Familiar battles await lawmakers returning to the Capitol this week, as House and Senate Democratic leaders plot votes on energy legislation even though prospects appear slim for a final bipartisan deal in the short stretch before adjournment.
In the House, Democrats plan votes as soon as this week on legislation that blends new offshore drilling with a suite of other measures. It is unclear whether the bill will be brought up under expedited rules -- which requires a two-thirds vote for passage while preventing GOP amendments on oil drilling -- or face only a simply majority vote.
Potential provisions that Democrats may include are a repeal of oil industry tax breaks, a renewable electricity standard, expanded regulation of oil futures markets, release of oil from the federal emergency stockpile, and provisions that pressure companies to produce oil from existing leases.
Republican leaders and the White House have pushed relentlessly for up-or-down votes on ending offshore drilling bans that cover most coastal areas. But the Democrats' plan will likely fall short of their goals, and Republicans and President Bush also oppose most, if not all, of the other measures House Speaker Nancy Pelosi (D-Calif.) has signaled the package will also contain.
Including wider coastal drilling represents a slight concession from Pelosi, who has been under relentless criticism from Republicans for refusing to allow votes on removing leasing bans.
GOP leaders -- gathered in Minnesota last week for their nominating convention that included the battle cry "drill baby drill" -- panned Pelosi's upcoming bill.
A Democratic leadership aide said the outer continental shelf portion of the bill would apply to the same states as a bipartisan Senate plan known informally as the "Gang of 10" proposal. The plan allows new drilling in the eastern Gulf of Mexico and off the coasts of four Southeastern states -- the Carolinas, Georgia and Virginia. The Gang of 10 plan allows the Southeastern states to decide whether drilling will be allowed in federal waters off their shores. The aide said the House bill would also include a "opt in" system, but details were not available.
The House plan faces obstacles even if it clears that chamber.
The Stanford Group Co., in a note to clients last week, said a renewable electricity standard -- which requires utilities to supply escalating amounts of power from sources like wind and geothermal -- faces long odds, especially if coupled with oil industry tax provisions.
An RES, also called a renewable portfolio standard, has passed either the House or Senate in years past but never become law. Last year, the House passed a standard of 15 percent by 2020, about a fourth of which could be met with efficiency measures, but it died in the Senate and faced a veto threat.
"[W]e believe the 60-vote hurdle in the Senate may continue to elude renewable advocates and Democratic leadership in the 110th Congress," the research note said. "Even if the Senate passed an RPS this year it is unlikely that Speaker Pelosi or Majority Leader Harry Reid (D-Nev.) would find the two-thirds support necessary to override a presidential veto due to strong opposition from Southeastern congressmen to an RPS and the possible opposition from Gulf Coast legislators to higher oil and natural gas industry taxes."
In the Senate, where Democrats and Republicans could not even agree on how to debate energy legislation in July, the focus has turned to the Gang of 10 plan, which now has 16 backers.
That proposal, which has yet to be turned into an actual bill, combines the expanded drilling with repeal of at least one major industry tax break -- the Section 199 deduction for major oil companies -- and new investments in renewable energy and conservation. It also extends expiring renewable energy tax credits for several years.
A spokesman for Reid said he will push for votes on the proposal. But the bill is under attack from interests on both sides of the issue, while the White House and GOP leadership have consistently opposed oil tax provisions, alleging they would slow domestic exploration.
The American Petroleum Institute has come out against the plan, saying it provides too little new acreage in return for the tax provisions. Environmental groups oppose any relaxation of oil-and-gas leasing restrictions that currently cover both coasts and the eastern Gulf of Mexico. "The Gang of 10 package, to my mind, is Exxon's' wish list wrapped up with a thin veneer of clean energy policy," said Anna Aurilio, who directs the Washington, D.C., office of Environment America.
While energy prices have receded from record levels, they are high by historical standards and the issue remains at the top of both parties' campaign agendas. But this by no means translates into strong odds for a deal, as election year partisan battles and the tight pre-adjournment calendar stand in the way. Congress plans to leave town again in a month or less.
"This is ultimately a contest of whether legislative accomplishment will be placed before politics," said Paul Bledsoe of the bipartisan National Commission on Energy Policy. The election-season political environment and short time before Congress means "the hurdles are incredibly high," he said.
The chambers reached agreement on an energy package at the end of 2007, but that bill was anchored with an expanded biofuels mandate, which had strong bipartisan support, and a landmark agreement on increasing auto efficiency. There does not appear to be a similar unifying theme this year. "It is not impossible that a deal could be put together, but it does not seem as many forces are aligning as in 2007," Bledsoe notes.
Average gasoline prices have fallen in recent weeks from highs above $4 per gallon. The current nationwide average is roughly $3.67 per gallon, according to AAA and the Oil Price Information Service, which is almost a half-dollar below the mid-July highs. One industry lobbyist predicted the falling prices make a deal even less likely. "If you could not do anything in July when it was above $4, why would you do anything at $3.50?" this lobbyist said.
Nonetheless, there is still pressure for some kind of deal. The Business Roundtable, a group of chief executives from several large companies, sent a letter to Congress last week saying that high energy prices are leading to job losses, higher manufacturing costs and other ills. They want Congress to open more coastal areas to drilling, even though it will not have a near-term effect on prices.
"While the benefits of increased OCS access will not be realized immediately, the longer we wait, the steeper the price we will eventually need to pay," wrote Michael Morris, the CEO of utility giant American Electric Power and a member of the group, in a Sept. 4 letter to Congress.
Even if the broad energy bills falter, the push for wider drilling will play out in the planned continuing resolution to continue federal spending beyond the end of the fiscal year, Sept. 30.
Most fiscal 2009 appropriations measures, including the Interior Department spending bill that annually contains the congressional leasing bans, have stalled and are expected to be rolled into the catch-all temporary spending bill.
But Republicans say the CR should not include the energy restrictions, raising the specter of a government shutdown if the sides deadlock on the issue.
Congress also faces pressure to extend tax breaks for wind, solar and other renewable energy projects that expire at the end of the year. But the extensions, while popular across the aisle, have thus far fallen victim to an ongoing dispute about whether -- and how -- to offset the costs of extended tax breaks.
The renewable energy industry has been pushing hard for the extensions, arguing that allowing the credits to lapse is devastating for the growing renewable power sector. The wind industry has grown tremendously in recent years when the tax credits have been available, but annual wind power installations have fallen by more than 70 percent during the three times the credit has been allowed to lapse since 1999, according to the American Wind Energy Association.
On another issue, Congress must decide whether to endorse a U.S.-India nuclear power cooperation agreement.
A multilateral body called the Nuclear Suppliers Group over the weekend removed a ban on sale of nuclear material and technology to India for peaceful power purposes. The action was needed because India, which has nuclear weapons, has not signed off on the international nonproliferation treaty.
The decision clears the way for enactment of a U.S.-India nuclear power cooperation agreement the Bush administration reached with that country, but requires congressional approval. The deal faces continued scrutiny in Congress and outright opposition among some lawmakers.
Secretary of State Condoleezza Rice told reporters traveling with her in Algeria om Saturday that she plans to continue discussions with relevant committee chairs early this week. "I will have those conversations again, most likely on Monday or Tuesday, as well as trying to see whether the leadership believes that this can go forward," she said.
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