WASHINGTON -- Despite a threatened veto, Senate Democrats decided Tuesday to push ahead with billions of dollars in oil industry taxes as part of an energy bill, but abandoned a requirement for utilities to use wind and other renewable energy to produce electricity, reported said the Associated Press.
Senate Majority Leader Harry Reid (D-Nev.) said he hoped a revised tax package, totaling $21 billion, will garner enough votes if necessary to overcome a threatened Republican filibuster. "We've been told by Democrats and Republicans that there's far more [image-nocss] than 60 votes for that, but we will see," he told reporters. He said he hoped to have a vote on the tax proposals on Thursday, followed by a vote on the overall energy bill.
But Reid said it had become apparent that a House-passed requirement that electric utilities produce 15% of their power from solar, wind and other renewable energy didn't have enough support and would have jeopardized the legislation. The mandate had been vigorously opposed by senators from the Southeast and parts of the Midwest where there is less availability of solar and wind resources. They argued it would raise electricity prices in the regions. More than half the states already have some renewable energy mandate for utilities.
The issue had threatened to derail passage of the energy legislation, which would increase automobile fuel economy requirements for the first time in more than three decades to an industry average of 35 miles per gallon and require a sevenfold increase in the use of ethanol as a motor fuel to 36 billion gallons a year by 2022. Both of those measures have widespread, bipartisan support, said AP.
The House passed its energy bill last week. But its prospects appeared to be doomed in the Senate where it became apparent the 60 votes weren't there to overcome a GOP filibuster. Democrats for days have been trying to work out changes to get the 60 votes.
The Petroleum Marketers Association of America (PMAA) said it has learned that Senate Finance Committee Chairman Max Baucus (D-Mont.) has now secured at least 62 votes for the producer/refiner tax provisions. Baucus said last week that the taxes were "an essential, necessary component" of the energy bill because they provide the revenue for a range of clean energy tax incentives.
Senate Republican leader Mitch McConnell (R-Ky.) called the taxes and electricity renewable fuels provisions in the House-approved bill the "twin millstones" that would keep the bill from passing.
But Democrats made only modest changes in the tax package, which would rescind for the five major oil companies $13.5 billion in tax breaks they have had since they were enacted in 2004 and 2005. Some adjustments were made, but the package totaling $21 billion remained essentially intact. "It's the same number" as the House approved, Reid said.
"I guess they're trying to guarantee a [presidential] veto," said Donald Stewart, a spokesman for McConnell, when asked for a comment on Democrats decision to push ahead with the House-passed taxes. When the legislation passed the House, White House press secretary Dana Perino called the taxes "misguided" and said if the bill "made it to the president's desk, he would veto it."
"We hope that common sense will prevail and the president would sign" the bill, Reid told reporters Tuesday.
The oil industry have lobbied hard to protect the $13.5 billion in tax breaks, which were given to them in 2004 and 2005. But renewable energy companies, especially the solar and wind energy industries, also lobbied heavily to keep the House-approved tax provisions in the bill because the revenue is needed to pay for tax incentives critical for the growth of their industries.
And the American Petroleum Institute (API) issued the following statement: "The tweaks the Senate has made to the counterproductive House energy bill will do nothing to produce more, much-needed oil and natural gas supplies for American consumers. The tax provisions target the oil and natural gas industry to pay for costly, and, in some cases, unrealistic alternative energy programs. This will be at the expense of consumers who will still require significant amounts of oil and natural gas for decades to come. The combined impact of the tax provisions and a complicated, unworkable renewable fuels mandate will likely result in higher costs for consumers, job losses and less, not more, energy security for our nation."
Reid was scheduled to file cloture yesterday for a vote that is likely to pass today. PMAA said it suspects that when the Senate sends the bill back to the House, Speaker Nancy Pelosi will express disappointment with the Senate changes, but will get the needed votes to pass it unchanged. This means it could go to the White House as early as next week.
Because the oil and gas producer tax increases will likely remain in the bill, PMAA said it expects President Bush will veto the measure. Reid is gambling that new pressures on a handful of senators could produce the 67 votes needed for an override; however, obtaining the 67 votes will be difficult, it said. With the changes in the bill, it is likely that the House will have enough votes for a veto override. PMAA said it remains opposed to the measure and will oppose the override if a veto occurs.
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