Energy Policy Act of 2003

ENERGY POLICY ACT OF 2003

Mr. GRASSLEY. Mr. President, I am going to discuss the legislation before the Senate, the Energy bill. In order to secure our country's economic and national security, we need to have a balanced energy plan that protects the environment, supports the needs of our growing economy, and reduces our dependence on foreign sources of energy.

Balance has been my guiding light as I worked legislation through the Finance Committee, which I chair, for tax incentives for energy. I wanted to make sure we had a very balanced piece of legislation. By balanced, I mean balanced between fossil fuels, conservation, and renewable fuels.

We do have in the finance provisions of this Energy bill very balanced provisions for fossil fuels, for near-term energy needs, but we also legislate for the future as we have emphasis upon renewable fuels, wind energy, biomass, biodiesel, ethanol, and things of that nature. We have tax incentives for that.

Then we also have tax incentives for conservation. It is my belief that a well-balanced piece of energy legislation, with tax incentives for fossil fuels, for renewable fuels, and for conservation, is not only good for such policy, but I have come to the conclusion that is the sort of legislation we have to have to get the bipartisanship it takes to get a bill through the Senate.

Now, the other body, in writing similar legislation out of their finance committee-over there it is called the Ways and Means Committee-it seemed to me it was very tilted toward fossil fuels. It was my job, representing the Senate, to make sure from the conference with the House of Representatives we came out with a balance. I think we did come out with that balance.

I commend that balance to this body, to think about that as you vote on cloture tomorrow. Give us an opportunity to vote this bill up or down, and consider that my committee, in bringing this balance-for conservation, for renewable fuels, and for fossil fuels-tried to do what we could to get a majority vote in this body.

Now, of course, we need a supermajority vote, and that supermajority vote is to stop a Democrat filibuster against this bill. In a time like this, when the energy needs of our country are so great, and we are in a crisis situation, we should not tolerate a filibuster against this bill.

Every man, woman, and child in the United States is a stakeholder when it comes to developing a responsible, balanced, stable, and long-term energy policy.

The events of September 11 have made very clear to Americans how important it is to enhance our energy independence. We can no longer afford to allow our dangerous reliance on foreign sources of oil to continue.

But somehow we can wait; and we do wait. We should not wait, but we seem to wait in a way that causes that wait to make "too good of an impact." It has been over 10 years since we passed energy legislation in this body. But if we wait until we get that perfect piece of legislation, we may be waiting forever. And by waiting forever, we will suffer the consequences of less supply and higher prices.

I do not know about folks in all parts of the country, but I know I was brought up in the State of Iowa just to have dependence upon our sources of energy. When you go to the gas pump, you put the hose in your car, you move the lever, you expect to get gasoline. When you flip the light switch, you expect the lights to come on.

In order for that to happen, and for the price to be stable, just a small percentage at the margins of supply is necessary in order for us to have that stability and that certainty.

Some people in this country believe that one way to change American lifestyle is to force down the supply of energy. I happen to believe that Americans ought to have a massive amount of choice; that we do not need a bunch of bureaucrats or interest groups in Washington dictating to us that somehow, through an energy policy, by cutting back on the amounts of energy, they are going to bring about their "perfect" society.

This bill is obviously not perfect. And to those who complain about various provisions, I just remind them, if they drafted a "perfect" bill-and there probably would never be one-it would not pass the House or the Senate.

Some say the process has not been perfect. But if the process had been perfect for some, it would not have been perfect in the view of others. And that is fairly common in any legislating process.

While we are talking about process, I would like to clarify the role the Senate Finance Committee, which I chair, played in this bill. We have heard a lot about Republicans shutting Democrats out of the conference process. Well, that is not the way I operate as chairman. That is not the way my Democrat counterpart, Senator Baucus, operated when he was chairman of this committee when the Democrats were in the majority in the last Congress.

With respect to the tax provisions of the bill, the process was open. Senator Baucus attended conference committee meetings. Finance Committee Democratic staff worked side by side with my Republican staff in the conference negotiations.

I might add, they were a key asset for us in the protracted negotiations with the House Ways and Means Committee. Conferee staff on both sides of the aisle was informed as the process moved forward.

If it is "perfection" you are insisting upon, then you are in the wrong business. Legislating is neither a perfect process nor does it produce perfect products.

The Energy Security Act of 1992-the last one that Congress passed-was not perfect. That quickly became clear.

In 1995, after extensive interagency review and analysis, under provisions of section 232 of the Trade Expansion Act of 1962, the Clinton administration concluded that oil imports threatened our national security.

Such a finding, under this law, gave him the authority to impose quotas and import fees on oil. But he chose to do nothing because he believed that import adjustments would be too harmful to the economy.

Within 3 years of passing what was called an Energy Security Act, the fact is, our national security only worsened. When national security is not in good shape, it is probably because our economic security has worsened.

So what do we do? Do we do nothing? Do we wait for a perfect piece of legislation? Do we wait for market forces to save us? We heard earlier today criticism of this Energy bill because it fails, in so many words, to allow the free market to work its magic. The bill is not perfect, it has been argued, because it favors one energy source over another. You can go on and on and on. I would like to talk about that favoritism, and I would like to talk about the marketplace.

