November 7, 1979
31191
The PRESIDING OFFICER. The Senator from Maine.
Mr. MUSKIE. Mr. President, I would like to indicate my support for the Senate Banking Committee synthetic fuels title with a few reservations; namely, I believe a higher level of, funding and a broader mix of financing mechanisms are warranted.
First of all, as every Member of the Senate knows, it is a rare occasion when the chairman of the Budget Committee can come to the floor of the Senate and support a higher level of funding.
However, in this instance, my posture is consistent with both the level of funding for new energy initiatives in the pending budget conference agreement and with our national energy needs.
Since the energy crisis of October 1973, we have debated energy policy and its impact on the U.S. economy, the quality of life, and our national security. We can debate no longer. Now is the time to act, the time to commit the resources required to lessen our dependency on imported oil.
The synfuels title offered by the Senate Banking Committee is an important step in developing alternative sources of liquid fuels. However, based upon the testimony heard before the Budget Committee's Subcommittee on Synthetic Fuels, the level of funding and the mix of financing mechanisms included in the banking title are inadequate to meet the challenge.
To stimulate private development of synthetic fuels projects and to accommodate a diversified commercial demonstration program of 8 to 12 varied synfuel technologies, up-front financing of up to $20 billion is needed. At the same time, to insure the broadest range of participation and development of pioneer technologies, a mix of economic incentives must be offered. Price guarantees and purchase agreements are required to stimulate the participation of large-scale corporations. These also tend to promote the utilization of proven technologies. Loan guarantees and direct loans are required to insure the participation of smaller corporations which lack access to capital. They also provide the up-front financing required to develop unknown technologies.
In light of these requirements, I support the Banking Committee's use of purchase and price agreements. However, I believe the limits on loan guarantees must be amended and direct loans included as a financial incentive. At the same time, I recommend limited eligibility for direct loans and loans guarantees. Only those entities, who because of financial limitations would not otherwise participate in the synfuels program, should be eligible.
Mr. President, with the inclusion of up to $20 billion authorization level and a mix of financial incentives, I would feel confident that the Senate had made an important step toward lessening the U.S. dependency on imported oil and I would strongly support the Senate Banking Committee's synthetic fuels title.
Mr. President, the development of energy policy in America has been a tremendous challenge. Last year the Congress sent the President the omnibus energy legislation that he had requested in 1977. But that legislation was insufficient to deal with our overall energy problems. The gas lines of this spring led to a further request by the President for major new legislation in the energy field.
The legislation before the Senate today, S. 932, has nine titles. It deals with issues that range from synfuels, gasohol, and energy conservation to wind and solar energy. The principal discussion on the Senate floor is likely to focus on the first title, which deals with synthetic fuels.
The Nation needs to develop test projects to see if oil and gas can be developed synthetically from other natural resources. But it would be wrong to pretend that this alternative has already been tested and made feasible. I believe the entire Senate is ready to commit billions of dollars to commercial test facilities. That is a major step forward in developing synthetic fuels.
But we must remember that we have time — and must take time — to place synthetic fuels in their proper perspective in energy policy.
If the commercial tests of synfuel plants are successful, then it is possible that this technology can make a useful contribution to solving some of our energy problems. But that contribution will come in the 1990's, if it comes at all.
In the 1980's, other actions will have to lead us to solutions. And many of these solutions are less costly, more probable, and more environmentally acceptable. We must have a strong emphasis on conservation. In many cases this will mean national efforts to conserve in order to reduce the regional impact of scarce fuels. The President's program announced this summer would do a number of important things to develop solutions that will be available in the 1980's, not just the 1990's. Heavy oil, solar energy, and unconventional gas are likely to produce significant fuel supplies in the next few years if we press their development quickly.
We ought to keep this in mind as we urge commercial testing of synthetic fuels. If we emphasize these other alternatives, we will see an improvement in our energy posture in the next decade.
The Senate Banking Committee and the Senate Energy Committee have reported different versions of S. 932. As I approach the Proxmire amendment on synthetic fuels and the Energy Committee title, a key guideline has been to preserve the flexibility needed in making a major decision on a massive commitment to commercial development of synthetic fuels.
