Pelosi Threads Energy Needle

Posted September 16, 2008 at 6:50pm

Speaker Nancy Pelosi (D-Calif.) massaged and massaged and massaged her energy bill for months before the vote Tuesday and said she’s willing to consider still more changes — even sharing offshore oil revenue with states — in a final deal with the Senate.

Pelosi told reporters Tuesday that she was not philosophically opposed to revenue sharing for states. Although she did not include it in her bill, she said she would consider adding it depending on what passes the Senate.

“We’ll see,” she said. “Louisiana has revenue sharing. Alabama has revenue sharing.”

Pelosi said she liked the revenue sharing for Louisiana, which directs the funding to coastal restoration and levee construction.

“That’s a good model,” she said. “What we do have is a CBO problem,” she said, referring to the Congressional Budget Office score that revenue sharing would have to be offset.

Pelosi said support for renewable energy is her top priority. Renewable energy gets billions in subsidies under the bill, while offsetting revenue sharing would reduce the available funding for renewables.

The lack of revenue sharing in Pelosi’s bill has opened Democrats up to charges from Republicans that they are not serious about promoting offshore drilling because states would have little incentive to allow it.

“It’s a problem,” said pro-drilling Democratic Rep. Gene Green (Texas), who worked with Pelosi on the bill. “We need to pass this out of the House. Under the CBO rules, we’re in a box. The Senate can take care of that.”

Green and other Oil Patch Democrats gave crucial support to Pelosi’s effort to move a bill through to the next step, although they still hoped to make changes.

Rep. Jim Costa (D-Calif.), another drilling supporter who earlier helped push a more expansive drilling package, said he would continue to try to allow drilling as close as 25 miles from shore and for revenue sharing in negotiations with the Senate.

“I think it’s a work in progress,” he said. “It’s a first step, and the Senate will have to act on it.”

But Costa gave credit to Pelosi for moving in the direction of pro-drilling forces — and the public: “Think of where we were a week ago, we were talking about four states. The important thing is the Speaker understood the necessity of doing something.”

Rep. Charlie Melancon (D-La.) added: “You’ve got to crawl before you can walk. You are never going to get a perfect drilling bill. If we don’t pass a drilling bill, you have nothing. It is something that America is demanding.”

Melancon said he agreed to support the bill only after leadership assured him that Louisiana’s existing 37.5 percent revenue share on offshore drilling would be preserved.

Melancon said the bill will die if the Senate cannot quickly pass its bill because neither chamber’s bill would pass in the other without significant modifications and there would not be enough time for negotiations if the Senate dawdles.

Senators, however, started tamping down the notion that they would pass a bill next week.

Pelosi also managed to ward off complaints from environmental groups that the bill potentially opens up oil drilling on both coasts, though no closer than 50 miles from shore.

And she fended off attacks from Republicans that the bill was designed for political cover, not to produce energy.

“If she was willing to consider revenue sharing, she should have done it before sending it to the Rules Committee,” said Antonia Ferrier, spokesman for House Minority Whip Roy Blunt (R-Mo.).

Many Democrats bit their tongues on the bill. Rep. Brad Miller (D-N.C.) hasn’t been a fan of offshore drilling but notes that the ban is set to expire Sept. 30, allowing drilling as close as three miles off the coast, “and North Carolina would have squat to show for it.”

Miller said coastal states should get revenue sharing.

“If North Carolina is going to take the risk of environmental and economic damages from spills, then North Carolina should have something to show for it,” he said.

Also tucked in the bill is a $1.1 billion provision intended for a rail line in New York serving JFK International Airport. Republicans assailed it as an earmark sought by embattled Ways and Means Chairman Charlie Rangel (D-N.Y.). Democratic aides denied the provision was an earmark, saying it had been sought by President Bush in his budget as part of the post-9/11 program for New York and had been pushed by other Democrats from New York as well.

Meanwhile, Pelosi’s bill embracing offshore drilling — as well as a deal on the long-stalled tax-extenders package — prompted a bipartisan group of Senators to begin rewriting its energy plan in the runup to next week’s energy debate.

Members of the “Gang of 10” remained publicly upbeat Tuesday, saying that while the tax bill would syphon off much of the “pay-fors” they had hoped to use to underwrite the cost of their bill, it would not scuttle the deal.

Asked whether losing the manufacturers’ tax credit pay-for to the tax-extender bill complicated the gang’s efforts, Sen. Kent Conrad (D-N.D.), a Gang of 10 leader, said, “Does it make it more challenging for us? Yes it does. Does it fatally damage us? No, it really doesn’t. It is very close to a wash. So it isn’t that big a deal.”

Similarly, Sen. Ben Nelson (D-Neb.), another member of the group, said the gang was scheduled to meet to rework its drilling provisions in the wake of Pelosi’s decision to include a broader drilling title in her bill than had been expected. Nelson also said the gang was in the process of identifying which items were included in the tax bill and what other additional sources of revenue could be found. “We’re trying to ferret out what could be included in the extenders [bill]. … We have a wish list as well, [but] we’re not far enough along the road to be making selections yet,” Nelson said.

Privately, Republicans and Democrats said the net effect of Pelosi’s drilling language and the tax-extenders bill could be to undercut the momentum of the gang. “You have to wonder about the timing,” one lawmaker said, noting the gang will have significant difficulties in finding enough pay-fors to offset the bill’s spending.