The Bush administration energy proposals that were presented this spring contained provisions to improve oil and gas distribution infrastructure, and review EPA regulations that might discourage refinery expansion, but nothing that would translate directly to improved industry profits in the short term. (Of course oil companies were enjoying record profits then, but that's another story.) Similarly the administration proposed spending $2 billion over 10 years for research in "clean coal technology." Why then does the bill that passed the House early in the morning of August 2nd contain $33.5 billion in tax cuts and incentives for the oil, coal, and nuclear energy industries?
Critics of the legislation suggested that the huge windfall was a reward to the energy industries for helping pass the Bush tax cut by not lobbying then for tax cuts of their own. "The purpose of this bill is to reward those businesses that got behind the Bush tax package who couldn't get involved in round one," said Rep. Lloyd Doggett, Democrat of Texas and member of the House Ways and Means Committee. One question now is how the administration and supporters of the bill plan to pay for it. Unnamed administration officials expressed concern to the Washington Post that the cost of the bill will reduce the budget surplus by $30 billion over ten years. The bill puts the Bush budget in noncompliance, meaning that spending cuts must technically be made to offset the tax cuts. Congress has habitually waived these rules over the past few years. The bill continues the pattern of passing tax cuts that take effect over a long time horizon, while the short-term budget situation continues to deteriorate. This year's budget surplus is now estimated at only $160 billion, assuming the administration honors its pledge not to allocate funds generated from Social Security payroll taxes.
Legislators from both political parties suggested that the problem was compounded by a series of provisions that narrowly benefited particular special interest groups. These included provisions that were originally intended to promote conservation or reduction of energy use. One such provision will cost an estimated $300 million and largely benefit Maytag, General Electric, Whirlpool and Frigidaire, paying them $50 to $100 for each washing machine or refrigerator that meets energy use parameters. Another provision intended to promote the production of energy-efficient motor vehicles was weakened at the last minute. Kevin Mills, a lawyer with Environmental Defense told the Washington Post, "They weakened it to the point where we can't be assured public health will be adequately protected or that large amounts of the credits won't flow to inefficient vehicles."
The bill also permits drilling for oil in a 2,000 acre area of the Arctic National Wildlife Refuge (ANWR). While the area is reduced from the 1.5 million in the administration proposals, critics argue that the provision is misleading since the area will be used as a base from which to explore petroleum resources along the coast. Also, the infrastructure to supply operations and distribute output is not counted in the 2,000 acre figure.
And ANWR is only the most visible of natural resources put at risk by the bill. It also strips national forest supervisors of their authority to limit oil and gas drilling. This provision could directly affect action currently underway to prevent oil drilling in a 370,000 acre area that includes portions of Gros Ventre, Teton and Bridger national parks. David Alberswerth of the Wilderness Society told the Los Angeles Times, "It will be very difficult in the future to protect national forests from the pressure from oil and gas industries." If his appointement is approved, these decisions would be handled by assistand Secretary of Agriculture, Mark Rey, a former timber industry lobbyist. Another concern to environmentalists is a provision to increase profitability of oil and gas wells on federal lands. Even wells defined as "low-production" would be allowed to participate in program permitting them to pay reduced royalties for use of federal land. The Congressional Budget Office has estimated the resulting loss in revenue at $242 million over the next 10 years.
The influence of organized labor over House Democrats was a key factor in the bill's passage. This was particularly true of two provisions considered key by environmentalists: automobile efficiency and drilling in the ANWR. Among the Democrats voting against significant increases in automobile efficiency were minority leader Dick Gephardt, and David Bonior of Michigan. Thirty eight Democrats including five members of the Congressional Black Caucus voted with Republicans to open up ANWR to drilling, with the justification that it would create thousands of jobs. A spokesman for Edolphus Towns, Democrat of New York, said that Mr. Towns had been persuaded by the argument made by Teamster lobbyists that ANWR drilling would create jobs "for the native community in Alaska." The provision would have been defeated if nine Democrats had not voted for it.
Despite having recently found common causes in trade and globalization issues, environmentalists and labor split during the hours leading up to the house vote. The Teamsters claimed that ANWR drilling could create 700,000 jobs -- a figure ridiculed by environmentalists as highly inflated. While it is unclear what discussions may have taken place between labor lobbyists and the administration, chief Teamster lobbyist Jerry Hood chided environmentalists for picking the wrong battle, saying, "They could have helped write the rule book, but instead they just oppose everything."
Environmentalists originally expected the labor unions to refrain from intense lobbying efforts on the energy bill. Improved automobile efficiency seemed particularly popular when it was introduced in the spring, offering the potential for more impact on the nation's energy requirements than the most optimistic estimates of ANWR production. The situation changed when the Big Three auto makers threatened job cuts if they were forced to produce more efficient vehicles. Labor jumped in from the sidelines and lobbied aggressively. Dan Becker, a lobbyist for the Sierra Club summarized, ""We had to fight the White House, the Republican leadership, the Teamsters union and, it turns out, the Democratic leadership. It's surprising we did as well as we did."
Pianin, Eric and Glenn Kessler "In the End, Energy Bill Fulfilled Most Industry Wishes" Washington Post 3 Aug. 2001
Shogren, Elizabeth "Bill Would Shift Drilling Approvals From Forest Supervisors to White House" LA Times 2 Aug. 2001
Kahn, Joseph "Core's Split on Energy Is Costly to Democrats" NY Times 3 Aug. 2001