A Deal Killer?

Ethanol expected to divide lawmakers as full Senate prepares for energy debate

Published in CSP Daily News

WASHINGTON -- After failing to pass an energy bill for years, Congress is positioned to send one to President Bush, but the legislation could be derailed before ever reaching the White House, speculated The Wall Street Journal.

Proposals for expanding offshore drilling and ethanol mandates are among potential deal killersmeasures that could be inserted when the full Senate takes up the bill this month or that could block agreement between the more Republican-dominated House and the more consensus-oriented Senate.

The House passed [image-nocss] a version in April and the Senate Energy Committee approved its bill in May. As reported in CSP Daily News, at a news conference last week, Bush named the energy bill first when listing his domestic priorities.

With compromise uncertain, the bill's fate could hinge on developments outside the energy-policy debate, the report said. If the price of gasoline steams toward $3 a gallon during the summer driving season, lawmakers will feel heat from voters to pass a bill. If the current d atente between Senate Democrats and Republicans over judicial nominees breaks down, the energy bill will become the first target of renewed delaying tactics. It going to be difficult, but doable, said Clay Sell, the newly installed deputy energy secretary, according to the Journal.

Sparks are expected to fly on the Senate floor, said the report, over a provision inserted by Sen. Mary Landrieu (D-La.) in the committee version of the bill authorizing the president to cut the nation's oil consumptionnow about 20 million barrels a dayby 5%, or one million barrels a day, by 2015. The provision does not specify details, but automobile makers will fight it. They see it as a backdoor attempt to force higher efficiency standards for cars and trucks, which consume two-thirds of the nation's oil, according to the newspaper, citing Eron Shosteck, a spokesperson for the Alliance of Automobile Manufacturers.

Fuel additives, such as ethanol, will give rise to further contention, said the report. It looks as if the Senate will pass a federal mandate requiring the use of eight billion gallons a year of federally subsidized ethanol by 2012, roughly double the amount now used. Ethanol is made mainly from corn, but incentives to make it from farm wastes, such as rice hulls and barley straw, have expanded support for ethanol beyond the Corn Belt.

In the House, Republican leaders are preparing to insist on a limited-liability waiver to protect sellers of additive methyl tertiary butyl ether (MTBE). We want liability fairness, that's issue No. 1, 2 and 3 for us, Ed Murphy, who tracks energy legislation for the American Petroleum Institute (API), told the paper.

Oil companies face damage claims in a number of states where lawyers say they need not prove negligence because MTBE is a defective product.

The MTBE waiver faces opposition in the Senate, the report said. But some energy experts on Capitol Hill see a potential compromise if the House accepts the ethanol proposals from the Senate, where farm-state legislators hold greater sway, it added.

In 2002, the big deal killer for the energy bill was a Republican proposal to lease land in Alaska's Arctic National Wildlife Refuge (ANWR) for oil and gas exploration. Senate Democrats successfully filibustered the whole package over that measure. This year, Republicans hope to avoid that problem by moving it out of the energy bill and onto the budget bill. If that fails, House Republicans could push ANWR, which is in the House version of the energy bill, making it once again harder to pass the Senate.