After MTBE Dropped, Energy Bill Moves Closer to Approval

A provision to protect producers of the gasoline additive methyl tertiary butyl ether (MTBE) from lawsuits over groundwater contamination will not be included in the omnibus energy bill currently being considered by House-Senate conferees, the two top negotiators on the measure said Sunday.

Rep. Joe Barton (R-TX), chairman of the conference committee, and Sen. Pete Domenici (R-NM), chief Senate negotiator, confirmed that MTBE would not be part of the energy bill following a rare Sunday conference session, which came two days after Barton unveiled a plan to resolve the stalemate over the MTBE issue (see Daily GPI, July 25).

The move to drop the contentious MTBE legal protections, which are included in the House version of the energy bill, eliminates a major hurdle that has prevented passage of comprehensive energy legislation in the past. The MTBE issue sank the energy bill in 2003.

"Domenici has made it clear that the Senate cannot accept liability protections" for MTBE producers, said Marnie Funk, a spokeswoman for the senator. "It is good that the MTBE boondoggle is now out of the energy bill. It doesn't have support in the Senate and we will do everything we can to kill it not matter where it appears," echoed Sen. Charles Schumer (D-NY). New York is one of several states that have experienced MTBE contamination.

A provision seeking to shield MTBE producers from lawsuits is not included in the base text of the ethanol and motor fuels title that will be reviewed by the conference committee at a meeting later Monday, a spokesman for Barton said. However, Barton has reserved the right to offer an amendment on the MTBE issue later today, but he conceded language on legal protection would be a tough sell. The staff draft text of the remaining titles to be voted on was put up on the Senate web site Monday morning.

With respect to liquefied natural gas (LNG), it appears that the language in the draft conference report is a hybrid of the Senate and House versions. On one hand, it gives the Federal Energy Regulatory Commission exclusive jurisdiction over the siting of onshore LNG terminals, while it also expands the role of the states to review and inspect new terminals.

The draft conference report also adopts the Senate's proposal to carry out an inventory of the oil and natural gas resources on the federal Outer Continental Shelf (OCS). The proposal has come under attack from a number of lawmakers from coastal states, who see an inventory as the first step in removing the moratoria on exploration and production in much of the OCS.

Look for amendments to be offered to either strike or change the provisions on LNG and OCS in conference or on the House and Senate floors.

The conference committee staff's language on natural gas price transparency follows the Senate version, allowing FERC to collect market and price information, rather than mandating Commission action as the House version prescribed. The language may still be challenged as the congressmen discuss and vote on the oil and gas title.

The MTBE plan unveiled by Barton and Rep. Charles Bass (R-NH) on Friday called for the creation of an $11.43 billion industry-government fund over a 12-year period to clean up groundwater contaminated by MTBE in exchange for shielding producers of MTBE from product liability lawsuits.

"With the announced 'deal' on MTBE looking dead on arrival with all parties, that contentious issue looks poised to be tossed over the side as the energy bill conference steams toward completion this week," said energy analyst Christine Tezak of Stanford Washington Research Group in an "Energy Policy Bulletin" Monday.

"We believe that the Chairman Barton proposal acknowledges the fact that the parties remain way too far apart at this time to make a deal feasible and we expect that he is not willing to let the balance of the energy bill fail again, no matter how much he'd prefer a different outcome" on the MTBE issue, she noted.

Barton has said he expects the conference committee to wrap up its work on the energy bill on Monday, and Congress to approve the final conference report by the end of this week before lawmakers leave for their August recess.

At a meeting re-scheduled for 5 p.m. (EST) today, the conference committee is expected to take up several titles -- oil and gas, climate, ethanol and fuels, studies, incentives and miscellaneous.

The price transparency language posted Monday says "the Commission may issue such rules as the Commission considers to be appropriate to provide [it] and the public with access to such information as is necessary to facilitate price transparency." Those rules "shall provide for, on a timely basis, information about the availability and prices of natural gas sold at wholesale and in interstate commerce to the Commission, state commissions, buyers and sellers of wholesale natural gas, and the public."

To do this, "the Commission may...obtain information from any market participant and rely on entities other than the Commission to receive and make public the information..." But it "shall exempt from disclosure information the Commission determines would, if disclosed, be detrimental to the operation of an effective market or jeopardize system security."

It also warns against disclosure of transaction-specific information that might undermine the competitive market or encourage collusion or other anticompetitive behaviors.

The bill, as currently written, would protect the exclusive jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act, and says FERC may not compete with, displace from the marketplace, or regulate "any price publisher (including any electronic price publisher) or any provider of trade processing services." Nor may FERC impose any requirements on the publication of information by price publishers (including any electronic price publisher) or any provider of trade processing services.

Also the Commission "shall not require natural gas producers, processors, or users who have a de minimis market presence to comply with any reporting requirements." The same language was expected to be inserted in the electric title of the bill regarding power price reporting.

Suggested language that would have required the Commission to determine that existing price publications and electronic systems were not providing adequate price transparency before initiating its own action was dropped from the energy bill text, but possibly could be re-inserted during the markup.

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