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Energy Bill May Hitch Ride on FSC

The fate of a comprehensive energy bill — the long-stalled priority of the Bush administration — could rise or fall on the fortunes of the international corporate tax bill currently on the Senate floor, Energy and Natural Resources Chairman Pete Domenici (R-N.M.) suggested in an interview last week.

Domenici hopes that passage of the so-called FSC/ETI tax measure — which already includes roughly $13 billion in energy tax breaks — will allow him or his surrogates to add the rest of his energy package to the bill during a House-Senate conference.

“This is not just passage of the energy tax title,” said Domenici. “Things don’t look great for a conventional way to pass” the energy bill.

While the FSC bill already includes enough energy tax provisions to satisfy many industry and GOP interests — such as tax breaks for natural gas producers, “clean coal” technology and the corn-based fuel additive ethanol — the policy portions of the bill involve other high-stakes proposals, such as reliability standards for the nation’s electricity grids and a national mandate to use ethanol in gasoline.

The tax portions of the energy bill were included in the FSC bill in early April in the hope that the tax bill might be made more attractive to wavering Senators; meanwhile, the non-tax energy provisions face an uncertain future without the tax components.

Energy bill supporter Sen. Larry Craig (R-Idaho) said that folding the entire energy measure into the FSC bill was just one of a handful of options Republicans are considering. Others include trying to add pieces of the energy bill to other legislation that moves through Congress.

But Craig said that he considers the international tax bill “a ticket to ride,” given that it is a must-pass measure that’s designed to settle a trade dispute with the European Union. European tariffs have already reached 7 percent on some U.S. goods and are scheduled to rise 1 percent every month until a U.S. manufacturing export subsidy ruled illegal by the World Trade Organization is repealed by the FSC bill.

The plan to attach the entire $14 billion Senate energy bill to the international tax measure comes after Majority Leader Bill Frist (R-Tenn.) put Domenici and other energy bill backers on notice that he will not bring the measure back to the Senate floor this year unless Domenici can secure a deal with Democrats to pass the bill within two or three days, a senior GOP aide said.

But Minority Leader Tom Daschle (D-S.D.) has repeatedly rejected such a deal, since Democrats fear that they would be barred from offering contentious amendments on such matters as climate change and fuel efficiency standards.

The senior Senate Republican aide also noted that high-ranking GOP lawmakers have tried to discourage Domenici from moving forward with his plan. They worry that appending additional energy provisions could muddy the entire international tax bill and increase its chances of failure.

Lobbyists who want the international tax bill to pass say they are not overly concerned about Domenici’s plan, as long as the international tax provisions ultimately get rid of the E.U. sanctions and provide a corresponding tax break for U.S. manufacturers.

“We’re not pressing either way,” said a lobbyist for large manufacturers. “We told them … whatever else you put in there we don’t care. We want to have manufacturing tax relief that somehow mitigates the tax increase of eliminating” the export subsidy.

Even so, Domenici faces several obstacles to his plan — not least of which is how to deal with a fuel additive known as methyl-tertiary-butyl-ether, which is known to contaminate drinking water.

Last year, Senate Democrats and a handful of Northeastern Republicans successfully filibustered a $31 billion energy conference report, largely because the bill included a provision shielding the makers of MTBE from lawsuits.

While Domenici essentially solved that problem in the Senate by stripping the provision from his new $14 billion energy proposal, House Majority Leader Tom DeLay (R-Texas) and House Energy and Commerce Chairman Joe Barton (R-Texas) have repeatedly refused to accept any energy policy bill that does not include the MTBE liability provisions.

However, the ethanol mandate, for its part, remains a high priority for corn-state Senators from the Midwest. Likewise, last August’s multi-state Northeastern power blackout has made many lawmakers eager to pass new electricity reliability standards.

Meanwhile, it is not at all certain that the international tax bill will pass the Senate this week, as supporters hope.

An unrelated amendment to extend federal unemployment benefits, sponsored by Sen. Maria Cantwell (D-Wash.), prompted Frist to file a motion to limit debate, or invoke cloture, on Friday. If Cantwell is denied a vote on her amendment, Democrats are expected to band together to defeat the cloture motion Tuesday, because invoking cloture would make Cantwell’s amendment non-germane.

Aides to Frist were optimistic on Friday, however, that a deal to vote on the Cantwell amendment could be forthcoming. That would likely clear the way for passage of the bill, according to several sources.

Though other Democratic amendments could be ruled non-germane if cloture is invoked on Tuesday, Democrats appeared willing to let those amendments fall by the wayside, said one corporate lobbyist familiar with the negotiations.

“There’s kind of a wink and nod from the [Democratic] leadership that they don’t mind if cloture is invoked,” the lobbyist said.

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