefits
under the plan as the employer's responsibility.'
476 VS. at 229. See id. (legislation is irrational'
in the absence of any connection between the
employer's conduct and some detriment to the
employee*).
The Court's Taking Clause cases in analogous
circumstances have established this principle
more firmly. For example, in Webb's Fabulous
Pharmacies, Inc. v. Beck with, 449 VS. 155
( 1980), a unanimous Supreme Court struck down
as violative of the Taking Clause a Florida stat-
ute providing that counties could claim as their
property the interest generated on funds deposit-
ed in the state courts through interpleader. The
Court struck down the appropriation of this in-
terest because 'it is not reasonably related to the
cost of using the courts.' Id. st 163. See slso
United States v. Sperry Corp., 493 VS. 62
(1989); Hodel v. Irving. 481 VS. 704 (1987); FCC
v. Florida Power Corp., 480 VS. 246 (1987).
Thus, the petitioner in Webb's Fabulous Phsrms-
cies could not be deprived of his interest because
he had no specific responsibility or obligation to
the court system different from the average citi-
zen. By the same token, it would appear that the
government cannot mandate a transfer of monies
from the coal companies to beneficiaries they
have never employed because the companies bear
no responsibility for these employees thst is in
any way distinguishable from that of another
taxpayer. ' Accordingly, all such taxpayers must
bear the cost of any public welfare benefits pro-
vided to those employees.
* The fact that the monies here will be trans-
ferred from the companies into s private fund,
rather than going directly to Treasury or some
other government entity for redistribution,
should be of no constitutional significance. See
Hawaii Housing Authority v. MidkifT, 467 VS.
229, 243 (1984) (Taking Clause analysis does not
change because property 'is transferred in the
first instance to private beneficiaries.').
This point was msde even more explicitly in an
opinion by Justice Scalia, in a case involving rent
control for 'hardship' tenants:
The fact that Government acta through the
landlord-tenant relationship does not magically
transform general pubic welfare, which must be
supported by all the public, in to mere 'economic
regulation,' which can disproportionately burden
particular individuals. Here the City is not
'regulating* rents in the relevsnt sense of pre-
venting rents that are excessive; rather, it is
using the occasion of rent regulation ... to es-
tablish a welfare program privately funded by
those landlords who happen to have 'hardship'
tenants.
PenneU v. City of San Jose, 108 S. (X 849,
863 ( 1988) (Scalia, J.t concurring and dissenting).
The majority of the Court did not reach this
issue because it viewed the taking question es
'premature.'
Notably, a recent decision of the D.C Circuit
upheld a similar wealth transfer statute by Con-
gress, but expressly did so only because the eases
congressional enactment provided 'just
compensation' for the company's burden. Set
Colorado Springs Production Credit Association,
v. Farm Credit Administration, 967 FJ2d 648
(D.C. Cir. 1992). No such compensation provision
is contained in the proposed bill.
In short, the absence of any employment nexus
between the beneficiaries of the proposed health
benefit program and the limited class of compa-
nies forced to bear this public burden setebliehes
s firm basis for challenging the proposed legisla-
tion under the Fifth Amendment • regardless of
whether the statute is analysed as a 'per se* er
regulatory taking, or as arbitrary and irrational
retroactive legislation. That there is no Supreme
Court decision directly on point is primarily due
to the fact that Congress has previously not gone
this far. As noted, any challenge to mandated
compensation for prior employees of the coal
comoanies would be substantially weaker. *
• Additional constitutional concerns may be
raised by the provisions of the proposed kill that
require a 'related entity' to pay the benefits and
that directly interfere with a prior collective
bargaining agreement. In light of the time con-
straints under which thie review has been per-
formed, we have not examined those I
If you have any questions or comments about
the foregoing, please give me a call.
Sincerely,
Charles J. Cooper.
Mr. President, let us look once more
at the players in this debate. The
retired community of the United Mine
Workers of America have no interest
in depriving their younger working
membership of their jobs. Nor do
working miners wish, in any way, to
diminish the benefits of hard-fought,
hard-earned retirement from the coal
mines. Let us remember them, first
and foremost, and we should
readily to our goals.
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HYDRO-FEDERAL POWER SECTION
Mr. BUMPERS. Mr. President, I
would like to ask the distinguished
chairman of the Energy Committee
for a clarification of the language
from title XVII of H.R. 776, the
Hydro-Federal Power Act section. Am
I correct in interpreting the provision
regarding fishways to say that even if
FERC and the Departments of Com-
merce and Interior do not agree on a
fishways definition, that FERC will
still be able to issue hydrolicenses by
order?
Mr. JOHNSTON. Yes, that is my
understanding.
Mr. BUMPERS. Once again even if
FERC and the National Marine Fish-
eries Service and the Fish and Wildlife
Service cannot agree on a definition of
fishways through the rulemaking
process, can hydro projects in Arkan-
sas and elsewhere across the country
which are up for licensing be assured
that the licensing process will contin-
ue and not be brought to a dead stop
if this language is agreed to?
Mr. JOHNSTON. Yes, that is my
understanding.
Mr. HATFIELD. Mr. President, I
want to take an even stronger posi-
tion than my colleague from Arkansas
that it must be clearly understood
that the language regarding fishways
is intended to allow FERC to continue
without limitation its role in issuing
licenses with conditions. The Senate
never dealt with this issue in its bill.
The Pacific Northwest has spent more
money on fish protection than almost
anywhere in the country, and is ex-
pected to spend in excess of $1.5 bil-
lion over die next 10 years for the
preservation of fish. We also have
more litigation than anywhere in the
country on fish and wildlife issues.
The conference report makes perfectly
dear that FERC can continue to i
hydrolicense orders and delineate the
proper scope of fishway prescriptions
included in those orders.
Also, we need to clarify that when
we say 'physical structures' in this
language we mean those structures -
ladders, screens and so on - that are
principally designed for the up and
down-stream passage of fish and that
help fish around the project works of
a hydropower project. Is it the
chairman's understanding that the
language must not be interpreted to
go beyond that into generally regulat-
ing flows or assuming control over the
operation project works?
Mr. JOHNSTON. Yes, that is my
understanding.
Mr. BUMPERS. I agree with the
views of my colleague from Oregon.
Furthermore, fishways are only those
structures for the passage of fish
which need such passage to maintain
their life stages.
Mr. WALLOP. Mr. President, I
concur with the remarks emphasizing
that this language allows FERC to
proceed on a case-by-case basis, and is
limited to physical structures princi-
pally designed for passage, and not
flows.
Mr. HATFIELD. I agree.
Mr. COCHRAN. Mr. President, at
the beginning of the 102d Congress,
almost 2 years ago, President Bush
submitted to Congress his proposals
for a comprehensive energy policy.
Since that time, the Senate has twice
passed energy policy bills, both of
which survived filibusters, the confer-
ence between the House and the Sen-
ate was deadlocked on several occa-
sions, and the energy bill was declared
dead on more than one occasion over
the past 2 weeks. Yet, today we are
considering a conference report that
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deals with the many controversial
issues of energy policy in what I be-
lieve to be a well-balanced manner.
The resilience of this bill can be
attributed to the dedication of the
distinguished chairman and ranking
member of the Senate Energy Com-
mittee, the Senator from Louisiana
(Mr. Johnston) and the distinguished
Senator from Wyoming (Mr. Wallop),
and to the tireless efforts of the Secre-
tary of Energy, James Watkins, and
Deputy Secretary of Energy, Linda
Stuntz. I applaud the diligence and
perseverance of those involved to
bring the bill to life once again.
This conference report represents a
clear and workable strategy for reduc-
ing the U.S. dependence on foreign
sources of energy.
The bill sets in place a long-term
approach to conserving energy by
encouraging the use of more
energy-efficient technologies and prod-
ucts that will reduce the amount of
energy consumed in our country.
Research and development of these
technologies is encouraged by incen-
tives in the bill.
There are also provisions which
encourage the development and use of
alternative fuels, such as clean- burn-
ing natural gas and non-fossil fuels,
both in energy production and in vehi-
cles.
These changes are necessary not
only to reduce our need for imported
oil but also to make more efficient use
of our resources.
Until we reach the point where
these alternative technologies, prod-
ucts, and fuel sources are widely avail-
able, we must encourage the domestic
production of oil and gas. This impor-
tant element of our economy will be
promoted through a provision in the
bill to changs the alternative mini-
mum tax treatment of expenses asso-
ciated with production by independent
oil and gas producers.
Perhaps the most dramatic changes
in this bill are in the area of Federal
regulation of electricity production.
Newer, safer designs for nuclear pow-
erplants are currently being developed
to provide for electricity production
that is safe, economical and
nonpolluting. But unless the process
for granting permits to operate those
plants is made more efficient and
more predictable, no nuclear plant
will be built in the future. The bill
before us provides for such a process,
whereby a license for construction and
operation of a nuclear plant will be
granted simultaneously, after exten-
sive opportunities for public comment
and participation.
Even more dramatic changes are
made through amendments to the
Public Utility Holding Company Act
(PUHCA). Under the conference
agreement, consumers will benefit
from the competition in the electric
utility industry that will result from
the deregulation of powerplant con-
struction and power distribution. The
conferees are to be commended for
resolving some very contentious issues
in PUHCA reform - especially with
regard to wheeling - in a fair and
equitable manner.
Mr. President, this bill is one of the
most important pieces of legislation to
be considered in this Congress. It was
crafted in a bipartisan manner and
provides much-needed direction for
meeting the future energy needs of
our Nation. I urge the Senate to ap-
prove this conference report.
Mr. NICKLES. Mr. President, I rise
today to urge my colleagues to support
passage of the National Energy Policy
Act of 1992. When this bill is passed it
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will be the first comprehensive energy
legislation enacted in over a decade.
Although the provisions of this bill do
not go as far as I would like, especially
in the area of encouraging domestic
production of oil and gas, it does con-
tain many provisions that will help
decrease our dependence on foreign
energy sources and encourages in-
creased use of clean-burning natural
gas.
Just last week the Senate and
House conferees completed action on
the nontax provisions of the compre-
hensive energy bill. This bill will ben-
efit producers in that it will stimulate
new markets for natural gas through
its alternative fuel provisions, its en-
couragement of competition in power
production and increased research
and development programs. However,
these provisions in and of themselves
are not enough. It is critical that
AMT relief be provided now to inde-
pendent producers before we no lon-
ger have any domestic producers left.
Over the weekend, the Senate and
House conferees completed action on
the revenue provisions of this bill. In
these provisions we were successful in
preserving the Senate passed AMT
provision that allows independent
producers to take greater deductions
against AMT for percentage depletion
and intangible drilling costs. Under
the bill, percentage depletion is fully
deductible against AMT income. IDC's
may be fully deducted against AMT
income to the extent that the in-
creased IDC deductions do not reduce
AMT income by more than 40 percent,
30 percent in 1993. This AMT relief
for independents would be permanent.
Our domestic oil and gas industry is
bleeding to death, increasing our
Nation's continued dependence on
foreign oil. Mr. President, we are
trying to enact a national energy bill
that is intended to help reverse this
trend of increasing dependence. AMT
relief is one of the most necessary
provisions in this bill that will have
direct impacts on increasing domestic
exploration and help decrease the
need for foreign imports.
Independents drill 85 percent of the
oil and gas wells in the United States.
Over two-thirds of these independents
are small, often family run, businesses
with less than 20 employees. The
AMT in its current form has an espe-
cially punitive impact on these small
producers, denying them the deduc-
tion of their most fundamental ordi-
nary and necessary business expenses.
Because the amount of IDC allowed
under the AMT is tied to the
producer's net income from oil and
gas, the lower the amount of produc-
tion, the lower the deduction for drill-
ing costs. In addition, the percentage
depletion deduction, which allows
smaller producers to replace increas-
ingly costly reserves and prevents the
premature abandonment of many
properties, is disallowed under the
AMT.
If the AMT provisions in the energy
bill are passed, drilling would increase
between 17 and 24 percent and should
result in almost 7,000 new wells
drilled each year. This should in-
crease the rig count by at least 200.
On average, each rig operating full
time directly creates 150 to 200 new
jobs. Therefore, between 30,000 and
45,000 additional jobs could be created
in the United States in the first year
alone as a direct result of eliminating
the nondeductibility of drilling costs
and percentage depletion under the
AMT.
A rig count of 720 indicates that the
industry has entered a period of accel-
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4886
erated decline. The Nation's domestic
oil production is falling at annual rate
of 300,000 barrels a day, and foreign
imports are rapidly approaching 50
percent of our domestic needs. We
have lost nearly 400,000 jobs, almost
half of the oilfield worker jobs since
the peak in 1982 when the rig count
was 3,105.
Independent producers have been
devastated by a combination of low oil
and gas prices and high taxes. Every
rig that shuts down means jobs that
are lost and increased dependency
upon foreign oil for our energy needs.
I strongly believe that tax relief is
needed to save the domestic industry
from collapse.
I am convinced that the alternative
minimum tax relief is the single most
important agenda item for the oil and
gas industry. It does little good to
talk about extending incentives unless
we remove alternative minimum tax
impediments.
When a recession coincides with
sustained low oil and gas prices,
the alternative minimum tax works
like a severe penalty that gets pro-
gressively worse the longer the tax-
payer falls under it. The longer prices
are low and profits thin, the harsher
is the alternative minimum tax's im-
pact.
Under current law, when percent-
age depletion and intangible drilling
costs are added back to income in
calculating alternative minimum tax
liability, it can result in a 70 to 80
percent effective tax rate for some
producers. The result is indisputedly
punitive, if not confiscatory.
Including intangible drilling costs
and percentage depletion as prefer-
ence items in 1986 was a mistake. It
has been referred to by some Ameri-
cans trying to increase oil production
here in the United States as a drilling
penalty tax for independents. We
need to eliminate IDC's entirely from
the alternative minimum tax.
IDC's are the only out-of-pocket
business expense in any industry or
profession that are treated as a pref-
erence item in the alternative mini-
mum tax. Inclusion of IDC's was
unfair, and another example of treat-
ing the domestic industry as a cash
cow to be milked every time revenue
is needed.
Taking IDC's and percentage deple-
tion out of the alternative minimum
tax is appropriate not simply because
they are a unique penalty on oil and
gas producers, but because in practice
these provisions have been both
anticompetitive and regressive, and
have had the effect of significantly
reducing drilling activity in the Unit-
ed States.
It is imperative that AMT relief be
enacted this year. The independent
oil and gas producers are being unfair-
ly penalized by the 1986 tax amend-
ments. If the AMT tax provisions
contained in the energy bill are not
adopted the results will be a contin-
ued devitalization of a strategic
sector of our industrial economic base,
a continued loss of jobs and a contin-
ued risk to our Nation's ability to
respond to requirements for domestic
oil and gas production. The AMT tax
provisions must be enacted now if this
industry is to survive and the *•***■*•'
security of this Nation be
from further reliance on foreign <
gy sources.
PERFORMANCE CONTRACTING FOR
FEDERAL ENERGY MANAGEMENT
Mr. WIRTH. Mr. President, one of
the most promising initiatives in this
energy legislation are provisions that
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would encourage greater energy effi-
ciency in Federal buildingB. The Fed-
eral Government is the Nation's sin-
gle largest energy consumer and
should be leading the effort to use
energy more efficiently Federal energy
efficiency is good economic policy and
good environmental policy.
Unhappily, the Federal Government
has been slow to take advantage of
creative financial arrangements that
promote energy efficiency without
requiring enormous investment out-
lays. This is most unfortunate for two
reasons. First, as we are all too
aware, current budgetary constraints
make it difficult if not impossible to
make many cost-effective, long-term
investments in efficiency. Second, the
Federal Government is failing to uti-
lize performance contracts widely
taken advantage of by the private
sector.
In order to harness the opportunity
to promote energy efficiency at little
or no upfront cost to the Government,
this legislation includes provisions
that will ease the bureaucratic road-
blocks to performance contracting. In
this way, performance contracting can
be utilized to stop the annual wasting
of 1 billion dollars' worth of energy in
Federal buildingB.
The performance contracting indus-
try is capable of assessing Federal
buildingB and identifying energy effi-
ciency opportunities. More important-
ly, this industry is capable of financ-
ing and maintaining new equipment
and guaranteeing that energy savings
will exceed the payments necessary to
compensate the contractor. What this
legislation clearly suggests is that the
Federal Government should take max-
imum advantage of the opportunities
presented by performance contracts.
Current procurement laws and
regulations - no doubt useful, neces-
sary and applicable in many cases -
are ill-designed to allow the Federal
Government to take advantage of
performance contracting. The regula-
tions are painfully complex and not
applicable to performance contracting
in many respects:
Most performance contracts provide
for paybacks to the contractor over
multiple years, conflicting with our
annual budgetary procedures and
requirements for advance appropria-
tions;
Traditional cost, pricing and cost
accounting standards are inappropri-
ate for these contracts;
Considerations must be given to
specifying the appropriate costs that
should be paid by the Government in
the event of contract termination for
the convenience of the Government -
these costs would include those relat-
ed to designing; financing; installing
and engineering energy efficiency
improvements, as well as penalties by
utilities.
In an attempt to address those con-
cerns, the energy legislation includes
a number of provisions to enhance the
Federal Government's ability to make
use of performance contracts. Specifi-
cally, the bill: Authorizes multi-year
contract authority without advance
appropriation. Directs the Secretary
of Energy, working with the FAR
Council, to issue regulations that will
facilitate performance contracting
with the Federal Government.
The bill is a clear direction to the
Secretary to issue regulations that
will address the impediments to per-
formance contracting I previously
discussed, as well as any others identi-
fied by the Secretary.
Any regulations developed by DOE
should be formulated to apply to all
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contracts - as opposed to rules that
would require a case-by-case applica-
tion - which is a prescription for bu-
reaucratic inertia. These regulations
should relieve contracting officers of
any hesitancy to enter into perfor-
mance contracts.
Finally, we recognize in this legisla-
tion that new procedures will be re-
quired to get this job done. Therefore,
the legislation directs the General
Accounting Office to monitor these
efforts and report to Congress on
problems and progress. And in order
to ensure a thorough evaluation of the
success of these new initiatives, the
bill sunsets these provisions after 5
years.
Unfortunately, Mr. President, we
were unable to gain agreement in
conference on remedying some of the
obstacles that prevent performance
contractors from doing business with
the Federal Government. Instead, we
have left that task to the implement-
ing agencies. We expect that they will
address all of the impediments to
performance contracting and ensure
that the Federal Government can
take advantage of these creative fi-
nancing mechanisms for energy effi-
ciency.
DAMS IN THE PARKS
Mr. WALLOP. The conferees agreed
to a version of a provision in the
House-passed bill which would have
prohibited any dams or improvements
within any unit of the National Park
System. The conference agreement
would prohibit FERC from issuing an
original license for a hydroelectric
dam located within the exterior
boundaries of a unit of the National
Park System and which would have a
direct adverse impact on federally
owned lands within the exterior
boundaries of such unit
That section will not apply to <
ing unlicensed or licensed projects, or
future additions or modifications to
such projects, nor projects for which
applications are pending upon the
date of enactment of this act.
The provisions also do not apply to
subsequent applications for an origi-
nal license which are located entirely
on nonfederal land and do not repeal
any provision of law which would
exempt or authorize such projects
within existing units, such as the
authority for High Ross Dam in North
Cascades.
Unfortunately, passage of these
provisions will extend what is already
law in national parks and monuments
to all other areas of the system. Lake
Mead and Glen Canyon National Rec-
reation Areas would not be units of
the system were it not for the dams
which created the reservoir. Using a
shotgun approach to problem solving;
the House placed these provisions in
the bill because nationwide there are
only two cases which seem to pose a
problem; both of which only became
an issue of concern after the Federal
Government made minor boundary
adjustments which incorporated exist-
ing projects within the new bound-
aries without making any provision
for the projects.
The House action only complicates
our lives and forces us to complete a
lengthy exhaustive analysis of the
hydro potential in any new legislative
proposal for a new park area. The
foolishness of this provision can be
seen if you look at only a few units of
the National Park System. Lowell
National Historical Park has 21 ]
ject8 operating under a FERC 1
and was speeificalry made a unit of
the system due to the importance of
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hydropower in industrial development.
SITE SELECTION FOR A MONITORED
RETRIEVABLE STORAGE FACILITY
Mr. BINGAMAN. Mr. President, I
have been very concerned that the
nuclear waste negotiator be held ac-
countable for demonstrating the value
of all expenditures in connection with
the site selection process for a moni-
tored retrievable storage facility for
spent commercial nuclear waste. In
the Nuclear Waste Policy Act of 1982,
Congress directed the Department of
Energy to take possession of high level
nuclear waste, to be emplaced in a
temporary storage facility for about 40
years, and in a permanent facility
thereafter.
The selection process for an MRS
consists of a series of steps of research
and analysis, each with a greater price
tag than the previous one. Phase II-B
of the grant process allows up to $3
million to be provided for a variety of
activities, including continued feasibil-
ity studies and formal discussions and
negotiations with the Office of the
Nuclear Waste Negotiator.
Three million dollars seems like a
lot of money when the prospect of
achieving the final goal, siting of mon-
itored retrievable storage facility, may
be quite uncertain. I believe that it
was Congress' intent that a unit of
Government should enter into phase
II-B with the negotiator only if there
is a reasonable likelihood that a given
site will be chosen.
Mr. JOHNSTON. I agree. It is
Congress' intent that efforts to evalu-
ate a given site for a temporary stor-
age facility take into account the like-
lihood of achieving that ultimate goal.
Mr. SIMPSON. Mr. President,
would the distinguished Senator from
Louisiana yield for purposes of a collo-
quy?
Mr. JOHNSTON. I would be happy
to yield to my friend from Wyoming.
Mr. SIMPSON. I thank the Sena-
tor.