Unfortunately, the Senate's action on the Energy Mobilization Board legislation has impaired our flexibility in the way we might approach synthetic fuels. Because these facilities will be eligible for waivers of substantive environmental controls and other important laws once they are under construction, we must insure that adequate substantive standards are in place prior to the construction of any broad-scale commercial program.
Without this potential waiver, we might have been able to approach the development of synthetic fuels with greater flexibility. But that has now been ruled out. We must insist that large commercial development not occur until substantive standards are in place, and until we are sure that adequate environmental controls are available. I would have preferred to allow these controls to develop as we increased our experience with these new plants. But because the waiver option is available to be used, we cannot rely on that pattern of development.
In terms of Government organization, economic considerations, and environmental protection, the most sensible approach to synthetic fuels is to develop a limited number of commercial demonstration plants. This means withholding commitments about production goals, final Government organization, environmental acceptability, and economic desirability until those test projects are completed, analyzed and reviewed. The Proxmire amendment fulfills these objectives. The Energy Committee bill does not.
First. It is premature to make a commitment to a Federal governmental corporation as the means of developing synthetic fuels. The Banking Committee title has no such corporation. The Energy Committee version does have a corporation, and authorizes the Government to construct these facilities, whereas the Banking Committee title does not. In addition, if the decision were made to have a corporation, the Energy Committee version is not the best kind of corporation to create.
Second. As the study by the Budget Committee's Subcommittee on Synthetic Fuels shows, the method of financial support for synthetic fuels chosen will have significantly different impacts on the Federal budget. Commitments to a large-scale production program should not be made until test projects are producing and can be analyzed from this perspective.
Third. Great uncertainty surrounds the environmental impact of synthetic fuel plants. There are potential benefits, but also appear to be many potential disadvantages. Reliable information will simply not be available until test facilities are actually in operation. It may he necessary to curtail these plants once their impact is fully known. The commitment to a production goal of 1.5 million barrels of oil equivalent per day by 1995 would make a decision to curtail activities very difficult. The energy bill creates such a production commitment.
Fourth. The decision on the second phase of the synfuel program of the Energy Committee bill will be made before the test projects are in operation. It will come in the form of a report from the Energy Security Corporation in 1982 outlining a strategy for future production and development. The plan would go into effect unless vetoed by Congress within 60 days, with no expedited procedures for a vote. The decision on the second phase is much too important to leave to this kind of process. I will now discuss these points more completely.
ENVIRONMENTAL IMPACTS
Mr. President, the Senate is being asked to launch a massive, crash program to develop synthetic fuels. The Senate is being asked to sanction a program without any clear idea of what impacts
this will have on our health or natural resources.
The only thing we do know is that the program will have a major impact on the environment. A key question facing us now is whether we make an irrevocable commitment to synthetic fuels before their environmental impacts are fully understood.
Too often we have waited to observe the effects of long-term exposure to hazardous pollutants and only then recognized our mistakes.
Too often we have tried to remedy those mistakes only to find that the effects on human health and on our environment are tragically irreversible.
We should not knowingly repeat those mistakes now. Yet that is exactly what we are being asked to do.
The bill offered by the Energy Committee would launch a massive program to develop synthetic fuels.
We would commit our Nation to an investment of $88 billion and incalculable damage to air quality, water quality, drinking water, and most important, the health of our citizens.
The Energy Committee legislation has been described as a two-stage approach. If this were really the case, perhaps such a large program would be justifiable.
However, it is in reality just a one-stage approach, with two phases. In the first phase, the Synthetic Fuels Corporation is given $20 billion to distribute for the construction of a limited number of synfuel facilities.
Yet, before any experience can be gained from the construction and operation of those plants, the Corporation must submit its comprehensive development plan to Congress.
The Corporation will have no opportunity to learn from the demonstration facilities.
The Congress will have no opportunity to learn from the demonstration facilities. In fact, the Congress will have no opportunity to assess the wisdom of a crash synfuels program with the benefit of some knowledge.
This is our one opportunity to make that assessment.