During the debate on the 1992 Energy Security Act, the chairman of the Energy Committee at that time, former Senator Bennett Johnston of Louisiana, stated that each barrel of imported oil was subsidized by the taxpayers to the tune of $200 per barrel. That is outrageous. Anybody listening to that says I had to misquote something.

But again, let me explain from this leading Senate expert on energy, as Senator Johnston was, he is telling us that imported oil is subsidized $200 for each and every barrel. Is that favoritism, when we subsidize imported oil at $200 a barrel? Are we picking winners and losers? What does that tell us about the so-called free market system? How can our domestic energy producers compete with that? It makes a mockery of the argument that we must sit idly by and let the marketplace control our energy policy.

How absurd can we be? On one hand, we subsidize imported oil, and we do that through the military expense it takes to protect the trail of oil from the Middle East to our shore or what we are doing in the Middle East now to preserve peace over there, cutting down on terrorism as part of that. But on the one hand we subsidize imported oil, and then we wonder why we become dangerously dependent upon that foreign oil. The Government, through a massive interagency review, declares that our national security is at risk because of imported oil but then declines to do anything about it because we might disrupt our domestic economy. So any way you look at it, we are in a box that we need not be in, if we can get this legislation passed.

The marketplace won't save us because we stacked the deck in favor of foreign oil. Again, I ask: What do we do in response to this imperfect world in which we find ourselves? Pass a bill that picks winners and losers? The answer is a definite yes. The winners we pick in this bill are all Americans, all of whom have a stake in reducing our dependence upon foreign sources of oil. We do this by favoring domestic producers over foreign producers. That is true of oil and natural gas, but it is also true of our supply of renewable fuels.

It is well past time that we get serious about implementing energy efficiency and conservation efforts, investing in alternative renewable fuels, and improving domestic production of traditional resources. I support a comprehensive energy policy consisting of conservation efforts on the one hand, the development of renewable and alternative energy sources on the other hand, and on the third hand, domestic production of traditional sources of energy.

As my colleagues well know, I have long been a supporter of alternative and renewable sources of energy as a way of protecting our environment, increasing our energy independence. That started with my work with former Senator Robert Dole on legislation for tax incentives for ethanol. It was my own work in 1992, developing the wind energy tax credit, that has increased our production of electricity by wind. My State of Iowa, for instance, is third of the 50 States in the production of wind energy, as an example. So obviously, you know I strongly support the production of renewable domestic fuels. I particularly emphasize, in addition to ethanol, biodiesel made from soybeans. As domestic renewable sources of energy, ethanol and biodiesel can increase fuel supplies, reduce our dependence upon foreign oil, and increase our national economic security.

For the first time we have a tax incentive in this legislation for production of virgin and recycled biodiesel. This is a new market for soybean farmers and yet another source of renewable energy. The renewable fuels standard, supported by a broad coalition, is good for America's farmers, obviously good for the environment, good for our consumers, good for creating jobs in our cities in the production of this fuel, and good for our national security, as we are less dependent upon foreign sources of oil.

A key reform in this Senate bill deals with the treatment of ethanol-blended fuels for highway trust fund purposes. Tax incentives for ethanol are unique in terms of their treatment in the Tax Code. Unlike incentives for other energy sources such as oil and gas, the revenue for ethanol incentives comes out of the highway trust fund because it simply is not paid into the trust fund in the first place. This bill makes it clear that those incentives will be treated like all other energy incentives: The revenue will be made up to the highway fund from the general fund.

We didn't get all of the Senate reform in this conference agreement. A gesture to the House was that we would defer repealing the partial tax exemption these fuels get until the next highway bill, which is early next year. The same is true with respect to the transfer of the 2.5 cents fuel tax that ethanol-blended fuels do pay. That highway bill will be before us early next year. The current highway trust fund spending authority runs out on February 29 next. So we have to get it passed early.

My friend Senator Baucus has made this highway trust fund reform a priority of his. Together, he and I will ensure that the highway trust fund is made whole for the gap between now and February 29. I have the assurance of the leadership of both bodies that our deferral will not prejudice the highway community.

As chairman of the Senate Finance Committee, I worked closely with ranking member Senator Baucus to develop a tax title that strikes a good balance between conventional energy sources, alternative and renewable energy, and conservation. Among other things, it includes provisions for the development of renewable sources of energy such as wind and biomass, incentives for energy-efficient appliances in homes, and incentives as well for the production of nonconventional sources of traditional oil and gas.

This bill reflects the broad diversity of energy resources in the United States. There are new benefits for clean coal technology. Our colleagues from the Rocky Mountains and the Ohio Valley produce and use this abundant source for the generation of electricity.

Burning coal for electricity can lead to environmental problems. This bill goes a long way toward remedying the pollution problems associated with coal use. In the heartland, agriculture is a key part of our economy. Agricultural activities result in food that our people in the cities eat. There is also waste that results from farming. New technology has given us a twofer in the farm community. I am talking about equipment and processes that convert animal waste to energy. This technology needs a bit of a lift to get off the ground, so we have tax benefits to get these new technologies started.

