Report of the Legislation Committee

Energy Law Journal, July 1, 2012 | Go to article overview

Report of the Legislation Committee


This report provides a summary of the energy legislative activities occurring during the 2nd Session of the 112th Congress, from May 1, 2011 through July 1, 2012.

I. BUDGET CONTROL ACT

In August 2011, President Obama signed the Budget Control Act of 2011 (BCA).1 The BCA initially raised the debt ceiling by $900 billion (and allowed the President to raise the debt limit further in incremental steps under certain conditions)2 and mandated a total $2.1 trillion ($900 million in initial cuts and then an additional $1.2 trillion through reduced caps) in deficit reduction between 2012 and 2021.3 The BCA included several parts aimed at reducing the budget deficit. First, the BCA set limits on discretionary spending (caps) on annual appropriations for 2012-2021.4 Second, the BCA established the Joint Select Committee (JSC), which was tasked with recommending a proposal by November 23, 2011, to cut the deficit by at least an additional $1.2 trillion between 2012 and 2021 through reductions to non-exempt direct and discretionary spending.5 The JSC was unable to achieve its target, and therefore the budget enforcement mechanisms (reduced spending caps and sequestration) that impose further reductions on non-exempt discretionary and direct spending will go into effect (pending any further action by Congress).6 Reductions would generally be achieved by reducing and capping annual appropriations.7 The specific programs affected by the spending cuts will be determined by the budget process of Congress. Under the BCA, cuts would be spread between defense and non-defense accounts (including some limited number of mandatory programs), starting in January 2013. 8

II. PIPELINE SAFETY

After being unanimously approved by Congress, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 ("2011 Act") on January 3, 2012.9 The 2011 Act includes changes that affect operators of all types of facilities, including natural gas gathering lines, hazardous liquid lines, gas transmission pipelines, and local distribution systems. Of particular interest to gas transmission operators, the 2011 Act requires certain gas transmission pipelines closer to populated areas to report which of the lines have records that are insufficient to confirm the established Maximum Allowable Operating Pressure (MAOP).10 The 2011 Act also directs the Pipeline and Hazardous Materials Safety Administration (PHMSA) to require that such pipelines reconfirm MAOP and take interim safety measures.11 In addition, the 2011 Act requires PHMSA to re-examine many of its regulations and, as appropriate, revise, expand, and strengthen them. For example, the 2011 Act requires that PHMSA study whether to expand its gas and hazardous liquid Integrity Management programs to more pipelines and whether to require the use of automatic or remote-controlled valves on new gas and liquid transmission pipelines.12 The 2011 Act also requires PHMSA to review existing federal and state regulations for gathering lines and make recommendations to Congress on whether they are sufficient and whether federal regulation should be expanded.13 The 2011 Act also doubles PHMSA's administrative civil penalty authority to $200,000 per violation per day, up to $2,000,000 for a related series of violations.14

III. OVERSIGHT OF DEPARTMENT OF ENERGY TITLE XVII LOAN GUARANTEE PROGRAM

Title XVII of the Energy Policy Act of 2005 established a loan guarantee program within the Department of Energy (DOE) authorizing the Secretary of Energy to issue loan guarantees for projects that "(1) avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and (2) employ new or significantly improved technologies as compared to commercial technologies in service . . . at the time the guarantee is issued."15 President Obama's February 2009 stimulus package amended Title XVII by adding section 1705 to include projects that use commercial technology for renewable energy systems, electric power transmission systems, and leading-edge biofuels projects 16 and by appropriating $6 billion in funding to pay the credit subsidy costs for section 1705 loan guarantees. …

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