So Mr. President, I cannot in good conscience make an affirmative assessment today.
The only knowledge I have indicates the following:
First, synthetic fuels technologies have been uneconomic for many years;
Second, the processes may not yet be technologically viable:
Third. there is a long list of conventional environmental hazards known to be associated with each synfuel process;
Fourth. there may be a long list of unconventional carcinogenic pollutants generated by these processes; and
Fifth, there are no pollution control requirements applicable to synfuels technologies now.
Frankly, this does not suggest to me the wisdom of the Energy Committee approach.
Another factor in this equation is the existence of the grandfather provision in the bill creating an Energy Mobilization Board.
This provision authorizes the Board to waive any Federal, State, or local requirement for a priority energy project once construction has begun. No matter what we learn about the hazards of a technology, once even the site has been cleared no remedial action can be taken.
No additional cleanup can be required, even if we find that toxic pollutants are threatening local populations.
No additional cleanup can be required, even if ground water supplies of the local population become contaminated.
This provision, in my mind, is one of the critical factors in evaluating the two different synfuels bills before us now.
Not only do we have inadequate knowledge about the impacts of synfuels technologies, but once we do have some knowledge, we will not be able to apply it to acknowledged problems.
And, last week the House authorized the Energy Mobilization Board to waive any Federal substantive law which might delay the construction of a priority energy project. I suspect that this provision may find its way into the conference agreement. I hope not. The Senate is on record against that provision, and by a wide margin.
This unprecedented way of legislating away safeguards enacted over the last decade removes the assurance of protection from the impacts of synthetic fuel plants.
Mr. President, should we not pause and consider what kind of a monster we are creating in the guise of an energy policy?
Waiving existing laws for unknown results?
Waiving future regulation of unknown pollutants with unknown impacts on our health?
Waiving our prerogative to reject a massive commitment to synthetic fuels once we learn about their impacts?
It seems to me that an energy policy based on so many unknowns is worse than no energy policy at all. Sooner or later we will have to pay the high price for acting in ignorance.
The projects which are meant to benefit by all of these extraordinary measures remain unbuilt today not because of regulatory delay, not because of environmental obstructionism, but because they are dubious contributors to energy independence, and they are questionable technologically and economically.
They need waivers of law and financial support not because they suffer from over-regulation — they have no Federal environmental regulations now — but because at this point they are problem makers, not problem solvers.
The development of these huge projects could constitute an irreversible commitment of massive capital outlays without sound consideration of the need, the costs and the harmful side effects of these technologies.
For all of these reasons, Mr. President, I believe that the best approach is the one contained in the Banking Committee bill.
Their approach permits a true multibillion dollar test of synthetic fuel technologies prior to a second multibillion dollar Federal commitment.
A real phased approach will give us some of the answers to the myriad of questions about the economic, technological and environmental impacts prior to a full-scale synfuels development program.
No commercial size synthetic fuels plants have ever been operated in this country. The only responsible course of action we can take is a one-of-a-kind test program of the various synfuels technologies.
The Banking Committee bill provides for this by authorizing up to 12 plants, each utilizing a different technology.
It does not prejudge the viability of these technologies by setting a production goal.
It does not commit us to a second phase of second generation plants.
It does not define the scope of Federal involvement in a subsequent stage.
It does not create a Federal corporation with a mission to achieve a production goal.
Only these limitations will guarantee proper concentration on testing and demonstration of different technologies during the first phase.
I would like to have printed in the RECORD at this point a discussion by the President's Council on Environmental Quality of some of the environmental impacts which a demonstration phase would provide more knowledge on prior to an irreversible commitment to synfuels.
There being no objection, the material was ordered to be printed in the RECORD, as follows :
POTENTIAL ENVIRONMENTAL IMPACTS OF A LARGE SYNFUELS INDUSTRY 1
The environmental impacts of the synfuels program described here assume that 85 percent of the proposed 2.0 mmb/d capacity by 1990 would come from coal liquefaction and 15 percent from oil shale. This assumption implies 34 coal liquefaction plants (50,000 b/d capacity) and 0.3 mmb/d from oil shale plants. For coal liquefaction, 3/4 of the coal fuel is assumed to come from the West.
