Energy remains firmly on the national agenda following Nov. 7 congressional elections in which Republicans received what US President George W. Bush described as “a thumpin’.”
At a White House briefing on Nov. 8, Bush said debate on the subject must continue.
“Dependency on foreign oil is a national security and economic security problem, and it’s a problem that requires bipartisan cooperation,” he said. “I know the Democrats are concerned about this issue, as am I.”
Democrats want to repeal tax breaks the oil and gas industry has received, Rep. Nancy Pelosi (D-Calif.), who becomes speaker of the House, told one interviewer after the election. She was not more specific, but the House Democratic Leadership web site lists “$33 billion in tax breaks and subsidies for Big Oil.”
Tax breaks
These include $4 billion of provisions in the Energy Policy Act of 2005 and $8.6 billion of “tax loopholes,” which two House bills, HR 5218 and HR 5234, aim to close.
The first bill, which Rep. Jim McDermott (D-Wash.) introduced on Apr. 27, would make oil and gas companies ineligible for reduced tax rates related to exports enacted in 2004 for domestic manufacturers after the World Trade Organization ruled previous provisions, which did not include the oil and gas industry, were protectionist. McDermott’s bill was referred to the Ways and Means Committee, which did not act on it.
The second bill, HR 5234, aimed to repeal Energy Policy Act provisions relating to temporary expensing of oil refining equipment, determination of a small-refiner exception to the accounting for depletion on oil production, and amortization of geological and geophysical expenses. It was introduced by Rep. John B. Larson (D-Conn.) on Apr. 27 and referred to the Ways and Means Committee, where it was not acted upon.
The Democrats also propose repeal of deepwater royalty relief, which they say would save taxpayers up to $20 billion over the next 25 years. Deepwater royalty relief became controversial earlier this year when it became apparent that price thresholds were omitted for leases issued during 1998-99.
Shortly before the election, House Government Reform Committee Chairman Thomas M. Davis (R-Va.) and Energy Subcommittee Chairman Darrell E. Issa (R-Calif.) announced that the Government Accountability Office agreed to investigate the Minerals Management Service’s handling of the federal deepwater leasing program.
Their likely successors when Democrats take control of the House in January-Henry A. Waxman (Calif.) and Diane E. Watson (Calif.), respectively-probably will try more aggressively to recover royalties lost as a result of the omission of price thresholds. They probably will try to repeal deepwater royalty relief.
Biggest casualty
Among advocates of federal oil and gas leasing in the House, Resources Committee Chairman Richard W. Pombo (Calif.) led the list of election casualties.
As he tried to convince voters that greater access to domestic oil and gas resources was as important as developing solar, wind, and other alternatives, Pombo fought to preserve the House’s aggressive approach to Outer Continental Shelf leasing and resisted the Senate’s more modest proposal.
His departure, along with the likely assumption of the committee’s chairmanship by Democrat Nick J. Rahall (W.Va.) in January, removes most of the resistance to the Senate bill, which concentrates on the eastern Gulf of Mexico and has the support of Florida’s senators.
Resource Committee activities potentially affecting oil and gas the past few years were not confined to leasing of the OCS and Arctic National Wildlife Refuge coastal plain. Cathy McMorris Rogers (Wash.) led a task-force review of the National Environmental Policy Act, which held seven hearings and issued 20 recommendations on Sept. 20. She was reelected but likely will become chief minority member if Democrat Tom Udall (NM) decides to pursue the matter further.
Pombo became the target of environmental groups after he pushed a bill that they felt would have gutted the Endangered Species Act. One such organization, Defenders of Wildlife, opened a political headquarters in Pombo’s district last spring from which almost 2,000 volunteers were sent to knock on the doors of 76,000 voters’ homes, political director Mark Longabaugh said.
Defenders of Wildlife opposed Pombo’s stands on drilling off California’s coast and in ANWR, according to Longabaugh. “The combination of those positions with money he’d taken from the oil and gas industry was a detriment to him,” he told OGJ.
His group, the Sierra Club, and other environmental organizations worked against 26 incumbents. “But Pombo was our main target. A large percentage of our efforts went toward defeating him,” Longabaugh said.
New committee chairs
When the 110th Congress convenes in January, the House Energy and Commerce Committee chairmanship will move from Republican Joe Barton of Texas to John D. Dingell of Michigan. While Democrats can be expected to aggressively promote alternative motor fuels, Dingell probably will temper many of the ideas because he comes from Detroit and is receptive to automakers’ concerns.
One Energy and Commerce Committee member who pushed important legislation last session won’t be back in 2007. Rep. Charles H. Bass (R-NH), who spearheaded a bill aimed at expediting new-refinery construction, lost his reelection bid. The bill passed the House and got as far as the Senate Energy and Natural Resources Committee, where it received no more than a polite hearing.
Democrat Jeff Bingaman of New Mexico will become Energy and Natural Resources chairman in the Senate, trading jobs with Pete V. Domenici, who will become chief minority member. While the two worked closely on many oil and gas issues, a major difference emerged the past few months as Bingaman pushed for more discussions of climate change. Those discussions can be expected to move to the foreground in January.
Bingaman also did not like aspects of the OCS leasing bill that the committee approved and the Senate passed, but it’s not likely he will try to undo the measure. It was a carefully developed compromise that eventually won the support of Florida’s senators, who previously opposed any activity in the eastern Gulf of Mexico.
More fireworks are likely in the Environment and Public Works Committee, where Republican James M. Inhofe (Okla.) will surrender the chairmanship, following the lame duck session, to Democrat Barbara Boxer (Calif.). James M. Jeffords (I-Vt.), the current chief minority member, is retiring at the end of the year.
In other major House oil and gas-related races, Rep. Heather Wilson (R-NM) was ahead of her Democratic challenger, Patricia A. Madrid, by more than 1,300 votes but had not been declared the winner at this writing. Thelma Drake (R-Va.) received 51% of the vote in her coastal district, which would be most directly affected if the state supports oil and gas leasing off its coast.
And Rep. John E. Peterson (R-Pa.), one of the principal sponsors of the House’s offshore leasing bill in 2006, was handily reelected. His return as the leading proponent of increased natural gas leasing on the OCS will make the issue difficult to ignore even in a House controlled by the Democrats.
