Formal US energy bill negotiations to resume next week

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, Oct. 21 -- Lingering disputes over energy tax incentives led US congressional leaders late Monday to push back a meeting to consolidate a pending comprehensive energy bill until early next week.

"Even though they continue to make good progress, House and Senate tax writers need additional time to complete their portion of the energy conference report," said a joint statement from Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) and House Energy and Commerce Committee Chairman Billy Tauzin (R-La.).

Republican bill managers blamed part of the delay on the House's shortened work schedule; the chamber takes a brief recess for the week starting today. "Since the House is recessing for the week tomorrow, it is our intention to convene an energy bill conference early next week, as soon as the House and Senate come back into session," the two lawmakers said.

Responding to criticism from Democrats that the bill is being revised in secret, Tauzin and Domenici said they will release the entire text of the draft conference report "at least 24 hr" in advance of that meeting. The two Republican leaders also predicted that the current disagreements over fuel ethanol incentives and other energy tax provisions, such as tax breaks for a proposed Alaskan gas export pipeline, would be resolved.

"We are absolutely confident of putting a comprehensive energy bill on the president's desk this year that will promote conservation, reduce America's growing dependence on foreign oil, and create new jobs," the two said.

Sticking points
Sticking points remain, however.
Environmental groups and their advocates in Congress sharply criticized efforts by Rep. Joe Barton (R-Tex.) to revise federal clean air rules so that the US Environmental Protection Agency could extend the cleanup deadline for areas with serious smog problems.

Barton's measure, which is strongly supported by House Majority Leader Tom DeLay (R-Tex.), is now in a draft plan being circulated by Republican leaders.

"The Barton amendment would force people to breathe dirty air for a longer period of time. That would mean more asthma attacks and other public health damage," said Frank O'Donnell, executive director of the Clean Air Trust.

Meanwhile, a bipartisan group of 29 senators urged Tauzin and Domenici to ensure ethanol tax incentives were protected in the final bill. Ethanol has been a major sticking point among lawmakers because of its role in a provision designed to give fuel suppliers more flexibility in meeting clean fuel guidelines.

Under the latest draft of the Renewable Fuels Standard, fuel providers would meet a target of 3 billion gal/year of ethanol-blended gasoline in the nation's fuel supply by 2005, reaching 5 billion gal/year by 2010. Suppliers if they so choose could use a credit-trading system if they do not want to use ethanol in certain areas.

By agreeing to an ethanol mandate, industry would not be forced to use oxygenates in clean-fuel formulas and would be given limited liability protection for the clean fuel additive methyl tertiary butyl ether. MTBE would be phased out although states could opt to retain its use. MTBE producers are also expected to get "transitional assistance" to refit their plants for other oxygenates. Lawmakers are still arguing on some finer points, including when MTBE liability would kick in; the new law may have an impact on states with pending MTBE groundwater contamination suits.

There are also concerns by some lawmakers that expanding ethanol's use could harm the highway trust fund, but a plan to shield that fund from the new tax incentives is expected to be crafted shortly, according to congressional and industry sources.

Industry sources said they also anticipate that bill managers will drop two oil and gas supply-related provisions supported by the White House. Energy bill negotiators are expected to drop a controversial House plan directing the secretary of the Interior to lease a limited portion of the Arctic National Wildlife Refuge; a Senate provision calling for a complete oil and gas inventory of the Outer Continental Shelf, including moratorium areas, is also unlikely to survive a final bill.

Meanwhile Senate Environment and Public Works Committee Ranking Member Jim Jeffords, (I-Vt.), and House Government Reform Committee Ranking Member Henry A. Waxman, D¿Calif)., Tuesday wrote to Domenici and Tauzin urging them to remove a provision from the energy bill that they say exempts hydraulic fracturing from drinking water protections.