House OKs Energy Bill Loaded With Subsidies, Arctic Drilling

By J.R. Pegg

WASHINGTON, DC, April 22, 2005 (ENS) - The House of Representatives passed an energy bill on Thursday that earmarks billions of dollars for the oil, gas and nuclear industries, permits drilling in the Arctic National Wildlife Refuge (ANWR), and grants manufacturers of the gasoline additive MTBE protection from litigation.

Proponents hailed the legislation as a blueprint for increasing the nation’s energy independence, but the bill is similar to a plan previously rejected by the Senate and is unlikely to survive in its current form.

The legislation passed by a vote of 249-183, with 208 Republicans and 41 Democrats voting in favor of the legislation.


Drilling for oil and gas in New York State yielded $232 million in 2003. (Photo courtesy DEC)
Several provisions in the legislation – including the Arctic drilling language and the MTBE liability shield – are likely to prompt opposition from the Senate, which plans to start work on its version of the energy bill next month.

Debate over MTBE and subsidies to oil and gas companies doomed a $24 billion version of the bill in 2003, as Senate Democrats and a handful of Republicans successfully filibustered the legislation.

White House Press Secretary Scott McClellan declined to say if President George W. Bush would sign the legislation in its current form, but told reporters it is "largely consistent with his views and with his principles."

"The House bill is comprehensive in approach and [the President] appreciates them taking this important step today to move forward to get legislation passed this year," McClellan said.

The legislation contains some $8 billion in tax incentives and subsidies, with the majority of the money earmarked to aid the oil, natural gas, coal and nuclear industries.

The nonpartisan research group Taxpayers for Common Sense says the total cost of the bill is some $92 billion, once direct and authorized spending are added to the tax breaks.


Congressman Tom Delay of Texas is House Majority Leader. (Photo courtesy Office of the Representative)
House Majority Leader Tom DeLay, a Texas Republican, said the bill "provides our nation with a comprehensive, environmentally friendly energy policy" and urged the Senate to act quickly on the legislation.

"The House has been passing a comprehensive energy policy bill for more than four years, which has been repeatedly stymied by Democrats in the Senate," he said. " Over the course of the Democrats' obstruction, gas prices have skyrocketed, and that's not a coincidence."

Democrats – and a handful of Republicans – blasted the bill as a vehicle for corporate welfare that does little to change the nation’s current energy mix.

They noted that President Bush acknowledged Wednesday that the bill "wouldn't change the price at the pump today."

House Majority Leader Nancy Pelosi, a California Democrat, said the bill is "anti-consumer, anti-taxpayer and anti-environment" and called the MTBE provisions "disgraceful."

The bill grants MTBE manufacturers safe harbor from litigation based on contamination of drinking water supplies, contains language phasing out use of the oxygenate by 2014 and gives MTBE manufacturers $1.75 billion for transition costs.

Twenty states have passed bans on MTBE in gasoline and the additive has contaminated water supplies across the nation.

Critics of the MTBE liability waiver – including the U.S. Conference of Mayors - say manufacturers knew of the toxicity of the chemical and should be liable for cleanup costs some estimate at $29 billion.

Representative Fred Upton, a Michigan Republican, said the measure is justified because Congress "mandated [use of MTBE] and we have got to protect people that carried through on those provisions."

An attempt by Democrats to strike the MTBE provisions failed Thursday by a vote of 219-213.

The language that allows drilling in the Arctic National Wildlife Refuge is another provision likely to draw opposition from the Senate.

Proponents said the refuge could eventually produce some one million barrels of oil a day and rejected concerns that drilling will harm the Arctic ecosystem.


Caribou in the Arctic National Wildlife Refuge is part of the Porcupine Herd that migrates through the refuge every year. (Photo courtesy U.S. Fish and Wildlife Service)
"This is not the pristine wilderness that most people have in mind," said Representative Don Young, an Alaska Republican. "This is a frozen tundra."

Young said those opposed to drilling in ANWR are "are really supporting terrorism because [they] do not want to develop the domestic fuel supply in this country."

