News Break: Senate "Gang of Ten" Forges Compromise Energy Bill Before August Recess

Thomas Schueneman

A bipartisan group of Senators calling themselves the “gang of 10” were finally able to package a compromise bill on Friday aimed at breaking the persistent deadlock in the Senate over energy issues.

Gang of 10 forge compromise energy legislation

On one side are Republicans that have remained in lock-step with President Bush’s chiding Democratic opposition to lifting the ban on oil exploration and development offshore and in the Arctic National Wildlife Refuge (ANWR); while Democrats have resisted such measures, favoring instead that energy companies pursue oil development in areas for which they already hold federal leases, selling oil from the Strategic Petroleum Reserve, and providing more incentives for renewable energy.

The “Gang of 10”, headed by Democratic Senator Kent Conrad of North Dakota and Republican Senator Saxby Chambliss of Georgia introduced the legislation, just hours before Congress left town on their August recess, in hopes that it will break the stalemate and bring forth progress in federal energy policy.

The bill will require opening additional areas for development in the Gulf of Mexico and allow drilling off the coasts of Virginia, North Carolina, South Carolina, and Georgia, incumbent on approval from those states. Any drilling activity approved by the states would be done at least 50 miles from shore. A commission would also be created recommending areas for leasing in the future.

In compromise to the offshore drilling proposal, the bill provides billions of dollars of research and development money to assist US automakers in achieving the goal of transitioning 85% of all new vehicles to run on alternative, non-petroleum based fuels within 20 years. The Senators propose paying for the spending by eliminating $30 billion in tax breaks for energy companies and requiring that the federal government get its cut of revenue from Gulf of Mexico oil leases. U.S. consumers will receive tax breaks up to $7500 for buying vehicles that run on alternative fuels.

A very important element of the legislation is the extension of tax breaks for renewable energy development and energy efficiency to 2012, something congress has thus far been unable to do in this session. Allowing these tax incentives to expire at the end of the year will mean yet another setback for sustainable energy development so desperately needed.

As with any compromise, few are happy with all elements of the bill. Republican Mel Martinez wants the bill to address drilling in ANWR and oil shale production in the west. Florida Senators object to the proposal to open up more areas in the Gulf of Mexico without the state’s input.

Nonetheless, the bill hammered out by the Gang of 10 likely represents this Congress’ last, best attempt at breaking the intransigence before the November elections. Intransigence fostered, in my view, largely by polarization from the White House, like an impudent teenager not getting his way.

Senate Majority leader Harry Reid said he will support the bill, though he does not agree with all the of its proposals:

…I am hopeful this plan can begin to break the current legislative stalemate on the Senate floor.”

So are we.

The Senate will debate the legislation after they return from their five-week break.


Energy & Economics