I. DISRUPTION OF LAND DUE TO MINING
It is likely that new coal liquefaction plants would be constructed in the arid West (e.g., Montana, North Dakota, and Wyoming) , where there are large amounts of low-cost strippable coal. If we assume 3/4 of the coal comes from strip mines in the West, 700 square miles of arid western land would be strip-mined over the 30 year lifetime of the plants. Another 140 square miles would be required for mining of oil shale and disposal of shale wastes. U.S. oil shale resources are concentrated in Colorado, Utah, and Wyoming. Land reclamation in dry regions, where much of our western coal and shale resources are located, is difficult and sometimes impossible. Our experience with reclamation in these areas is limited, as is our knowledge of the potential impact of coal and shale mining on critical ground water resources.
The 25 percent of the coal mined in the East could render about 7,600 square miles of land subject to subsidence over 30 years, if mined underground. Subsidence, which is difficult to predict or prevent, can damage roads and other structures, as well as disrupt natural water course patterns. If the coal in the East were to be surface-mined, 1300 square miles would be affected.
This area. together with the 700 square miles in the West, is about the size of Delaware.
Mine drainage, soil erosion, and alteration of runoff patterns are effects of both coal and shale mining. The mining of shale wastes, however, results in a volume of processed shale that is about 1.2 times greater than the raw shale. The consequent difficulty in storing the shale waste in the excavated areas has led to proposals to use natural canyons as storage space for piles of spent shale up to 250 feet deep. This action might lead to the permanent loss of many canyon lands, as well as to the destruction of natural habitats for a number of rare and endangered species.
Furthermore, the longterm stability of spent shale is uncertain. Revegetation of spent shale has not yet been demonstrated, and it is uncertain whether canyons filled with spent shale can be reclaimed for other uses.
II. DEMAND FOR WATER
The water requirement for synfuels production arises mainly from the need for cooling water to dispose of waste heat and the chemical need for hydrogen in the conversion process. Water may also be used to quench gaseous products to remove oil and particulates, in dust suppression, in land reclamation, and in solid waste disposal. The coal liquefaction program would require 245,000 acre-ft/yr of water in the West for operation of the plants and another 11,400 acre-ft/yr for mining the coal. In oil shale processing, water is chemically consumed in the generation of hydrogen for reactions with the raw shale, and still much larger quantities are consumed in mining and disposing of the shale. Oil shale operation would require an additional 43,000 acre-ft/yr for this synfuels program. This water would be sufficient to irrigate about 150,000 acres of agricultural land per year. Although this much water may be physically available at appropriate locations in the West, much of it is already committed to agricultural use. Acquiring the water rights to this much water may be a formidable problem. If significant amounts of western water are diverted from agricultural purposes for synfuels plants and coal mining, a decline in agricultural production may result. Indeed, some farmland may be purchased solely to acquire the accompanying water rights for use in synfuels production.
In addition to the water consumed in the synfuels plants, the new towns of workers (over a thousand per plant for the 5 to 6 years necessary for construction) will put a further drain on water supplies.
III. WATER POLLUTION
Any reduction in downstream flow carried by consumption of water at a synfuels plant may increase the temperature and salinity of the water below the diversion point. For example, the withdrawal of low salinity water from the Upper Colorado River Basin for use in synfuels processing will produce an increase in salinity in the Lower Colorado because of the decreased dilution effect.
Although, with strict controls direct emissions of contaminated water from coal liquefaction plants may be minimized by recycling and using waste treatment ponds, some water pollution would result from leaching of the solid wastes from coal liquefaction plants. These solid wastes consist of mineral residue, sludge from water treatment, particulates, char, and heavy tar residues. Leachates from these solid wastes may contain silicates, trace metals, hydrocarbons, nitrogen compounds, and polynuclear aromatics. Some of these substances are known or suspected carcinogens, and many are toxic to aquatic and terrestrial flora and fauna.
