This month’s Washington Update provides insight into a number of energy-related developments at the federal level, including President Trump’s recently proposed budget for Fiscal Year 2018, the Senate’s failed efforts to turn back the Obama administration’s methane rule, and several pieces of legislation related to energy efficiency.

President Trump’s FY18 Budget

On May 23 President Trump released his proposed budget for Fiscal Year 2018 (FY18). The budget calls for a significant increase in defense spending, and reductions in non-defense spending. Defense would see an increase of $22 billion above current levels, with $668 billion proposed for FY18, while non-defense spending would see a decrease of $57 billion from current levels, with $479 billion proposed for FY18.

The Department of Energy (DOE) budget is reduced by more than 9%, with a proposed budget of $28 billion for FY18. The budget reduces by more than 50% the budget for DOE’s Office of Fossil Energy and Office of Energy Efficiency and Renewable Energy. The budget would eliminate the Advanced Research Projects Agency-Energy (ARPA-E) program.

The Environmental Protection Agency (EPA) budget is reduced by 32%, from the current $8.2 billion to $5.7 billion for FY18. EPA’s budgetary reduction is the steepest of all federal agencies.

The spending levels in the FY18 budget are in line with what was included in the “skinny budget” released by the White House several weeks ago, but it should be noted that this is just one step in the budget process for FY18 and there will be skepticism from both Democrats and Republicans on Capitol Hill about some of the deep spending cuts proposed by the president.

Methane Rule Survives CRA Roll-Back Effort

Efforts in the US Senate to turn back the Obama administration’s Methane and Waste Prevention Rule faltered on May 10 when three Republicans – Sens. Collins (R-ME), Graham (R-SC), and McCain (R-AZ) – joined with all 48 Democratic senators to reject the Congressional Review Act (CRA) resolution to undo the Bureau of Land Management (BLM) rule. The rule limits methane emissions from oil and natural gas drilling. The Department of Interior is still expected to seek to modify the rule through administrative action.

Senate Nomination Hearing

On May 25 the Senate Energy and Natural Resources Committee will hold a hearing to consider the nominations of Dan Brouillette to be the Deputy Secretary of the Department of Energy; Neil Chatterjee to be a member of the Federal Energy Regulatory Commission (FERC); and Robert Powelson to be a member of FERC.

Senate Energy Efficiency Legislation

Senate Finance Committee Ranking Member Wyden (D-OR) has introduced the Clean Energy for America Act – a bill that aims to create a new technology-neutral system for federal tax credits for clean energy, clean fuel, and energy efficiency projects. The bill has 21 cosponsors. More on this legislation, including the legislative text, a one-page summary, and a longer summary of the bill, can be found on our Energy Technology Matters blog post.

Senators Seek End to Delay of Innovation R&D to Small Businesses

On May 19, Sen. Cantwell (D-WA), ranking member of the Senate Energy and Natural Resources Committee, and Sen. Shaheen (D-NH), ranking member of the Senate Small Business and Entrepreneurship Committee, wrote to Energy Secretary Perry and Small Business Administrator McMahon asking for an explanation for the delay in federal research and development grants to small businesses through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

Senate Hearing on Ozone Standards

The Senate Environment and Public Works Committee held a hearing on May 23 focused on the Ozone Standards Implementation Act (S. 263) and the Ozone Regulatory Delay and Extension of Assessment Length Act (S. 452). Both bills are aimed at delaying implementation of the Environmental Protection Agency’s ground-level ozone standard. Hearing witnesses were Misael Cabrera, director, Arizona Department of Environmental Quality; Kyle Zeringue, senior vice president, Baton Rouge Area Chamber; Ahron Hakimi, executive director, Kern Council of Governments; Dr. Monica Kraft, former president, American Thoracic Society, University of Arizona College of Medicine, Tucson; and Shawn Garvin, secretary, Delaware Department of Natural Resources and Environmental Control.

Offshore WIND Act

Sens. Markey (D-MA) and Whitehouse (D-RI), and Rep. Langevin (D-RI) have introduced the Offshore Wind Incentives for New Development Act, which would extend a 30% investment tax credit for offshore wind projects through 2025. The credit currently runs through 2019. The Senate bill is cosponsored by Sens. Merkley (D-OR), Warren (D-MA), Reed (D-RI), Booker (D-NJ), and Brown (D-OH). The House bill currently has no cosponsors. The bill was introduced in the House and Senate last year but never made it out of committee.

Senators Introduce Vehicle Innovation Act

Senators Gary Peters (D-MI), Debbie Stabenow (D-MI) and Lamar Alexander (R-TN) have reintroduced the Vehicle Innovation Act to encourage investments in research and development of clean vehicle and advanced safety technologies to increase fuel efficiency and reduce dependence on foreign oil. The Vehicle Innovation Act strengthens and streamlines the Department of Energy’s Vehicle Technologies Office, which promotes public-private partnerships to conduct technology-neutral research and development on a diverse range of new technologies to improve fuel efficiency in light, medium, and heavy-duty vehicles. The bill will support domestic research and development, and is intended to support advanced manufacturing industry in the United States and reduce our dependence on imported oil. The legislation is supported by the Motor and Equipment Manufacturers Association, the Auto Alliance, UAW, the BlueGreen Alliance, and NTEA – The Association for the Work Truck Industry.

Bipartisan Ethane Storage Hub Legislation

Sens. Manchin (D-WV), Capito (R-WV), and Portman (R-OH) have introduced the Appalachian Ethane Storage Hub Study Act, which calls for an assessment of the potential for an underground ethane storage site and distribution hub. The bill would also incentivize investment in such a project.

National Lab Report on Renewable Energy

The Lawrence Berkeley National Laboratory (LBNL) has released its 2016 Annual Status Report on U.S. Renewable Portfolio Standards. According to LBNL, wind energy has been the primary form (64%) of all renewable portfolio standards (RPS)-driven renewable energy capacity growth to date, but solar was the largest source (69%) of RPS builds in 2015. The report describes key trends, including recent legislative revisions, RPS policy design features, compliance with interim targets, and costs.

ARPA-E Funding Released

The Department of Energy announced on May 18 that it is honoring commitments to three previously selected Advanced Research Projects Agency-Energy (ARPA-E) awardees. The department says that the funds are moving ahead following a review of all taxpayer-funded grants and projects. Earlier in the month congressional letters were sent to Energy Secretary Perry arguing that by withholding the funds the department could be in violation of the Congressional Budget and Impoundment Control Act of 1974, whereby funds cannot be withheld for publicly announced projects covered by earlier appropriations. The projects moving forward are part of ARPA-E’s Next-Generation Energy Technologies for Connected and Autonomous On-Road Vehicles (NEXTCAR) and Renewable Energy to Fuels Through Utilization of Energy-Dense Liquids (REFUEL) programs. The awards are going to Purdue University (NEXTCAR), FuelCell Energy, Inc. (REFUEL), and SAFCell, Inc. (REFUEL).