As the Senator knows, the Presi-
dent initialled an agreement on highly
enriched uranium with the Russian
Federation on August 31. While the
details have yet to be worked out, the
agreement calls for the United States
to purchase 500 metric tons of highly
enriched uranium recovered by dis-
mantling Soviet warheads. This ma-
terial would then be converted into
low-enriched uranium for use in civil-
ian nuclear power plants.
This is an extraordinary develop-
ment. The agreement will help beat
nuclear 'swords into plowshares.'
From an environmental view point, I
can think of no greater benefit than
ridding the world of the highly en-
riched uranium from 20,000 nuclear
weapons.
I am interested to hear from the
Senator from Louisiana how the ura-
nium provisions in the conference
report would affect this proposed
agreement.
Mr. JOHNSTON. I am familiar
with the agreement and share the
Senator from Wyoming's views on its
importance. The uranium provisions
of the conference report are consistent
with the agreement.
The conference report completely
overhauls the uranium enrichment
program in this country. As the Sena-
tor knows, the Department of Energy
has for years operated a $1.5 billion
uranium enrichment business. If the
enrichment program were a private
corporation it would rank about 240th
on the Fortune 500. DOE operates
two aging enrichment plants that
i built for military purposes in the
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early days of the cold war. These
plants now supply most of the en-
riched uranium used to generate
about 20 percent of the Nation's elec-
tricity. They also supply nuclear pow-
erplants around the world and gener-
ate about half a billion dollars of for-
eign payments each year.
But times have changed and DOE
has not been able to keep up. Accord-
ingly, the conference report sets up a
new Government corporation to run
the enrichment program like a busi-
ness. It sets up a fund to pay the cost
us of cleaning up and ultimately retir-
ing the old plants. It provides a
mechanism for developing a new,
promising, and more efficient, enrich-
ment technology.
The new Government corporation
will be responsible for implementing
the United States' side of the agree-
ment with Russia. The conference
report expressly directs the corpora-
tion to purchase the Russian highly
enriched uranium and to assume the
obligations of DOE under the agree-
ment.
Mr. SIMPSON. How will the corpo-
ration pay for the Russian material?
In his announcement, the President
said that the costs of the transaction
would be budget neutral. Is that still
the case?
Mr. JOHNSTON. Yes. It is less
expensive to blend down highly en-
riched bomb-grade uranium to
low-enriched reactor fuel than to en-
rich natural uranium to the point
that it can be used for reactor fuel.
Enriching natural uranium in DOE's
existing plants requires enormous
amounts of electricity. Using the
Russian material will reduce the
amount of electricity the corporation
uses, thus saving money. The corpo-
ration will be able to buy the Russian
material with the money saved. As a
result, the transaction will be budget
neutral. It is our intent that the
corporation would recover all of its
costs under the Russian agreement on
a year-to-year basis.
Mr. SIMPSON. It is my understand-
ing that the actual arrangements for
blending down the Russian material
have not yet been worked out. The
conversion from the highly enriched
to low-enriched form may take place
in existing, NRC-licensed, privately
owned facilities in this country. If so,
I am advised that it would be flown
into this country aboard military air-
craft and that the Defense Depart-
ment already has authority to do so if
requested by the President.
DOE would then be responsible for
ground transportation to the conver-
sion facility. Existing NRC licenses
may have to be amended in minor
respects to possess and process the
highly enriched material here, but no
additional legislation will be required.
Is that the Senator from Louisiana's
understanding?
Mr. JOHNSTON. The Senator is
correct. I share the Senator's judg-
ment that additional authorising legis-
lation, beyond the pending conference
report, is not necessary.
Mr. SIMPSON. Will the private
sector continue to have a role in this
program? Private firms have taken a
lead role in encouraging this program
and they should continue to play •
part as the program unfolds.
Mr. JOHNSTON. I fulry agree with
the Senator. The conference report
addresses this. It provides that if the
Russian material is to be converted in
this country, the corporation is to
develop a least-cost approach for doing
so consistent with environmental,
safety, security, and nuclear nonprobf-
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eration requirements. The corpora-
tion may select private-sector firms to
perform these services through a com-
petitive bidding process.
Mr. SIMPSON. How will the Rus-
sian agreement affect the domestic
uranium industry and jobs in urani-
um mining and enrichment in this
country?
Mr. JOHNSTON. The Senator from
Wyoming raises a very serious con-
cern. Once again, though, we have
addressed it in the conference report.
The new corporation is expressly di-
rected to manage the release of the
Russian material into the market in a
manner that minimizes its impact on
the domestic uranium industry.
The Russian material will not be
released into the market all at once.
Dismantling the warheads will take
years. The uranium they yield will be
converted and marketed over time in
a controlled and economically respon-
sible fashion. Utilities will continue to
deliver natural feed uranium, which,
through overfeeding, will help to re-
duce electricity costs at the enrich-
ment plants.
I have been assured that the
amount of Russian material covered
by the proposed agreement and the
rate at which it would become avail-
able will not result in any loss of jobs
at the Paducah, KY, and Portsmouth,
OH, enrichment plants. Moreover,
additional amounts of natural urani-
um will be required to blend down the
Russian material from bomb grade to
reactor grade. So there will still be
demand for natural uranium from
domestic mines.
Mr. SIMPSON. As the Senator from
Louisiana knows, the domestic urani-
um industry is on the ropes. During
the 1980*8, hundreds of mines were
closed and thousands of jobs were lost.
Last year, the domestic producers
filed an antidumping suit against
the Soviet Union regarding
below-market-price uranium and en-
riched uranium imports. In Decem-
ber, the International Trade Commis-
sion found that the United States
uranium industry was being harmed
by the Soviet imports and, in May, the
United States Commerce Department
found that six Republics of the former
Soviet Union were selling uranium at
below market cost. Last month, the
Commerce Department announced a
proposed settlement of the
antidumping action that would impose
quotas on these imports of low en-
riched and natural uranium, which
are relaxed and lifted based on an
increase in market price.
Does the conference report have
any affect on the proposed settlement
agreements with the Republics?
Mr. JOHNSTON. No, the confer-
ence report does not affect the
antidumping case or the proposed
settlements.
This is a very difficult issue. The
domestic uranium enrichment indus-
try has been harmed and it is entitled,
under our law, to relief. But this is a
critical moment in our relations with
Russia. As we forge new commercial
ties, we must find ways to encourage
commerce in one of the few commodi-
ties they can sell for hard currency.
The conference report does not
solve this dilemma. It is my hope,
though, that an appropriate solution
can be found to balance, in a fair and
responsible manner, the interests of
both the domestic industry and the
Republics. The new Government cor-
poration may provide an appropriate
means for doing so.
Ultimately, though, I think we need
a Government-to-Government agree-
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ment with the Russians that covers
not just uranium derived from dis-
mantled warheads but also
low-enriched uranium produced from
Russia's enrichment plants. I have
urged both the administration and the
Russians themselves to negotiate such
an agreement. I think that, in the
long run, an arrangement that balanc-
es the interests of United States ura-
nium miners, the enrichment corpora-
tion, and the Russians offers a better
solution than resorting to
antidumping actions.
Mr. SIMPSON. I thank the distin-
guished chairman of the Committee
on Energy and Natural Resources and
commend him for his attention to
these important matters.
WHOLESALE TRANSMISSION SERVICES
Mr. RIEGLE. I would like to ask
the chairman of the Energy Commit-
tee a question regarding the confer-
ence report's language on rates,
charges, terms and conditions for
wholesale transmission services. Does
the clause 'including, but not limited
to, an appropriate share, if any,' modi-
fy the clause 'the costs of any enlarge-
ment of transmission facilities' as well
as the clause 'legitimate, verifiable
and economic costs'?
Mr. JOHNSTON. Yes it does.
Mr. RIEGLE. I thank the Senator.
FERC STUDY OF IIYDROPOWER
LICENSING IN HAWAII
Mr. AKAKA. Mr. President, I would
like to engage the chairman of the
Energy Committee in a colloquy con-
cerning a provision of the bill which
directs the FERC to perform a study
on the merits of removing the jurisdic-
tion of the Federal Energy Regulatory
Commission (FERC) to license hydro-
power projects on the fresh waters of
the State of Hawaii. The bill provides
that the study shall be conducted in
conjunction with the State of Hawaii
As the chairman knows, there are
considerable differences between the
State of Hawaii and FERC on this
issue, and it is quite possible that
these differences will remain unre-
solved at the time that the final re-
port is issued.
Should this turn out to be the case,
it seems only reasonable that the
State of Hawaii should be permitted
to have its contrary views represented
in the final report.
I would like to ask the chairman of
the Energy Committee if the conferees
intend that the views of the State of
Hawaii be fully and fairly reflected in
the FERC report.
Mr. JOHNSTON. Yes, I agree with
my colleague from Hawaii. The confer-
ees specifically addressed this issue
when the phrase 'in coordination with
the State of Hawaii' was included in
this provision. We adopted this
phrase so that the views of the State
of Hawaii would be fully and fairly
reflected in the final report. If FERC
and the State of Hawaii do not agree
on some or all of the conclusions of
the final report, then the additional or
dissenting views of the State of Ha-
waii should be printed as part of the
FERC report.
Mr. AKAKA. I thank the chairman
of the Energy Committee for that
clarification.
PUBLIC UTILITY COMPANY ACT
AMENDMENTS
Mr.METZENBAUM.Mr.Pi*aident,
I would like to engage the chairman of
the Energy and Natural Resources
Committee and the senior Senator
from Arkansas in a colloquy about a
provision in the energy bill which
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amends the Public Utility Holding
Company Act (PUHCA) to permit
utility and utility holding companies
to invest in foreign utility companies.
As I understand this provision, for
aU utilities and holding companies,
except those associated with the nine
multi-State utility holding companies
which are registered under PUHCA,
every State regulatory commission
with retail rate authority over an
affected utility must certify to the
Securities and Exchange Commission
(SEC) that, first, it has the authority
to protect ratepayers from the impact
of foreign utility investments, and
second, it intends to exercise that
authority. However, the onty regula-
tory body with authority to directly
review foreign utility investments
engaged in by registered holding com-
panies is the SEC.
Mr. JOHNSTON. That is correct
The provision requires the SEC to
promulgate rules or regulations
which provide for the protection of
the customers of registered holding
company utilities. In addition, when
a registered holding company issues
securities to acquire a foreign utility
company, those State commissions
with retail authority over the hold
ing company's utility subsidiaries
would be permitted to make a recom-
mendation to the SEC regarding the
holding company's relationship to a
foreign utility company. The SEC
will be required to 'reasonably and
fully consider such State recommenda-
tion.'
Mr. BUMPERS. Mr. President,
during conference committee consider-
ation of the energy bill, where the
foreign investment provision was in-
cluded, I argued that due to the risky
nature of foreign investments and
other related concerns about utility
holding company diversification, reg-
istered holding company consumers
needed protection in addition to that
provided by the SEC. The
Commission's PUHCA office is
underfunded, understaffed and, in the
recent past, has not played an active
role in the protection of consumers.
Mr. METZENBAUM. I share the
concerns of the Senator from Arkan-
sas, like ratepayers in Arkansas,
many consumers in my State of Ohio
are served by a multi-State registered
utility holding company. During the
last 5 years, several court cases have
raised questions regarding whether
the laws governing utilities and utility
holding companies provide any forum
for the protection of consumers. I
fear that the foreign utility amend-
ment will further leave consumers in
my State and the other 22 States
served by registered holding compa-
nies further unprotected.
Mr. BUMPERS. As I noted before,
while I am dissatisfied that State
regulators of registered holding com-
pany subsidiaries were not given the
same authority over foreign utility
investments that all other State regu-
lators were given, and contested the
pro vision in the conference committee,
I do note that the SEC will have to
take several steps toward the protec-
tion of consumers. I intend to follow
the SEC's process of reviewing regis-
tered holding company applications to
make foreign investments and the
issuance of rules and regulations to
protect consumers extremely closely.
If I see that the SEC is not doing the
job that the chairman of the confer-
ence committee has assured me that it
would do, I wiU take action to amend
the law so that consumers will be
adequately protected.
Mr. METZENBAUM. I thank ti»
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Senator from Arkansas for his dili-
gence on this issue. I also intend to
closely scrutinize the SEC's actions
under the foreign investment provi-
sions to ensure that consumers are
adequately protected and will join
with you in taking all necessary ac-
tions to change the law if it is insuffi-
cient.
GEOTHERMAL HEAT PUMP PROVISION
Mr. MOYNIHAN. I wonder if I can
engage in a colloquy with the manager
of the bill, my good friend the senior
Senator from Louisiana.
Mr. JOHNSTON. I would be
pleased to engage in a colloquy with
the senior Senator from New York.
Mr. MOYNIHAN. As the Senator
knows, section 303 of the bill autho-
rizes the Secretary of Energy to en-
courage the installation of geo thermal
heat pumps which utilize the flow of
water from and back into the public
water system. I think the Senate
should know that States, counties,
municipalities, private water authori-
ties, public service commissions and
others have raised serious concerns
regarding the potential for these de-
vices to have a negative impact on
local public health and safety because
of the potential contamination, of the
public water supply.
Mr. JOHNSTON. I am aware of
those concerns and that is why section
303 states that this must be done
consistent with public health and
safety.
Mr. MOYNIHAN. Since the legisla-
tion is silent on specific actions the
Secretary is required to take, am I
correct that the legislation does not
authorize or require the Secretary to
undertake any specific action such as
a rulemaking, a national program or
a proactive effort of any form?
Mr. JOHNSTON. That is correct.
The legislation does not authorize any
specific action on the part of the Sec-
retary to encourage these devices,
other than in the most general way
consistent with public health and
safety concerns.
Mr. MOYNIHAN. May I also as-
sume correctly that when issues of
public health and safety are to be
determined that the determination is
to be made by the appropriate level of
State or local government and not the
Secretary?
Mr. JOHNSTON. That is correct.
Mr. MOYNIHAN. I thank my
friend.
ENERGY EFFICIENCY
Mr. JOHNSTON. Mr. President,
there are several sections of this bill
regarding energy efficiency, title I, on
which I would like to specifically com-
ment.
First, under section 125 of the bill,
there will be established a new energy
efficiency information program for
commercial office equipment. This
language was based upon joint recom-
mendations made by the American
Council for an Energy Efficient Econ-
omy, the Alliance to Save Energy, and
the Computer and Business Equip-
ment Manufacturers Association.
These groups recommended that Con-
gress follow two principles: First, en-
courage voluntary cooperative efforts
and impose government regulation
only if such voluntary efforts fail; and
second, provide sufficient flexibility so
that the goal of providing consumers
with energy efficiency information can
be achieved in a manner that makes
sense in this market.
Flexibility is needed to determine
what type of energy efficiency infor-
mation is most usefully provided, and
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how it can best be conveyed to con-
sumers in a timely manner. House-
hold appliances such as refrigerators
are quite different than commercial
office equipment such as personal
computers. The energy consumption
labels found on refrigerators simply
may not be appropriate for commer-
cial office equipment. It is contem-
plated that the full range of methods
for providing consumers with useful
information, including labels, concern-
ing the energy efficiency of commer-
cial office equipment products will be
considered. For example, it may be
most useful to make energy efficiency
information available in catalogs
promotional materials, or in trade
magazines, rather than affixing labels
to the products themselves.
The effort to develop an effective
energy efficiency testing and informa-
tion program may involve a number of
difficult technical tasks, such as estab-
lishing testing protocols and appropri-
ately categorizing different types of
commercial office equipment. On
such technical questions, it is expected
that those with technical expertise on
commercial office equipment, such as
equipment manufacturers, standard
setting organizations, or technical
societies, should be relied upon.
Second, subsection 124(c) of the bill
would direct the Secretary of Energy
to conduct a study on the practicabili-
ty, cost effectiveness, and potential
energy savings of replacing, or upgrad-
ing components of, existing utility
distribution transformers during rou-
tine maintenance.
In conducting this study, I believe
that it is important to recognize that,
unlike the other consumer products
addressed in this legislation, distribu-
tion transformers are not commodity
products but a key part of an electrici-
ty distribution system that requires a
balance of all its component parts in
order to maximize efficiencies while
providing reliable service to custom-
ers.
Finally, section 155 of title I would
amend title Vm of the National Ener-
gy Conservation Policy Act to further
promote the use of energy perfor-
mance contracts.
It is estimated that the Federal
Government could reduce its energy
costs by approximately $1 billion an-
nually through the installation of
energy efficiency measures. However,
the budget deficit has prevented the
necessary investments from being
made by the Government.
Energy savings performance con-
tracts are a mechanism through
which private sector funds can be
obtained to finance Federal energy
assistance improvements. The confer-
ees recognize that these contracts
differ significantly from traditional
Federal procurement contracts. Un-
der these contracts, the contractor
bears the risk of performance, makes
a significant initial capital investment,
guarantees significant energy savings
to the Government agency, and from
these savings the agency, in effect,
makes payments to the contractor.
The contractor makes a guarantee
that the energy and maintenance cost
savings will exceed the contractor
payments.
Because these contracts differ sig-
nificantly from traditional Federal
contracts, existing contracting regula-
tions are often inconsistent For ex-
ample, current regulations regarding
the submission of cost and pricing
data and compliance with cost ac-
counting standards where not contem-
plated for application to energy per-
formance contracts. Accordingly, this
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provision authorizes and directs the
Secretary, with the concurrence of the
Federal Acquisition Regulation Coun-
cil, to develop substitute regulations
in these and other areas where exist-
ing regulations are inconsistent with
the goal of promoting energy perfor-
mance contracts. The Secretary is
given wide latitude to develop substi-
tute regulations within procurement
law, in order to facilitate the use of
energy performance contracts.
It is the expectation of the conferees
that uniform regulations will be devel-
oped for energy performance contracts
to relieve contracting offices of the
need to make develop modifications,
waivers, or determinations on a
case-by-case basis. The intent is to
encourage energy service companies to
contract with Federal agencies on a
uniform basis.
It is further the intent of the con-
ferees that if any agency terminates
an energy performance contract for
the convenience of the Government, it
is appropriate for the Government to
pay the contractor's fair and reason-
able termination costs, which may
include the costs related to designing,
financing; installing, and engineering
the energy efficient improvements
provided for in the contract, plus any
reasonable penalties resulting from
such termination imposed by utilities
or other entities providing funding.
Finally, this section would clarify, in
clause (a)(2XD)(Iii), that performance
contracts do not require the advanced
appropriation of the payments to be
made under the contract.
Many of the provisions in this bill
convey additional responsibilities to
the State energy offices through the
State Energy Conservation Program
(SECP). A comprehensive update of
this program, as well as the Institu-
tional Conservation Program and the
Weatherization Assistance Program
was implemented through the State
Energy Efficiency Programs Improve-
ment Act, Public Law 101-440, signed
into law on October 18, 1990. This act
was intended to streamline the afore-
mentioned programs and
their flexibility while
non-Federal financing of State <
projects. Unfortunately, the Depart-
ment of Energy has failed to issue the
implementing regulations for the stat-
ute that provides a basis for so many
of the important energy efficiency and
renewable energy provisions in the
Energy Policy Act of 1992. The confer-
ees therefore urge the Department to
take all measures necessary to issue
these implementing regulations imme-
diately.
NATURAL GAS
The conferees agreed not to include
most of title U, regarding natural gas
regulatory issues, in the confe
report. Three divisive is
to be the undoing of the natural gas
title.
First among these was the FERC
restructuring rule known as Order
No. 636. The House conferees con-
tended that a provision included as
part of the natural gas import i
made the FERC order a confe
issue. The Senate conferees dis-
agreed.
Second was the natural gas
prorationing and the so-called
Markey-Scheuer amendment in the
House bill. The Senate bill included
no comparable provision. The confer-
ees agreed to include as part of title II
a nonbinding sense of the Congress
that natural gas consumers and pro-
ducers, and the national economy, are
best served by competitive wellhead
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natural gas markets. The conferees
also agreed to statement-of-managers
language expressing the view that the
prorationing section was unnecessary
because existing law provides ade-
quate protection against States using
their prorationing authority to re-
strict production for the purpose of
increasing the price of natural gas.
Third was natural gas imports. The
House bill included a section providing
for fewer restrictions on imports of
natural gas. Most of this section had
been adopted in response to the
so-called Wirth-Domenici amendment
to the Senate bill. The Wirth-
Domenici amendment addressed con-
cerns of domestic natural gas produc-
ers that Canadian natural gas enjoyed
a competitive advantage due to dis-
parity between the way that United
States and Canadian regulators set
rates for natural gas pipeline trans-
portation. Subsequent to the adoption
of this provision in the Energy Com-
mittee, the Federal Energy Regulatory
Commission took action to address the
pipeline rate design issue that was at
the heart of the controversy. The
Wirth-Domenici amendment was
stricken from the Senate bill on the
floor. Still, the House retained its
provision that had been adopted in
response to the Wirth-Domenici
amendment.
The conferees agreed to an amended
version of the House natural gas im-
port section. As amended, the provi-
sion has been expanded to include
fewer restrictions on exports of natu-
ral gas to countries with which the
United States has a Free Trade Agree-
ment. Other language in the import
section also was modified to the satis-
faction of the Senate conferees.
Unfortunately, due to the conten-
tiousness of these three issues, most of
the natural gas title was not included
in the conference report. The provi-
sions that were dropped included
many where the Senate and House
bills were in basic agreement. These
included provisions to expedite the
authorization to construct new natu-
ral gas pipelines and to streamline
procedures at the Federal Energy
Regulatory Commission. I believe that
the intent underlying these provisions
remains valid and urge the Commis-
sion, through the administrative pro-
cess, to take steps to implement this
intent.
FLEETS AND ALTERNATIVE FUELS
The legislation contains ambitious
provisions on alternative-fueled fleets.
This is an important component of a
comprehensive energy policy bill given
the fact that two-thirds of all the oil
used in the United States is used in
transportation. During the last month
alone, American cars and trucks have
burned about 9 billion gallons of gaso-
line.