Surface coal mining may pollute ground water through leaching of minerals and trace elements from the mine wastes. Common solids dissolved by this downward percolation of water are carbonates, sulfates, chlorides, phosphates, and trace metals. Water pumped from underground coal mines may be acidic and high in concentrations of trace elements and dissolved solids. The mining of coal for coal liquefaction contaminates water by alkaline runoff from solid waste piles. Mining the coal for this coal liquefaction program would also contaminate western water sources with traces of heavy metals, sulfates, and 340,000 tons of dissolved solids.
For oil shale development, the impact on water by alkaline runoff from solid waste pile, with in situ processes the possibility of disruption and/or contamination of ground water aquifers exists with consequent impacts on the quantity and quality of water drawn from wells for domestic, industrial, and commercial use. Raw and spent shale piles can leach salts and otherwise contaminate groundwater and surface water bodies. For surface retort operations, information is still incomplete on the means to minimize leaching of shale piles and effluents from retort and other waste waters. Retort water can contain hazardous substances, such as ammonia, dissolved solids, hydrogen sulfide, and organic compounds.
IV. AIR POLLUTION
Although there are presently no federal performance standards for synfuel plants, it is expected that they will be required to meet federal standards. The two main sources of air pollution from synfuels plants are the combustion of fuels to provide heat, steam, and electricity for the plant and the emission of sulfur-containing waste gas from sulfur recovery operations. Even assuming application of "best available" emission controls, these synfuels plants would produce, for example, 130,000 tons of SO2 and 230,000 tons of NOx per year. Other air pollutants include 42,000 tons of particulates and 14,000 tons of hydrocarbons. The mining of coal for coal liquefaction would produce an additional 3,200 tons of particulates per year, as well as significant quantities of SO2.
V. PUBLIC AND WORKER HEALTH
The chief concern over air and water quality is that people will be exposed to toxic or hazardous substances through breathing contaminated air, drinking contaminated water or otherwise being exposed to hazardous and/or carcinogenic substances from coal and oil shale, such as sulfur oxides, nitrogen oxides, particulates, aromatic hydrocarbons, and trace metals.
In the second generation technologies planned for a U.S. coal liquefaction program (H-coal, Exxon donor solvent, SRC — II), trace elements such as arsenic, cadmium, and selenium may be vaporized during the liquefaction process and (unlike coal gasification or coal methanol processes, where apparently more of the trace elements are left in the residue) some of these trace elements will be carried through into the synthetic crude product. Some of these trace elements are known or suspected carcinogens to man. Many of the same trace elements are also present in oil shale, and some of them will remain in the syncrude product as well.
Although differences in emissions from shale or coal syncrude and those of conventional fuel are not fully identified, the main differences may be the higher concentration of trace elements and aromatics in the synfuels. The potential for exposure of the general public to these trace elements during transportation, handling, and combustion of the final products may therefore be greater with second generation liquefaction processes.
VI. ENVIRONMENT STANDARDS
Careful siting of synfuels and strict adherence to pollution control standards, some of which have not been developed, would tend to mitigate adverse environmental consequences. Much additional research and development is necessary to determine the toxicity and/or carcinogenicity of many of the air and water pollutants as well as to determine the optimal pollution control and siting strategies for the various facilities and activities involved.
Mr. MUSKIE. Mr. President, the scientific community is also concerned about the additional carbon dioxide released into the atmosphere from the synfuels technologies which use coal. A July 1979 report to the Council on Environmental Quality concluded that massive synfuels would accelerate the warming trend of the Earth, depleting the ozone layer. This in turn would result in a "greenhouse effect," with potentially drastic environmental implications.
An Energy Committee print on synthetic fuels describes this as a chicken-egg situation in which there is delay on the part of the agencies in promulgating standards due to little operational data, and pertinent data cannot be generated because there are no commercial-scale demonstration plants.
The report concludes:
This chicken-egg situation could be avoided by following a policy which would provide for collection of pertinent data on environmental impacts and on occupational health and safety from the initial commercial-scale plants rather than trying to guess or estimate the precise nature and magnitude of the pollution problems in advance.