Critics contend drilling would have devastating impacts to a wide array of wildlife and do little to reduce foreign oil imports – it would take a decade for oil to flow from the refuge once drilling is approved.

Representative Ed Markey, a Massachusetts Democrat, called ANWR "one of the most unique wild and irreplaceable refuges" and warned that opening it to drilling could set a dangerous precedent.

"If we allow the oil and gas drillers into this refuge, we might as well say good-bye to protection of all 544 refuges in this country," Markey said.

Opponents of drilling in the Arctic refuge argue the move is hypocritical given the reluctance of the House majority to support higher fuel economy standards.

"Even a modest increase in [fuel economy] standards would save more oil than would be produced by drilling in ANWR," said Representative Christopher Shays, a Connecticut Republican.

An amendment to raise the national fuel economy standards to 33 miles per gallon by 2015 was defeated 254-177.

The measure would cut oil use by two million barrels a day – double the potential daily output from ANWR.

The United States consumes some 20 million barrels of oil daily.

Critics of boosting federal fuel economy standards – led by Democrats and Republicans from Michigan – said the provision would harm the economy and interfere with the marketplace.


Filling up costs more today than ever before. (Photo credit unknown)
"It undermines the hard work of our auto companies and auto workers that is being made through the investment of billions of dollars in alternative fuels and advanced technology vehicles," said Representative Dale Kildee, a Michigan Democrat. "The drastic increases called for in this amendment would have negative consequences for passenger safety and consumer choice."

The legislation grants additional royalty relief for deep water gas drilling in the Gulf of Mexico as well as $2 billion to finance new oil and gas exploration.

"It is unnecessary and is nothing more than corporate welfare for the oil and gas industries," said Arizona Democrat Raul Grijalva, who failed in an attempt to remove the royalty relief. "Even the President realizes this is not a good idea."

The bill gives the U.S. Energy Department the authority to accelerate construction of new oil refineries and expansion of existing refineries in areas with high unemployment - a move proponents said will create jobs and could help lower gasoline prices.

"The bottom line on this is we need more refinery capacity," said House Energy and Commerce Committee Chairman Joe Barton, a Texas Republican and the bill’s lead sponsor.

Representative Hilda Solis, a California Democrat, who failed in a bid to remove the refinery provisions, called the refinery provisions "the biggest environmental and public health injustices that the Congress and Bush administration can perpetrate on the American people."

"Most of the neighborhoods in refinery communities are low-income minority communities with the least availability to defend themselves from corporate pollution, and most are vulnerable to environmental and public health problems, yet are targets in this very language," Solis said.

Democrats also failed to strip provisions in the bill that ease environmental reviews and regulatory hurdles for the siting of hydroelectric facilities, electric transmission lines and liquefied natural gas terminals.

The Republican leadership refused to consider an amendment by Democrats to strike language in the bill that encourages the U.S. Environmental Protection Agency to extend the compliance deadline for new smog standards.

The provision would allow states to request extensions to the deadline due to smog that originates in other states, even though a new federal rule was recently enacted to address air pollution that drifts across state borders.


New Mexico Representative Tom Udall serves on the House Resources Committee, the Subcommittee on Forests and Forest Health, and the Subcommittee on National Parks (Photo courtesy Office of the Representative)
Representative Tom Udall, a New Mexico Democrat, said he is disappointed with the measure.

"The bill funnels billions of dollars in taxpayer money to traditional industries while ignoring practical solutions such as a federal renewable standard," Udall said. "Solar, hydrogen, wind, geothermal and biomass are clean, unending sources of energy that could be delivering a significant percentage of our energy."

The House voted down an amendment offered by Udall to kill language that would provide $30 million in subsidies to open up areas in northwestern New Mexico to future uranium mining. The funding would allow firms to experiment with what Udall calls "controversial and unproven in-situ leach mining technology, which could threaten the scarce groundwater resources for residents of Crownpoint and Church Rock, New Mexico."

Barton said the provision is "necessary for the production of enriched uranium and the production of nuclear fuel."

"We need more environmentally sensitive uranium mining in order to feed the growing demand for nuclear power," Barton said. "Nuclear power is here to stay and we need to support a strong domestic uranium program."