The fleets provisions of the confer-
ence report in title V contain elements
of both the House and Senate bill.
Clearly, I have a preference for the
approach adopted by the Senate. I
believe the clear and even-handed
approach of the Senate bill would
have afforded greater certainty to the
automobile manufacturers and fleet
operators and would have assured to
the American public the benefit of
decreased reliance on oil in the trans-
portation sector.
Further, it is with some reluctance
that I agreed to the provisions of the
legislation relating to the imposition
of special mandates on alternative-fuel
providers. However, the final compro-
mise on this section contains suffi-
cient safeguards so that I am satisfied
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that a sound and reasonable program
can be implemented.
Section 501(a)(1) of the bill requires
that of the new light-duty motor vehi-
cles acquired by an alternative-fuel
provider, starting in model year 1996,
a designated percentage must be
alternative-fueled vehicles. However,
paragraph (a)(5) of section 501 re-
quires the Secretary to promulgate
regulations providing for a prompt
exemption, through a simple and rea-
sonable process, from the acquisition
requirements if the alternative fuel
provider demonstrates that
alternative-fueled vehicles meeting its
needs are not reasonably available or
that the needed fuels are not available
in the area where the vehicles are to
be operated.
In addition, section 507(g)(3) of the
legislation provides general authority
that nothing in the title is to be con-
strued to require any alternative fuel
provider, or other fleet operator sub-
ject to requirements imposed by the
title, to acquire alternative-fueled
vehicles or alternative fuels that do
not meet the normal business require-
ments and practices and needs of the
fleet.
The alternative fuel provider pro-
gram set forth in section 501 is,
through the definition of covered per-
son contained in title HI, subject to
criteria as set forth in the Senate bill
making the program applicable only to
fleets of 20 or more vehicles capable of
being centrally fueled and used pri-
marily in cities of 250,000 or more
population where the alternative fuel
provider owns 50 or more vehicles
nationwide. Thus, the program is
intended to apply only to relatively
large business concerns.
Paragraph (a)(2) of section 501
describes the alternative fuel provid-
ers to whom the program require-
ments apply. Subparagraph (aXSXA)
clarifies that the program is intended
to apply onjy to those affiliates, divi-
sions, or other business units of the
alternative fuel provider which are
substantially engaged in the alterna-
tive fuels business, as determined by
the Secretary. Subparagraph (aXSXB)
provides that alternative fuel provid-
ers who are engaged in a principal
business transforming alternative
fuels into a product that is not an
alternative fuel or consuming alterna-
tive fuels as a feedstock are not cov-
ered.
Finally, the Secretary is granted
under subsection 501(b) broad author-
ity after model year 1997 to revise the
percentage requirements under the
program downward and to extend the
time under the acquisition schedule
for up to 2 model years.
The legislation also contains provi-
sions relating to a municipal and pri-
vate fleets program found in section
507. Pursuant to subsection (b) of
that section, the Secretary is required
to undertake a mandatory rulemaking
to determine if a municipal and pri-
vate fleet requirement program is
necessary, based on certain findings as
set forth in the legislation. The
rulemaking is to be started no sooner
than 1 year after the date of enact-
ment of the legislation and to be con-
cluded no later than December 16,
1996.
Any determination under this earr/
rulemaking regarding whether a vohi-
cle operating on reformulated gasoline
qualifies as meeting the i^quirementa
of the program must be made at the
time of this rulemaking; pursuant to
paragraph (g)(4) of section 507. In the
event that the Secretary determines
that a municipal and private fleets
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requirement program m necessary, the
program will commence in calendar
year 199&, when model year 1999
begins or some later date established
by the Secretary.
If the Secretary declines to initiate
a program, the Secretary, pursuant to
subsections (c), (d), and (e) of section
507, must undertake a second
rulemaking starting in 1998 and end-
ing with a determination no later
than January 1, 2000, as to whether a
municipal and private fleet require-
ment program is necessary. If the
program was initiated under the first
rulemaking; this later rulemaking
ahalls not be undertaken.
Once again, any determination
about whether reformulated gasoline
use qualifies under the program must
be made as part of this rulemaking, as
required by paragraph (gX4) of section
507. If the Secretary determines un-
der this later rulemaking that the
program is necessary, the program
will commence in model year 2002, or
at some later date determined by the
Secretary.
The legislation provides for exemp-
tions from the municipal and private
fleets requirement program under
section 507. Paragraph (g)(3) of sec-
tion 507 applies to the program. In
addition, subsection 507(i) sets forth
specific exemptions. Paragraph (2) of
that subsection provides that private
fleets garaged at personal residences
under normal operations are exempt
from the private fleets requirement
program. Paragraph (gX2) of section
507 grants the Secretary authority to
establish lesser acquisition require-
ments and to extend the dates under
the acquisition schedule. Section
507(n) provides the Secretary with
suspension authority as specified.
Section 507(o) establishes a fleet
requirement program lor the States.
A Federal fleets program is provided
for in title m of the legislation. Defi-
nitions applicable to titles m, IV, and
V, are also contained in title HI.
CO ALBED METHANE
The bill provides mechanisms to
allow coalbed methane development to
proceed while questions of ownership
of the methane resource are decided.
The provisions make no attempt to
address or resolve the ownership ques-
tion, and no inference should be
drawn regarding such question.
The section provides that in cases
where the coalbed methane operator
does not have the consent of die coal
operator to stimulate a coal seam, a
neutral entity, the Secretary of the
Interior, is to determine whether such
coal seam may be stimulated. Such a
determination is subject to appeal.
The Senate bill did not have a
coalbed methane development provi-
sion. As passed by the House, this
section gave the coal operator a veto
over the stimulation of coal seam in
the proximity of his coal mine or in
the proximity of a coal seam in which
he has the right to operate a mine.
The Senate was concerned that this
coal operator veto would frustrate the
goal of the section, which is to pro-
mote the development of coalbed
methane resources. In response to
this concern, the conference report
establishes a procedure whereby a
coalbed methane operator who has
been refiised consent, or who has not
received a reply to his request for
consent, my petition the Secretary for
a determination.
ELECTRICITY
I would like to make the following
observations concerning title VII of
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the conference report dealing with
electricity.
The definition of an exempt whole-
sale generator contained in new sec-
tion 32(a)(1) of the Public Utility
Holding Company Act of 1935 permits
an exempt wholesale generator to own
facilities and goods, such as fuel and
related transportation, storage, and
handling facilities, reasonably neces-
sary for the operation of its business.
The definition also permits an exempt
wholesale generator to sell byproducts
of electric generation such as steam
and fly ash. Such ownership and
sales are incidental to an EWG's in-
volvement in wholesale electric gener-
ation.
The definition of an EWG has been
drafted so as to permit an EWG to sell
wholesale power that it has not neces-
sarily generated itself. It appears that
buyers of wholesale power may fre-
quently desire to purchase capacity in
increments that exceed what the most
economical unit would produce. Con-
sequently, the legislation would per-
mit EWG, for example, to generate
350 MW and purchase an additional
50 MW in order to fill a purchaser's
400 MW capacity need.
Under section 32(h)(6) the SEC
may, prior to the promulgation of
final rules, issue proposed or tempo-
rary rules, and registered holding
companies may operate pursuant to
those proposed or temporary rules
until final rules are effective. The
SEC and affected persons may contin-
ue to rely upon and proceed on the
basis of such temporary or proposed
rules if the promulgation of final rules
is delayed, by reason of judicial review
or otherwise, beyond the 6-month
deadline contained in section 32(h)(6).
The State approval requirements
for affiliate transactions under new
section 32(k) of PUHCA do not apply
to situations in which a retail operat-
ing subsidiary of a registered holding
company does not enter into a con-
tractual relationship with an affiliated
EWG but indirectly receives energy
from such EWG - as opposed to capac-
ity - from another retail operating
subsidiary of such holding company
pursuant to the normal integrated
operation of such holding company
system.
Mr. President, I want to give some
recognition to the staffs of other
Members of Congress who were criti-
cal to the successful conclusion of the
electricity title of this bill. On the
House side, I give my thanks to
Jessica Laverty, minority counsel to
Congressman Moorhead, and to David
Nemtzow, legislative director to Con-
gressman Markey, for their diligent
efforts on behalf of PUHCA reform
and especially transmission access
On the Senate aide I am grateful to
Howard Useem for his cooperation
and tireless work.
In particular, I express my respect
and deep appreciation to Sue
Sheridan, counsel to Congressman
Sharp's Energy and Power Subcom-
mittee. But for her fairness, courage,
and intelligence in the face of difficult
and uncertain negotiations, I question
whether there would have ever been
an electricity title agreed to by the
conferees.
Finally, I am greatly indebted to
Sharon Heaton, senior policy adviser
to Senator Riegle. She shared the
vision of PUHCA reform at a time
when it was not the popular measure
that it has since become. With an
acute understanding of substance) and
an unfailing ability to generate cre-
ative solutions to political problems,
Sharon has been a faithful airy in the
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pursuit of good public policy.
HYDROELECTRIC POWER
In title XVII the conference commit-
tee included provisions that define the
scope of the term 'fishways' under
section 18 of the Federal Power Act.
Section 1701 of the bill provides that
fishways are:
Limited to physical structures, facil-
ities, or devices * * * and project oper-
ations and measures related to such
structures, facilities, or devices which
are necessary to ensure the effective-
ness of such structures, facilities, or
devices.
Therefore, for example, a fishway
does not include general project flows
but only those, such as attraction
flows, necessary to the proper opera-
tion of a structure, facility, or device.
To state it more generally, any flows
or project operations that are purport-
ed to be a legitimate part of a fishway
must be functionally necessary for a
structure, facility, or device to work.
Flows and project operations have no
independent validity as fishways.
STRATEGIC PETROLEUM RESERVE
In title XIV, the conferees agreed to
a modification of the existing law that
defines the circumstances under
which the President can draw down
the SPR, the SPR trigger. This modi-
fication does not represent a major
policy change. The law, as modified in
the conference report, allows the Pres-
ident to draw down the SPR only if
there is a severe energy supply inter-
ruption. Previously, the Energy Policy
and Conservation Act (EPCA) defined
an interruption in terms of a short-
age. This definition reflected the fact
that when EPCA was first enacted, oil
markets were regulated with price
and allocation controls. Under those
circumstances, a supply interruption
would likely result in shortages. Sup-
plies would not flow to the highest
bidders, and markets would not clear.
Fortunately, for both consumers and
producers, price and allocation con-
trols were abolished over a decade ago.
Markets now operate much more
efficiently.
The conferees agreed that the SPR
trigger language needed modification
to reflect the current reality of free,
deregulated oil markets. One would
now expect a severe energy supply
interruption to result in sharp price
increases. These sharp price increases
can inflict the major economic damage
in the same way as supply shortages.
Therefore, the modified trigger lan-
guage allows the President to draw
down the SPR if: First, an emergency
situation exists; second, a significant
reduction in supply has occurred
which is of significant scope and dura-
tion; third, a severe increase in the
price of oil has occurred; and fourth,
the price increase is likely to cause a
major adverse impact on the national
economy.
Let me emphasize that all four
conditions must be met. Taken to-
gether, they define the kind of crisis
in which the President should have
the power to draw down the SPR.
This modified trigger does not allow
the President to use the SPR to con-
trol oil prices, smooth out price fluctu-
ations, or otherwise manipulate the oil
market. A drawdown in response to a
price increase is allowed but only in
the context of all four conditions.
Price spikes or supply imbalances of a
regional nature would not qualify.
Nor would a demand-driven price
spike qualify. In essence, the SPR
title of the energy bill maintains the
policy that the SPR is to be used sole-
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ly for severe energy supply interrup-
tions, while recognizing that such an
interruption might result in either
shortages or severe price increases
that could cause major harm to the
economy.
Mr. President, I want to join with
the vast majority of my colleagues in
expressing support for this legislation.
This has been one long time coming.
There has been a great deal of work
done on this bill in order to reach
such a carefully crafted, strong, bipar-
tisan piece of legislation. This is,
indeed, the culmination of years of
hard work at all levels.
Mr. President, I would like to first
take the time to offer my great appre-
ciation to the very able committee
chairman, Senator Johnston, and the
ranking member, my esteemed and
dedicated senior colleague and
long-time friend from Wyoming, Sena-
tor Malcolm Wallop.
I have known the senior Senator
from Wyoming for over 40 years. He is
a special man and a special friend. I
know that Senator Wallop has devot-
ed so much time these past years to
crafting a national energy strategy bill
that truly charts the course for energy
use and conservation in the United
States well into the 21st century.
Malcolm Wallop is truly a credit to
Wyoming and to the Senate. We are
all so very proud of him and his her-
culean efforts. He brings great pride
to our State.
Mr. President, I am troubled by the
resistance this legislation seems to be
faced with in these closing hours of
the session. It is somewhat ironic
that the resistance is coming from
those who are normally strongly
aligned with proenvironmental legisla-
tion. Because I believe this bill is, in
fact, very good for the environment.
This energy legislation charts our
country's energy course for the next
generation; well into the 21st century.
The bill before us encourages the con-
sumption of cleaner fuels using in-
creasingly efficient methods. This
legislation responsibly addresses the
environmental impacts of fuel use in
densely population areas.
Our colleagues serving on the Fi-
nance Committee deserve commenda-
tion, as well, Mr. President. This legis-
lation corrects a great unfairness
imposed on independent oil and gas
producers by eliminating
the alternative minimum tax for in-
tangible drilling costs. That single
provision will do much to stimulate
domestic production of oil and gas and
take us one further step from reliance
on imported oil.
This is truly a national energy
strategy, Mr. President. This legisla-
tion deals with electric power genera-
tion and includes provisions to eco-
nomically expand electrical power
generation facilities by amending the
Public Utility Holding Company Act.
But that is not all, Mr. President,
there are incentives in this legislation
which will lead to use of cleaner fuels
in existing power generation facilities.
Efficient use of existing forms of
energy is a priority in this strategy.
Everything is covered: from alterna-
tive fuels for fleet operators to more
efficient light bulbs, air-conditioners,
and hearing systems.
The Federal Government plays a
significant role in increasing efficiency
and reducing waste and cutting back
on pollution. In many respects, Mr.
President, we could fairly call this
legislation the environmentally con-
scious national energy strategy.
This national energy strategy not
only looks to the future in providing
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for cleaner and more efficient energy
sources, but the legislation also takes
on a global perspective. The provi-
sions to improve clean fuel technology
and then aggressively share those
cleaner technologies with the rest of
the world reflect true vision, Mr. Pres-
ident. These provisions, together with
the farsighted research and develop-
ment sections of this legislation, will
result in less dependence on foreign
oil, a cleaner environment for all
Americans, and the potential to sell
these technologies throughout the
world.
With respect to nuclear power, Mr.
President, it is my view that history
will record this legislation as truly a
landmark of the 102d Congress of the
United States.
I am particularly pleased to see that
the conferees have retained the urani-
um mining and enrichment provisions
as well as the nuclear plant licensing
reform provisions.
This legislation takes a step toward
privatizing the Federal program of
uranium enrichment - it creates a
Government uranium enrichment
corporation. Restructuring the De-
partment of Energy's uranium enrich-
ment office into an independent Gov-
ernment corporation will improve the
corporation's competitive edge and
will promote enrichment sales.
I am pleased that this legislation
contains provisions which allow the
partial reimbursement of the costs of
reclamation and remediation at urani-
um mill tailings sites which produced
uranium for the U.S. defense pro-
gram.
For many years, I have sought to
preserve the infrastructure needed to
maintain a modicum of domestic capa-
bility to fuel the domestic nuclear
reactors which produce more than 20
percent of this Nation's electricity.
Uranium is a fuel which is abun-
dant in the United States and which
is extremely efficient. For example,
the energy of a finished uranium fuel
pellet the size of a pencil eraser is
equivalent to the energy contained in
1,780 pounds of coal, 149 gallons of
oil, or 157 gallons of regular gasoline.
The United States was the major
producer of uranium in the world, and
Wyoming still produces uranium to
fuel electricity generating reactors. At
its height of production in 1980, Wyo-
ming produced 12 million pounds of
uranium - the energy equivalent of 15
billion gallons of oil. In 1980, the U.S.
uranium mining industry employed
20,000 people. Now only about 1,300
people are employed - 300 in Wyo-
ming; 26 uranium mills and 350 ura-
nium mines have closed around the
country since the peak in production
of the early 1980's. Today, only sever-
al uranium mines and two uranium
mills are operating.
Market conditions during the
1980 's, over supply and low-cost ura-
nium producers outside the United
States, have plagued the U.S. urani-
um industry. This has resulted in the
deterioration of the U.S. uranium
mining infrastructure. By 1995, esti-
mates show that U.S. uranium pro-
duction will only be 10 percent or less
of U.S. demand to fuel reactors.
This country's utilities have become
dependent on imports of uranium.
This legislation will increase the de-
mand for U.S. produced uranium. It
will preserve the uranium mining and
enrichment infrastructure of this
country so that we can reduce our
dependence on imported uranium.
Another important uranium provi-
sion in this bill seeks to ensure that
an agreement, announced by the Pres-
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ident, between the United States and
Russia will succeed. According to the
agreement, the United States will
purchase Russian nuclear weapons-
grade uranium. That high enriched
uranium will be used by the Depart-
ment of Energy in its production of
low enriched uranium fuel for com-
mercial nuclear reactors and will be
used in a way that will minimize dis-
ruptions to the commercial market.
This swords- to-plowshares agreement
is a watershed development for the
peace and security of all nations. It
will make the world a safer place from
nuclear proliferation and ushers in a
new era of international cooperation.
The nuclear plant licensing reform
provision expands, so very favorably
in my belief, upon the Nuclear Regu-
latory Commission's (NRC) part 52
rule for a combined construction and
operating license. This provision clar-
ifies that public concerns should be
addressed before a spade of soil is
turned - not after completion of a
plant. Once the construction of a
plant is approved by the Nuclear Reg-
ulatory Commission (NRC), a utility
may proceed with construction with-
out the specter of indefinite delays.
The NRC may halt construction at
any time if new information arises
which the Commission decides is sig-
nificant with respect to safety. In any
event, any NRC licensing decision may
be appealed in Federal court. This is
significant improvement over current
practice.
I wish to thank Senator Breaux for
diligently working to preserve a provi-
sion, which he introduced and I co-
sponsored, which allows for the re-
moval of restrictions on utility decom-
missioning fund investments. This
provision will open up a wider range
of investment options for utilities to
consider in managing these funds and
will thereby greatly benefit utility
ratepayers and the American taxpay-
ers.
Certainly, Mr. President, some
tough compromises had to be made to
get to the point we have now reached
on this legislation. As in all truly
bipartisan efforts, this legislation does
not do all that some among us would
prefer. Some of our colleagues here
feel very strongly that there should
have been a moratorium declared on
Outer Continental Shelf leasing. I
happen to disagree with them -just as
strongly. Others of our colleagues - 1
among them - strongly feel that there
should have been a provision in this
legislation to permit the limited explo-
ration of the Arctic National Wildlife
Refuge. There are other conscientious
issues.
The truth is, Mr. President, that
this is a national energy strategy, not
a parochial one. There are no special
provisions directed to benefit any
single State. All States benefit.
My home State of Wyoming will
benefit in ways far different than the
populated coastal States. For example,
Wyoming will directly benefit from
this energy strategy. It encourages
increased production of natural gas.
While Wyoming is a leader in the
production of natural gas, the rig
count in recent years has been well
below average. I have reason to be-
lieve this legislation will cause a real
improvement in exploration and devel-
opment activities in the West.
But, Mr. President, as Wyoming
benefits from increased demand and
production of natural gas, more dense-
ly populated States will benefit from
the increased supply of that resource.
Prices will tend to remain stable so
consumers will benefit. The popula-
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tion centers will also benefit because
natural gas is cleaner and more effi-
cient - the air quality and the quality
of life in the major cities will be im-
proved.
This legislation encourages the use
of clean coal and the development of
new technologies for using and for
marketing that coal. Wyoming will
benefit from these provisions because
Wyoming has some of the cleanest and
largest coal reserves in the world. My
State's economy will benefit and con-
sumers will benefit. Use of clean coal
will result in a direct improvement of
air quality. Again, Mr. President,
everyone will enjoy an improvement in
the quality of life because of this legis-
lation and the planning and the
thoughtful efforts of our fine col-
leagues on the Energy and Natural
Resources Committee.
But that is legislating, Mr. Presi-
dent. That is what we are all about.
We make the tough compromises and
the tough choices - sometimes we take
our lumps making those choices and
compromises • but we do that with the
country's very best interest in mind.
This legislation is historic, just as
the Clean Air Act was, and I, for one,
am very pleased to support it. In my
view, Congress will have done well,
indeed, when we send this legislation
to the President for his signature.
MONITORED KKTRIKVAIILK STORAGE
PROVISIONS
Mr. DURENBERGER. Mr. Presi-
dent, one of the provisions in this bill
changes our policy with respect to the
temporary storage of nuclear waste
from electric powerplants.
In the Nuclear Waste Policy Act,
Congress authorized construction of
temporary, above-ground storage facil-
ities for the spent fuel rods from pow-
erplants. These facilities would serve
as a midway point between the stor-
age pools located at nuclear reactors
and the permanent repository that
will isolate the waste from the bio-
sphere so long as it remains radioac-
tive.
The temporary holding facilities are
called MRS the acronym for moni-
tored retrievable storage. MRS facili-
ties will take the wastes, store it safe-
ly for a time, perhaps process the
waste for ultimate disposal and then
send it on to the permanent reposito-
ry.
There has been opposition to the
MRS concept. Many are opposed to
processing spent fuel because it can be
used to make nuclear explosives. The
Carter administration banned fuel
reprocessing as an option in the Unit-
ed States because of this fear of prolif-
eration.
