Senate energy bill passes; tough negotiations ahead

Senate energy bill passes; tough negotiations ahead

Yesterday the Senate passed its energy bill, which includes $1 billion in grants and loans to establish a voluntary diesel engine retrofit program though a variety of sectors in the transportation industry

Yesterday the Senate passed its energy bill, which includes $1 billion in grants and loans to establish a voluntary diesel engine retrofit program though a variety of sectors in the transportation industry. Neither the House or Senate versions of the bill allocates tax credits or incentives for trucking companies to purchase diesel equipment compliant with the upcoming EPA 2007 emissions standard.

This sets the stage for the House and Senate to debate their significantly different versions of the energy bill in conference in July.

The Senate’s $1 billion retrofitting program, called the Diesel Emissions Reduction Act, is spread out over five years with half of the money allocated to public fleets. The language is vague enough so that the retrofit could apply to locomotives, off-road vehicles, trucks, construction and marine, noted Glen Kedzie, environmental council of the American Trucking Assns. (ATA).

“It’s not spelled out if (trucking) fleets are being thrown in as a token or if all sectors are being thrown into the mix,” Kedzie told Fleet Owner. “The details haven’t been worked out yet.

“Plus there’s the question of where’s the money coming from,” Kedzie continued. “In this budgetary cycle its difficult to propose monolithic programs—we’re not talking the ‘M’ word as in million but we’re taking about the ‘B’ word as in billion. And with the President wanting to keep spending under control, we’re waiting to see what happens.”

“The Diesel Emissions Reduction Act seems to be homerun no matter how you look at it,” Allen Schaeffer, executive director of the Diesel Technology Forum (DTF) told Fleet Owner, noting it was backed overwhelmingly by a Senate vote of 92 to 1. “However once it gets to conference, it’s going to get tangled up in the quagmire of economics and price.”

The House version of the bill has set aside $100 million for fiscal years 2005-2007 to public agencies for the modernization of diesel equipment, favoring the retrofitting of diesel trucks operating in ports.

An amendment that was submitted earlier by Sen. Gordon Smith (R-OR) that would provide a 5% investment tax credit to the cost of EPA 2007 emissions compliant diesel equipment wasn’t formally proposed to be on the energy bill. However, the upcoming transportation bill could be another avenue for amendment, said Shaeffer.

But the biggest question that lies ahead is whether there will be an energy bill passed. The House and Senate are set to for a heated debate on whether oil companies and refineries should be shielded from environmental litigation regarding MTBE drinking water poisoning—an issue that stalled the energy bill two years ago.

“The MTBE liability issue is a major hurdle to overcome and there’s some talk to shift it into the transportation bill,” said ATA’s Kedzie. “If it does the chances for getting an energy bill passed greatly improve. But whether or not [the MTBE issue] shifts remains to be seen.”

And then there’s the issue of price. The steep price tag of the Senate version of the energy bill is set to become another hurdle when negotiations begin. This leaves a murky outlook for measures such as the Diesel Emissions Reduction Act, despite its strong Senate backing.

“The House bill is more in line with the President’s budget and the Senate bill is far out of line," said Kedzie. "Something has to give when they go to conference— whether it’s the President or the Senate or there’ll be a stalemate of neither budges.

“The President is very interested in passing the energy bill but is mindful of the expenditures,” DTF's Schaeffer said. “People are going to mindful of the things that are slipped in and the dollar amount associated with them. Considering the current economic situation, I think it will be more challenging.”

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