Maureen Lorenzetti
Washington Editor
WASHINGTON, DC, Sept. 17 -- US congressional negotiators continued discussions this week on a pending comprehensive energy bill with Republican leaders pledging to wrap up talks within 2 weeks.
"We believe these meetings will produce language that can be presented to conferees for their consideration. We look forward to an open and bipartisan process that will deliver final language to conferees for a vote by early October," said House Energy and Commerce Committee (ECC) Chairman Billy Tauzin (R-La.) and Senate Energy and Natural Resources Chairman Pete Domenici (R-NM) in a joint statement Tuesday.
Negotiations were expected to be briefly suspended Thursday and Friday as lawmakers prepared to leave the Capitol because of Hurricane Isabel, which is expected to make landfall along the US East Coast sometime Thursday. But talks on the staff level were likely to continue with formal meeting resuming next week.
Similarly, a final meeting of a House task force on natural gas scheduled for Thursday was postponed. Recommendations from that report and an upcoming document from the National Petroleum Council due Sept. 25 may be incorporated into a final bill, according to congressional sources and industry lobbyists.
Process criticized
Democrats over the past month have criticized the talks, saying they are being held in secret, closed to the public and the media. According to the Senate Energy Committee's Democratic spokesman Bill Wicker, the daily meetings between the staffs of Domenici and Tauzin to review various discussion drafts do not include input from Democrats.
Republican energy staff maintained that the drafts being considered are not final language and instead are working documents to which all lawmakers will have an opportunity to respond.
"We do not consider this to be final language. Rather, it is a first step toward productive negotiations. We have instructed our staff to hold a series of meetings with the staff of Republican and Democratic conferees and the majority and minority staff of House and Senate committees with jurisdiction over this issue," ECC said in a statement.
Draft proposals
Formal negotiations on many controversial proposals directly impacting the oil and gas industry are not expected to take place until month's end. This includes tax incentives designed to encourage more domestic oil and gas production, as well as a decision about leasing a small portion of the Arctic National Wildlife Refuge.
Republican negotiators did release draft language that supports the construction of an Alaskan natural gas export pipeline to the Lower 48 states. The language reflects the authorizing language of S. 14, the Republican energy bill that was abruptly pulled from the Senate in August.
The proposal does not include loan guarantees or other pricing incentives; both will be addressed in the larger tax incentives package.
Commenting on pending energy proposals, the White House reversed its position regarding government support for such a pipeline.
Sec. of Energy Spencer Abraham Sept. 10 said the White House still strongly opposes a price floor tax provision because it feels the plan would "distort markets, could undermine fiscal responsibility, and would likely undermine Canada's support for construction of the pipeline and thus set back broader energy integration."
But, President George W. Bush's administration would now be willing to support an "appropriately structured 80% loan guarantee, accelerated depreciation, and an enhanced oil recovery tax credit to support the construction of a pipeline to the nearest economical access point to markets in the continental US that would maximize consumer benefit, and minimize risks to tax payers."
Another provision in the draft Alaska gas pipeline plan mandates the "southern" route through Alaska, a provision in previous Senate and House bills. Republican negotiators also want to create a federal coordinator position to facilitate in the permitting and construction of the pipeline.
Midwest deals
Lobbyists and congressional staff attributed the White House's new support for a federally backed gas pipeline as a predictable concession to the politically strategic US Midwest. That region and the state of Alaska stand to benefit the most from an export gas pipeline. Labor groups also support the line, possibly the largest US construction project ever.
Along those lines, a longstanding bipartisan deal to create an ethanol mandate under new reformulated fuel rules could be further expanded if the ethanol industry gets its way.
The Renewable Fuels Association (RFA), a Washington, DC, trade group representing US ethanol producers, joined with several agriculture and renewable fuel organizations to urge energy bill conferees to accelerate the ethanol renewable fuels standard (RFS) schedule in the final energy bill. Without a faster implementation schedule, ethanol producers may face overcapacity problems, the groups said.
To avoid that problem, producers are urging lawmakers to expand the mandate level to 3.2 billion gal in 2005. Current Senate language endorsed by a broad coalition of stakeholders including the American Petroleum Institute stipulates a 2.6 billion gal number as part of a larger deal to remove oxygenate standards in reformulated gasoline. The House 2005 figure is 2.7 billion gal.
RFA said US ethanol production capacity is expected to exceed 3.4 billion gal by 2005, when the RFS is slated to begin. And given current production rates, "neither schedule meets current capacity and as a result the RFS would not stimulate new ethanol production until at least 2008 under the Senate bill and 2012 under the House bill," RFA said.
API told OGJ they do not support this new ethanol proposal; they say they object to ethanol interests looking to guarantee 100% of their supply.
It is uncertain whether the White House would support such a change. The administration, in its letter to lawmakers, endorsed reformulated fuel program updates that reflect last year's Senate energy bill.
Indeed, the administration "would oppose changes to the renewable fuels standard provisions that would raise the costs and reduce efficiency of the credit-trading program, which is vital to making the renewable fuels program economically achievable," Abraham said in his letter to Congress.
Contact Maureen Lorenzetti at [email protected].
