Senate Democrats battling for viable energy bill

WASHINGTON (Reuters) - Senate Majority Leader Harry Reid hopes to unveil his pared-back U.S. energy bill on Tuesday that focuses on reforming offshore oil drilling but Republicans were quick to dismiss its chances of passing.

Senate Majority leader Harry Reid (D-NV) listens to remarks in Washington, March 25, 2010. REUTERS/Jim Young

The bill would aim to hold BP Plc accountable for its Gulf of Mexico oil spill and boost investment in vehicles fueled by natural gas and electricity.

Democrats, who last week abandoned a key Obama administration effort to forge a broad climate bill because of a lack of votes, are hoping to get the narrowly focused bill passed by next week.

“Tomorrow afternoon, we expect to release the text of this plan,” said Reid’s spokesman Jim Manley.

Among its provisions, the bill will likely force companies to spend more money to cover the costs of oil spills, raising the liability cap to $10 billion or more from $75 million.

But partisan conflicts could delay the bill’s passage and, as Republican aides warn, there might not be enough time to pass it ahead of the congressional recess starting on August 6.

Some expect Reid to not allow any amendments to the bill once it is brought to the Senate floor. But such a move could provoke an uproar from Republicans.

“I would think so,” said Matt Dempsey, a spokesman for Republican senators on the Senate Environment and Public Works Committee when asked whether they would boycott the energy bill if they are not allowed to offer amendments.

Some Senate Republican leadership aides speculated that Democrats might opt to return to work on a bill stimulating investment in small business rather than the energy bill in the days leading up to the recess in early August.

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Republicans released an energy bill of their own on Friday that would lift a moratorium on deepwater drilling pushed by the Obama administration after requirements were met and inspections were completed. It would also allow for royalty revenue sharing with states.

Last week, Reid said Congress could revisit climate legislation in September but lawmakers and analysts doubt there will be much appetite ahead of congressional elections in November.

And if Republicans pick up seats in Congress, as expected, the effort to put a price on carbon emissions could be stalled for years, which would also hamper the Obama administration’s efforts to take a lead role at world climate talks.


Reid’s bill will also contain incentives to convert trucks to run on natural gas and for cars to run on electricity.

It will outline $900 million a year for land and water conservation and increase energy efficiency in homes, according to one Senate source.

Analyst Kevin Book of ClearView Energy Partners LLC said he expects the energy efficiency measure known as Home Star to include $5 billion in incentives for plugging window leaks and insulating attics.

The natural gas incentives for trucks could cost the government $4.1 billion, compared with the $19 billion price tag for an earlier bill that had been endorsed by energy tycoon T. Boone Pickens, Book said.

To pay for these measures, lawmakers may consider raising taxes on the oil and gas industry.

“One possibility would be to raise the Oil Spill Liability Trust Fund tax from 8 cents per barrel to 49 cents per barrel, which would raise approximately $18 billion,” said analyst Whitney Stanco of the Washington Research Group.

This fund, created in the aftermath of the Exxon-Valdez accident in Alaska in 1989, helps pay claims for financial or property losses caused by oil spills.

Environmentalists worry they are not winning a battle to get a renewable energy standard in the bill, requiring utilities to produce some power from wind and solar sources. The greens and some utilities warn that without such measures, China would surpass the United States in alternative energy.

Lew Hay, chief executive of the utility NextEra Energy, told reporters in a teleconference that such a measure would allow his company to create more than 40,000 jobs over five years.

Republican Senator Sam Brownback joined the push for a renewable mandate on Monday, calling for bipartisan support of the “moderate” target approved by the Senate Energy and Natural Resources committee last year.

Additional reporting by Ayesha Rascoe; Editing by Russell Blinch and John O’Callaghan