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Federal energy bill issues delayed Alaska natural gas pipeline provisions caught up in House, Senate corporate tax dispute Larry Persily Petroleum News Government Affairs Editor
The U.S. House version of corporate tax legislation will not include Alaska gas line tax incentives and other federal energy bill tax breaks adopted by the Senate last month, likely pushing the entire package into a conference committee later this summer or fall.
The House Ways and Means Committee chair deleted all of the energy bill provisions from the legislation in a move to hold down the bill’s price tag, said John Katz, director of the state of Alaska’s Washington, D.C., office.
The Senate version of the bill, adopted 92-5 on May 11, included provisions for accelerated depreciation for the proposed North Slope natural gas pipeline and tax credits for the project’s gas treatment plant on the slope. Proponents of the project say they need the tax savings to reduce the gas line’s financial risk.
Alaska’s gas line provisions are not the problem holding up final passage, Katz said.
The tangled dispute between House and Senate members covers a long list of partisan election year fights, budget deficit debates and special-interest provisions that have stymied congressional passage of a comprehensive energy bill for more than a year and now threaten timely passage of the corporate tax bill.
“We’re just caught up in it,” Katz said.
The corporate tax bill is intended to settle a trade dispute with the European Union over a U.S. export tax break for corporations. The measure would eliminate the break but protect U.S. businesses from higher taxes by dropping the overall corporate tax rate 10 percent. Bill also allows clergy to endorse political candidates The 398-page House version also includes billions of dollars for tobacco farmer buyouts to attract Southern votes and a controversial provision to allow clergy members to engage in political activity, including endorsing candidates, without jeopardizing their church’s tax-exempt status as long as they state they are not acting on behalf of their religious organization.
The $18 billion estimated cost of the Senate’s energy tax breaks and incentives “was more than he wanted to absorb,” Katz said of House Ways and Means Chair Bill Thomas. The California Republican’s version of the corporate tax bill, unveiled the first week of June, already carries a net cost to the U.S. treasury of $34 billion over the next decade, according to reports in the Wall Street Journal.
And those non-energy tax breaks are drawing a fair amount of criticism in the news media. “The House would leave out the energy provisions but add tax breaks for bourbon distillers,” Washington Post business columnist Steven Pearlstein said June 9. Senators had added the Alaska gas line and other energy bill provisions to the tax bill in hopes of catching a ride to passage and then to the White House for signature into law. The energy bill itself has been stuck in the Senate since House members passed it last fall but senators couldn’t agree on a version acceptable to themselves and House Republican leaders. House, Senate disagree over liability waiver Still the single biggest difference between House and Senate members is the House-backed product liability waiver for manufacturers of the gasoline additive methyl tertiary butyl ether, or MTBE. Enough senators oppose the liability waiver to block passage of the energy bill.
“Nothing’s changed in the Senate,” Katz said.
The House had been scheduled to consider the tax and energy bills the week of June 7, but the death of former President Ronald Reagan pushed the calendar back a week, said Chuck Kleeschulte, spokesman for Republican Sen. Lisa Murkowski, the Alaska delegation’s energy bill leader.
House Ways and Means is expected to consider its chairman’s new version of the tax bill the week of June 14, with action by the full chamber perhaps the next week, Kleeschulte said. “I expect the House to pass their version,” he said, leading to a conference committee when the Senate rejects the energy-free House version. The full House also intends the week of June 14 to take up last year’s version of the energy bill — the version senators blocked in November. That bill, too, could go back to a conference committee this summer or fall. It will include the MTBE liability waiver, Kleeschulte said, and the Alaska gas line provisions missing from the Senate tax bill — the federal loan guarantee covering up to 80 percent of construction borrowing and provisions to speed up permitting and any judicial review. Congress running out of time Time, however, is getting tight for lawmakers, Katz said. Congress is scheduled to break June 26 for the July 4 recess, and will return to work after the holiday only until members leave town for their political parties’ conventions in late July and August. Then there are the November elections to contend with, too.
“Anything is conceivable at this point,” Katz said.
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