Maureen Lorenzetti
Washington Editor
WASHINGTON, DC, Nov. 17 -- Leaders of the Republican-led US Congress Monday said they expect to pass comprehensive energy legislation by the end of this week.
The White House earlier this month helped break a stalemate between Republicans over tax related issues; the pending legislation is largely seen as an outgrowth of an energy blueprint first released by Vice-Pres. Dick Cheney on behalf of President George W. Bush in May 2001.
Even with strong opposition from most House Democrats, the measure is expected to pass the House as early as Tuesday. The Senate vote may take longer given the potential risk of a filibuster that allows those unhappy with some of the provisions to potentially talk the measure to death.
Yet sources close to Republican leaders said GOP lawmakers were confident they have the necessary 60 votes in the Senate to cut off debate if necessary. That means the filibuster threat could be waning, for now at least, according to congressional sources and industry lobbyists.
Democrats still are expected to offer some amendments but few may actually have enough support to make it into the latest version of the bill. Congress has informally debated an omnibus energy bill for over 2 years.
Republican leaders Friday reached an agreement on their latest proposed version of the 1,100-page bill; it includes dozens of items of interest to both independent and multinational oil companies. Among the provisions are extensive tax incentives and royalty relief for domestic oil and gas production, and measures designed to streamline permitting procedures for on and offshore projects.
Ethanol, Alaskan gas line
The Republican package also includes a provision designed to update clean fuel rules by removing a required oxygenate requirement to help address state water contamination concerns over the additive methyl tertiary butyl ether. The oxygenate is used in more than half of the reformulated gasoline sold in some of the smoggiest cities. The clean fuel provision is seen as a way to win bipartisan consensus on the bill; Senate Minority Leader Tom Daschle (D-SD) helped craft an earlier version of the clean fuel plan that along with an MTBE phase down requires fuel suppliers to double ethanol use in US markets.
Under a deal brokered between Republican leaders, MTBE would be technically banned beginning 2015 although states could choose to continue using the product. MTBE also could still be exported. Democrats are expected to object to a new provision that calls on the National Academy of Sciences to review MTBE markets by 2013 because the measure also gives the White House authority to lift the ban by June 30, 2014.
The timetable for mandating ethanol into gasoline would start with a 3.1 billion gal/year level in 2005, rising to 5 billion gal/year by 2012. Suppliers not interested in using ethanol could use a credit trading system, and US officials could suspend the targets if the requirement results in severe fuel shortages.
Another House Republican provision extends a MTBE product liability waiver retroactive to Sept. 5, so that lawsuits filed on or after that date would be null and void.
The measure also now offers $2 billion over 8 years (at the rate of $250 million/year through fiscal years 2005-12) to provide "conversion assistance" for MTBE producers to convert their facilities to other chemicals, expected to be other fuel additive components. Legislation also authorizes $3 billion over 5 years (FYs 2004-08) to allow for MTBE groundwater contamination cleanups.
Republican leaders rejected a measure sought by some Alaska North Slope producers to provide a "commodity risk" tax break for natural gas shipped through a proposed Alaska natural gas pipeline to the Lower 48. Also absent was any provision designed to encourage or allow leasing in the Arctic National Wildlife Refuge, a plan originally sought by the White House in its energy plan, but considered far too controversial to survive a narrowly-divided Congress.
What did survive was a loan guarantee for as much as $18 billion of the cost of an Alaska export pipeline, although it is up to the US Secretary of the Department of the Interior if they want to issue loan guarantees for the project in the first place. It also is the secretary's decision whether to include the Canadian portion of the line in the loan guarantee. The pipeline, if built, would be the US's largest construction project ever and has the full support of organized labor.
Soon after the Republicans reached agreement, the bill's manager on the Senate side, Sen. Pete Domenici (R-NM) labeled the measure a "jobs bill" that he said will create nearly 1 million new jobs.
"The conventional wisdom has been that ANWR is the big jobs engine and that without ANWR, there won't be a lot of jobs from this bill. The conventional wisdom is wrong. This bill doesn't include ANWR, but we've still documented nearly 1 million direct and indirect jobs that will be created by the Energy Policy Act of 2003," he said. "With this bill, we are creating new manufacturing jobs, new construction jobs, and new mining jobs. The Alaska natural gas pipeline, alone, will create 38,000 new jobs. Extending the renewable production tax credits will help create more than 100,000 new jobs in wind, solar, and geothermal energy.
