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Federal energy bill will be cut back Senate leadership looks to trim costs in effort to win passage Larry Persily Petroleum News Government Affairs Editor
Senate leadership has decided a smaller, less expensive federal energy bill stands a better chance of winning passage this year, and Alaska natural gas line proponents will be looking to make sure the project’s incentives don’t get trimmed away in the process.
The energy bill that stalled out in the Senate in November includes tax and loan provisions to encourage construction of the $20 billion pipeline from Alaska’s North Slope to mid-America.
The 1,100-page bill also includes provisions to spur oil and gas exploration and production in the National Petroleum Reserve-Alaska, and up to $1 billion over 20 years for rural energy projects in the state.
The Congressional Budget Office estimated the bill’s price tag in appropriations and tax credits totals at least $26 billion — three times more than the president had said he wanted at the start of the legislation. Opponents say the eventual total could reach $80 billion, after discretionary spending and other future provisions are included.
Sen. Pete Domenici, chairman of the Senate Energy and Natural Resources Committee, said Feb. 2 he plans to significantly reduce the cost of the energy bill to the federal treasury and will bring the lower-cost legislation to the full Senate for a vote, perhaps as soon as the end of this month.
The House passed the bill in November, and its approval would be required again if the Senate passes a different version. Federal deficit prompts cuts to bill “It is necessary, in light of current deficit numbers, to trim spending every way that we can,” Domenici, R-N.M., said in a prepared statement.
In addition to senators who are griping about many of the home-state projects that House and Senate leaders added to the bill during closed-door meetings last fall to win votes, several fiscally conservative Republicans object to the bill’s overall high costs and are unwilling to support the measure unless it is scaled back.
“(Domenici) is saying basically, I get the message, this bill is too rich,” said John Katz, director of the state of Alaska’s office in Washington, D.C.
It is possible, Katz said, that the cutting will not nick the Alaska gas line provisions or the NPR-A royalty reduction provision.
“All you can say with certainty is that such things as the gas line provisions and the NPR-A leasing provisions have not been controversial to this point,” Katz said. “Our goal remains the same, which is to get as many of the Alaska provisions as we can.”
In addition to gas line tax and loan incentives, the bill includes up to $1 billion over 20 years for the Denali Commission to spend on rural energy projects in Alaska and a $125 million federal loan to possibly rebuild the dormant Healy coal power plant 110 road miles south of Fairbanks. Filibuster threat still a problem Because of threats to filibuster the energy bill, supporters need 60 votes in the 100-member Senate to cut off debate. They fell short by three votes in November. But even if they defeat the filibuster, backers could face another supermajority procedural vote because of the bill’s high price tag.
There are objections that the bill’s total cost doesn’t comply with the federal Budget Act, and overcoming those objections could require another 60-vote majority.
In addition to the cost of the legislation, a controversial provision to exempt gasoline additive manufacturers from product liability claims also is holding up passage of the measure.
The additive, MTBE, or methyl tertiary butyl ether, was used to clean up gasoline emissions but faces its own cleanup problems where it has leaked and threatens underground water supplies.
Several senators have said they would vote for the bill if the MTBE liability waiver is dumped from the measure. But House Energy and Commerce Committee Chairman Billy Tauzin, R-La., whose state is home to MTBE producers, is not willing to concede to their demands.
While not giving in to the opposition, however, Tauzin is resigning his committee chairmanship and said he will not seek re-election to the House in November. Tauzin is considering a high-paying job offer to lead the Pharmaceutical Research and Manufacturers of America, the drug makers’ major trade association.
His decision to give up the committee chairmanship effective Feb. 16 is seen as a move to calm accusations that the job offer looks like a payoff for his committee’s negotiations with the trade group for prescription drug benefits in the Medicare bill.
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