The other concern about MRS is
that it will weaken our resolve to
develop a permanent repository. If we
have these temporary storage facili-
ties, the pressure to find a permanent
solution to the nuclear waste problem
will be off. The powerplants will be
relieved of their wastes, the material
will be in the hands of the Govern-
ment and who cares if the Govern-
ment takes the next step and places it
in a permanent facility.
We all should care, Mr. President.
We ought not pass this nuclear waste
problem on to our children unre-
solved. For those two reasons, cur-
rent law prevents the construction of
an MRS until the permanent waste
repository is in operation. That is a
policy that we should continue.
Northern States Power, a Minneso-
ta utility that operates two reactors, is
beginning to run short of storags ca-
pacity at iu powerplants. Their peti-
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tion to expand that storage capacity
has recently been rejected by the
State of Minnesota. Allowing construc-
tion of an MRS even before a perma-
nent facility is open would give them
relief. Nevertheless, I think this is a
change in policy that is not well ad-
vised. We need to keep our focus on
the permanent repository that will
separate nuclear waste from life on
this planet.
ELECTRICITY TRANSMISSION
Mr. LOTT. Mr. President, amend-
ing section 212 of the Federal Power
Act, the conference agreement says
the rates, charges, terms and condi-
tions of wholesale transmission servic-
es pursuant to a section 211 order
shall permit the recovery of costs
'including taking into account any
benefits to the transmission system of
providing the transmission service.'
What are such 'benefits to the trans-
mission system?1
Mr. WALLOP. The purpose of this
language is to recognize that the elec-
trical system of a transmitting utility
is a dynamic system which must han-
dle numerous transfers of electricity
simultaneously. This phrase requires
that where an order under section 211
causes benefits from reduced line
losses on parts of the transmission
system, the reduced losses must be
taken into account in the recovery of
other costs, including the costs of any
increased losses in other portions of
the transmission system.
Mr. LOTT. Amending the same
section, the conference agreement
states, among other things, that
transmission 'rates, charges, terms,
and conditions shall promote the eco-
nomically efficient transmission and
generation of electricity.' What is the
meaning of 'economically efficient
transmission and generation of
electricity' in this context?
Mr. WALLOP. The purpose of this
language is to encourage negotiated
rates, where appropriate. In cases
where the relevant market - the mar-
ket for delivered power - is competi-
tive, the negotiated or market price
will reflect the true value of the use of
facilities and promote the economical-
ly efficient allocation of resources. In
such cases, a market-based rate shall
be deemed to meet all the require-
ments of section 212 (a).
Mr. NICKLES. Mr. President I ask
unanimous consent to put in the Re-
cord a summary and section-
by-section analysis of the oil pipeline
regulatory reform title of the Energy
Policy Act of 1992.
This was prepared jointly by the
Association of Oil Pipelines and the
National Council of Farmer Coopera-
tives.
There being no objection, the analy-
sis was ordered to be printed in the
Record, as follows:
OIL PIPELINE REGULATORY REFORM
TITLE XVIII OF H.R. 776
BACKGROUND AND NEED FOR LEGISLA-
TION
Tho Interstate Commerce Act (ICA) w
ml in 1887 and lies been amended many tan
ovor tho yciara. In 1906, oil pipelines we
subject to the ICA by tho Hepburn Act
In 1977, in conjunction with the formation of
the Department of Energy, regulatory authority
over oil pipeline under the ICA was transferred
from tho Interstate Commerce Commission (IOC)
to tho newly created Foderal Energy Regulatory
Commission (FERC). Soe Section 402(b) of tht
Department of Energy Organization Act, 42
U.S.C. 7172(b). That transfer was intended to
facilitate a coordination of energy policy by bring-
ing regulation of oil pipelines under the asms
agency responsible for regulation of other forms
of energy transportation. Importantly, the tradi-
tional standards governing rate regulation under
the ICA were not modified.
The FERC's first substantive ruling under its
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ICA authority concerned u rale proceeding in-
volving William* Pipeline. The case has boon
initiated at the ICC before regulatory authority
over oil pipelines was transferred to the FERC.
The ICC'a decision had In«ii appealed to a federal
appeals court for review. The FERC requested
the court to remand the case to enable the FEKC
to develop its own oil pipeline rate making meth-
odology. The court remanded the matter to the
FERC. Farmers Union Central Exhange v.
FERC, 684 F.2d 408 (DC. Cir. 1978) ('Farmers
Union P).
On remand, the FEKC issued Order No. 154.
21 FERC 61,260 (1982). Order No. 154 was
struck down by tho D.C. Circuit in Fannors Un-
ion Central Exchange. Inc, v FEKC, 734 F.2d
1486 (D.C. Cir. 1984) ('Farmers Union IP). In
response to the D.C. Circuit'** rejection of Order
No. 154, the FEKC issued Order No. 154-B, 31
FERC 61,337 (1985). adopting 'net depreciated
trended original cost' as (he basis for oil pipeline
rate regulation, but leaving aspects to be devel-
oped on a case-by -case basis. See ARCO Pipe
Line Co.. 63 FERC 61.398 (1990).
Despite years of administrative proceedings and
judicial litigation, to date the process has not
yielded a generally applicable oil pipeline
ratemaking methodology that meets the needs of
the oil pipeline industry and its shippers.
Moverover, both oil pipelines and shippers have
generally been dissatisfied with the FERC's
case-by-case approach to developing an oil pipe-
line ratemaking methodology.
HISTORY OF TILE VIII
The House Energy and Commorco Committee
adopted an oil pipeline regulatory reform propos-
al as Title XVIII of the House energy bill, H.R.
776. H.R. 776 was sequentially referred to the
House Public Works and Transportation Commit-
tee. The House Public Works and Transportation
Committee reported its own version of Titlo
XVIII which was more general in many respects
than the Title reported by the Energy and Com*
merce Committee.
A compromise version of Title XVIII was adopt-
ed as part of the original text of H.R. 776 consid-
ered by tho full House. Title XVIII as passed by
the House enjoys the support of both the oil pipe-
line industry and many oil pipeline shipper inter-
ests.
Oil pipeline legislation was not included in S.
1220 reported by the Senate. The Senate receded
to the House after minor amendments ofTored by
the Senate were agreed to by the House.
SECTION-BY-SECTION ANALYSIS
Titlo XVIII is comprised of three major ele-
ments. First. Title XVIII calls upon the FERC to
develop a 'simplified' ratemaking methodology
applicable to regulation of oil pipelines under the
Interstate Commerce Act. Second. Title XVIII
directs the FERC to streamline its ratemaking
procedural rules. Third, for purposes of future
ratemaking, Title XVIII establishes a baseline of
historically-effective rates that, to a limited ex-
tent, are deemed to be just and reasonable under
tho ICA. This mechanism is intended to provide
a one-time basis for implementation of new rates
developed pursuant to the rate reform methodolo-
gy to be developed by the FERC in response to
the legislation, the starting point for which are
those existing rates that meet the specified crite-
ria in section 1803(a). The mechanism for estab-
lishing base rates as just and reasonable does not
apply to rates approved by the FERC after the
date of enactment.
It is important to note that Title XV11I does
not affect regulation of the rates of the
Trans-Alaska Pipeline.
SECTION 1801 - OIL PIPEUNE
RATEMAKING METHODOLOGY
Section 1801(a) requires the FERC to conduct
a rulemaking to develop a 'simplified ratemaking
methodology' for oil pipelines in accordance with
section 1(5) of Part I of the Interstate Commerce
Act. In this regard, the methodology must be
consistent with the substantive requirements of
the ICA. This ratemaking methodology must be
'ge no rally applicable' to oil pipelines. The FERC
must issue a final rule within one year after
enactmout. Section 1801(b) provides a 366-day
delay in the effective date of the final rule re-
quired by subsection (a).
SECTION 1802 - STREAMUNING OF FERC
PROCEDURES
Section 1802(a) requires the FERC to conduct
a rulemaking to streamline its oil pipeline
ratemaking procedures. The procedural reforms
■re intended to eliminate unnecessary regulatory
costs and delays. Tho FERC must enact the final
rule within 18 months after enactment of the
legislation.
Section 1802(b) identifies issues the FERC b to
consider in conducting the rulemaking mandated
by subsection (a). Subsection (b) does not, howev-
er, require the FERC to adopt any particular
procedural reforms.
Subsection (c) directs Die FERC to identify
procedural changes which the FERC believes
would be usoful but which require legislative
authorization before they may be adopted by the
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PERC. The FERC ix to advise Congress of proce-
dural change* that require* such legislative autho-
rization.
Subsection (d) is a response to dissatisfaction
by oil pipeline* and id uppers respecting their
inability to terminate costly proceedings before
the FERC when the pipeline and the shipper
have readied an accord on their di (Terences and
the pipeline has withdrawn the tariff increase
that gave rise to the tariff proceeding. Oil pipe-
lines and shippers have expressed concern re-
garding the inability of the pipelino to withdraw
its proposed lariflT increase and reinstate its prior
rate in order to resolve a shipper's protest.
Under paragraph (1) of subsection (d). if an oil
pipeline withdraws a proposed rate increase, the
tariff proceeding related to the withdrawn rate
increase is to be terminated and the pipeline's
previously-effective rate is to Ik* reinstated. The
oil pipeline must refund any amounts collected
under the withdrawn tariff that were in excess of
the revenues the pipeline could have collected
under the previously effective larifTrate. Howev-
er, the Conference Committee expects that tho
FERC will give duo consideration to the adverse
consequences to shippers that could result from
the untimely termination of cases challenging
rate increases. For example, if a case, that has
been litigated for a considerable period of time, is
nearing a decision, the Committee would not
expect the FERC to permit the case to be abrupt-
ly terminated over the objection of the complain-
ing shipper.
Under paragraph (2) of subsection (d). when a
complaint is withdrawn, the proceeding before
tho FERC is to be terminated. Paragraph (2) is
intended to ensure that the FERC does not con-
tinue a proceeding where the basis for tho com-
plaint which initiated the proceeding no longer
exists. Nothing in paragraph (2) prejudices the
FERC's authority to institute its own investiga-
tion under the ICA if the FKRC determines that
such an investigation is warranted.
Subsection (e) requires the FERC to adopt
rules which promote the use of alternative dis-
pute resolution procedures as the preferred meth-
od of resolving rate disputes between oil pipelines
and shippers. Subsection (a) provides an oppor-
tunity for alternative dispute resolution after an
oil pipeline tariff change has been filed, and thus
offers significant potential rewards in reduced
costs and time for both shippers and oil pipelines.
While the FERC has taken steps to implement
the Administrative Dispute Resolution Act, this
subsection is a continuing expression by Congress
that alternative dispute resolution should be
encouraged in this context.
SUBSECTION 1803 - PROTECTION OF
CERTAIN EXISTING RATES
Section 1803 provides increased rate certainly,
limits the opportunity for future challenges to
rates which have been in effect without challenge
for an extended period of timo, and limits refund
exposure with respect to those rates.
Subsection (a) of section 1803 identifies oil
pipeline rates that will be deemed just and rea-
sonable by operation of law. Paragraph (I) of
subsection (a) provides that rates in effect for a
366-day period before enactment of this legisla-
tion are deemed to be just and reasonable for
purposes of tho ICA if tho rates were not subject
to protest, investigation or complaint within that
365-day period. Paragraph (2) of subsection (a)
provides that rates that were in effect on the
365th day preceding tho date of the enactment of
this legislation are deemed to be just and reason-
able for purposes of the ICA even if the rates
were not in effect throughout the 365-day period
preceding enactment if an intervening rate filing
was made during tho 365-day period, so long as
the rates in effect 365 days before enactment
were not subject to protest, investigation or com-
plaint during the period in which those rates
were in effect. Consistent with the foregoing, the
conferees intend that a person may file a com-
plaint up to. and including, the day preceding the
date of the enactment of this legislation and that
the complaint need only comply with FERC's
existing regulations in order to satisfy the statu-
tory requirement. So long as a complaint filed
during the periods described above meets this
standard, tho complaint will be sufficient to pre-
clude a rate from being deemed just and reason-
able under section 1803(a). In view of the fact
that, but for tho exceptions provided in subsec-
tions (b) and (c) of section 1803, this will be
complainants' last chance to challenge such rates
as well as FERC's last chance to review such
rates before they are deemed just and reasonable,
the conferees expect that FERC will review such
complaints carefully.
Deeming rates just and reasonable under sub-
section (a) does not insulate those rates from all
subsequent challenge, however. Paragraph (D of
subsection (b) establishes two alternative thresh-
old showings, either of which will permit a sub-
stantive challenge to the justness and I
ness of a rato (otherwise deemed just and i
able under subsection (a)). Under paragraph (1)
of subsection (b), the person seeking to challenge
a rate deemed just and reasonable under subsec-
tion (a) must demonstrate the existence of s
substantial change alter the enactment of the
legislation either (A) in the *o
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stances of the oil pipeline' which were tho I
for the rate; or (B) in 'the nature of services
provided' which were the basis Tor the challenged
rate. Under paragraph (2) of subsection (b), a
person may challenge u rate deemed just and
reasonable if tho person had been prohibited from
filing a complaint by a contract provision in effect
prior to January I, 1991 and on tho date of the
enactment of this legislation. The complaint
must, however, be brought within 30 day* of the
expiration of the contractual prohibition.
Except as provided in subjection (c) described
below, the FEKC may not investigate the lawful-
ness under the ICA of a rule deemed just and
reasonable under subsection (a) unless one of
these threshold showings is made. In tho evout
that one of the required threshold showings has
been made, the FEKC may proceed to review the
justness and reasonableness of the challenged
rate without regard to subsection (a). However, if
as a consequence of such review, a tariff reduc-
tion is ordered, refunds may be ordered to be paid
only for transportation services rendered from
the date the complaint was filed.
Subsection (c) provides that even though a rate
is deemed just and reasonable under subsection
(a), an aggrieved person may file a claim against
any rate as unduly discriminatory or unduly
preferential. Subsection (c) also permits com-
plaints to be filed against non-rale tariff provi-
sions on grounds of undue discrimination or
undue preference. The distinction between com-
plaints under subsection th) and complaints un-
der subsection (c) is that complaints under sub-
section (b), as to which the threshold showings
described above apply, are complaints directed at
the level of the rate itself. By contrast, com-
plaints under subsection (c) are premised on
some element of undue discrimination, rather
than the level of the rale alone.
SECTION 1804 - DEFINITIONS
Section 1804( 1) defines the term 'Commission'
as the Federal Energy Regulatory Commission.
The term includes the Oil Pipeline Board and
any other office of the FEKC unless tho context
requires otherwise.
Paragraph (2) defines 'oil piftclinc' as any com-
mon carrier which transports oil by pipeline and
is subject to the FERC's ralemaking authority
under the ICA. The definition excludes the
Trans-Alaska Pipel""' <TAI*S).
Paragraph (3) incorporates the meaning of 'oil'
used for purposes of transferring the oil pipeline
regulatory functions of the ICC under the ICA to
the FERC pursuant to the Department of Energy
Organization Act. When authority over oil pipe-
lines (including both crude oil and refined petro-
leum product lines) was transferred to the FERC,
initially the ICC also transferred, and the FERC
accepted, authority over anhydrous ammonia
pipelines which had been regulated by the ICC
under the ICA on the same basis as oil pipelines.
Subsequently, tho FERC and the ICC deter-
mined, and the Court of Appeals agreed, that
anhydrous ammonia did not qualify as 'oil' and
regulation of these pipelines was returned to the
ICC where it is vested today. This definition
assures that regulatory reform under this legisla-
tion will apply only to those oil pipelines over
which tho FERC exercises regulatory authority
under the ICA and does not extend to anhydrous
ammonia pipelines which remain subject to regu-
lation by the ICC under tho ICA.
Paragraph (4) defines the term 'rate* to mean
'ull charges that an oil pipeline requires shippers
to pay for transportation service.' This definition
is intended to encompass any type of fee, tariff,
fare, or other charge, however denominated by
tho pipeline, for transportation or transportation
services, and is included to address imposition of
separate charges by some pipelines for certain
transportation services. However, the definition
is not intended to change the scope of FERC
jurisdiction under tho ICA or extend the jurisdic-
tion of tho FERC beyond that provided under the
ICA.
(At the request of Mr. Mitchell, the
following statement was ordered to be
printed in the Record.)
CHANGES TO THE PUBLIC UTILITY
HOLDING COMPANY
Mr. SANFORD. Mr. President, I
rise to discuss provisions in this con-
ference report amending the Public
Utility Holding Company Act
(PUHCA). I am pleased that the con-
ference report changing PUHCA in-
cludes concepts from the Senate bill
that assures that the States will be
required to consider promptly a series
of issues arising in connection with
so-called exempt wholesale generators
(EWG's). As the Senate is aware, this
was an issue in which I took a special
interest, with emphasis on assuring
full State consideration of the effects
of disproportionately greater amounts
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4912
small steps, but they will yield enor-
mous benefits in energy savings.
Make no mistake about it, in the long
run it will be cheaper to implement
small measures such as this rather
than build expensive new power
plants.
I would also like to note that I am
pleased that H.R. 776 has retained an
amendment that I cosponsored with
Senators Hatfield and Wirth that will
beef up the Department of Energy
low-income weatherization program.
This will benefit those who often do
not have the resources to weatherize
their homes, and it will be particularly
helpful in a State like North Dakota.
H.R. 776 will also increase the effi-
ciency of our power-generating indus-
try by increasing competition. The
amendments to the Public Utility
Holding Company Act (PUHCA) will
open up the utility industry to allow
independent power producers to com-
pete for power contracts. The in-
creased competition that will result
from these changes will lead to re-
duced utility costs, and the Depart-
ment of Energy estimates that it will
save $1.8 billion per year.
There were many who were con-
cerned about the wisdom of altering
the Holding Company Act. I shared
many of these concerns and believe
that H.R. 776 goes a long way in as-
suring that the PUHCA amendments
will not have a negative effect. It will
allow wholesale sales by IPP's, but not
retail sales or so-called sham transac-
tions. This will prevent an IPP from
cherry-picking large customers away
from a utility and leaving the small
customers with higher rates. H.R.
776 also has a strong provision to
insure system reliability. Finally, I
continue to be concerned about the
potential negative effects of highly
leveraged IPP projects. IPP projects
generally have a much higher
debt-equity ratio than utility projects.
Therefore, I am pleased that H.R. 776
contains my amendment requiring
States to conduct a review of the po-
tential negative effects of
debt-leveraging. Such a review will
hopefully serve to protect consumers
from the adverse consequences of
highly leveraged projects.
I also feel very strongly that we
need to take steps to promote alterna-
tive fuels as a way of reducing our
dependence on foreign oil. Transpor-
tation accounts for 60 percent of U.S.
oil consumption, and it is time to start
promoting fuels other than oil. H.R.
776 contains an aggressive alternative
fuels program that will utilize natural
gas, alcohol fuels, hydrogen, and elec-
tricity. The bill also solves the prob-
lem of creating both a supply and
demand for these vehicles by requir-
ing Government fleets to begin pur-
chasing alternative fuel vehicles. It
will also require the Secretary of En-
ergy to perform a rulemaking to set
standards and a timetable for private
fleet requirements. The fleet require-
ments will apply to 50-car fleets in
cities of 250,000 or more.
One of the biggest energy policy
failures of the past 12 years has been
the administration's gutting of renew-
able energy programs. Environmen-
tally safe and domestically available,
renewable energy holds the promise
for our energy future. H.R. 776 takes
strong steps to promote development
of solar, wind, biomass, and geother-
mal power. It includes a Federal pro-
duction incentive for new renewable
facilities, joint ventures for technology
development, and a tax credit for
renewable energy production. Mr.
President, my State of North Dakota
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In general, States should be consid-
ered fully free to operate in a discre-
tionary manner to fully and effectively
implement the full scope of this regu-
lation authority in this area in order
to protect consumers.
Mr. President, I think that as we
move toward a broad restructuring of
the utility industry, our mandate that
States take an active role in consider-
ing the risks as well as the promised
rewards of purchased power will prove
as the most important consumer pro-
tection tool in this legislation.
If I might, Mr. President, let me
conclude by noting that this is just
the first chapter in a restructuring
effort that Congress will have to revis-
it, at least in an oversight capacity.
In that connection, we may need addi-
tional legislation. For example,
changes may be in order to the Public
Utility Regulatory Policies Act. I un-
derstand that our chairman has
agreed to look at this issue early in
the next Congress, and I commend
him for that as I suspect that, in the
new climate created by this bill, some
limits on the PURPA mandatory pur-
chase right may prove to be appropri-
ate.
Mr. President, I thank the Chair
and I yield the floor.
Mr. CONRAD. Mr. President, I
want to express my strong support for
the conference report on H.R. 776, the
Energy Policy Act of 1992. This is the
most comprehensive energy legislation
that we have considered in over a
decade, touching virtually every sector
of the U.S. energy industry. It will
reduce our dependence on imported
energy, make our economy more effi-
cient and competitive, and spur re-
search and development of innovative
new energy technologies. H.R. 776 is
a 'Made in America' bill that will
improve the utilization of our domes-
tic resources and lead to domestic
economic growth.
Our need for a comprehensive ener-
gy policy is acute. We cannot afford
to forget so quickly the wrenching
experience of the Persian Gulf war.
Just 2 years ago, we sent over 500,000
of our men and women halfway
around the world to defend the oil
reserves in the Middle East. We risked
the lives of our fighting forces to in-
sure that we would not lose our oil
supply. In fact, the war was in part
the result of our failure to implement
a comprehensive energy strategy.
Mr. President, I strongly believe our
country needs and deserves an energy
policy that will reduce our dependence
upon imported oil. Our economy is
still highly vulnerable to increased oil
prices. Can we allow our economic
future to be determined by the whims
of Middle Eastern leaders? The oil
embargo price spikes of the 1970's still
haunt us today, and they could be
waiting just around the corner in the
near future if we do not take aggres-
sive action today.
