Energy: Deal or Dry Hole?

Posted September 12, 2008 at 6:20pm

The biggest question remaining this Congress is whether Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) really want to cut a deal with the White House before the elections to allow more offshore oil drilling — or whether they are going through an elaborate exercise to give their Members a heaping dose of political cover.

Pelosi caught Republicans by surprise with her stunning turnaround on drilling last week, moving from decades of fierce opposition and months of blocking any votes to offering up legislation that would allow offshore drilling nationwide.

But Republicans remain suspicious and believe she has no interest in cutting a deal.

They note her package includes no revenue sharing for states that choose to allow drilling, which they consider a poison pill. Nor is there any provision for drilling closer than 50 miles, which puts off limits most of the oil reserves on the West Coast, where the Outer Continental Shelf is narrow. They deride her proposal to tie the oil package to a renewable electricity mandate, charging it would raise utility bills. And they also say that if she was prepared to craft a grand compromise to become law in the two weeks before Congress goes home, she would have picked up the phone and called a Republican or two to lay the groundwork.

House Minority Leader John Boehner (R-Ohio) said that he was “somewhat pleased” that Democrats appear to be “coming our way” but that the bill as outlined by Pelosi “looks like a hoax” because it doesn’t provide incentives to states.

“I’m not sure there’s any real intention to get a bill that could be signed into the law,” Minority Whip Roy Blunt (R-Mo.) said.

Blunt said secondhand sources have told him that Democratic leaders are reassuring their Members not to worry about new drilling ever taking place.

According to his sources, top Democrats are telling their Members, “Look, this is never going to happen, so it’s better than a moratorium,” Blunt said. “It looks like we’re allowing something that we’re not allowing.”

For her part, Pelosi explained her evolution on the issue as trying to stave off the expiration of the offshore drilling ban on Sept. 30. The choice, she said, is not between having the ban or not, “it is a question of what the president will sign” before the ban expires.

Democrats say there is still time to cut a deal — if Republicans are interested in policy solutions, not just having an issue to take into the election.

Democrats acknowledged last week that they simply do not have the votes to pass a stopgap spending bill extending the drilling ban past the election, and so they have an incentive to cut a deal to so the ban does not disappear.

If it goes away, drilling would be allowed as close as three miles to most states, Pelosi said.

“We have to face the reality that if we don’t have something in the bill, it is drilling three miles offshore,” she said. “Many Republicans are not for that. So we think we can get bipartisan support.”

However, some Democrats have noted that an expiration of the ban would not be the end of the world. It would take years before new drilling could go through the permitting and leasing process — plenty of time to craft a drilling plan in a lame-duck session or next year, when Democrats hope to have larger majorities and the presidency — and before any drilling actually would occur.

The best chance for a bipartisan drilling deal lies in the Senate, where a “Gang of 10” — swollen to 20 Senators by the end of last week — is trying to grind out a deal.

If the Senate can reach a grand compromise, the House could go along and Republicans and President Bush would face a difficult decision of blocking a bill that has some, but not all, of what they want.

Despite the tight time frame, Senate Democrats insist they have enough time to pass renewable energy tax credits and a comprehensive bill including drilling and conservation.

“I think that the work we’re doing on renewables is something that will become law,” Reid said Friday. “It appears to me that there’s going to be some things actually accomplished, rather than just going through a routine exercise here legislatively.”

Reid, however, said he plans to bring up the tax extenders bill first, before moving on to a broader energy debate in which he envisions the Senate voting on three proposals to expand offshore drilling: a Democratic plan, a Republican plan and a bipartisan bill proposed by the gang.

Sens. Kent Conrad (D-N.D.) and Saxby Chambliss (R-Ga.), who head the Gang of 10, said they are optimistic about their bill’s chances, but they warned that any deal faces stiff opposition from both sides.

Chambliss said he was not sure whether the combination of opposition from Republicans and Democrats would amount to filibuster strength.

“There is still a large contingency of folks on both sides of the aisle that want to do nothing, and I just think that’s a huge mistake,” Chambliss said.

Conrad agreed, saying the House Democrats’ decision to support more offshore drilling could be the key to producing a compromise within the next two weeks. “There’s a commonality of opening up offshore [drilling]. There’s a commonality of extending wind and solar tax credits by more than a year. … It’s almost a consensus that we ought to take back the manufacturers’ tax credit that the oil industry got that was never intended to apply to them,” Conrad said. “Those things were anathema before, but now they’re a common element in the plans.”

But Republicans — even Chambliss — remain skeptical of the Democratic leadership’s commitment and ability to complete a comprehensive bill before adjourning Sept. 26 as planned.

“It’s really important to examine what’s underneath all of this,” Senate Minority Whip Jon Kyl (R-Ariz.) said. “Is this just an opportunity for Members to have a cover vote? To vote for something so they can say they did, knowing that it will never become law? Or is it a real exercise?”

Kyl added, “I don’t yet see a willingness on the part of the majority, if you look for example at what the House Democrats have now come out with, to confront the issue of drilling in a meaningful, substantive way.”

Chambliss said he doubted that Congress has enough time before the end of the month to forge a deal that could pass both chambers and be signed by the president.

“The chances of that being done before the election — that’s probably not going to happen. That’s not realistic,” Chambliss said. “I think this conference would be extremely delicate, complicated, and take time.”

Jennifer Bendery contributed to this report.