Congressional Interest in Energy Bills Dims

By Steven Mufson and Jonathan Weisman
Tuesday, July 25, 2006

Three months after soaring gasoline prices sent members of Congress scrambling to propose energy legislation, the House and Senate are poised to go on August recess with little to show.

Up this week: a Senate version of a bill that would allow more offshore oil and gas drilling. Republican leaders say it could reach the floor for a vote Friday. But many senators and environmentalists fear that the terms of a much more permissive House version could prevail in the conference committee.

Yesterday, California Gov. Arnold Schwarzenegger (R) weighed in. "I'm concerned that when this merges with the House bill, it could lead to a weakening of the moratorium that has protected the California coast for 25 years," he said in a call to reporters. "I'm opposed to any weakening of the protections of the California coast."

The Senate version is limited. It would allow drilling in 8 million acres in Lease 181, a promising natural gas prospect in the Gulf of Mexico, and an area to its south. It would also establish a 125-mile buffer for the Atlantic and Pacific coastal states through 2022, and funnel 37.5 percent of federal royalty payments on new drilling to Gulf Coast state governments.

The House version would allow oil and gas drilling at least 50 miles from shore, ending a moratorium in effect since 1981 on the nation's Pacific and Atlantic coasts. Coastal states could pass legislation to allow exploration even closer, or to push drillers at least 100 miles from shore. The measure would give states a portion of royalties from existing or future production in federal waters. The administration says that could cost the Treasury "hundreds of billions" of dollars over 60 years.

Sen. Bill Nelson (D-Fla.) said in a statement yesterday, "During these negotiations, supporters of more drilling easily could adopt their own horrendous plan to allow oil and gas rigs just several miles off the nation's shorelines."

Meanwhile, a coalition of senators may try to attach an amendment to the bill that would force an increase of 4 percent a year, or about one mile per gallon a year, to the Corporate Average Fuel Economy (CAFE) standards for passenger vehicles. Sen. Barack Obama (D-Ill.) said that the plan adopts a "gradual, sensible approach" with "off-ramps" if there are "legitimate technical or economic reasons" that auto companies cannot meet the targets. Past opponents of increased standards -- Sens. Norm Coleman (R-Minn.), Gordon Smith (R-Ore.) and Joseph R. Biden Jr. (D-Del.) -- support the measure.

CAFE standards have not changed for 20 years.

What is not on the congressional agenda before the break: a measure to clear the way for U.S. companies to help India's civilian nuclear power program. The measure easily passed House and Senate committees, and two weeks ago Secretary of State Condoleezza Rice said in a speech that the administration wanted Congress to vote on it before the August recess. The first anniversary of the accord made by President Bush and Indian Prime Minister Manmohan Singh passed last week.

Pension Bill Faces Eleventh-Hour Hurdle

After nearly five months of difficult talks, House and Senate negotiators hope to complete a major overhaul of the private pension system today, in time for a vote this week in the House. The bill would create a more lenient way for businesses to calculate contributions to their defined-benefit pension plans and make permanent some of the retirement savings incentives that were approved in 2001. But extraneous tax provisions may still weigh it down.

Senate Majority Leader Bill Frist (R-Tenn.) was pushing hard yesterday to include a deep, permanent cut in the estate tax -- which the Senate failed to pass on its own -- in the pension bill. If he succeeds, legislation that was expected to pass with broad bipartisan support would become a nail-biter. But opposition among Senate negotiators -- especially Sens. Olympia J. Snowe (R-Maine) and Max Baucus (D-Mont.) -- could eliminate the estate tax cut before it emerges from the conference committee.

For old-line manufacturers with traditional pension plans, and for the unions that love them, the bill is considered urgent. The gap between the amount that businesses are contributing to their plans and the benefits owed has reached a record $450 billion. The federal Pension Benefit Guaranty Corp. (PBGC) is on the hook to pay some benefits when businesses such as United Airlines ditch their pensions. The PBGC's deficit stands at $23 billion.

Labor and management want to rejigger the formula to lower required contributions, not raise them. That would slow down the exodus from old-fashioned pension plans to 401(k)-style retirement plans, which put the risk on the worker.

A new analysis by the PBGC, released yesterday by Rep. George Miller (D-Calif.), suggests that the pension legislation would make the PBGC's deficit worse, increasing the prospects of a default that would land on the federal taxpayer.


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