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Friday, October 29, 2010

Intermediate-Level Blends of Ethanol in Gasoline, and the Ethanol “Blend Wall”


Brent D. Yacobucci
Specialist in Energy and Environmental Policy

On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to the Environmental Protection Agency (EPA) for a waiver from the current Clean Air Act (CAA) limitation on ethanol content in gasoline. Currently, ethanol content in gasoline is capped at 10% (E10); the application requests an increase in the maximum concentration to 15% (E15).

On October 13, 2010, EPA issued a partial waiver for the use of E15 in model year (MY) 2007 and later passenger cars and light trucks. The agency also announced that it could expand the waiver to MY2001-2006 cars and light trucks after it receives final testing data from the Department of Energy (DOE)—a decision that could come as early as November 2010. At the same time, EPA denied the waiver request for the use of E15 in MY2000 and older passenger vehicles, as well as in motorcycles, heavy trucks, and non-road applications, citing a lack of sufficient data to alleviate the agency’s concerns about potential emissions increases from these engines. A broad waiver would allow the use of significantly more ethanol in gasoline than is currently permitted under the CAA.

The current 10% limitation leads to an upper bound of roughly 14 billion to 15 billion gallons of ethanol in all U.S. gasoline. This “blend wall” will likely limit the fuel industry’s ability to meet an Energy Independence and Security Act (EISA, P.L. 110-140) requirement to use increasing amounts of renewable fuels (including ethanol) in transportation. To meet the high volumes of renewable fuels mandated by EISA, EPA recognized in a November 2009 letter to Growth Energy that “it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent.” The partial waiver for newer vehicles—roughly one-third of the cars and light trucks on the road in 2011—will allow the use of more ethanol going forward, assuming other conditions are met. Expanding the waiver to MY2001 and later would cover an additional one-third of vehicles and an even larger share of fuel consumption (as newer cars are driven more miles than older cars).

To receive a waiver, the petitioner must establish to EPA that the increased ethanol content will not “cause or contribute to a failure of any emission control device or system” to meet emissions standards. EPA is to consider short- and long-term effects on evaporative and exhaust emissions from various vehicles and engines, including cars, light trucks, and non-road engines.

In addition to the emissions concerns, other factors affecting consideration of the blend wall include vehicle and engine warranties and the effects on infrastructure. Currently, no automaker warrants its vehicles to use gasoline with higher than 10% ethanol. Small engine manufacturers similarly limit the allowable level of ethanol. In addition, most gasoline distribution systems (e.g., gas pumps) are designed to dispense up to E10. While some of these vehicle and fuel distribution systems may be able to operate effectively on E15 or higher, their warranties/certifications would likely need to be modified. Further, many current state laws prohibit the use of blends higher than E10. Questions have been raised whether fuel suppliers would even be willing to sell E15 alongside E10 if some of their customers may not use the higher blend.

As EPA’s waiver only applies to newer vehicles, a key question is how fuel pumps might be labeled to keep owners from using E15 in older vehicles and other equipment. Along with the waiver decision, EPA proposed new pump labeling rules to indicate which gasoline pumps dispense E15. A 60-day comment period for the proposal will begin once the proposal is published in the Federal Register.



Date of Report: October 18, 2010
Number of Pages: 15
Order Number: R40445
Price: $29.95

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Friday, October 8, 2010

Rare Earth Elements: The Global Supply Chain


Marc Humphries
Analyst in Energy Policy

The concentration of production of rare earth elements (REEs) outside the United States raises the important issue of supply vulnerability. REEs are used for new energy technologies and national security applications. Is the United States vulnerable to supply disruptions of REEs? Are these elements essential to U.S. national security and economic well-being?

There are 17 rare earth elements (REEs), 15 within the chemical group called lanthanides, plus yttrium and scandium. The lanthanides consist of the following: lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. Rare earths are moderately abundant in the earth’s crust, some even more abundant than copper, lead, gold, and platinum. While more abundant than many other minerals, REE are not concentrated enough to make them easily exploitable economically. The United States was once self-reliant in domestically produced REEs, but over the past 15 years has become 100% reliant on imports, primarily from China, because of lower-cost operations.

There is no rare earth mine production in the United States. U.S.-based Molycorp operates a separation plant at Mountain Pass, CA, and sells the rare earth concentrates and refined products from previously mined above-ground stocks. Neodymium, praseodymium, and lanthanum oxides are produced for further processing but these materials are not turned into rare earth metal in the United States.