H.R. 776 will address the problem of
our oil dependency from many differ-
ent directions. One of the most im-
portant titles in the bill is the one on
energy efficiency. Increased efficiency
must be a cornerstone of any serious
policy - it is the key to reducing de-
mand and making our economy more
competitive. I would note that im-
provements that we have made in
energy efficiency since the 1970's have
yielded significant increases in produc-
tivity. H.R. 776 will set new energy
efficiency measures for homes, build-
ings, appliances, motors, lamps, and
factories. It also sets new standards
Mr. President, these may sssm like
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4912
small steps, but they will yield enor-
mous benefits in energy savings.
Make no mistake about it, in the long
run it will be cheaper to implement
small measures such as this rather
than build expensive new power
plants.
I would also like to note that I am
pleased that H.R. 776 has retained an
amendment that I cosponsored with
Senators Hatfield and Wirth that will
beef up the Department of Energy
low-income weatherization program.
This will benefit those who often do
not have the resources to weatherize
their homes, and it will be particularly
helpful in a State like North Dakota.
H.R. 776 will also increase the effi-
ciency of our power-generating indus-
try by increasing competition. The
amendments to the Public Utility
Holding Company Act iPUHCA) will
open up the utility industry to allow
independent power producers to com-
pete for power contracts. The in-
creased competition that will result
from these changes will lead to re-
duced utility costs, and the Depart-
ment of Energy estimates that it will
save $1.8 billion per year.
There were many who were con-
cerned about the wisdom of altering
the Holding Company Act. 1 shared
many of these concerns and believe
that H.R. 776 goes a long way in as-
suring that the PUHCA amendments
will not have a negative effect. It will
allow wholesale sales by IPP's, but not
retail sales or so-called sham transac-
tions. This will prevent an IPP from
cherry-picking large customers away
from a utility and leaving the small
customers with higher rates. H.R.
776 also has a strong provision to
insure system reliability. Finally, I
continue to be concerned alxmt the
potential negative effects of highly
leveraged IPP projects. IPP projects
generally have a much higher
debt-equity ratio than utility projects.
Therefore, I am pleased that H.R. 776
contains my amendment requiring
States to conduct a review of the po-
tential negative effects of
debt-leveraging. Such a review will
hopefully serve to protect consumers
from the adverse consequences of
highly leveraged projects.
I also feel very strongly that we
need to take steps to promote alterna-
tive fuels as a way of reducing our
dependence on foreign oil. Transpor-
tation accounts for 60 percent of U.S.
oil consumption, and it is time to start
promoting fuels other than oil. H.R.
776 contains an aggressive alternative
fuels program that will utilize natural
gas, alcohol fuels, hydrogen, and elec-
tricity. The bill also solves the prob-
lem of creating both a supply and
demand for these vehicles by requir-
ing Government fleets to begin pur-
chasing alternative fuel vehicles. It
will also require the Secretary of En-
ergy to perform a rulemaking to set
standards and a timetable for private
fleet requirements. The fleet require-
ments will apply to 50-car fleets in
cities of 250,000 or more.
One of the biggest energy policy
failures of the past 12 years has been
the administration '8 gutting of renew-
able energy programs. Environmen-
tally safe and domestically available,
renewable energy holds the promise
for our energy future. H.R. 776 takes
strong steps to promote development
of solar, wind, biomass, and geother-
mal power. It includes a Federal pro-
duction incentive for new renewable
facilities, joint ventures for technology
development, and a tax credit for
renewable energy production Mr.
President, my State of North Dakota
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has more potential for wind energy
than any other State. I can assure you
from personal experience that the
wind blows almost all the time there.
Does it not make sense to harness and
develop this nonpolluting resource?
H.R. 776 will help to achieve this goal.
I'd also like to point out that the
bill also contains a provision of mine
which will help promote renewable
energy projects in rural areas. It will
authorize States to make DOE grants
to farmers and rural electric coopera-
tives for renewable energy develop-
ment.
Another key to reducing our oil
dependence is to find new ways to
utilize our coal resources in clean and
efficient ways. We have enough coal
in the United States to supply us for
hundreds of years. H.R. 776 will pro-
mote clean coal technology and effi-
ciency by authorizing new innovative
coal projects. Of particular note are
provisions which I authored to pro-
mote the research of low-rank lignite
coal, which is found in abundance in
North Dakota. North Dakota has an
estimated 30 billion tons of recover-
able coal reserves which can power
our country for centuries to come.
Finally, Mr. President, although
this bill properly ensures that retired
coal miners will continue to receive
their health benefits, it does so on the
backs of the wrong people. The
reachback provision in the bill is un-
fair, and imposes extreme hardship on
certain former BCOA signatories. It
creates a windfall for large BCOA
signatory companies, who since 1988
have willfully underfunded the 1950
and 1974 health benefit trusts, at the
expense of former signatories. I urge
the Finance Committee to revisit the
reachback issue early next year, to
ensure that the bill places these finan-
cial obligations where they belong.
Mr. President, H.R. 776 contains a
great many other provisions which I
won't list here, but which will have a
profound effect on our energy con-
sumption. This bill has been 2 years
in the making. It was forged in the
crucible of the Persian Gulf war, and,
though we have stable oil prices now,
we cannot afford to take the chance
that they will stay that way in the
future. H.R. 776 is by no means per-
fect. I personally would have like for
it to contain a provision requiring
increased fuel efficiency in new auto-
mobiles. There were other similarly
worthy ideas that were not included
in this bill. Nevertheless, this is a
vitally important step toward a com-
prehensive energy policy that our
country desperately needs. It is time
to act now - we will be better for it in
the future.
Mr. BRADLEY. Mr. President, the
national energy policy now before the
Senate is lengthy, complex, and, as is
generally the case with such legisla-
tion, a mixed bag. On the one hand,
the bill promotes the use of natural
gas in industry and in the transporta-
tion sector. It promotes energy con-
servation. It promotes competition in
the electric utility industry. On the
other hand, it give billions in tax relief
to the oil and gas industry. It at-
tempts to restructure the uranium
enrichment business in the United
States in a manner that could cost
consumers billions. It could have gone
much further in the pursuit of energy
conservation. There could have been
greater consumer safeguards included,
as I urged, in the reform of the Public
Utility Holding Company Act.
However, I am pleased that the
legislation includes a number of items
that I have fought for. Thetaxprovi-
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4914
sions do make clear that energy con-
servation rebates by utilities will not
be taxed, as was the case until 1989.
In recent years, these rebates have
emerged one of the most effective
tools in the battle to promote energy
efficiency and avoid the need for siting
and building new powerplants. One
New Jersey utility has estimated that
these rebates have already saved us
enough power to forego two
medium-sized powerplants that would
have otherwise be required. Few Fed-
eral programs have had such an im-
pact. These rebates mean less energy
demand, less energy produced, and
cleaner air and water.
The bill also includes provisions to
ensure independent electric power
producers will not be shut off the
electric transmission grid. The bill
takes a giant step, with the PUHCA
reform title, toward deregulating the
electric utility industry. However, as
we have seen in other industries, de-
regulation is not without risks for
consumers. These electric utilities
have been regulated because they are
natural monopolies. Even with
PUHCA reform, the monopoly on the
transmission grid will persist. Only
through a policy which includes wider
access to the grid can the full benefits
of a competitive electric utility indus-
try be felt by consumers.
Mr. President, as I said at the out-
set, this bill has as its centerpiece
increased natural gas use. The natu-
ral gas title, title II, is short but it
also has very important provisions in
it for both natural gas consumers and
producers. Both sections of the title
concern matters on which I have been
active for some time - imports and
prorationing.
Title II continues and broadens our
Federal natural gas policy. It com-
pletes the drive for an open North
American gas market. It also will
ensure vigorous competition at the
point of production - the wellhead
markets. These new provisions are
critical, particularly as to the
prorationing issue, because of what
has happened recently. As Federal
regulation of wellhead markets has
eased, and the accompanying Federal
preemption of State pricing regulation
by a comprehensive scheme of Federal
price controls has started to phase
out, new concerns have arisen. Some
producing States have considered
reoccupying this important field of
interstate commerce with a new type
of regulation - wellhead production
regulation that could be used to cut
back output in order to raise the price
of natural gas.
The replacement of Federal regula-
tion and market intervention with
State price-raising regulation and
intervention, would, of course, be
directly contrary to a national energy
strategy aimed at free, market-based
growth of natural gas use. It would
hurt gas use both in new areas pro-
moted in the other titles of the bill
and in the traditional gas markets.
Moreover, State intervention in place
of Federal control would undermine
fundamentally our attempts to have a
competitive gas market.
Many supporters of new producing
state prorationing proposals have
asserted that there is no evidence of
their intent to set up State adminis-
tered price fixing cartels. On the one
hand, it would be preferable to defer
to the States on this matter. Howev-
er, there is a long history here. Dur-
ing the 1950's the Texas Railroad
Commission used economic waste and
reasonable market demand
prorationing to affect price. Also the
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public statements of numerous pro-
ducing State officials regarding these
new State initiatives raise serious
questions that cannot be ignored.
When the Senate Energy Committee
held hearings on this issue, I referred
to a letter sent by Oklahoma Energy
Secretary Charles Nesbitt. I ask unan-
imous consent that the text of that
letter, which lobbied on behalf of an
Oklahoma prorationing proposal, be
included in the record following my
remarks.
There is a long history of legitimate
State regulation to further the goals
of physical conservation, to prevent
unfair drainage among producers in a
common reservoir, to enforce
wellspacing rules, and so on. The
Congress has not intended to preempt
these legitimate State authorities. It
is, however, now necessary for us to
speak definitely on these new
prorationing initiatives, and I am very
pleased that title II has done so.
The prorationing provision in title
II does not decide the lawfulness of
these new State initiatives. This is
entirely a question for the Federal
courts, in the context of a preemption
challenge to those State laws or regu-
lations that substantially and unrea-
sonably interfere with the broad Fed-
eral policy of wellhead competition.
The intent of Congress, however, will
be a central question in any possible
future disputes. Accordingly, new
section 202 of title II restates and
extends our support for free national
gas production markets, and I am
pleased to have had a hand in its
evolution and adoption by us in this
legislation.
This short natural gas title also
makes very clear that Canadian natu-
ral gas will be considered like any
other gas in this country. Unfettered
access to Canadian energy supplies
was one of the great accomplishments
of the Canadian Free-Trade Agree-
ment. Unfortunately, time and time
again domestic producers have sought
to use U.S. regulatory authority to
block access by consumers to these
alternative supplies. With the passage
of this legislation, we make clear that
these tactics will not succeed.
I am also pleased that this legisla-
tion includes provisions I've promoted
which gives tax equity to commuters
who use mass transit. The existing
Tax Code allows employers to deduct
the cost of onsite employee parking as
part of the cost of doing business.
The tax proposal would allow an em-
ployee to receive each month up to
$150 from his or her employer if they
park at commuter stops and an addi-
tional $60 when they commute by
public transportation. This benefit,
which would not have to be reported
as income, could amount to nearly
$2,500 annually for a commuter. For
the millions of New Jerseyans who
commute every day, this proposal
makes public transportation a good
option. It could make the difference
in choosing whether to drive all the
way to work or go to Newark,
Metropark, or Princeton Junction or
any one of the SEPTA stations and
catch a train or bus.
Mr. President, this national energy
policy is not without problems. It is
not the proverbial home run. But it
represents progress, nonetheless, and
I will support it. The managers of
this bill have tried to balance many
competing interests and they have
largely succeeded. They are to be
complimented for their persistance,
their endurance and their simple hard
work.
There being no objection, the letter
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was ordered to be printed in the Re-
cord, as follows:
Suite or Oklahoma,
Office of the Secretary of Energy.
Oklahoma City, OK,
October 22, 1991.
Representative G rover Campbell.
State Capitol Building.
Oklahoma City, OK.
Dear Representative Camphell:
I enclose a draft of a hill which is being pre-
pared for introduction in the 1992 legislative
session. As a member of the Enorgy, Environ-
ment, and Natural Resources Committee, I feel
you should bo kept informed about proposed
legislation in the Held of Energy.
The subject of this legislation is seasonal mar-
ket demand proration of natural gas. As you are
no doubt aware, Oklahoma enacted tho nation's
first market demand laws relating to both oil and
gas in 1913, when a condition of severe ovcrsup-
ply had resulted in low field prices and wide-
spread waste.
These laws wcro enforced and worked very well
until the mid-1970's, when the first Arab embar-
go and punitive federal price controls on natural
gas resulted in a severe shortage of supply. Later,
when the shortage of gas had turned to surplus,
the Oklahoma Supremo Court held that the Cor-
poration Commission could not impose more
stringent production controls except aflor person-
al notice which is a practical impossibility.
Recent events have clearly demonstrated the
cost to Oklahoma and its citizens resulting from
an excess of natural gas supply. During the sum-
mer of 1991. gas field prices sank to tho lowest
level in many years, below the cost of replace-
ment, simply because of oversupply in the field.
Those who profit from the oversupply and
resulting depressed price ore the gas traders, the
interstate pipe-lines, and the Eastern consumers.
Those who lose are the developers, the Stale, and
above all. the Oklahoma mineral owners. We
should never forget that natural gas. unlike an-
nual crops, is a nonrenewable resource. When
gas is sold at a distress price, the landowner
suffers a financial loss which can never be re-
couped.
Tins proposal would simply impose a seasonal
limitation on production from natural gas wells.
It is well known that the market for gas is sea-
sonal: high in the winter mouths; low in the
summer months. Pipe lines are rapidly develop-
ing storage facilities. specifically designed to
further extent the period of low field |
When there is an excess of supply <
mand. the simple solution is to reduce the <
supply by storing gas in the ground. If «
producer were willing to cut production propor-
tionately during the summer period, no legisla-
tion would be necessary. However, we all know
that as a practical matter, such joint action, even
if it would mean higher prices immediately, sun-
ply will not occur.
This proposal would impose a daily gas produc-
tion limitation of 60% of well deliverability dur-
ing the winter 6 months' period and 26% of
deliverability during the summer 6 months' peri-
od. Wells producing casinghead gas and wells of
low capacity (under one million cu/ft/day) would
be exempt, because the impact of these wells on
the market is small. Production from super- wells
would be further limited to 26% of deliverability
over 10 million cu/ft/day year round. Overage or
underage could be made up only during a similar
seasonal period, to minimize manipulation. Fi-
nally, the present draft includes an automatic
sunset provision, under which the allowable re-
strictions would expire automatically at the and
of two years unless renewed by legislative act. If
for any reason the plan ia not working, it can
simply be allowed to die.
No one state can unilaterally overcome the
distress prices resulting from seasonal oversup-
ply. No state would want to impose production
restrictions, and then see the market move to
another state with no improvement in field pric-
es. For this reason, the gas producing states of
the Southwest are in close cooperation in these
eflbrts to address the problem of oversupply and
low field prices. Tim Texas Railroad Commission
already has conducted hearings preparatory to
issuing an Order imposing seasonal market de-
mand proration on gaa wolls in that state. Sisai-
lar initiatives aro under way in Kansas, Arkan-
sas. Louisiana and Colorado.
Oklahoma is fortunate in that all states recog-
nize tho necessity for legislation hers. Thia
means that Oklahoma no doubt will be the last to
actually impose binding production restrictions.
We will know whether other states will act before
final passage of the bill by the Oklahoma legisla-
ture. However, it ia essential that Oklahoma
move forward in concert with the other states.
1 would appreciate your careful attention to
this proposal. I would be glad to meet with you
to discuss the mattor further if you desire. If
you share my conviction that thia legislation
would be of significant benefit to Oklahosaa. its
economy, and especially its dtizen-landownsrs,
your joinder as a legislative sponsor would be
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extremely valuable.
Vory truly yours,
Charle* Nenbitt,
Secretary of Energy.
Mr. GLENN. Mr. President, I voted
for passage of the Comprehensive
National Energy Policy Act when it
was before the Senate earlier this
year, and I plan to vote for final pas-
sage of the conference report. Howev-
er, I have strong reservations about
several major provisions in this final
version of the bill.
The conference committee deleted
provisions dealing with natural gas
prorationing that were passed over-
whelmingly by the House. I strongly
opposed efforts by certain States to
control natural gas production solely
to artificially increase prices. I do not
challenge the traditional authority of
States to proration gas production to
protect property owners' rights, to
protect State interest in resource
conservation or for other reasons. I
sympathize with producer concerns
about low natural gas prices, but
these concerns would be better an-
swered by expanding gas markets
than by artifically increasing prices.
In fact, the bill before us takes signifi-
cant steps to encourage and stimulate
the use of natural gas in transporta-
tion, electric generation, and applianc-
es.
Ohio is ranked fifth in the Nation
for natural gas expenditures. Contin-
ued increases in natural gas prices
will have a severe impact in Ohio and
the Midwest. I oppose the deletion of
prorationing provisions from this leg-
islation.
In addition, I wish to question the
provision in the energy bill conference
report which addresses nuclear waste
disposal standards. This provision
sets an unfortunate precedent. It
excludes the Environmental Protec-
tion Agency from establishing a public
health standard for long-term
high-level nuclear waste disposal and
instead delegates this authority to the
National Academy of Sciences - an
entity which is neither a regulatory
nor a standard setting body.
Not only does this provision require
the NAS to promulgate standards, it
also tells the NAS exactly what kind
of standard should be issued. It or-
ders the NAS to promulgate standards
that only take into account the maxi-
mum dose that any individual can be
exposed to from radiation leaking
from a high-level nuclear waste repos-
itory. It would not address the issue
of how many people would be subject-
ed to a given dose.
This provision has the effect of
setting the stage for the DOE to pick
the Yucca Mountain site, when the
purpose of site characterization is to
determine whether or not this site is
actually suitable. The Department of
Energy is opposed to the approach
being taken by EPA in setting a repos-
itory standard because it may put into
doubt the suitability of the Yucca
Mountain site. This is, in my view, an
insufficient reason to change our nor-
mal regulatory procedures.
Mr. President, in the areas of ener-
gy efficiency and conservation, I am
pleased that conference accepted pro-
visions on Federal Energy Manage-
ment which I had offered in a series of
amendments during the Senate's con-
sideration of this bill. This language
paralleled legislation I had introduced
last year - S. 1040, the Government
Energy Efficiency Act - which was
favorably reported by the Committee
on Governmental Affairs.
I've been preaching the virtues of
energy efficiency and conservation
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long before it became popular. And so
I am pleased that the conference has
accepted language which I had offered
during the Senate's consideration
regarding energy conservation and
efficiency in federally owned buildings.
Mr. President, when consumers in
my home State of Ohio are faced with
rising utility bills, they respond with
energy conservation efforts, like in-
stalling clock thermostats, weather-
stripping doors and windows, and
insulating the attic and pipe systems.
While these steps sound small, they
can add up to significant - 10 to 30
percent - savings.
Unfortunately, the Federal Govern-
ment does not seem to exhibit a simi-
lar response. In short, I'm not sure
who exactly is watching the meter in
the Federal Government. Answers to
such questions as - who turns out the
building lights at night; what incen-
tives do agencies and their employees
have for installing energy efficient
products or conserving energy; how do
building managers know which heat-
ing systems and water pumps are
most energy efficient - are vague at
best.
Further, it has been estimated that
even though the average Federal
building uses more than $7,000 per
year in energy, we spend less than $90
per building on efficiency improve-
ments. OTA, DOE lab experts, inde-
pendent analysts, and even Federal
building managers say that a
25-percent improvement in Federal
energy use is easily attainable with
the goods and services on the market
today. That would shave $900 million
from our annual Federal energy costs.
It does not take a rocket scientist to
see that cost-effective energy invest-
ments abound throughout the Federal
Government - if only proper commit-
ment and resources are applied.
Energy conservation and efficiency
has an added benefit. In fact, I look
upon the promotion of American in-
dustries in this field as recession bust-
ing: We'll create more jobs for Ameri-
cans and save money in the long run
through the use of these products.
You just can't go wrong with a pro-
gram like that.
I strongly believe that the Federal
Government must be a leader in the
acquisition and use of new and inno-
vative energy efficiency technologies
and conservation measures. To this
end, I am pleased that the conferees
have established an energy efficiency
fund, authorized at $60 million, to
install proven energy efficiency tech-
nologies and products in Federal
buildings. Further, the bill includes a
provision I originally proposed for
demonstrating the commercial viabili-
ty of state-of-the-art technologies in
Government facilities. Let's get these
technologies out of the lab and into
the public use. Finally, this legislation
requires the Federal Government,
through GSA, to identify energy effi-
cient products and services and start
to buy them.
This bill requires Federal agencies
to develop procedures to reliably ac-
count for utility bill costs as well as
account for spending on efficiency and
conservation upgrades. Additionally,
the bill authorizes the placement of
qualified, trained energy engineers in
the Government's most energy- waste-
ful buildings as well as setting up an
incentives program to reward Federal
agencies and employees who imple-
ment conservation and efficiency im-
provements in buildings which result
in substantial savings in taxpayer
dollars.
In an effort to build on innovative
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energy management programs already
in existence, the bill requires OSA to
hold regional workshops for Federal,
State, and local energy management
officials. If an energy conservation
program is working successfully on a
local or State level, perhaps it could
work at the regional or national level.
My legislation attempts to address
these and other problems concerning
the Federal Government's use of ener-
gy.
I am committed to making the Fed-
eral Government a model of efficient
energy use and conservation. And I
can assure you that I will continue
these efforts in the 103d Congress.
I am also pleased that the conferees
accepted language to help promote
and better coordinate Federal Govern-
ment purchase and use of clean burn-
ing; alternatively fueled vehicles.
In addition, I also support a provi-
sion of the bill that will preserve
health benefits that were promised to
retired coal miners and their families.
It will also protect additional miners
in the future if their companies go
bankrupt. The program will be fund-
ed by tracing retired miners back to
their previous employer or a related
company, by shifting excess money
from a pension fund, and from inter-
est on the abandoned mine lands
fund.
