House Repeals Tax Break for Big Oil

Speaker Nancy Pelosi (D-Calif.) and Democratic Caucus Chairman Rahm Emanuel applaud passage of six bills.
Speaker Nancy Pelosi (D-Calif.) and Democratic Caucus Chairman Rahm Emanuel applaud passage of six bills. (By Win Mcnamee -- Getty Images)
By Steven Mufson
Washington Post Staff Writer
Friday, January 19, 2007

House Democrats capped their "100 hours" agenda with the passage of an energy bill yesterday, the sixth piece of legislation approved in two weeks, and Democratic leaders said the package marked "a beginning, not an end" to their legislative ambitions.

Though the six measures still face battles in the Senate and possible veto by the White House, Rep. Rahm Emanuel (D-Ill.), chairman of the House Democratic Caucus, boasted that "we made promises and we kept our promises."

Though Republicans complained that they were not given enough opportunities to amend the six bills, an average of 62 GOP lawmakers voted in favor of the measures. Thirty-six Republicans voted for the energy bill adopted yesterday in a 264-163 vote.

But the atmosphere of celebration among Democrats was marred by criticism over House Speaker Nancy Pelosi's decision to create a new Select Committee on Energy Independence and Global Warming.

Pelosi said the committee would be designed to "raise the visibility" of energy and climate change issues, and that it would not have legislative jurisdiction. Many lawmakers saw it as a way to diminish the influence of veteran lawmakers, such as Energy and Commerce Committee Chairman John D. Dingell (D-Mich.), who in the past has guarded the interests of the big U.S. automakers from his state by opposing higher fuel efficiency standards.

Pelosi said she was still looking to the committees on energy, environment and technology to come up with legislation and asked them to do that by July 4.

Dingell held a two-hour meeting yesterday with Democrats on his committee to discuss Pelosi's initiative. "It is unclear what this committee will do besides serve as a distraction to the substantive work already being done by the committee of expertise on this issue," Dingell said later.

Rep. Edward J. Markey (D-Mass.) has told fellow Democrats that Pelosi asked him to chair the new committee, congressional sources said. Markey has been a vociferous critic of the oil and gas industry.

Pelosi needs a majority vote of the House to create the new committee, and congressional sources said there was talk yesterday of unhappy Democrats joining with Republicans to quash her proposal. "I believe the existing committees can deal effectively with global warming," Rep. Henry A. Waxman (D-Calif.), chairman of the Committee on Oversight and Government Reform and author of a climate change proposal, said in a statement. "But I can also understand why the Speaker believes it's important to highlight this issue."

The new committee and the July 4 target were responses to critics who said that yesterday's energy measure did not address key energy policy issues and to the groundswell of activity among companies, lawmakers and state governments who want to do something about climate change.

The measure passed yesterday would repeal a tax break oil and gas firms received in 2004 that effectively lowered their corporate tax rates. It would also bar oil companies from bidding on new federal leases unless they pay a fee on or renegotiated improperly drafted leases from 1998 and 1999 that did not require royalty payments on Gulf of Mexico production. And the bill would take the estimated $13 billion to $15 billion in revenues over a five-year period and set the money aside for tax breaks and appropriations that would go to renewable energy sources.

On Wednesday, the Bush administration said it was opposed to raising corporate tax rates on the oil industry when other manufacturing industries had benefited from the same rate reduction. The Office of Management and Budget also said that the administration was opposed to forcing companies to renegotiate contracts through statutes and said it preferred voluntary agreements with firms over the 1998 and 1999 leases. The OMB also said that using the revenues for new energy sources embodied a "tax and spend philosophy."

Other energy experts have taken issue with the idea of "energy independence" that Pelosi built into the name of the new select committee. Even with major efforts to cut consumption and boost alternative sources, the United States would be hard-pressed to eliminate imports that account for 64 percent of the about 21 million barrels a day of oil currently consumed.

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