Some of the major end uses for rare earth elements include use in automotive catalytic converters, fluid cracking catalysts in petroleum refining, phosphors in color television and flat panel displays (cell phones, portable DVDs, and laptops), permanent magnets and rechargeable batteries for hybrid and electric vehicles, and generators for wind turbines, and numerous medical devices. There are important defense applications, such as jet fighter engines, missile guidance systems, antimissile defense, and space-based satellites and communication systems.

World demand for rare earth elements is estimated at 134,000 tons per year, with global production around 124,000 tons annually. The difference is covered by previously mined aboveground stocks. World demand is projected to rise to 180,000 tons annually by 2012, while it is unlikely that new mine output will close the gap in the short term. New mining projects could easily take 10 years to reach production. In the long run, however, the USGS expects that global reserves and undiscovered resources are large enough to meet demand.

Legislative proposals H.R. 6160 (Dahlkemper) H.R. 4866 (Coffman) and S. 3521(Murkowski) have been introduced to support domestic production of REEs, because of congressional concerns over access to rare earth raw materials and downstream products used in many national security applications and clean energy technologies. The House approved H.R. 6160 on September 29, 2010, by a vote of 325-98.



Date of Report: September 30, 2010
Number of Pages: 18
Order Number: R41347
Price: $29.95

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Energy and Water Development: FY2011 Appropriations


Carl E. Behrens, Coordinator
Specialist in Energy Policy

The Energy and Water Development appropriations bill provides funding for civil works projects of the Army Corps of Engineers (Corps), the Department of the Interior’s Bureau of Reclamation, the Department of Energy (DOE), and a number of independent agencies.

Key budgetary issues for FY2011 involving these programs may include the following:
  • the distribution of Corps appropriations across the agency’s authorized planning, construction, and maintenance activities (Title I); 
  • support of major ecosystem restoration initiatives, such as Florida Everglades (Title I) and California “Bay-Delta” (CALFED) and San Joaquin River (Title II);
  • alternatives to the proposed national nuclear waste repository at Yucca Mountain, Nevada, which the Administration has abandoned (Title III: Nuclear Waste Disposal); 
  • several new initiatives proposed for Energy Efficiency and Renewable Energy (EERE) programs (Title III); and 
  • funding decisions in DOE’s Office of Environmental Management.
Funding for FY2010 Energy and Water Development programs is contained in H.R. 3183, which the House passed July 17, 2009. The Senate passed its version of H.R. 3183 July 29. The Conference Committee issued its report (H.Rept. 111-278) September 30, and the House passed the conference bill October 1, and the Senate October 15. The President signed the bill October 28 (P.L. 111-85).

President Obama’s proposed FY2011 budget for Energy and Water Development programs was released in February 2010. On July 15, 2010, the House Appropriations Subcommittee on Energy and Water Development approved a bill to fund these programs. In the Senate, the Energy and Water Development subcommittee approved a bill on July 20, and the full Appropriations Committee reported out S. 3635 (S.Rept. 111-228) on July 22. On September 30, the Senate and the House passed H.R. 3081, a continuing resolution that funds government programs at the FY2010 level through December 3.



Date of Report: September 30, 2010
Number of Pages: 55
Order Number: R41150
Price: $29.95

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Tuesday, October 5, 2010

The Low Income Home Energy Assistance Program (LIHEAP): Program and Funding


Libby Perl
Specialist in Housing Policy

The Low Income Home Energy Assistance program (LIHEAP), established in 1981 as part of the Omnibus Budget Reconciliation Act (P.L. 97-35), is a block grant program under which the federal government makes annual grants to states, tribes, and territories to operate home energy assistance programs for low-income households. The LIHEAP statute authorizes two types of funds: regular funds, which are allocated to all states using a statutory formula, and emergency contingency funds, which are allocated to one or more states at the discretion of the Administration in cases of emergency as defined by the LIHEAP statute.

States may use LIHEAP funds to help households pay for heating and cooling costs, for crisis assistance, weatherization assistance, and services (such as counseling) to reduce the need for energy assistance. According to the most recent data available from the Department of Health and Human Services (HHS), in FY2006, 49.6% of funds went to pay for heating assistance, 3.6% of funds was used for cooling aid, 17.8% of funds went to crisis assistance, and 10.0% was used for weatherization. The LIHEAP statute establishes federal eligibility for households with incomes at or below 150% of poverty or 60% of state median income, whichever is higher, although states may set lower limits. However, in both the FY2009 and FY2010 appropriations acts, Congress gave states the authority to raise their LIHEAP eligibility standards to 75% of state median income. In FY2008, the most recent year for which HHS data are available, an estimated 33.5 million households were eligible for LIHEAP under the federal statutory guidelines. According to HHS, 5.4 million households received heating or winter crisis assistance and approximately 600,000 households received cooling assistance that same year.