Mr. President, in general I support
the objectives of this legislation and
will vote for its passage.
Mr. SIMON. Mr. President, I want-
ed to briefly discuss the Comprehen-
sive National Energy Policy Act.
I want to commend the Members of
the Senate Energy Committee for all
the important work that went into
this piece of legislation. There are
some important provisions included in
this conference report. In particular,
the policies adopted on energy efficien-
cy and renewable energy will be an
important step in decreasing our de-
pendence on foreign oil.
There are also a number of provi-
sions that will be very important to
the State of Illinois. The coal title of
the energy bill contains several pro-
grams that encourage new ways to use
coal more cleanly and efficiently. This
will help enhance the use of coal as an
energy source in the future. In addi-
tion, the uranium title of the energy
bill contains provisions that will au-
thorize funding for the off-site dispos-
al of low-level radioactive waste from
certain active uranium and thorium
processing sites. One of these sites is
located in West Chicago. I am pleased
that much of the language from the
House bill was retained in conference.
Finally, the tax title of the bill con-
tains a compromise that will provide
health benefits for coal industry em-
ployees and retirees. The inclusion of
this compromise is very important to
me and my constituents in Illinois.
I want to take this opportunity to
thank my good friend and colleague,
Senator Rockefeller, for his hard work
in forging a compromise on provisions
providing health care benefits to retir-
ees of the coal industry. Without
Senator Rockefeller, this compromise
would not have been reached. A num-
ber of other Senators also worked
hard to come to agreement on this
The energy bill provides a vehicle
for funding the health benefits of all
coal industry employees and retirees,
particularly those retirees who have
been orphaned by bankrupt companies
and coal companies which no longpr
are in business. Coal industry work-
ers have contributed significant^ to
providing energy consumed in the
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United States and abroad. It is vital
to every worker as well as the Ameri-
can economy that we maintain a sta-
ble and strong coal industry. The
provision of lifelong health benefits is
crucial to ensuring the continued
well-being and security of coal indus-
try employees, retirees, and their de-
pendents, many of whom work and
reside in Illinois.
While there are a number of provi-
sions in this bill that I support, I be-
lieve we could have done better. I am
concerned by the provisions regarding
Yucca Mountain, and the process by
which they were inserted in the bill.
I also supported language that was
passed by the House, but dropped in
conference, that would have restricted
the ability of States to pass
prorationing natural gas legislation.
Since several major natural
gas-producing States passed these
laws, natural gas prices have in-
creased by 56 percent. Illinois natural
gas users will pay $631 million more,
according to the Northeast Midwest
Senate Coalition. I am very disap-
pointed that the House provisions
were not accepted by the conference
committee.
Finaly, the Senate bill contained
provisions requiring certain private
fleets to begin phasing in alternatively
fueled vehicles. I supported even
stricter provisions on alternative fuels
when I voted twice for amendments
offered by Senator Jeffords that would
have set production goals for domesti-
cally produced alternative fuels. Ulti-
mately, these amendments were de-
feated in the Senate. Unfortunately,
the alternative fuels provisions accept-
ed by the conference committee are
weaker even than those originally
passed by the Senate.
Mr. INOUYE. Would the manager
of the conference report H.R. 776, the
distinguished senior Senator from
Louisiana and chairman of the confer-
ence committee on H.R 776, clarify
subtitle B, of title VII of the agree-
ment concerning transmission?
Is this Senator's understanding
correct that the Federal Energy Regu-
latory Commission's authority to or-
der wholesale transmission service
under the conference agreement does
not apply if the power is to be trans-
mitted to other than a wholesale cus-
tomer.
Mr. JOHNSTON. The Senator is
correct in his understanding.
Mr. INOUYE. Is this Senator's un-
derstanding also correct that imple-
mentation of a FERC order to provide
wholesale transmission service on an
island or between islands would re-
quire approval by the local public
utility commission? In other words, if
the local public utility commission
does not grant approval, the transmit-
ting utility is excused from the wheel-
ing order?
Mr. JOHNSTON. Yes, to the extent
such approval is required under State
law, the Senator is also correct in this
understanding.
Mr. INOUYE. Is this Senator's un-
derstanding also correct that FERC
would require the applicant seeking
wholesale transmission service to pro-
vide evidence of its ability to pay for
the transmission service including the
transmitting utility's cost of expand-
ing the transmission facilities to ac-
commodate the petitioner?
Mr. JOHNSTON. The Senator is
again correct in his understanding.
My expectation is that in any situa-
tion involving major expansion of
transmission facilities FERC would
not order transmission services union
it was clear that the applicant could
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pay for its allocated share of the costs.
Mr. INOUYE. I thank the Senator
for his clarification.
(At the request of Mr. Mitchell, the
following statement was ordered to be
printed in the Record:)
Mr. SANFORD. Mr. President, I
rise today to speak on the conference
report to the National Energy Securi-
ty Act, H.R. 776. And it was with very
mixed feelings that I reviewed this
conference report. I support many of
the provisions in this bill because I
want to see progress in our national
energy policy; we must reduce our
dependence on foreign oil and begin to
make efficiency and conservation part
of the American lifestyle. I am con-
cerned, however, that the energy bill
does not go far enough to reduce our
need for polluting fossil fuels. And,
sadly for North Carolinians, the bill
does not address the desires of those
in my State who have maintained
hope that Congress would address the
issue of offshore drilling.
I am thankful for the hard work of
the Energy Committee, as they
steered this legislation along a very
difficult course through the Senate. I
did not support the original Energy
Bill, S. 1220, offered by the Energy
Committee, and I voted last November
with a number of my colleagues to
keep S. 1220 from coming to the floor
of the Senate. At that time, I felt that
several Senators had not had the
opportunity to give their input on the
bill. Since the energy bill first came
to the floor, progress has been made
on a number of important provisions.
I am particularly pleased with the
language to increase the use of renew-
able and alternative fuels. Such pro-
visions are critical to improving our
long-term energy policy. As fossil fuel
supplies dwindle, these new energy
sources will become ever more impor-
tant in meeting our country's energy
needs. Also, as we all know, the emis-
sions from the use of fossil fuels have
an adverse affect on our environment,
and it is in our best interest to move
away from these polluting fuels. We
must increase our use of such fuels as
ethanol, natural gas, hydrogen, solar,
wind, geothermal, and biomass; H.R.
776 will lead us in that direction.
I am also pleased with the language
in the conference report on energy
efficiency. The language expresses the
intention of the conferees to make the
Federal Government a leader in the
use of energy efficiency technology.
The report also includes numerous
efficiency standards for light bulbs,
electric motors, heating and cooling
equipment, and shower heads and
faucets. These energy efficiency provi-
sions are a critical part of reducing
energy consumption, and, therefore,
reducing our imports of foreign oil.
My support for this bill is tempered,
however, by my great concern about
the omission of any language on the
matter of Outer Continental Shelf
(OCS) oil and gas drilling. This is a
subject of great concern to many peo-
ple around the country, and certainly
to my constituents, the citizens of
North Carolina. I would like to take
this opportunity to share with my
colleagues the recent history of this
issue in North Carolina.
Several years ago, Mobil Oil Co. tod
a group that purchased leases for oil
and gas drilling off the coast of North
Carolina. However, the efforts of Mo-
bil Oil and its partners to begin ex-
ploratory drilling have been held up
for 4 years due to local opposition and
a lack of scientific information regard*
tng the possible environmental im-
pacts.
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In 1990, at the direction of Con-
gress, a top-flight collection of profes-
sionals, the Environmental Sciences
Review Panel, was assembled to ana-
lyze the drilling option. This North
Carolina/Minerals Management Ser-
vice cooperative study found that
available information was inadequate
to assess potential environmental
effects. Significant risks to marine
and coastal environments may result
from drilling in this area of uniquely
strong converging currents and severe
weather.
I supported the language in the
House version of the* National Energy
Security Act which called for the can-
cellation and buy-back of existing
Mobil leases and a 10-year moratori-
um on new leases in the mid -Atlantic
and south Atlantic planning areas. I
also supported several fair compro-
mise positions that I felt should have
been acceptable to both the House and
Senate conferees.
In the end, the White House stood
in the way. The same administration
that 2 years ago called for moratoria
on drilling in several coastal areas of
our Nation and pledged to cancel and
begin the buy back of off-shore leases
in south Florida ha* now had a
change of heart and demos even lim-
ited drilling moratoria in other sensi-
tive areas and says that buy backs are
unacceptable.
Due to the objections of President
Bush's Office of Management and
Budget, there is no lease buy-back
provision and no moratoria on either
leasing or drilling off the coast of
North Carolina. The chance to ad-
dress this critical matter this session
was thus eliminated
I am very disappointed and con-
cerned about this result. It was my
sincere hope that this matter could be
resolved in a manner that is fair to
both Mobil and the people of North
Carolina. Mobil has never been able to
take action on the leases they paid
good money for, and the people of
North Carolina are concerned about
the still-unknown impact that drilling
would have on our outer banks. Coast-
al residents, the environmental com-
munity, and Mobil Oil want to put
this frustrating saga behind them.
North Carolina has much work to do
before we are ready to bring offshore
drilling back to the table in an area of
the State which is largely dependant
on recreation and tourism for econom-
ic survival.
Since we have not dealt with this
matter now, I hope my colleagues will
work with me to resolve this issue
early in the 103d Congress. I am hope-
ful that the chairman of the Energy
Committee will give this matter his
careful attention and lend me his
assistance and support in crafting a
workable solution to this matter as
soon as possible.
Congress must not leave this matter
hanging. This is not fair to Mobil and
its partners, and it is not fair to the
people of North Carolina.*
Mr KERREY. Mr President, in
adopting the National Energy Securi-
ty Act, H.R. 776, the Senate has taken
a long overdue step addressing the
lack of a coordinated national energy
strategy. The United States stands
out among the industrialized coun-
tries for our lack of a comprehensive
energy plan. In a period of increasing
emphasis on economic competitive-
ness, energy costs are a critical vari-
able. The United States currently
spends about 10 percent of its GNP
on energy, almost twice the amount
spent by Japan and Germany. We
need to lower our energy costs.
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Although I have some specific con-
cerns about a number of provisions in
this legislation, on balance it is a step
in the right direction.
This bill's energy efficiency and
conservation provisions are critical to
our country's effort to reduce our
reliance on imported oil, reduce envi-
ronmentally destructive emissions and
help our country make a transition to
new cleaner energy sources. The leg-
islation improves energy efficiency
standards for appliances, lighting,
motors, commercial air-conditioning,
and heating equipment. Further, it
sets efficiency standards for Federally
insured housing.
The legislation will require State
regulators to consider ratemaking
changes and other reforms that would
make electric utilities' investments in
energy efficiency as profitable as in-
vestments in new generating plants.
This approach to energy efficiency,
known as least cost planning or
demand-size management, involves
managing a utility's various power
supplies and the demands of its retail
customers to make the most of exist-
ing generating capacity.
Improved efficiency is a critical
component to our country's economic
competitiveness, and I applaud Sena-
tor Wirth and others who have played
a critical part in seeing that efficiency
and conservation become central to
our energy policy. Not only will our
firms be in a better position to com-
pete, but these fields will provide im-
portant job opportunities in the com-
ing decade.
I am also pleased that this legisla-
tion expands research and develop-
ment programs for alternative and
renewable energy sources. The alter-
native fuels fleet provisions build on
the measures that were included in
the Clean Air Act last year. We could,
and should, go further and I look
forward to- working with others who
have supported alternative fuels to see
that we continue our transition to
domestically produced alternative
fuels.
The conferees included language to
create a Federal production incentive
for public utilities that build or pur-
chase facilities that generate electrici-
ty from renewable energy sources.
The bill would also authorize joint
ventures between the Federal Govern-
ment and private enterprises to devel-
op renewable technologies and applica-
tions. Renewable energy sources will
also benefit from the transmission
access provisions that were included
in the conference. Traditionally, re-
newable energy producers have faced
substantial obstacles in selling their
clean energy to the Nation's electrici-
ty grid. The United States has tradi-
tionally been a leader in the field of
renewable energy. Unfortunately, we
have lost some of our competitive
edge. This legislation will strengthen
our position by encouraging U.S. pro-
ducers to export renewable energy
technology.
Finally, we have built a framework
for an energy strategy without open-
ing the Arctic National Wildlife
Refuge's coastal plain oil and gas drill-
ing. This important ecological area
does not need to be opened in order to
satisfy our oil habitat. This legislation
paves the way to saving millions of
barrels of oil through efficiency and
energy conservation. This savings
offsets the need to open up ANWR.
Even though I did support the con-
ference agreement, I am strongly op-
posed to the provision that addresses
the Yucca Mountain high-level radio-
active waste site. The Congress
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should not be directing a
non-governmental entity to study
radiation exposure and develop stan-
dards that the Environmental Protec-
tion Agency will promulgate. This
short-circuits the public process that
helps guarantee accountability and
openness on this divisive issue.
I am opposed to the inclusion of
nuclear licensing provisions, one-step
licensing, that streamline the process
for license applicants, but create new
obstacles for the public. Citizens with
just cause should have the opportuni-
ty to have a hearing before a nuclear
plant goes online. The provisions in
this bill will only add to the current
climate of distrust a1x>ut nuclear pow-
er and the Nuclear Regulatory Com-
mission. I am also concerned about
the uranium enrichment provisions in
the legislation because it involves a
poor expenditure of taxpayer dollars.
Despite these drawbacks, the legis-
lation does move us closer to reducing
our dependence on oil, protecting the
environment and helping make our
country more competitive. Finally, we
should not allow this to be the last
word on energy policy. We need to
support the development of innovative
solutions to encourage the conserva-
tion of existing energy resources and
promote the development of renewable
energy resources.
Mr. DURENBERGER. Mr. Presi-
dent, if you ask Americans what
should be the fundamental objective of
U.S. energy policy most would say,
'Our policy should strive to reduce oil
imports.' As one listens to the debate
on the energy bill here on the floor of
the Senate that is the objective most
often mentioned. In light of Desert
Storm, Members of this body have
been moved to make very impassioned
statements on the evils of oil imports
and our dependence on Persian Gulf
energy supplies.
There are three ways that we could
reduce imports. We could increase
the supply of domestic oil to meet our
needs. We could shift to domestic
sources of energy other than oil. Or,
we could reduce our consumption of
oil by improving our efficiency or
changing our lifestyles.
There are examples of each of these
strategies in the energy bill now pend-
ing before the Senate. The tax provi-
sions of this bill would exempt invest-
ments in oil and gas exploration from
the alternative minimum tax. That
should increase the domestic supply of
oil.
There are mandates for the use of
alternative fuels in fleets owned by
the Federal and State governments in
this bill. Those mandates may lead to
increased use of natural gas, ethanol
and methanol fuels. That will in-
crease the use of alternative domestic
energy supplies.
And the Department of Energy and
the States are required to consider
and adopt various fuel efficiency stan-
dards for new construction and new
appliances and motors. That will
reduce our consumption of oil.
There were many other proposals
that would have reduced oil imports
that were proposed for inclusion in
this bill that were rejected.
This bill does not include an in-
crease in the corporate average fast
economy standards that now require
new cars to average 27.5 miles per
gallon.
The bill does not authorize leasing
of the Arctic National Wildlife Reftigi
for oil exploration.
The bill does not include any real
solution to the Nation's nuclear \
disposal problems. It
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permitting of new natural gas pipe-
lines. And it does not include the
tough mandate for alternative trans-
portation fuels that Senator Jeffords
proposed here in the Senate.
There are some modest provisions
in this bill that may serve the objec-
tive of reducing oil imports. There
are other measures that were consid-
ered and rejected that would have
reduced oil imports by much greater
amounts, much greater amounts.
Mr. President, if you compare the
rhetoric of war and defiance used to
justify this bill with its modest,
business-as-usual provisions, you could
become confused about the objectives
of U.S. energy policy. Should we real-
ly be prepared to reduce oil imports at
any cost as is sometimes suggested by
the advocates of this bill? If so, then
this bill leaves us well short of our
objective. In fact, imports as a per-
centage of our oil use will continue to
increase under this legislation.
On the other hand, if this bill is an
appropriate response to our energy
situation then, what are we to make
of the rhetoric of war and indepen-
dence that makes up so much of our
energy debate?
I want to try to tackle the import
question directly today. Do we import
too much oil? Forty percent of our oil
demand is met with imports. Is that
too much? If so, what kind of effort
would be appropriate to reduce our
imports?
To answer these questions let us
look first to some energy realities.
The first reality is the enormous re-
serves of cheap oil in the Middle East.
Proven reserves in the Persian Gulf
region are 589 billion barrels. At cur-
rent production rates that is enough
oil for another 100 years. The actual
reserves are likely much larger than
even this amount. And it can be pro-
duced for $2 to $3 per barrel. Wears
not running out of cheap oil.
The second reality is the depen-
dence of the whole world on this oil
supply. Cheap, abundant oil fuels
economic growth all around the world.
Even if the United States were still an
exporter of oil, we would not be eco-
nomically independent from the Mid-
dle East reserves. Our economy is
tied to the world economy. Our pros-
pects for growth and higher standards
of living depend on growing economies
all around the globe. Even complete
energy independence, zero imports,
would not free us of the economic
problems which occur when the flow
of oil is interrupted.
The third reality is the dominant
role that oil plays in our transporta-
tion system. Americans drive.
Today's Americans drive more than
those of yesterday. Higher oil prices
do not keep us home. Today we drive
twice as many miles as we did before
the first embargo of 1973. Our cars
and trucks are more efficient, but we
have many more of them and we use
them more extensively than we ever
have before. That's not going to
change.
The fourth reality is declining
American oil production. We started
the petroleum century. We've looked
practically everywhere within our
borders for crude oil. We've found
and produced great quantities. But
there will be less and less oil from
domestic sources in the future. More
and more of what we use will need to
be imported.
In that respect we will be more like
the rest of the developed world. Be-
cause of our reserves of coal and natu-
ral gas, onty 16 percent of our total
energy needs are met by imports. We
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are much better situated than Japan,
Germany, the Scandinavian nations,
most of Western Europe, all of these
nations are much more dependent on
imported energy than we are. Nobody
in Japan would say, as some Ameri-
cans do, that Japan does not have an
energy policy because its oil imports
are high as a percentage of total use.
Japan imports virtually all of its oil
and a policy to reduce imports to zero
would not be thinkable.
Another reality in the American
energy picture is a long string of fail-
ures by Government. I spoke on this
subject at length when this bill was
before the Senate last spring. Today,
let me just repeat the list of the big
energy policies that have been re-
pealed, President Nixon's price con-
trols, President Carter's windfall prof-
its tax, the Powerplant and Industrial
Fuel Use Act that rationed natural
gas, the Synfuels Corporation, the
natural gas price controls imposed by
the Supreme Court, the billions of
dollars in conservation and wind and
solar energy tax credits. The list of
Government blunders is sobering,
especially to Senators who served in
this body when many of those policies
were adopted.
On the other hand, the U.S. energy
picture has changed in some dramatic
ways since the first oil embargo. Our
fleet of cars and trucks is almost twice
as fuel efficient today. Large improve-
ments in energy efficiency have been
made throughout the economy.
We use one-third less energy per
dollar of real GNP today as compared
to the early 1970's. We are by no
means the most energy efficient econ-
omy in the world, but progress has
been made. These improvements are
the result of the higher oil prices that
came with the energy disruptions of
the 1970's and 1980*8. When we final-
ly decontrolled prices, the energy mar-
ket pointed us in the right direction.
One final reality needs to be men-
tioned. Oil is relatively cheap today.
After the rapid price increases that
came with the 1973 embargo and the
1979 Iranian revolution, prices have
now subsided again. In fact, oil prices
collapsed in the mid-1980's and gaso-
line is today as cheap as it was in the
1950*8 when compared to the
we pay for other goods and
And it appears that the policy of the
international cartel that controls
world oil production is to keep the
price in the present range.
OPEC is in business to sell oil.
They don't want the world to convert
to exotic synfuels or to cut consump-
tion dramatically. They want our
dollars and they plan to sell oil at
prices that will keep the world depen-
dent on their resource. Absent some
very dramatic change in the govern-
ments of many OPEC nations, we are
not likely to see oil prices that will
make alternative transportation fuels
like ethanol or methanol or electricity
competitive in the marketplace.
Lower oil prices have been good for
our economy. The current worldwide
recession would likely have begun
sooner and been much steeper, if en-
ergy prices had been maintained at
the levels reached in the early 1980's.
So those are some realities in the
energy picture. Let me return now
directly to the question of oil imports
and whether we import too much.
Notwithstanding the fact that 95
percent of all Americans would say
that our imports are too high, I find
this a very difficult question to an-
swer. My own view of the correct
answer to the question has changed
during the time that I have i
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the Senate and watched events in the
oil economy.
To sort out the factors that need to
be considered in answering the import
question, I am going to describe four
different oil scenarios. Let us see
what each can teach about our import
problem.
My first scenario is the simplest.
Let us suppose for a moment that all
of those Middle East oil reserves were
here in the United States, in east
Texas, 600 billion barrels of oil, pro-
duced at very low prices by a private,
competitive oil industry. Oil imports
would, of course, not be a problem.
Recycling our export revenue would
be our principal concern.
But even with that incredible natu-
ral resource blessing, 100 years supply
of cheap oil within our borders, we
still might decide that our current
level of oil consumption was too high.
There are environmental costs of oil
use, including air pollution in our
cities, spills and accidents in the oil
production system, and the buildup of
carbon dioxide in the atmosphere, a
possible threat to our climate as a
consequence. We might, based on the
evidence of global warming, decide to
consume less oil than we presently do
even if we had no oil imports.
The fuels, ethanol, methanol, natu-
ral gas, and electricity, that might be
used as alternatives to oil in the
transportation sector are quite expen-
sive because of the huge capital in-
vestments that would be needed to
make any substantial conversion from
oil.
