Energy battle heats up again

House Energy and Commerce Chairman Joe Barton (R-Texas) was believed to be ambivalent about backing a big energy bill after three years of contentious negotiations failed to fashion a bill that could pass the Senate. Under pressure from House Republican leaders, however, Barton has told industry officials in recent meetings that he is prepared to try again, using as his starting point the bill that passed the House twice but died in the Senate.

With Sen. Pete Domenici (R-N.M.), the chairman of the Senate Energy and Natural Resources Committee, already committed to a comprehensive plan, Congress looks set to wade into the energy-policy quagmire again before tackling higher administration priorities — and even more difficult policy debates — such as Social Security and tax reform.

The passage of an energy bill may not mean much for consumers. Experts say it will do little to reduce gasoline prices, for example. But lobbyists said the administration and congressional Republicans could point to an energy bill as another example of how they are trying to create jobs.

Burned before by the Senate’s failure to pass a bill, Barton — who also wants to update telecom and healthcare laws — is waiting to see if an energy bill is likely to pass in the Senate before pressing forward with his own updated proposal, lobbyists said.

Even with a 55-member Senate majority, a four-seat pickup, potential obstacles remain.

Newly elected fiscal conservatives in the Senate could balk if the cost of the energy bill rises again, as fiscal conservatives did after a contentious House-Senate conference committee last year tried to build support by adding various legislative goodies, energy lobbyists said. The bill grew to $31 billion, about three times as pricey as the administration’s own plan.

Energy tax cuts attached to a corporate tax bill that passed last November may make it easier to keep the cost relatively low, one Republican lobbyist said.

“Think smaller than last year,” the lobbyist said.

But rising costs are still a worry, especially with administration officials talking tough about the deficit, as various industries are expected to push for new tax help.

The nuclear-power industry, ready to break out of a 20-year holding pattern that saw no new plants licensed, is looking for a production tax credit to encourage construction of plants that employ more recent technologies.

Because new plants aren’t likely to be built for several years, the tax credit scores relatively low in the 10-year estimates that accompany bills. But the cut could spur a tax-cut race among the various competing fuels that utilities use to make power, such as coal or natural gas.

One utility lobbyist said Senate Republicans could face a problem of having too many “piggies at the trough,” although he said they seemed aware of the danger of “overreaching.”

Domenici, in fact, has already reached out to Democrats, such as ranking committee member Jeff Bingaman (D-N.M.), in hopes of winning over more of the minority.

Democrats chafed at being left out of the negotiations in a closed-door conference committee between the House and Senate last Congress.

Bill Wicker, a spokesman for Democrats on the committee, called the atmosphere “significantly different.”
“It’s been so good so far,” he said.

Marnie Funk, a spokeswoman for Domenici, said Republicans hope to cut the number of amendments Democrats offer during debate so the measure doesn’t tie up too much floor time.  

It may take more than reducing costs and increasing cooperation. The problem that stopped the bill in its tracks remains an obstacle: liability protection for makers of MTBE, a gasoline additive that has polluted water supplies in some communities.

Bob Slaughter, the president of the National Petrochemical and Refiners Association, said efforts are ongoing to set aside money to clean up MTBE sites — akin to the leaking-underground-storage-tank fund that pays to clean up so-called orphan sites.

The new money would help pay to clean up MTBE contamination at sites with no identifiable owner. Slaughter said he hoped such a fund could alleviate concerns in communities that they could get stuck with huge cleanup bills.

But Slaughter said the industry still seeks protection from certain types of lawsuits, calling the fund a “supplement” to the safe-harbor provision.

MTBE makers have powerful allies in Congress — such as House Majority Leader Tom DeLay (R-Texas) and Barton. But Northeast Republicans essentially blocked the energy bill in the Senate over that provision.

While issues such as MTBE held up the energy bill last year, the 108th Congress wasn’t an entire loss to energy concerns. A corporate-tax package passed that included energy tax breaks for electric utilities and wind-power producers. But lobbyists still want a big bill for long-sought regulatory changes and the additional tax help the bill would likely provide.

A sweeping measure would, for example, repeal the Public Utility Holding Company Act (PUHCA), long a bane for utilities because they say it restricts their areas of operation and the types of outside businesses they can invest in.

Supporters of repeal say PUHCA restricts investment in the electricity grid. But Democrats want tougher consumer protections added to ensure that bad corporate investments don’t lead to higher power rates for consumers.

Other provisions have sought to encourage pollution controls for coal-fired power plants and speed the permitting process for natural-gas drilling. Last year’s measure also doubled a federal production mandate for ethanol, a gasoline additive made from corn, to entice Midwestern Democrats.

The starting point for discussion this year is likely a Jan. 24 half-day Senate Energy and Natural Resources Committee hearing on natural-gas costs, which are roughly three times higher than historic averages.

Domenici sought industry views on how to reduce the costs. Responses were sent this week.

The Interstate Natural Gas Association of America, which represents gas-pipeline companies, urged Congress to empower the federal government with a final say in “reviewing, approving, and siting” pipelines. Other industry groups called for opening more areas to production, a tricky political issue that if pressed could bring opposition from both sides of the aisle.