Scenarios: Possible provisions in Senate energy bill

WASHINGTON Fri Jul 23, 2010 4:13pm EDT

WASHINGTON (Reuters) - With hopes of passing a climate bill this year all but dead, U.S. Senators are working to craft a less ambitious package of energy provisions that can quickly pass the chamber with bipartisan support.

Senate Majority Leader Harry Reid on Thursday said he plans to unveil legislation dealing with oil spill liability, energy efficiency, environmental conservation, and natural gas vehicles.

A Senate Democratic aide said the scaled-back legislation could be unveiled as soon as Monday.

Democrats are hoping that a scaled-back bill will have more chance of moving through the chamber quickly, giving them a victory on energy issues before November elections.

While disappointing to backers of efforts to combat global warming through caps on carbon emissions, Reid's bill could have major implications for the oil and gas sector still reeling from the BP oil spill.

The details of the bill have not been released, but the inclusion of measures related to the Gulf oil spill disaster could help gain support for the legislation, as lawmakers on both sides of the aisle will likely want to support efforts to respond to the accident.

Here are some of the measures that may be included in bill.

PAYING FOR OIL SPILLS

The energy bill will almost certainly include provisions that would force companies to dole out more money to cover the economic costs associated with oil spills.

There is currently a $75 million cap on the amount companies have to pay for damages, such as losses in commercial fishing, tourism and other industries.

Reid said on Thursday his legislation would hold BP accountable for the Gulf accident but it is unclear how much the cap on liability will lifted.

Initially several bills in Congress called for raising the cap to $10 billion, but as the Gulf oil spill worsened lawmakers in the Senate moved to remove the cap on economic damages entirely.

Reid has supported eliminating the cap, but such a move may face resistance from lawmakers in oil-producing states. The oil industry has argued against raising the cap too much, saying smaller oil companies would not be able to get the insurance necessary to operate offshore with unlimited liability.

It is possible legislation could include measures that would set up a system where companies would have different liability caps depending on their size.

NATURAL GAS VEHICLES

To help wean the nation off gasoline, the bill will include measures promoting the use of trucks that run on natural gas.

These provisions will likely be based on legislation Reid backed last year that was crafted by Democratic Senator Robert Menendez and Republican Senator Orrin Hatch.

Menendez and Hatch's bill would extend tax credits for purchasing vehicles that run on natural gas for 10 years and installing natural gas refueling stations. It also raises tax credit caps for natural gas-fueled vehicles.

In addition, the bipartisan legislation would provide grants for development of light and heavy-duty natural gas engines.

Reid will likely not include all the measures from the Menendez-Hatch bill, but instead focus on the deploying heavy-duty natural gas trucks.

ENERGY EFFICIENCY, CONSERVATION AND TAG-ALONGS

The other two prongs of Reid's scaled-back approach include the creation of a so-called Home Star program that would support retrofitting homes to make them more energy efficient and funding for land and water conservation funds.

The Home Star program would provide tax rebates for investments lowering energy consumption in existing homes.

ADDITIONAL ITEMS?

While the energy package will likely remain focused on these four areas, interest groups are pushing to attach additional measures promoting various forms of energy to the legislation.

Clean energy groups, in particular, are lobbying hard for the inclusion of renewable electricity mandates, but at this point it seems unlikely they will be successful.

(Additional reporting by Timothy Gardner; Editing by Lisa Shumaker)