For instance, DOE estimates that it
would require an investment of $240
billion to replace 1 million barrels per
day of oil with electric energy used in
cars.
Some of these fuels, especially natu-
ral gas and ethanol, can play a role in
solving our urban air pollution prob-
lem. But we should not expect that
they are an immediate option to abate
our concerns about global warming.
But there are many conservation
options that are available at today's
prices that could reduce our use of oil
in the transportation sector. The
Senate was correct to reject a 40 miles
per gallon CAFE standard for this bill,
at this time, but there are many
smaller steps that could be taken to
push the fuel efficiency of our new car
fleet to a higher miles per gallon. A
modest, longterm benefit in lower oil
imports would result.
So, even if all the oil were ours, we
might use somewhat less, to protect
toe environment. That's our first
possible scenario.
Now, a second scenario. Let's sup-
pose that all that Middle East oil were
in Canada. Again, we assume that it is
produced by a private, competitive oil
industry and as a result we can expect
stable oil prices over the long term.
There is no security issue in this sce-
nario. We don't have to fight any
wars to gain access to this vast re-
serve of Canadian oil.
But there is the economic problem
of imports. As the oil comes in across
the border our dollars flow out. Our
balance of trade suffers. Our stan-
dard of living is less. If this were the
energy reality we faced, should we
reduce oil imports and if so by how
much?
I don't know if any Member who
wrote this bill or any staff person who
worked on it has considered this ques-
tion. But there are some economists
who have. Their studies do not claim
absolute economic certainty. But they
have measured the economic penalty
of a barrel of imported oil without the
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security risk associated with the Per-
sian Gulf. And these economists would
tell us that the economic penalty for
imported oil is about $2 to $3 per
barrel.
In addition to the $18 we actually
pay for any barrel of oil today, wheth-
er domestic or imported, the imported
barrel also carries a penalty of $2 to
$3, because the basic payment of $18
leaves our country.
If that is a correct estimate, then
we should be willing to pay somewhat
more for domestic energy sources that
can be substituted for oil, not a lot
more, but somewhat more. Domestic
energy options including conservation
and renewable energy, and even en-
hanced oil recovery technologies, that
cost up to $2 to $3 per barrel more
than the basic price of oil should be
preferred because they are domestic.
That doesn't mean $60 per barrel
synfuels. The economic penalty we
pay for imports is not large. And the
drain on our economy typically mea-
sured as a negative balance of trade
does not justify huge investments in
liquid fuels from coal or oil shale or
exotic conservation or renewable tech-
nologies.
Our national energy policy should
take this economic reality into ac-
count. In addition to the conservation
policies we employ to address pollution
including global warming, small subsi-
dies for domestic options that are only
slightly more expensive than oil would
be appropriate. And research and
development to bring other technolo-
gies into this range should also be
pursued.
Now let me turn to a third scenario.
This is the scenario that I see as the
reality today. All that oil is in the
Persian Gulf region. The region is
politically unstable. Many of the oil
nations are our friends and allies.
But some are not. The price and
production rates for the oil are con-
trolled by a cartel. It is likely that
periodic interruptions in supply will
occur.
There is a new cost in this scenario
that isn't present if we imagine the oil
in Canada. It is the cost of economic
uncertainty. Although over the long
run, we might expect a stable real
price for oil in the $18 per barrel
range, there will be short term events
that cause much higher spot market
prices. What is the economic cost of
these disruptions?
If we remain unprepared as we were
in the early 1970's and 1980's for
these disruptions, the costs are quite
high. Oil disruptions have triggered
recessions that cost us billions of dol-
lars in lost GNP. But if we prepare
ourselves for the realities of this sce-
nario, the cost can be much less. The
cost is an adequate strategic petro-
leum reserve. It is the most impor-
tant piece of our energy policy under
this third scenario. A reserve with
750 million to 1 billion barrels of oil
used aggressively to manage disrup-
tions can protect us from the large
economic losses that would otherwise
occur in this energy scenario.
Those who use oil ought to pay for
the SPR. Today, the SPR is not as big
as it should be. It is about 570 million
barrels. Because the taxpayer cur-
rently finances the SPR and because
of our budget deficits, we have been
slower than we should have been in
reaching full capacity. The cost of
filling and maintaining the reserve
should more appropriately fall on the
energy consumer and ought to be
carried on the price of oil as an addi-
tional fee. That fee would also stimu-
late a modest amount of additional
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domestic production to reduce im-
ports.
Some would also include our mili-
tary expenditures in the Persian Gulf
as a cost of energy under this third
scenario. I personally do not think we
fought for access to oil in Desert
Storm. Perhaps our enemy did, but
our interest was in containing his
power, not in having his oil. After all,
the world has access to the oil that is
inside Iraq for the very same price
that we buy the oil produced by Ku-
wait.
Even if you include the cost of
Desert Storm in the price of energy
under this third scenario, the num-
bers are not large. The nations who
participated in Desert Storm spent
$60 billion on the war. For 600 billion
barrels of oil, that's 10 cents a barrel.
The principal point I am making
here is that huge expenditures on
conservation or renewables or domes-
tic fossil resources are a means to
reduce oil imports are not justified by
the actual economic penalties we pay
either because we import oil or be-
cause we import oil from an unstable
region. The economic penalties mea-
sured in a negative balance of trade or
in the cost of the strategic petroleum
reserve are small. Even the material
price of desert Storm, which I do not
believe was a war for the oil resource,
is small when compared to the eco-
nomic value to us and to the world of
the Middle East oil reserve.
My final scenario is the one that I
think most Americans carry around in
their heads. It is the scenario born of
gas lines, hostages in Iran, economic
decline at home, and American men
and women fighting in the deserts of
the Middle East.
Those who hold this view, and it is
a plausible interpretation of our cur-
rent energy reality, see the Persian
Gulf oil reserves in the hands of na-
tions hostile to our interests who will
use the oil weapon to bring us to our
knees. Under this scenario our depen-
dence is a threat to our security and
to the security of our allies, most espe-
cially Israel. No price is too small to
regain our independence.
I must say that there was a period
after the 1979 Iranian revolution
when I found this scenario the most
realistic. I voted for the windfall prof-
its tax and the Synfuels Corporation
and the tax subsidies for every kind of
energy that wasn't foreign energy. At
the time the U.S. Department of En-
ergy was predicting oil prices of $90
per barrel by 1990 and it seemed that
huge investments in domestic alterna-
tives were our best policy.
It doesn't seem so today. In fact, I
believe that OPEC prices and produc-
tion rates have been managed to help
our economy and our consumers for a
number of years now. Eliminating
the oil we have imported for most of
the last decade, by paying billions and
billions of dollars more for domestic
energy would have been an economic
folly of catastrophic proportion.
In outlining these four scenarios, I
have also tried to outline the elements
of a national energy policy I could
support.
We must focus on the threat of
global warming and should be employ-
ing all the measures that are available
at today's prices to reduce carbon
buildup in the atmosphere.
Second, we should provide small
subsidies to domestic alternatives that
are somewhat more expensive than oil
to offset the economic costs associated
with a negative balance of trade.
Third, we should conduct research
and development efforts across the
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broad range of near-term energy tech-
nologies that may be brought within
the range of these small subsidies.
Fourth, we need to fill the strategic
petroleum reserve and pay for it with
a fee on energy consumers.
Finally, we should do everything
within our means to facilitate peace
and stability among the nations of the
Middle East. We must prevent scenar-
io number four from becoming our
energy reality.
I am voting against cloture on this
bill. I have voted against the bill each
time it has come before the Senate.
There is no part of the conference
report which is especially troublesome
to me. There is no special outrage in
this bill, nothing to compare with
leasing the Arctic National Wildlife
refuge, for instance. The bill is now
mostly a collection of adjustments for
various sectors of the energy industry,
some justified by the reality of our
energy situation and some not.
I have voted against this bill not
because of what it contains, but what
it lacks. It lacks a theory, a purpose,
a clear statement of reality and policy
around which it is focused. There is
no evidence that the bill was put to-
gether based on a coherent view of
our economic and energy reality and a
determination to take advantage of
every opportunity to improve our
condition, and an equal determination
to reject the options that are beyond a
reasonable cost.
Do we import too much oil? Proba-
bly. A little bit too much. How much
should imports be reduced? You won't
find the answer in this bill. After 2
years of debate and consideration, this
collection of adjustments in our na-
tional energy policy is still justified by
the old rhetoric of war and indepen-
dence.
The American people deserve an
energy policy based on a hard-headed
analysis of our energy realities. We
need to clearly define our energy ob-
jective and justify the cost of each of
the steps we take to reach it. I have-
n't seen that kind of justification for
this bill. So, I shall vote against clo-
ture.
KUDOS
Mr. WALLOP. Mr. President, I
want to pay tribute to our colleagues
in the House who were such tough
and honorable negotiators. Congress-
men John Dingell, Phil Sharp, George
Miller, Norm Lent, Don Young; and
the others all brought ideas, ideals,
and a common purpose to the confer-
ence.
Our spirited debates helped articu-
late the goals and define the solutions
to these complicated and diverse is-
sues. I think most of us would agree
that our two bills got better in confer-
ence.
Let me also commend my friend,
and colleague, the chairman of the
Energy and Natural Resources Com-
mittee, Bennett Johnston. It's been a
long journey, but throughout this
2-year odyssey the senior Senator
from Louisiana never gave up. This
bill is a testimony to the
and the vision of a very good 1
tor.
There is another group of individu-
als whose contribution to this bill was
enormous. Secretary of Energy, Jim
Watkins, Deputy Secretary of Energy,
Linda Stuntz, and their stalls were of
incalculable help to us throughout.
The Energy Policy Act of 1992
truly a partnership between the <
utive and legislative branches, thanks,
to a great extent, to them.
The best I've saved till last Any
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acknowledgements would be incom-
plete without a word about the car-
penters who put it all together - the
staffs of 10 House committees and 7
Senate committees.
We've heard a lot about the faults
of our institution. Clearly, those crit-
ics haven't been to an energy confer-
ence with these men and women.
These dedicated individuals put in,
literally, tens of thousands of hours to
get us here, today. And believe me, it
wasn't just a 9 to 5 undertaking.
Those hours were logged during week-
days, weeknights, weekends, and even
during a few sunrises.
Congratulations, too, to Ben Cooper
and the majority staff for the profes-
sional and cooperative manner they
worked with everyone. Ben once re-
marked that organizing this confer-
ence was like herding cats. He was a
good cat wrangler.
And, of course, a very special
thanks to Rob Wallace, Gary
Ellsworth, Richard Grundy, Jim
Beirne, Judy Pensabene, Howard
Useem, Jim O Toole, Marian Marshal,
Carol Craft, Gerry Hardy, Gigi Beall,
Kelly Fisher, Vaughn Baker, and Jim
Tate of the Minority staff. It was a
job well done.
ACKNOWLIttXiKMKNTS: U.K. 776
Mr. JOHNSTON. Mr. President,
many, many people worked to make
this bill into a law. I can only ac-
knowledge a few of them in the space
here. I must necessarily omit mention
of many who should be mentioned.
For that I apologize in advance.
I would particularly like to thank
my colleagues:
Malcolm Wallop, ranking minority
member, who has been my partner
throughout this effort;
Kent Conrad, who stuck with me
through everything;
Tim Wirth, the inspiration for the
energy efficiency, renewable energy
and global warming provisions;
John D. Dingell, chairman of the
Committee on Energy and Commerce,
who made it happen in the House;
and
Phil Sharp, chairman of the Sub-
committee on Energy and Power, who
produced the bill.
This was an effort that included the
administration from the beginning, an
example of how Congress and the
executive branch can work together to
produce legislation that is in the na-
tional interest. I particularly want to
thank:
Adm. James D. Watkins, Secretary
of Energy, who guided the National
Energy Strategy through an adminis-
tration that was not always united in
its support;
Henson Moore, as Deputy Secretary
of Energy and on the White House
staff, was a tireless advocate for the
legislation;
Gregg Ward, DOE Assistant Secre-
tary for Congressional Affairs, who
always kept the line of communication
open; and
Linda Stuntz, Deputy Secretary of
Energy, and the guiding force in the
design of the national energy strategy.
I also recognize the professionalism
and great energy of the House staff,
and particularly want to thank:
Mike Woo, of Chairman Dingell 's
staff with whom we worked through-
out the year to develop the strategy
for the legislation; we sorely missed
Mike's counsel while he was ill during
the conference; and
Dave Finnegan, Chairman Dingell's
right hand man, who kept us all fo-
cused on the goal.
I would also like to acknowledge my
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own committee staff, who worked for
2 years without losing hope.
Paul Barnett, who worked on the
R&D sections.
Patty Beneke, senior counsel, who
organized everyone else and still
found time to handle OCS and alter-
native fuel fleets issues.
Bill Conway, the architect of
PUHCA reform, who believed before
anyone else did, including me.
Ben Cooper, stafT director.
Leslie Black Cordes, who handled
an extraordinarily broad range of
issues, including renewables, energy
efficiency, alternative fuels, and global
warming.
Sam Fowler, all purpose counsel,
handled several very difficult policy
and drafting assignments, including
uranium enrichment, alternative fuels
and fleets, nuclear licensing reform,
and whistleblower protection.
Mike Harvey, chief counsel, our
most valuable and most experienced
hand.
Karl Hausker, chief economist,
chartmeister, number cruncher and
ruler of the strategic petroleum re-
serve.
Tom Jensen, our water and hydro-
electric power expert, who was also
the guiding force behind the omnibus
water policy legislation.
Don Santa, who handled natural
gas issues, oil pipeline regulatory re-
form and counted the votes.
Allen Stayman, who handled the
huge energy efficiency section of the
bill and got his work done first.
Lisa Vehmas, our newest counsel,
who more than ably handled the Inte-
rior Department and native America
issues in the conference.
Mary Louise Wagner, who covered
coal, R&D, and nuclear waste, and
still managed to get a conference re-
port drafted on the WIPP bill and
arrange a wedding.
Tom Williams, steady hand, master
of the Public Lands Subcommittee
and expert on Alaskan issues and mil
matters relating to the National Park
System.
This was a bipartisan effort from
the beginning, and it stayed that way.
We could not have succeeded without
the cooperation of the minority and,
in this case, without the uniformly
high quality of Senator Wallop's com-
mittee staff. I want to acknowledge
the help of:
Jim Beirne, hydropower expert,
who, like Tom Jensen, also juggled the
energy bill and the water bill.
Gary Ellsworth, chief counsel to the
minority, whose value to the process
cannot be overstated.
Richard Grundy, who seemed to be
involved in almost every title of the
bill.
Marian Marshall, expert on the
Interior Department issues.
Jim OToole, who covered national
parks and Alaska issues for the minor-
ity.
Judy Pensabene, the minority's
expert on all nuclear issues.
Howard Useem, who covered elec-
tricity and hydropower issues and
coped with Bill Conway.
Rob Wallace, minority staftdirector,
who led the minority with distinction,
humor and keen insight into the ways
of the Senate.
And finally, Mr. President, I want
to express my deepest gratitude to the
administrative staff of the committee.
These people are the backbone of the
committee. We absolutely could not
have completed the work without
their tireless efforts and dedication.
They worked into the wee hours of
the night and sacrificed weekends,
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typed and reproduced innumerable
materials, delivered and retrieved
documents, responded to an infinite
number of written and oral inquiries,
coordinated a myriad of complicated
schedules, monitored legislative activi-
ties, and contributed in countless
other ways to this legislative effort
And above all, they managed to carry
out these demands while continuing
to perform their many other responsi-
bilities admirably.
At this point I would like to thank
these people individually: Vicki
Thome, the committee's chief clerk,
for coordinating the activities of the
entire administrative staff and orga-
nizing all of the many administrative
details of the conference meetings;
Raymond Paul, who operated at the
center of the hurricane with confi-
dence and great good humor, Diane
Balamoti for her work in putting to-
gether provisions in the bill relating to
Alaska while at the same time assist-
ing in the voluminous workload of the
Public Lands Suhcommitee; Jason
Dilgand Craig Ward for their extraor-
dinary patience and fortitude in staff-
ing the reception office and assisting
in the distribution of materials;
Wanda Freeman, for her excellent
work in carrying out the enormous
task of coordinating and compiling the
materials for the more than
1,000-page conference report; Marjorie
Gordner for her unrelenting dedica-
tion and assistance in compiling the
titles relating to the strategic petro-
leum reserve, alternative fuels, and
uranium enrichment; Anne Goshorn
for the ease in which she was able to
juggle the demands generated by this
bill and the reclamation bill which
were being conferenced simultaneous-
ly; Heather Hart for all her hard work
on the provisions relating to natural
gas, oil pipelines, coal bed methane,
and for her proficiency in compiling
the statement of managers; Chris
Kimball and Mia Miranda for making
the whole job of document distribution
and seating arrangements for more
than 100 Members look effortless;
Celeste Miller for her fine work on the
sections relating to alternative fuels,
nuclear reactors, and coal technology
while also managing the tasks sur-
rounding the WIPP legislation; Paul
Mann for his high level of computer
expertise and his quick response to
the inevitable computer crises; Becky
Murphy for her willingness to help
field phone calk and for coming to the
rescue more than once when an emer-
gency arose; Pat Temple for her tire-
less work on the energy efficiency and
renewable energy provisions; Ray-
mond Paul for his capacity to endure
late hours and countless phone calls
and for his persistence in promptly
transmitting information to staff; and
Hartmann Young for his support in
the reception office and his efficient
disbursement of documents.
I am very proud of all of them. I
thank them for their individual ef-
forts and for their contribution to an
outstanding team effort.
The PRESIDING OFFICER, b
there any further debate? If not, the
question is on agreeing to the confer-
ence report to H.R. 776, the energy
bill
The conference report was agreed
to.
Mr. JOHNSTON. Mr. President, I
move to reconsider the vote by which
the conference report was agreed to.
Mr. WALLOP. I move to lay that
motion on the table.
The motion to lay on the table i
agreed to.
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PASSAGE OP TIIK KNKItCY BILL
Mr. DOLE. Mr. President, today the
Senate took an historic step by acting
on an issue before it became a major
problem. We finally used vision to
craft a comprehensive strategy to
bring about a rational, dependable,
and balanced energy policy. This is in
no small measure due to the efforts of
the senior Senator from Wyoming,
Malcolm Wallop.
In the midst of a most acrimonious
Congress - one in which the partisan-
ship we have come to expect in Presi-
dential election years usually leads to
deadlock - as the ranking Republican
on the Senate Energy Committee,
Senator Wallop joined with the
committee's chairman, Bennett
Johnston,to bring us a voluminous bill
which clearly indicates the amount of
effort put forth by the committee.
Every conceivable source of energy
appears to be addressed. Senator Wal-
lop could be expected to be concerned
with oil, natural gas, coal, and nuclear
energy - all resources in abundant
supply in his treasured State of Wyo-
ming. But Senator Wallop went be-
yond promoting his home State re-
sources to address renewable energy
sources, the transmission of energy,
the consumption, conservation, and
creation of energy to drive our coun-
try.
The Senate can adjourn with pride
knowing that we have taken a great
step toward reducing the threat of
another energy crisis.
Mr. President, on behalf of all my
colleagues, I want to congratulate
Senator Wallop and his Energy Com-
mittee colleagues for bringing us a bill
of which we can all be proud.
TAX ENTERI'KISK ZONKS ACT
Mr. WELLSTONE. Mr. President, I
would like the Record to reflect that
had there been a rollcall vote on final
passage of the conference report ac-
companying H.R. 776 I would have
voted in favor of final passage.
While I supported my colleagues
from Nevada in voting against invok-
ing cloture, the bill as reported from
the committee on conference has been
greatly improved. Despite the oner-
ous provisions of the bill regarding
nuclear power, there are many provi-
sions which merit the Senate's sup-
port - the proposed programs for ener-
gy efficiency, renewable energy, and
restoring health benefits for retired
coal miners are particularly notable.
Most of the criticisms which I have
raised about this bill have been ad-
dressed during the course of congres-
sional action on it. Notably, the con-
ferees greatly improved the provisions
regarding the Public Utility Holding
Company Act and addressed some of
the taxpayer issues surrounding the
bills provisions on uranium enrich-
ment. The conferees also removed
natural gas provisions which threat-
ened farmers and ranchers with emi-
nent domain abuses by energy compa-
nies.
In conclusion, I wish to express my
support for the work of the distin-
guished chairman of the Senate Ener-
gy Committee and all of the conferees.
While the bill we have sent to the
President today is not perfect, it is on
the whole a good bill which begins to
respond to our Nation's need for a
sound energy policy.
TIIK ENEKCY POLICY ACT OF IS02
Mr. DOMENICI. Mr. President, our
Nation's standard of living and quali-
ty of life is in great part of function of
our energy policies. Energy effects
every aspect of our economy - from
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industrial production to ensuring a
reliable energy supply to support ser-
vice industries - energy is a critical
factor in determining our economic
prosperity.
Here in the United States, we are
developing a new concept of energy -
one that stresses the necessity of clean
fuels, conservation, mass transporta-
tion, and an emphasis on renewable
energy resources. This legislation
contains strong provisions aimed at
addressing our energy needs through
efficiency and conservation. It calls
for more efficient use of energy
throughout our economy, including
improvements in the industrial sec-
tors, increasing energy efficiency in
the Federal Government, and encour-
aging more efficient use of energy by
utilities.
My colleagues know that I strongly
supported both the National Energy
Strategy proposed by President Bush
and the original National Energy
Security Act as reported from the
Energy and Natural Resources Com-
mittee. Both represented a balanced
and thoughtful approach to our need
for a national energy policy. Unfortu-
nately, not all the provisions included
in those two early energy proposals
have survived the legislative process.
However, this legislation remains one
of the most important pieces of legis-
lation to come before this Congress.
