House Dems Confirm Outlines of Oil Tax, Royalty Plan

House Democratic leaders yesterday offered more details on the shape of a multi-billion dollar plan to roll back oil industry tax and royalty incentives to ultimately steer the funds into alternative energy development.

Incoming House Speaker Nancy Pelosi (D-Calif.) has included the plan in the new Democratic majority's opening 100-hour legislative showcase. The Democratic leadership is planning a Jan. 18 vote on the energy measure.

Incoming House Majority Leader Steny Hoyer (D-Md.) said lawmakers are "still working on the nuances" of the proposal and that it would not be introduced this week. But he confirmed it would roll back two tax incentives -- one being the amortization of oil and gas exploration costs.

The second tax incentive on the chopping block is the oil and gas industry's eligibility for a deduction on income from domestic manufacturing, which was contained in 2004 tax legislation.

Hoyer estimated the tax changes could yield around $5 billion over 10 years.

The plan also aims to correct problems with the federal program that allows royalty waivers for deep water Gulf of Mexico oil and gas production. Deep water leases issued to dozens of companies in 1998 and 1999 were mistakenly drafted without "price thresholds" that end the royalty incentive when oil prices are high.

The package will seek to correct this oversight, although Hoyer said the plan is still being drafted and did not say what the mechanism for ensuring royalty payments from these leases would be. This will raise an additional $9 billion to $11 billion, he said.

Proposals for addressing the problem to date have included denying new offshore leases to companies that refuse to renegotiate the 1998-1999 contracts and placing a new fee on production from these leases if companies do not agree to inclusion of price thresholds.

Democratic leaders say the plan will steer the new revenues toward development of alternative energy sources. However, the package will not lay out specific programs that the new revenues must fund, Hoyer told reporters.

Rep. George Miller (D-Calif.), a senior member of the House Resources Committee, said in an interview that the royalty relief issues reach far beyond next week's plans. "This thing needs a complete and thorough and exhaustive investigation," he said.

GOP complains about lack of inclusion

Even before the official launch of the 110th Congress, the two parties have already started squabbling on the level of bipartisan cooperation that will be involved in the Democrats' 100-hour agenda.

Republican leaders complained yesterday that the Democrats planned to debate their six legislative priorities -- including the energy tax package -- under rules that do not allow for amendments, committee consideration or any significant input from the GOP.

"I am very disappointed, it is totally inconsistent with what we have been promised throughout this campaign process," said House Rules Committee ranking member David Dreier (R-Calif.).

But Democratic leaders have said in recent days that they do not believe their initial legislative priorities need to be subject to the full legislative debate because they have already been widely discussed and because the election essentially gave the Democrats the mandate for those items.

"We view the first 100 hours as uniquely part of the '06 campaign and our promise to the American people of what we would do starting out," Hoyer said.

Hoyer vowed that after that initial push, Democrats will subject all other bills to a more open process that will include greater transparency and input from the Republicans.

Senior reporter Darren Samuelsohn contributed to this report.

Copyright 2007 E&E Daily. All Rights Reserved. Visit E&E Daily for a free trial.

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