The Senate soundly rejected an amendment yesterday that would have ended $35 billion worth of tax breaks for oil and gas producers over the next decade.
The amendment that would have cut oil and gas tax breaks related to amortization, depletion of oil wells and domestic production income was rejected by a 35-61 vote.
Of the $35 billion secured from repealing the tax credits, $25 billion would have gone to the Treasury and $10 billion would have been invested over five years into state energy and conservation programs. President Obama included a similar proposal in his fiscal 2011 budget.
Sen. Bernie Sanders (I-Vt.) offered the amendment to a $140 billion tax extenders package currently under consideration by the Senate that includes several energy tax credit extensions and a 41-cent-per-barrel oil tax to expand the oil spill liability fund, as well as expired Medicare payments for doctors and unemployment insurance (Greenwire, June 8).
Democrats would like to finish the bill from Sen. Max Baucus (D-Mont.) by the end of the week. Majority Leader Harry Reid (D-Nev.) filed cloture on the measure yesterday, but it is not clear that he has the votes to end debate. Several Democrats are not comfortable with the $80 billion in unpaid "emergency" spending contained in the bill and Reid is looking for possible cuts to the bill.
The Senate also narrowly rejected, 48-49, an amendment from Sen. David Vitter (R-La.) that would have prevented any new revenue from an increased tax on oil that would augment the oil spill liability trust fund to be used to offset the tax extenders bill.
The extenders bill proposes to levy a 41-cent-per-barrel tax on oil companies to raise about $15 billion over 10 years for the oil spill liability fund. The enriched fund would cover expenses the government would have otherwise had to pay for, so Democrats say those now $15 billion in unused funds can be used to offset other parts of the tax extenders bill.
The Senate proposal would also raise the per-incident oil spill damages cap from $1 billion to $5 billion, including lifting the amount paid out for natural resource damages from $500 million to $2.4 billion.
The House passed its $115 billion version of the tax extenders bill last month.
Clean energy grants in lieu of tax credits
A bipartisan group of senators is pushing to amend the tax package with an amendment to extend a Treasury program created in the stimulus bill that provides cash grants in lieu of tax credits for clean energy development.
The amendment introduced yesterday by Sen. Maria Cantwell (D-Wash.) would extend the "clean energy" Treasury grant program through 2012 and expand it to include nonprofit power producers like rural electric cooperatives.
A statement from Cantwell's office said the costs of the extension will be "minimal," although the Joint Committee on Taxation has not officially scored the provision. The increased cost could be offset by further increasing the per-barrel oil spill fund tax on oil companies, the statement said.
Cantwell told reporters yesterday that she wants to attach the amendment to the tax extenders bill, but it is unclear how the Democratic leadership will handle amendments given the impending cloture vote.
The stimulus bill included the Treasury grant in lieu of a tax credit program because the traditional tax credit program did not function in a financial downturn as developers lacked the profits -- and tax liability -- that made the credits appetizing. The program provides Treasury grants of up to 30 percent of project costs for wind, solar, biomass and some other types of projects.
Treasury has estimated it will provide about $3 billion in grants to support $10 billion to $14 billion worth of projects under the program, which is slated to end this year. A report by the Lawrence Berkeley National Laboratory said the program will create more than 143,000 jobs by the end of the year and enable 4,250 megawatts of renewable power projects to come online.
"The evidence is clear that the Treasury Grant Program is one of the most successful in the entire 2009 stimulus bill in terms of incentivizing industry to invest in renewable energy alternatives," Cantwell said. "Extending this program for another two years will create tens of thousands of jobs and enable enough renewable power to come online to power millions of homes."
The amendment would also permit partners of the Tennessee Valley Authority to participate in the program, make real estate investment trusts eligible and make a technical amendment so that "normalization" -- restricting a regulated utility from passing federal tax benefits onto taxpayers -- would not apply to these grants.
The amendment is supported by the Solar Energy Industries Association, Business Council for Sustainable Energy, Large Public Power Council, National Rural Electric Cooperative Association, American Public Power Association, American Wind Energy Association, Geothermal Energy Association, National Hydropower Association and dozens of other environmental organizations.
Sens. Dianne Feinstein (D-Calif.), Debbie Stabenow (D-Mich.), Jeff Merkley (D-Ore.), Ben Nelson (D-Neb.) and George LeMieux (R-Fla.) are co-sponsors of the amendment.
Click here to read the Cantwell amendment.
Click here to read the Cantwell summary.