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Friday, January 19, 2007

Democrats seek fees, taxes on oil firms

Democrats seek fees, taxes on oil firms
WASHINGTON (AP) — House Democrats sprinting to finish six bills on terrorism, the minimum wage, drug prices and other issues are well ahead of the 100-hour deadline they gave themselves to do it.By new House Speaker Nancy Pelosi's clock, they began Thursday morning with more than 60 hours remaining and only one measure left: an energy bill with $15 billion in new fees, royalties and taxes for the oil industry. A celebration was planned later Thursday once it's passed.
On Wednesday, seven hours ticked off the Democrats' 100-hour clock for passing an agenda the party had told voters they would enact after sweeping to victory in November.
According to Pelosi's count, it has taken just over 34 hours to pass the first five bills, including a measure Wednesday to lower interest rates on some student loans.
The House actually had been in session for about 79 hours from the time the 110th Congress was sworn in on Jan. 4 through close of House business Wednesday. But the clock on Pelosi's website, which racks only hours spent on legislation, showed that 34 hours, 5 minutes had elapsed.
The clock started again Thursday with the opening of debate on the oil revenues bill.
The others passed so far would:
• Make the government negotiate for lower Medicare prescription drug prices. It passed last Friday.
• Expand federally funded stem cell research. It passed Jan. 11.
• Raise the federal minimum wage from $5.15 to $7.25 an hour over 26 months. It passed Jan. 10.
• Bolster terrorism-fighting efforts with more cargo inspections. It passed Jan. 9.
Democrats also won approval of internal House rule changes dealing with ethics, lobbying and budgeting. They were passed on Jan. 4-5, the first two days of the new Congress.
House members on Thursday took up the energy bill, which Pelosi has characterized as key to reducing government subsidies for oil.
The bill is largely aimed at recovering an estimated $10 billion that stands to be lost to the government because of an error in deep-water drilling leases for the Gulf of Mexico issued in the late 1990s. Congressional auditors and the Interior Department's inspector general have said the mistake was ignored for six years by the Minerals Management Service, which oversees the leasing program.
As the House began debate on the energy measure, Interior Inspector General Earl Devaney told a Senate hearing that the minerals bureau showed "a shockingly cavalier management approach" in dealing with the leasing error, although the problem was known within the agency as early as 2000.
It's "a jaw-dropping example of bureaucratic bungling," he told the Senate Energy and Natural Resources Committee.
The White House on Wednesday expressed support for some of the tax and royalty proposals but said other provisions unfairly single out the oil industry or jeopardize domestic oil and gas production.
The legislation would impose a "conservation fee" on oil and gas taken from deep waters of the Gulf of Mexico, scrap nearly $6 billion worth of oil industry tax breaks enacted by Congress in recent years and seek to recoup royalties lost to the government because of an Interior Department error in leases issued in the late 1990s.
Democratic leaders estimate the measure would generate an additional $15 billion in revenue. Almost all of that money would be funneled into a research and development fund for renewable fuels such as solar and wind power, alternative fuels including ethanol and bio-diesel, and conservation incentives.
The legislation was expected to move through the House with broad support from Democrats and moderate Republicans. Its prospects in the Senate were uncertain, given the Democrats' narrow majority there and sharp opposition from some Republicans as well as the White House.
Sen. Maria Cantwell, D-Wash., said Wednesday she doubts the Senate would accept the package as written. She suggested the Senate might want broader legislation to fix what she characterized as an oil and gas royalty program "riddled with blatant mismanagement."
While President Bush supports a rollback of some of the royalty breaks for deep-water drilling contained in the House bill, the White House said Wednesday it strongly opposes the new production fees and a provision that would bar oil companies from future lease sales unless they renegotiate and pay royalties under the flawed 1998-99 leases.
Those measures could embroil the government's offshore oil and gas leasing program in protracted litigation, delay future lease sales and disrupt energy supplies, said the White House.
"We must be mindful of potential unintended consequences. Litigation could take years to resolve," Interior Assistant Secretary C. Stephen Allred told the Senate hearing. He said a three-year delay in leases would cut domestic oil production by 1.6 billion barrels and cost the government $13 billion in lost royalties over 10 years.
The 1998-99 leases did not include a provision that would trigger royalty payments once market prices reached a certain level far below today's prices. The mistake so far has cost the government nearly $1 billion in lost royalties with the losses potentially growing to $10 billion over 25 years, according to Congress' Government Accountability Office.
The House bill also would prohibit the oil and gas industry from taking advantage of a 2004 tax break that was aimed at helping U.S. manufacturers compete against imports. That provision was never intended for highly profitable large oil companies, but it has saved them $700 million a year, maintains Rep. Jim McDermott, D-Wash.
White House officials opposed that provision as an attempt "to single out this industry from others for punitive tax treatment."
Oil lobbyists have been trying to block the tax and royalty provisions — if not in the House, perhaps in the Senate.
Repeal of royalty relief and rollback of the tax breaks "will discourage new domestic oil and gas production and refinery capacity, threaten American jobs and make it less economical to produce domestic energy resources," Red Cavaney, president of the American Petroleum Institute, wrote members of Congress on Wednesday.
Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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