Mr. President, I have not prejudged the ultimate viability of synthetic fuels as a major contributor to domestic energy independence. It may be possible to minimize adequately the known and unknown environmental impacts associated with synfuels. It remains to be seen.
But if in the demonstration phase it is determined that the hazards are too great, the risks to our basic environmental structure too severe, the unknowns too unresolvable, we must preserve our option to walk away from those technologies.
GOVERNMENT CORPORATIONS: CONSTRUCTION AND OWNERSHIP OF SYNTHETIC FUELS PLANTS
One of the issues debated extensively in this legislation is the question of the role of the Federal Government in constructing and owning synthetic fuels plants. In the Energy Committee bill these are known as "corporation construction projects."
The concept of developing a Government corporation to build a few "yardstick" plants was discussed in previous energy debates over the last few years. There is a legitimate role for Government corporations in the synthetic fuels area. The Government corporation could be a means of providing the Government with full information on all aspects of the development of these new projects. The Government would then have a way of measuring the accomplishments and requests for support from the private sector. These requests could be measured against the Government's own experience with its own plants.
Government corporations can also consider additional objectives, such as social, economic development, and environmental policies that are not likely to be represented in private ventures.
Unfortunately, the kind of corporation and the kind of Government construction projects available in the Energy Committee bill does not meet the characteristics I have discussed. A Government construction project would not be allowed unless all other means of bringing the project into construction had failed. In other words, the Government would be given the right to build the projects most likely to fail, and be barred from construction facilities where private interests might exist.
When could the Government build its own "Government construction project"?
Only when all private interests had rejected price supports;
Only when all private interests had rejected long-term purchase guarantees;
Only when all private interests had rejected loans or loan guarantees;
Only when no private interests were available to work in a joint venture with the Government; and
Only when all private interests had refused to develop and agree to a specially negotiated contract free from the competitive bidding process.
In short, the Government would be limited to building those plants that no private interest was willing to undertake even when the Government removed most risks from the project.
Mr. President, that seems to be a clear invitation for the Government to try something that is bound to fail.
There are two meanings given to the word "corporation" in this synfuels debate. I have been discussing the first, which is Government ownership of a construction project.
The second is to use a corporation as the general organizational form for developing all aspects of the synthetic fuels program. This would include administering price supports, loan guarantees, and any financial support mechanisms. Until we know whether or not a massive developmental commitment should be made to synthetic fuels, the concept of a corporation as a governing organization is premature. During a testing program of commercial demonstration projects, the present governmental structure is adequate. In fact, the present agencies should be able to move more rapidly than a new corporation. They are in existence with procedures, regulations, and personnel in place. A new corporation would have to be organized, with rules and regulations to be adopted.
In addition, the symbolic commitment to a massive synfuels program which the corporation format stands for is a premature commitment.
In summary, the symbolic commitment to an overall corporation is premature, and the authority for corporation construction projects of specific plants is too flawed in the present Energy Committee bill to be supportable.
The Banking Committee title is preferable: It allows the President to assign to existing Government organizations the task of stimulating synthetic fuels. It does not allow Government construction projects. It is interesting that the Banking Committee unanimously rejected the proposal to create a new Federal corporation. The committee report on pages 31-33 contains a convincing discussion as to why no Energy Security Corporation is needed in the present synthetic fuels legislation. Let me quote from the four principle arguments raised on page 31 of the report:
1. Creating a Federal corporation for the sole purpose of managing a synthetic fuels program is inconsistent with the committee's intent to minimize Federal interference with and involvement in synthetic fuels development efforts;
2. Creating the Corporation is inconsistent with the phased-development approach approved by the committee;
3. Initial and irreversible authorization of $88 billion for Federal financial assistance is excessive and further promotes a high degree of Federal interference in the program; and
4. The time needed to create a new Federal corporation would be likely to delay initiation of the first phase of commercial testing.
Mr. President, I ask unanimous consent that Charlene Sturbetts and Karl Braithwaite of the Committee on Environment and Public Works be granted privilege of the floor during the consideration of S. 932 which extends the Defense Production Act of 1950, as amended.
The PRESIDING OFFICER. Without objection, it is so ordered.
Several Senators addressed the Chair.