"The ethanol provision, alone, will create more than 200,000 jobs across all segments of the economy. Our nuclear provisions will protect 61,800 jobs and create more than 25,000 new jobs," Domenici said.
Domenici's statement however did not go over well with one key labor group, the International Brotherhood of Teamsters. They said President George W. Bush should veto the bill because it does not contain ANWR.
"By stripping language to allow for the opening of the ANWR, Senator Domenici failed Teamsters and other working families. Unlike many of the sorts of jobs listed in the Senator's statement, new jobs created by opening ANWR are primarily union jobs, with livable wages, strong benefits, and security. That's the only reason why the Teamsters joined more than a dozen other unions to work with Republicans and Democrats in Congress to pass a comprehensive national energy policy," said Teamsters General President James P. Hoffa.
Environmental and public interest groups also called for a veto, saying the bill harms the environment and gives too many tax breaks to special interests.
"The oil and gas provisions of the House-Senate Energy Conference Committee draft effectively establish oil and gas development as the dominant use of the federal public lands. All other values such as water quality; the property rights of ranchers and farmers on split-estate lands; wildlife and wildlife habitat protection; the preservation of wild lands; [and] the protection of cultural, historical, and recreational values take a back seat to oil and gas development," said The Wilderness Society.
Democratic response
Meanwhile House and Senate Democrats complained that the new version of the bill contains provisions that were snuck into the legislation and never considered by either chamber.
"So, after 71 days of closed-door negotiations, Republicans have produced an energy conference report replete with serious deficiencies and larded with billions of dollars in special-interest giveaways," said Bill Wicker, Democratic spokesman for the minority side of the Senate Energy Committee.
Among the oil and gas provisions Senate Democrats take issue with are MTBE liability and water pollution exemptions for oil and gas activities. Democrats also disagree with measures that grants the DOI Secretary new authority for oil and gas support facilities, even in areas on the Outer Continental Shelf under leasing moratoria; they say for example it undermines protection of Padre Island National Seashore from impacts of oil and gas development. They also criticized what they called "billions of dollars in special-interest giveaways" that include $1.1 billion in new direct spending from the US Department of the Treasury to Gulf Coast states and Alaska; $1.5 billion in spending for "ultradeepwater oil and gas research and development" principally benefiting a consortium led by Texas A&M, the University of Houston, and Louisiana State University; $500 million for the Denali Commission in Alaska; and "tens of millions in special royalty payments to the state of Louisiana and three Texas and Louisiana-based oil companies."
Of special concern to environmentalists and offshore drilling opponents in Congress was a new provision under the Oil and Gas Title, Sec. 329. Environmentalists said the provision makes it easier for industry to construct and operate floating offshore oil storage vessels instead of using subsea pipeline transport to shoreline processing facilities. Environmentalists said that using offshore storage was more dangerous and more prone to spills than constructing a more expensive pipeline shipping system. The provision also allows for large LNG terminals to forgo some federal environmental reviews if state analyses have already been conducted.
House Democrats meanwhile, said the cost of the bill to taxpayers was too high.
Regarding the oil and gas provisions, House Democrats said the title "contains a lavish buffet of unwarranted subsidies for oil and gas companies operating on public lands and in coastal waters under the aegis of 'production incentives.'"
They said although there is no cost estimate from congressional budget makers on the conference report yet, the House-passed oil and gas incentive provisions were previously estimated by Congressional Budget Office to reduce federal revenues by $383 million over 10 years.
"The total cost is unknown as federal revenues will be reduced for decades into the future," House Democrats said.
Among the more egregious provisions to Democrats include: Section 312, which codifies "royalties in-kind" authority which Democrats say the General Accounting Office criticized for its potential to reduce federal revenues; Sections 314 and 315, which provides "deep well" and "deep water" royalty holidays for oil and gas operations in the Gulf of Mexico; and, Section 326, which reimburses oil and gas companies for the costs of environmental analysis for leasing activities on public lands.
Contact Maureen Lorenzetti at [email protected].
