Make or break time on spending, taxes

Source: Geof Koss and Hannah Northey, E&E reporters • Posted: Monday, December 14, 2015

Capitol Hill could learn as early as today whether lawmakers can seal a blockbuster end-of-year spending and tax agreement that would end the ban on crude oil exports and extend key renewable energy tax breaks.

Negotiators appeared to be making headway on a deal to allow exports as part of talks over a broader tax package, with The Wall Street Journal reporting over the weekend that a repeal of the oil ban was “likely” — citing unnamed aides from both parties.

The parameters of a deal on exports hew to the basic framework that has been known for weeks, with long-term extensions of the renewable production and investment tax credits and reauthorization of the Land and Water Conservation Fund apparently still in the mix.

But the prospects for a final deal are complicated by the inclusion of non-energy items sought by Democrats as part of the horse-trading on exports, with Democrats’ demands to index for inflation child tax credits being one contentious factor.

House Minority Whip Steny Hoyer (D-Md.) said during an interview on C-SPAN’s “Newsmakers” on Friday that the lower chamber could pass both an omnibus bill and tax extenders package as early as Wednesday but quickly added that policy riders unrelated to funding the government were impeding those discussions and another stopgap funding measure could be on the horizon.

“If, on the other hand, that’s not possible, there may be need for another short-term [continuing resolution] until Friday [Dec. 18],” Hoyer said.

Should the decadeslong ban on exporting domestic crude be lifted as part of a large spending bill, Hoyer said he personally wants to see the American maritime industry and seamen involved to boost shipbuilding and national security.

“If, in fact, we can resolve some of the other issues we feel very strongly about, including … the extension of tax credits for alternative energy, I think this is not something that could not be resolved with the Republicans getting something they want and we get something we want,” Hoyer said.

An analysis by ClearView Energy Partners, which has taken a decidedly pessimistic view of the likelihood of an exports deal, over the weekend assigned “better-than-even odds (50% to 66.667%)” of a repeal if agreement on a broader tax package extending the PTC and ITC is struck. The odds fall significantly if Congress is forced back to a two-year extenders deal or none at all.

According to one lobbyist, an export deal included in a broader tax package would extend the PTC and ITC for five years, with the ITC qualification terms being adjusted to allow facilities to qualify when construction commences.

Other lobbyists said the PTC would be phased out over five years, according to a schedule that would assign the credit 100 percent of its value the first two years, before reducing it to 80 percent, 60 percent and finally 40 percent the last year before expiring. The ITC is said not to include a phaseout.

The role of an eleventh-hour proposal by Sen. Tom Carper (D-Del.) that would hand additional tax credits to refineries disadvantaged by allowing exports is unclear (Greenwire, Dec. 9). Republicans last week were deeply skeptical about the plan, although its inclusion would likely bring along additional Democrats wary of a deal.

But in a sign of how opaque the negotiations are, even a top committee chairman with jurisdiction over the issues at play is unsure of where things stand. House Natural Resources Chairman Rob Bishop (R-Utah) on Friday told reporters he’s had word that the expired Land and Water Conservation Fund was not part of the dealing on exports but, echoing other senior lawmakers, added the caveat, “I’m not negotiating this sucker,” (E&ENews PM, Dec. 11).

Additionally, negotiators are said to be eyeing a final decision on the scope of a tax deal today, although it’s unclear if that means earlier or later in the day.

Riders galore

Hoyer said the amount of Democratic support for an omnibus would hinge on the number of “red line” or unacceptable policy provisions that are tacked onto the omnibus bill — and how many Republicans would lend their unconditional support to House Speaker Paul Ryan’s (R-Wis.) request.

Negotiations so far have revealed points of possible cooperation and sticking points.

Hoyer, for example, was critical of a campaign finance law rider that Senate Majority Leader Mitch McConnell (R-Ky.) is pushing to tack onto the omnibus. “We are not at all happy about that, and I don’t want to say that we can live with that,” Hoyer said, adding that Congress last year passed the “cromnibus” that boosted the level of funding that parties can spend on candidates. “We think it ought to be in a separate bill; we don’t think it ought to be in this bill,” Hoyer said.

