A controversial energy policy reform bill — the Energy Policy Reform and Revitalization Act of 2007 (HR 2337), which would impose new restrictions on oil and natural gas producers and pipelines while repealing benefits that were offered to the energy industry in the Energy Policy Act of 2005 (EPAct) — will result in new discretionary spending of $2.6 billion over the 2008-2012 period, according to the Congressional Budget Office (CBO).

In a cost estimate report issued in response to an order from the House Committee on Natural Resources, the CBO also projected that enacting HR 2337 would bring a $52 million reduction in direct spending in 2008 and a $431 million reduction over the next 10 years. A fee of $1 per acre for land not in production, which would be assessed to certain oil, gas and coal operators holding onshore federal leases, would generate approximately $30 million in 2008, according to the CBO report.

HR 2337 would establish a framework of national strategies to protect natural resources affected by the production, distribution and use of energy. The bill would also revise programs managed by the Department of the Interior to promote and regulate the production and transmission of alternative energy, including solar and wind power, on federal lands. The bill calls for audits of royalty payments by 2009, penalties for companies that fail to pay all of their royalties, repeal of the “categorical exclusion” under the National Environmental Policy Act, an extension of time for the Commerce Department to rule on industry appeals related to the Coastal Zone Management Act, limiting the royalty-in-kind program to filling the Strategic Petroleum Reserve, the establishment of fees for the Interior Department to recover costs of processing oil and gas permits, and the repeal of EPAct provisions with respect to energy right-of-way corridors across federal lands.

The legislation would authorize three major programs to protect natural resources:

The bill was introduced May 16 by House Resources Chairman Rep. Nick Rahall (D-WV). Last month the bill was passed by the House Natural Resources Committee (see NGI, June 18). By 26 to 22, the panel voted out the Democrat-sponsored energy bill to the House floor. The measure is expected to be part of a broader energy package requested by Speaker Nancy Pelosi (D-CA).

The bill has drawn fire from a number of energy sectors, including oil and natural gas producers, natural gas pipelines, industrial energy consumers, wind energy developers and the gas-intensive chemistry industry. In May the Independent Petroleum Association of America, the Interstate Natural Gas Association of America and the Natural Gas Supply Association cited their objections in a joint letter to Rahall (see NGI, May 28). They said the measure would thwart oil and gas production and the development of pipeline and power transmission infrastructure and would raise energy prices.

The Independent Petroleum Association of America, which represents independent oil and gas producers, said the bill was a “step backward” for domestic energy production. The American Gas Association (AGA), a gas utility group, said the bill had “serious flaws” and fell short of addressing the needs of U.S. energy consumers. “HR 2377, if enacted into law, would result in a decrease in natural gas supply and an increase in natural gas prices to consumers,” remarked AGA President David Parker. The bill also is opposed by the Bush administration.

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