On December 16, 2009, the President signed the FY2010 Consolidated Appropriations Act (P.L. 111-117), which provided a total of $5.1 billion for LIHEAP, the same amount that was appropriated in FY2009. Of this amount, approximately $4.5 billion was appropriated as regular funds and $590 million as emergency contingency funds. The FY2010 appropriation also maintained the distribution of regular funds set out in the FY2009 appropriations act, with approximately $840 million allocated according to the “new” LIHEAP formula and the remainder—approximately $3.67 billion—distributed according to the proportions of the “old” formula. Unlike the FY2009 appropriation, however, where Congress required HHS to release the emergency contingency funds within 30 days of the law’s enactment, P.L. 111-117 did not specify that funds must be released within a certain time frame.

For FY2011, the President has proposed to provide $2.51 billion for LIHEAP regular funds and $790 million for emergency contingency funds. In addition, the Administration would create a trigger for additional LIHEAP funds to be released when energy prices or participation in the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps) increase above certain levels. According to the budget, this trigger would result in an estimated $2 billion in mandatory budget authority in FY2011. As of the date of this report, the Senate Appropriations Committee had reported its version of the FY2011 Departments of Labor, Health and Human Services, and Education (LHE) appropriations bill (S. 3686), which would provide $3.3 billion for LIHEAP. The House LHE Subcommittee would provide a total of $5.1 billion for FY2011.

This report describes LIHEAP funding, current issues, legislation, program rules, and eligibility.



Date of Report: September 28, 2010
Number of Pages: 27
Order Number: RL31865
Price: $29.95

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Offshore Oil and Gas Development: Legal Framework


Adam Vann
Legislative Attorney

The development of offshore oil, gas, and other mineral resources in the United States is impacted by a number of interrelated legal regimes, including international, federal, and state laws. International law provides a framework for establishing national ownership or control of offshore areas, and domestic federal law mirrors and supplements these standards.

Governance of offshore minerals and regulation of development activities are bifurcated between state and federal law. Generally, states have primary authority in the three-geographical-mile area extending from their coasts. The federal government and its comprehensive regulatory regime govern those minerals located under federal waters, which extend from the states’ offshore boundaries out to at least 200 nautical miles from the shore. The basis for most federal regulation is the Outer Continental Shelf Lands Act (OCSLA), which provides a system for offshore oil and gas exploration, leasing, and ultimate development. Regulations run the gamut from health, safety, resource conservation, and environmental standards to requirements for production based royalties and, in some cases, royalty relief and other development incentives.

In 2008, both the President and the 110
th Congress removed previously existing moratoria on offshore leasing on most areas of the outer continental shelf. As of the date of this report, the 111th Congress has not reinstated the appropriations-based moratoria that were not renewed by the 110th Congress, and the President has advocated moving forward with oil and natural gas exploration and production in some areas previously under moratoria. However, in response to the recent Deepwater Horizon oil spill, the Secretary of the Interior has suspended some exploration and production activities in the Gulf of Mexico.

Despite the Deepwater Horizon incident and subsequent suspension of some exploration and production activities, other recent legislative and regulatory activity suggests an increased willingness to allow offshore drilling in the U.S. Outer Continental Shelf. In 2006, Congress passed a measure that would allow new offshore drilling in the Gulf of Mexico. Areas of the North Aleutian Basin off the coast of Alaska have also been recently made available for leasing by executive order. The five-year plan for offshore leasing for 2007-2012 adopted by the Minerals Management Service (MMS, now the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOE)) in December of 2007 proposed further expansion of offshore leasing. At the same time, the role of the coastal states in deciding whether to lease in areas adjacent to their shores has also received recent attention.

In addition to these legislative and regulatory efforts, there has also been significant litigation related to offshore oil and gas development. Cases handed down over a number of years have clarified the extent of the Secretary of the Interior’s discretion in deciding how leasing and development are to be conducted. 
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Date of Report: September 20, 2010
Number of Pages: 26
Order Number: RL33404
Price: $29.95

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