Now we have heard some big city folks and big city papers ridicule some of the tax benefits for this new technology. I guess I would ask these folks from the big cities just a couple questions: Do you think it is wise to address these environmental problems? Do you think it is wise to ignore a new source of energy?

I believe the Senate Finance Committee did a good job in addressing our Nation's energy security in a balanced and comprehensive way. I believe the Congress has finally gotten to the point of addressing an issue with such a direct impact on our national economic security. For the sake of our children and grandchildren, we must implement conservation efforts, invest in alternative and renewable energy, and improve the development and production of domestic oil and natural gas resources. We must do it now. That is what this legislation does.

Before we get to an up-or-down vote on this legislation, we have to face the issue of a Democrat filibuster against this legislation, and that filibuster is going to keep us from voting, if we don't get 60 votes tomorrow. We have to have those Senators of both parties that represent primarily the grain-growing regions of the country, from Ohio west to Nebraska, and from Arkansas north to the Canadian border, stick together tomorrow on what we call the cloture vote, to get 60 votes. We are going to lose six Republicans from the Northeast. We have to pick up about 15 Democrats to get this job done. I expect that we can, because most of the bulwark of support of the last 20 years for renewable fuels-meaning ethanol, biodiesel but also including wind energy, geothermal, things such as that-have come from people within the Democrat Party, but particularly from what I call the upper Midwest of the United States, the grain-producing regions of the country. If we all stick together, I think we can produce these votes.

There is tremendous leadership from that part of the country. Senate Democratic Leader TOM DASCHLE, from South Dakota, has always been a leader in the production of renewable fuels, and particularly ethanol. He can claim a lot of credit for what we have done in that area over the past. I know he is not supporting cloture, but I also know, as Democrat leader, he has an opportunity to use a lot of muscle in his efforts as leader to produce the votes we need.

We cannot afford to lose votes on this issue if we are going to get the job done. I think there are a lot of other people who ought to be concerned about it. Senators on the other side of the aisle are concerned about conservation of energy, and rightly so. I pointed out how I felt, that we need a balanced bill between fossil fuel, renewables, and conservation.

There are a lot of conservation provisions in the tax provisions of my legislation that ought to get support from the other side. There has been some talk, particularly from the other side, that some people have tried to twist the arms of our colleagues to be against cloture, which means to keep the bill from coming to a final vote, arguing that we can refer this back to conference and get certain provisions taken out. That is not going to work under the Senate rules. This cannot be referred back to conference. Once it passed the other body, conference doesn't exist.

There has been some talk, when it comes to the important provisions I have talked about and have been a part of-I even complimented Senator Daschle for being a proponent of these for a long period of time-what we call the renewable portions of it, or this part of our legislation that makes up for the road fund. The money lost to the road fund can be made up from the general fund. That is all in this bill.

We have tax incentives for ethanol until the year 2010. We have an ethanol-like tax incentive for biodiesel. We have the renewable fuels standard, which mandates 5 billion gallons of ethanol to be used every year, phased in over a few years. That is 20 percent of our corn crop. Just think how that will benefit agriculture, cut down on taxpayers' subsidies to farmers over the long haul, and clean up the environment at the same time.

But all of these provisions are in this bill. It was not something that was easy for me to get through conference. If it had not been for the intervention of the Vice President in offering a compromise that the House of Representatives did not want to accept, we would not have such a perfect piece of legislation for renewable fuels in this bill.

As I started to say, there has been talk on the other side that somehow we can get this all done in a conference on transportation next year when the highway bill comes up. Well, all you have to do is sit in conference with members of the Ways and Means Committee and find out how they love fossil fuels. God only made so much fossil fuel; it is a finite quantity. But on the other side of this Capitol Building, the idea is there is no end to it. You don't need to worry about renewable fuels.

So they come to conference with heavy emphasis upon fossil fuels, not wanting to give tax credits to biodiesel, and to wind and ethanol, and they don't like the renewable fuels standard mandate of 5 billion gallons. Some people are being told it is just a simple process of getting this done next February, so you can vote against cloture and kill this bill.

If you knew how hard it is to negotiate this, this is the last train to leave town. If you want good provisions for biodiesel, good provisions for ethanol, good tax incentives for conservation, that is the wave of the future for energy. But if this bill is filibustered to death, don't count on me bringing back ideal provisions on renewables. I cannot guarantee that. Nobody else can guarantee it. We don't know what next January and February is going to be like.

When we have a bird in the hand, it is worth two in the bush. I hope my colleagues, particularly the Democrats who are filibustering this, and particularly anybody from the grain-producing parts of the United States, where they benefit from renewable fuels, will work hard to produce the votes and help us to get the 60 votes so we can pass this bill in an overwhelming way.

Don't tell me you are for ethanol, don't tell me you are for biodiesel, don't tell me you are for putting general fund money into the road fund to make up for lost revenue from ethanol-and this bill does that.

Don't tell me those things if you are not going to help us fight hard to get the 60 votes necessary to break the filibuster.

I yield the floor.