by Darrin Munoz, James Spaanstra and Andrew Wheeler
Faegre Baker Daniels is an IMA member full-service international law firm…
The House Appropriations Committee marked up the fiscal year 2018 Energy and Water Appropriations Bill last week, which provides annual funding for various programs under the U.S. Department of Energy, the Army Corps of Engineers, nuclear weapons activities and other related agencies. The bill totals $37.56 billion — $209 million below the FY 2017 enacted level and $3.65 billion above President Trump’s budget request. That the funding exceeded the administration’s request is hardly a surprise, as both Republicans and Democrats in Congress pushed back on the proposed spending when Energy Secretary Rick Perry testified. The House bill also largely ignores the steep cuts to clean energy programs that were outlined in President Trump’s proposal.
House Energy and Water Appropriations Bill Summary
Nuclear energy activities received about $1 billion, a major bump above FY 2017 levels. Energy programs under the DOE would see $9.6 billion in funding next year, which is a $1.7 billion cut from FY 2017. Highlights of the bill include:
- National Laboratories: The national laboratories operate under the Office of Science, which remains at the FY 2017 funding level of $5.4 billion under the House bill. President Trump recommended making a significant cut to the program.
- Office of Fossil Energy: This office directs much of the DOE’s carbon capture and sequestration efforts. Secretary Perry has touted the benefits of carbon capture, even doing so as recently as his congressional hearings, even though President Trump’s budget slashed funding for the office drastically from $668 million in FY 2017 to $280 million. The House bill only cuts it to $636 million, which signals Congress’s commitment to continued research into clean energy, including clean coal technologies.
- Energy Efficiency and Renewables: In one of the larger cuts, the bill slashed funding for the Office of Energy Efficiency and Renewable Energy by half from the FY 2017 enacted level of $2.1 billion. Although this is a significant cut, the House’s $1.1 billion in allocations for this program exceed the $636 million proposed in President Trump’s budget. This could have repercussions for those looking to invest in renewable energy, particularly in light of the administration’s repeal of the Clean Power Plan and withdrawal from the Paris Climate Accord. Yet there remains bipartisan support for the programs in both the House and the Senate.
- Nuclear: Nearly $1 billion was included in the bill for research and development for nuclear energy. This amount was $266 million more than the president’s request.
- ARPA-E: The House bill followed the administration’s recommendation and eliminated funding for Advanced Research Projects Agency-Energy. ARPA-E promotes funding research and development of advanced energy technologies within the DOE. This is likely to roil some Republican senators who have come out in support of the program in the past several weeks. ARPA-E has been a valuable funding source for U.S. public research university development of alternative/clean energy technology in the recent past.
- Yucca Mountain: The bill signals Congress’s intent on supporting the Yucca Mountain nuclear repository. According to the bill, it will provide $90 million for the nuclear waste disposal program. Additionally, it shells out $30 million for defense nuclear waste disposal and $30 million for the Nuclear Regulatory Commission. This will have significance for the utilities currently collecting the waste storage fee as well as those entities that were concerned about the prospect of building an interim waste facility at another location.
- Petroleum Reserve: The House bill departs sharply from President Trump’s view that the Strategic Petroleum Reserve (SPR) is not as important as it once was. His budget advocates for selling off half of the reserves and using it to pay down the deficit. The House bill increases funding for the SPR to $252 million.
- Army Corps of Engineers: The Army Corps of Engineers is funded at $6.16 billion, an increase of $120 million above the FY 2017 enacted level and $1.16 billion above the president’s budget request.
In addition to laying out the spending priorities, the legislation includes a provision authorizing the U.S. Environmental Protection Agency and the Army Corps to withdraw the Waters of the U.S. rule (WOTUS) “without regard to any provision of statute or regulation that establishes a requirement for such withdrawal.” Many supporters of the repeal read this language as not requiring the notice and comment requirement of the Administrative Procedure Act, which means the repeal process could be significantly shorter. It also included language from the FY 2017 omnibus stating that farm ponds and irrigation ditches are exempt from the Clean Water Act.
The committee action on the appropriations occurred one day after the EPA proposed the formal repeal of WOTUS, reinstating the 1986 regulations and the 2008 guidance defining coverage of “waters of the U.S.” by the Clean Water Act. The significant change in direction for the agency is how it will interpret the 2006 Rapanos v. U.S. Supreme Court decision. The Rapanos case was decided with a 4-1-4 plurality opinion. The EPA under the WOTUS rule attempted to follow the single concurring opinion by Justice Anthony Kennedy. EPA Administrator Scott Pruitt has signaled that he intends to follow the plurality opinion by the late Justice Antonin Scalia. The change in direction utilizing the Scalia opinion over the Kennedy opinion could have significant consequences for wetlands permits going forward. The inclusion of the language in the House appropriations bill signifies support for this approach by the majority.
It remains to be seen whether the Senate will have similar funding levels in their version of the energy and water appropriations bill. As Energy Secretary Perry was testifying before the Energy and Water Appropriations Subcommittee, Chairman Lamar Alexander, R-Tenn., emphatically stated that funding for ARPA-E will not be zeroed out in the Senate appropriations process as President Trump has requested. He also stated his concern regarding cuts to the national labs and reiterated that there isn’t much to support in DOE’s budget request, which likely means he won’t like some of the items included in the House version as well. Even House appropriators have expressed doubt that the Senate will keep the larger cuts in place. The appropriations process is months behind schedule, increasing the chances that a continuing resolution will be required to avoid a shutdown. As this is the first energy spending bill under the new administration, it will be important to see what priorities remain given the disagreements with Congress and tight budget constraints.
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