It is impossible to speak in appropri-
ate detail to the broad range of provi-
sions included in this bill. I would,
however, like to draw particular at-
tention to two areas in which have
special importance to me.
As one of the original advocates for
ensuring that America has a viable,
domestic source of uranium and ura-
nium enriched fuel, I am very pleased
that we are about to enact legislation
to facilitate the clean-up of mill tail-
ings sites and to ensure the continued
supply of uranium and competitively
priced enriched uranium through an
effectively restructured uranium en-
richment enterprise (UEE). I stated in
April of 1986 during one of the first
congressional hearings on this issue,
that a restructured UEE is essential
for the good of the nuclear energy
industry, which supplies over 20 per-
cent of the Nation's electricity, for our
energy independence, for our environ-
mental concerns, and for our econo-
my. I believe this is true now more
than ever.
While I am gratified that we are
finally acting on this important ener-
gy legislation, I must remind my con-
gressional colleagues that the long
delay in getting to final action on the
comprehensive uranium legislation
has not been without some conse-
quences. At one time, the United
States led the world in uranium pro-
duction, and my State of New Mexico
was the world capitol in uranium
mining. Today, however, there are few
remaining uranium mining operations
in the United States, with enormous
uranium reserves, produces onry a
small portion of our domestic needs.
Had we paid better attention to the
policy considerations of all elements of
the nuclear fuel cycle, which I at-
tempted to do in legislation I intro-
duced in April of 1985, I believe we
would be more energy independent
today. I am pleased the conference
has also retained the overfeeding pro-
gram to enourage the consumption of
domestically mined uranium.
I commend the conference for
adopting the mill tailings remedial
action plan. At long last, the Con-
gress is recognizing the Nation's re-
sponsibility for the cost of
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decomissioning and stablizing these
mill tailings sites that came into exis-
tence under Federal contracts, yet
have been left with private businesses
and local communities to manage.
In this post cold war era, action on
this restructuring language is very
timely and is very much needed. The
newly created Uranium Enrichment
Corp. will play a central role in turn-
ing the weapons of the cold war into
plowshares of nuclear energy fuel. I
also believe the corporation will play
an important role in maintaining
order in the world enrichment market
as the transformed highly enriched
uranium enters the market place.
The conference committee reached
an equitable solution to funding the
decontaminationand decommissioning
program for the UEE facilities. There
were many during the course of de-
bate who would have foisted the
government's responsibility onto nu-
clear energy ratepayers, heaping addi-
tional, and artifical, costs on nuclear
energy generated electricity.
This bill also finally concludes the
debate on what is the acceptable ac-
counting principle under the 161 v.
provisions in the Atomic Energy Act.
Again there were many who through
accounting gimmickry were plotting
various taxing schemes to amass
funds from utilities and their
ratepayers, and drive up the cost of
nuclear energy. I want to add as a
post mortem on this so called unrecov-
ered cost issue that when I first intro-
duced my comprehensive uranium bill
in 1985, I calculated that their was a
shortfall in revenues over expenses.
Accordingly, my proposal would have
required the payment of $350 million
into the Treasury. However, since
1986, the UEE has returned to the
Treasury more than $C00 million in
excess revenues over appropriations.
This bill rightly dismisses the unrecov-
ered costs issues and returns to the
corporation the unexpended appropri-
ations and accounts that have been
earned through appropriations.
While I am on this topic, I wish to
recognize the efforts of those who
have worked so hard for so long on
this restructuring legislation, particu-
larly the staff of the Senate Energy
and Natural Resources Committee. I
also want to thank two AAAS congres-
sional fellows, Paul Gilman and K.P.
Lau, who first worked with me on this
issue 8 years ago and are responsible
for putting together the framework
for this comprehensive uranium bill,
which is embodied in H.R. 776. They
have since left my staff, but I thank
and compliment them, and I applaud
AAAS and IEEE for supporting the
Congressional Fellow Program that
brings scientists and engineers into
the legislative process.
Of equal importance are those pro-
visions in this conference report deal-
ing with the domestic production of oil
and gas, particularly changes to the
way in which oil and gas production is
taxed. I represent one of the big oil
and gas production States. While rigs
sit idle in my State, and while wells
are shut in all over the Nation, we are
importing almost half the oil we con-
sume on a gross basis. That repre-
sents an increase by almost one-half
over our dependence in 1985.
The tax title contains some of the
most important energy provisions for
independent producers. Right now,
they are being taxed out of existence
by the alternative minimum tax
(AMT).
Independent producers have been
stuck in the AMT since it was enacted
in 1986. Under the AMT there are
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four big penalties imposed upon in-
vestments made by U.S. -based taxpay-
ers who explore for, and produce U.S.
oil and gas reserves. These penalties
hit the independent oil and gas pro-
ducers who drill 85 percent of all do-
mestic wells. There are two tax pen-
alties on drilling investments and two
penalties on asset depletion. Without
the independent oil and gas
producers' exploration and develop-
ment activities, the options for an
energy strategy would be greatly limit-
ed. The President recognized this,
and fully supports AMT relief for
independent oil and gas producers.
This bill also contains important
reforms of the Public Utilities Holding
Company Act (PUHCA) that will en-
able independent power producers
(IPP's) to meet a significant share of
our country's future power needs. I
anticipate that these IPP's will, in
many cases, utilize energy efficient,
abundant, and clean burning, natural
gas.
To the many New Mexicans in-
volved in the production of natural
gas, this bill, in conjunction with the
recent rulings by the Federal Energy
Regulatory Commission (FERC), sets
the basis for a stable and reliable do-
mestic natural gas market. I antici-
pate that the groundwork has been
established for a period of growth and
prosperity in the natural gas industry.
I am very pleased to have worked
with my colleagues, in particular
Chairman Johnston and the ranking
member of the Energy and Natural
Resources Committee, Malcoln Wallop
as this legislation has developed. It
has been a long, and at times, frus-
trating process. However, today our
efforts have culminated in a bill of
which we can all be proud.
IN SUPPORT OF THE CONFERENCE RE-
PORT ON IIJL 776, THE ENERGY BILL
Mr. DODD. Mr. President, I rise
today in support of the conference
report on H.R. 776, the Energy Policy
Act of 1992.
The Senate should act today to pass
this critical legislation. The need for
this legislation is clear. Weneedonjy
look back to the days when the Con-
gress first took up the energy bill -
our Nation was at war in the Persian
Gulf. We were at war for many rea-
sons, but certainly one of them was
our dependence on imported foreign
oil. This legislation puts us, as a Na-
tion, on the path toward a more se-
cure, a more sound energy future.
I am not suggesting this bill is per-
fect - far from it. I have concerns
about the inclusion of the language
regarding the Yucca Mountain site,
currently under consideration for a
high level waste disposal site and will
carefully monitor this issue as it pro-
gresses. I also am concerned that in
some areas this bill does not go far
enough. I firmly believe that in-
creased corporate average fuel econo-
my standards belong in this bill - but
they are not here. Additionally, I was
disappointed that the conferees
dropped the provisions for a moratori-
um on drilling on much of our
Nation's outer continental shelf.
However, on balance, I believe the
policy before us here today is sound
and I will vote to support this bill.
First, the bill will promote conserva-
tion and efficiency. No matter what
the energy source -we must not waste
what we have. The bill sets new effi-
ciency standards for homes, for build-
ings, for appliances, and for the Fed-
eral Government It also provides
incentives for utilities to pursue
demand-side management £o further
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conserve energy.
The energy bill fosters the develop-
ment of renewables and the commer-
cialization of alternative fuels. A key
provision establishes a Federal pro-
duction incentive for public utilities
that use renewable energy sources.
Additionally, the bill provides for nu-
merous joint ventures with the Feder-
al Government to assist in the com-
mercialization of renewable energy
sources • such as fuel cells, which hold
such promise in meeting our future
energy needs. The bill also takes
strong steps to curb the use of import-
ed oil on our Nation's roads. Govern-
ment motor vehicle fleets would be
required to purchase an increasing
number of alternatively fueled vehi-
cles.
While encouraging domestic fuel
production, this bill recognizes that
not all areas are appropriate for devel-
opment. This bill includes important
protections for several unique Con-
necticut areas. As many in my State
know, several Connecticut town parks
have been threatened with hydropow-
er development • development which
would produce little power and cause
great damage. This bill protects those
areas - and other parks across the
country. This bill also does not in-
clude provisions to open the Arctic
National Wildlife Refuge to oil and gas
drilling - so for now this unique eco-
system is safe from development.
The bill provides for reform of the
Public Utility Holding Company Act
to increase competition in the utility
industry and ultimately to lower rates
for consumers of electricity. I became
personally involved in the PUHCA
issue through the Banking Committee
and held several hearings, here and in
Connecticut, in an effort to craft legis-
lation balancing the concerns of con-
sumers, the utility industry, and inde-
pendent producers. Although this was
certainly a daunting task, I am
pleased that the legislation before us
today strikes that delicate balance.
In addition, the bill protects impor-
tant State rights. This measure clari-
fies a State's right to regulate
low level waste, which the Federal
Nuclear Regulatory Commissions de-
termines 'below regulatory concern.'
This will ensure that States, such as
my own State, can set standards for
low level waste in the absence of Fed-
eral regulations.
The energy bill before us is a large
bill and I have only sketched a few of
its many provisions. It touches on
nearly every aspect of our Nation's
energy industry and it moves us for-
ward on each of these fronts toward a
more safe and sound energy future. In
this regard, I urge my colleagues to
join me in support of this vital legisla-
tion.
ll.R. 776. NATIONAL ENERGY POLICY ACT
Mr. CHAFEE. Mr. President, we
have heard a great many things about
this bill. It has been characterized as
a major rewrite of our Nation's energy
policy. It has been suggested that the
bill includes a bold new program to
promote energy efficiency and new,
renewable sources of energy - to im-
prove our environment and to combat
the threat of global climate change.
These characterizations make great
press but they are not based on the
facts. This bill does too little to en-
courage improvements in energy effi-
ciency. It does too much to promote
increased use of fossil fuels and too
little to encourage the development of
nonpolluting, alternative renewable
sources of energy. This bill is, in
short, a bill that promotes the statue
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4939
quo in energy policy.
Mr. President, our national energy
policy is shaped by three competing
objectives. One objective is energy
security typically measured by depen-
dence on foreign sources of oil. Three
oil disruptions over the last two de-
cades, the attendant recession and
inflation, and finally a war, Desert
Storm, involving U.S. forces have
educated all Americans to the impor-
tance of energy security.
A second objective is low energy
prices. Mr. President, you don't often
hear low energy prices praised in the
national energy debate. Many have a
stake in higher prices. The energy
industries like higher prices because
they raise profits and provide the
funds for new exploration. The envi-
ronmental community likes higher
prices because they cut consumption.
And those who worry about the secu-
rity of our energy supplies like higher
prices because they cut U.S. oil im-
ports.
But low energy prices are of great
advantage to our consumer and to our
economy. The unprecedented period
of economic growth experienced dur-
ing the 1980's was sustained in part
by the collapse of oil prices in the
middle of the decade. Had it not been
for falling oil prices, the current reces-
sion would likely have begun much
sooner. Low prices help consumers
and help our economy.
The third objective is environmental
quality. There is no sector of our
economy that has a greater impact on
the environment than the energy
sector, the production and consump-
tion of energy. We control sulfur
dioxide emissions from our power-
plants to reduce acid raid. We put
catalytic converters on our cars to
reduce smog. We declare parts of the
Continental Shelf off limits to drilling
to protect marine life. We regulate
strip mining of coal and the injection
of brine produced with oil so that our
lands are not despoiled. We impose
strict liability on ocean tankers to
prevent oil spills.
We do all of that and much more to
protect our environment from the
effects of energy production and con-
sumption. These measures are also a
part of our national energy policy.
As I said these are competing objec-
tives. If we were willing to allow drill-
ing in the Arctic National Wildlife
Refuge, we might temporarily reduce
oil imports and increase our energy
security. If we were willing to pay
higher prices for alternative transpor-
tation fuels from domestic sources,
such as ethanol or electricity, we
could improve our security. If we
were willing to put a substantial tax
on gasoline, we could reduce the car-
bon dioxide emissions that play a role
in global warming. Managing these
competing objectives in the context of
a world energy market dominated by
Persian Gulf oil is one of our most
difficult challenges as a nation.
On Tuesday night Ross Perot
bought 30 minutes of TV time to dis-
cuss our Nation's problems. During
that half hour, one of the things he
said is that we do not have a national
energy policy. When he said that, he
was holding up a chart showing oil
imports as a percentage of our total
consumption. We now import almost
half of the oil we use. Mr. Perot ap-
parently thinks imports are too high.
He said that we do not have a nation-
al energy policy because we have not
succeeded in reducing oil imports to
much lower levels.
Mr. Perot then went on to compare
U.S. gasoline taxes to gasoline taxes in
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the European nations. American
taxes are relatively low. In this coun-
try, combined Federal and State gaso-
line taxes average about 30 cents per
gallon. In Europe they are much
higher; $2.57 in Britain; $3.09 in
France; $3.92 in Italy. If gasoline tax-
es in the United States were $3 per
gallon, it is certain that our imports
would be much lower. However, a
European-type gasoline tax would
have a devastating effect on our econ-
omy. We would have much lower
imports but also a much slower econo-
my.
Mr. Perot mentioned Marie Antoi-
nette, the French queen who said,
'Let them eat cake,1 in his talk on
Tuesday evening. Just as Marie An-
toinette was wrong about the avail-
ability of cake in 18th century France,
Mr. Perot is wrong about the avail-
ability of energy tax dollars in late
20th-century United States. Without
a massive overhaul of our tax system,
American consumers and voters would
reject $3 per gallon gasoline taxes.
It is not correct to say that we have
no national energy policy. We have a
policy. But it is not a policy that
seeks to reduce imports at any cost.
We want to reduce imports but we
also must consider the pocketbooks of
our consumers and the quality of our
environment. Current U.S. energy
policy is sometimes described as
market-based. It reflects the price
decontrol decisions made by President
Reagan in early 1981, the lack of any
substantial energy taxes and little
regulation of energy consumption
decisions. It is a policy designed to
reap the economic benefits of low
prices.
The energy bill now before the Sen-
ate cannot be called a new national
energy policy. H.R. 776 will not do
much to reduce oil imports. This bill
has no gasoline tax. It does not in-
clude a sweeping mandate for alterna-
tive fuels or conservation programs
that will dramatically change the
shape of U.S. energy policy. Measured
by any of the three objectives, securi-
ty, price or environmental protection,
this bill fails to break new ground.
This is a bill that continues the statue
quo in the big picture terms of energy
policy.
There are small steps in this bill.
But some of these small steps are in
the wrong direction. I would prefer a
policy that puts more emphasis on
energy conservation and on the use of
renewable sources of energy. The
conservation measures in this bill
simply codify a business-as-usual poli-
cy, they follow rather than lead. And
to the extent that this bill encourages
new domestic energy production, the
sources are the synfuels that come
from fossilized carbon. It is too much
reliance on fossil fuels that already
threatens our climate.
As science improves our under-
standing of the interaction between
energy used and environmental quali-
ty, as we develop new technologies for
energy production and consumption, it
is appropriate that we adjust our na-
tional energy policy to reflect the new
science and to take full advantage of
new technology. One factor that must
be given more weight in shaping our
future energy policy is the possibility
of global warming and other climate
changes caused by human activity.
There is enough science available
now for real concern. We are perhaps
not ready to make radical changes in
our energy policy, with wrenching
economic effects, in an effort to head
off the build up of carbon dioxide in
the atmosphere. But there are many
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things that we can do to save energy
and to use renewable resources that
will protect the climate without signif-
icant economic sacrifice. Most of these
measures also have the additional
benefit of reducing oil imports. H.R.
776 makes too little of those opportu-
nities.
Let me give you just one specific
example. This bill contains no change
in the corporate average fuel economy
standards that govern automobile fuel
efficiency. CAFE amendments were
considered by the Energy and Natural
Resources Committee and were re-
ported by the Senate Commerce Com-
mittee. But no upward adjustment
from the current standard of 27.5
mpg was made, even though we know
there are available technologies that
can achieve significant improvements
in fuel economy without great cost.
We can understand that CAFE is
controversial and could not be includ-
ed here. But what is offered in its
place? An alternative fuel requirement
for fleets of cars and trucks. H.R. 776
mandates that all governments and
some private companies operating
large fleets of cars and trucks use
alternative fuels. That would be fine
if it wasn't for the fact that alterna-
tive fuels, as defined in this legisla-
tion, generally means methanol.
There are some specialty markets
for compressed natural gas, but natu-
ral gas will never make a substantial
contribution to total transportation
fuel uses in the United States. And
the other alternatives, principally
ethanol and electricity, are so expen-
sive that no fleet owner will turn to
them, especially if methanol is an
option.
Methanol can be made from natural
gas or coal. Because U.S. natural gas
delivered by pipeline commands pre-
mium prices for spatfc heating and
industrial needs, any substantial in-
crease in methanol use would be sup-
plied either from foreign sources of
gas or from domestic conversion of
coal. If the methanol is made from
foreign gas supplies and then import-
ed, our energy security is not im-
proved. If produced from domestic
coal, C02 loadings to the atmosphere
will be even greater than they are
with the petroleum-based fuels of
today.
Also important is the fact that
methanol is likely to be much more
expensive than the gasoline it replac-
es. How is our national energy policy
- a balance of security, price and envi-
ronment - improved by mandating the
use of methanol as a transportation
fuel? How can that option be justified
while modest increases in CAFE are
rejected?
There are alternative energy sourc-
es that are domestic and that are
better for the environment. Some of
these are onry appropriate for use
outside the transportation sector, but
they could make a significant contri-
bution nevertheless. We should be
doing more to encourage their devel-
opment and use. Solar and wind en-
ergy will not get much of a boost from
this bill. Natural gas and coal are big
winners. And there are conservation
strategies for buildings, lighting; appli-
ances, industry and transportation
that could have been pushed much
more aggressively.
There are other pluses and minuses
inthebill. On the plus side, H.R. 776
does encourage least cost planning by
electric utilities. Many utilities, in-
cluding the New England Electric
System, have championed energy con-
servation programs to deal with load
growth and they have had great sue*
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4942
The reforms to the Public Utili-
ty Holding Company Act that are
included in this bill will help hold
down electric prices by bringing new
competition to the utility sector.
Among the minuses, perhaps the
most troubling in the role assigned to
the National Academy of Sciences to
develop radiation protection standards
for any waste repository that might be
located at Yucca Mountain, NV. By
requiring that EPA adopt any NAS
recommendations, the bill limits the
public scrutiny and participation that
would otherwise be brought to bear on
the development of those important
standards.
Mr. President, I admire the mem-
bers of the Energy and Natural Re-
sources Committee for their persever-
ance in this very difficult field. As I
have said, the struggle to manage the
competing goals that define a national
energy policy, and to do it in the con-
text of cartels, embargoes, recessions,
revolutions, and wars, in one of the
most difficult problems we face. I do
not criticize their efforts for the lack
of radical change in our current poli-
cy. Unlike Mr. Perot, 1 am not ready
for $3 per gallon gasoline taxes and
crash programs for energy production
to reduce our imports.
But it seems to me that this bill
does not make as much as we could of
the more modest opportunities that
we do have for energy conservation
and greater use of domestic, renew-
able energy resources. Rather, it tilts
in the director of moiv energy produc-
tion and the consumption of the fossil-
ized, carbon energy resources that
pose such a threat to our environ-
ment. Without any economic penalty
- in fact, with real benefits from great-
er economic efficiency • we could do
more for your energy security and for
our environment with a policy mora
reliant on conservation and the use of
renewable energy resources.
ADOITION OF THE CONFERENCE
REPORT OF THE NATIONAL ENERGY
POLICY ACT OF 1992
Mr. BIDEN. Mr. President, I tup-
port the passage of the national ener-
gy strategy because it starts the Na-
tion on a course toward a comprehen-
sive plan to reduce our dependency on
foreign oil and provide incentives for
wise use of existing energy resources.
While I believe the bill points us in
the right direction, I cannot say that
it will carry the country as far as we
need to go. We can and should take
bolder steps toward energy security in
the next Congress. Three oil shocks in
the last 20 years are undeniable evi-
dence of the risks our Nation and our
economy runs if we continue in our
current policies.
Contrary to the administration's
desire to seek only production-based
solutions, the bill addresses the de-
mand side of the energy equation. By
diminishing and diversifying demand,
we can develop enduring solutions to
our energy problems. The next ad-
ministration must provide stronger
backing to the proven programs, such
as alternative energy development and
clean fuel car incentives and to novel
approaches to our energy problems.
Regarding one of the shortfall of
this bill, I will continue to press the
nuclear industry to adhere to the
safety standards that they espouse.
As I stated during debate on my
amendment to create an independent
nuclear safety board, we need to
re-examine the energy sources we
encourage and those we hinder. In
addition, I have deep reservations
about the Yucca Mountain nuclear
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4943
waste disposal provisions in the bill.
Experience has shown that the high-
est levels of competence and attention
are required to control the potential
threats posed by nuclear energy pro-
duction and nuclear waste disposal.
While further improvements in the
way we produce and consume energy
are necessary, the bill recognizes the
threshold issue involved: the need for
a comprehensive plan. We have be-
gun to address the role of demand, as
well supply, in our energy planning.
That is of critical importance. As
much as some would like it, a radical
restructuring of our energy system is
unrealistic. This bill represents an
effort to turn the system in a direc-
tion that makes sense for the condi-
tions our Nation will face in the years
ahead.
Today, we have taken a step toward
our future. If sincerely followed, the
guideposts provided in this legislation
can lead us to a more secure and effi-
cient national energy program. I hope
that we have had to learn the lesson
of the Persian Gulf for the last time.
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3 6105 119 543 705
DATE DUE
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STANFORD, CALIFORNIA 94305-6004
CAY1080
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