But the congressman was reluctant to say negotiations would crumble if Republicans refused to remove language that would limit research on gun violence — a provision that House Minority Leader Nancy Pelosi (D-Calif.) pushed last week (Greenwire, Dec. 10).

“We think it ought to be removed, calling it a red line; I don’t want to put too many red lines on the bill,” Hoyer said. “It’s something we think ought to be removed, but I don’t want to call it a red line.”

As for oil exports, some Democrats aligned with Hoyer in calling for protections for the nation’s domestic shipping industry, while other members said they remain opposed.

Rep. John Garamendi (D-Calif.), ranking member of the Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation, said during an interview on Capitol Hill last week that he opposed lifting the crude export ban while laying out provisions should Republicans shore up enough support to move forward.

“If they are determined to export, and maybe they’ve got the votes, then spread the benefit across the American economy — solar, wind,” he said. “That oil is going to go on some ship. I think it ought to be American ships with American sailors for the benefit of our shipyards and our maritime industry, which is rapidly disappearing. So that’s what we’re negotiating.”

When asked about other elements that may be included in a rider to lift the ban, Garamendi outlined four elements, including an $8 billion tax credit to the oil industry for their refineries and protections for domestic refineries, as well as language that would be phased in over time to benefit American ships and mariners.

“If this is going to be done and the oil industry is determined to do it — and may very well have the votes — then do it in a way that benefits the consumer and the American economy as a whole,” Garamendi said.

Other Democrats made no secret of their opposition.

Rep. Marcy Kaptur (D-Ohio), ranking member of the House Appropriations subcommittee overseeing energy and water, said during an interview that she continues to oppose lifting the ban but acknowledged that it’s up to leadership now. The United States, she said, cannot afford to export domestic crude because the country isn’t energy-independent and at some point — decades down the road — will need to transition to a new energy system.

“We know how much power the oil industry has, and frankly, they don’t care if the United States is a free country or not,” Kaptur said. “They only care about their company and their shareholders. And that’s not good enough for me. I’m elected for a different reason.”

Groups are also lobbying against a potential rider to block Interior Department efforts to update and reform coal, natural gas and oil valuation rules for royalty purposes. “Westerners continue to be shortchanged by developers on U.S. public lands,” said Jennifer Rokala, executive director of the Center for Western Priorities, faulting Republican Reps. Ryan Zinke of Montana and Steve Pearce of New Mexico for pushing the riders.

Lawmakers are also nearing an agreement on a policy rider that would overhaul the way the nation pays for wildfires while also streamlining approvals for logging projects. While the deal could provide major budget relief to the Forest Service and Interior Department, environmental groups Friday signaled that they would not support language that erodes environmental laws like the National Environmental Policy Act.

In a letter to House and Senate leaders, Defenders of Wildlife, Earthjustice, the League of Conservation Voters, the Natural Resources Defense Council, the National Parks Conservation Association, the Sierra Club and the Southern Environmental Law Center called for a “clean fix” for fire budgeting.

“While the wildfire funding fix has unprecedented bi-partisan support, provisions that undermine thoughtful, science-based management of our National Forest System do not,” they wrote.

But Bill Imbergamo, executive director of the Federal Forest Resource Coalition, whose members rely on timber from public lands, said industry has been working in a bipartisan fashion for months on a “reasonable compromise” that provides “some modest new forest management authorities.”

“The deal these groups are seeking to blow up doesn’t mandate a single timber project on the national forest, doesn’t waive a single environmental law, and doesn’t reduce public involvement or take away anyone’s right to sue,” he said, “and does nothing more than provide discretionary tools that can be used — are not required to be used — on a very small portion of the National Forest System.”

Reporters Manuel Quiñones, Hannah Hess and Phil Taylor contributed.