The House has passed a national energy policy bill for the fourth time, but the measure faces an uncertain future because of a product liability waiver for MTBE that has stalled the same legislation in the Senate.
The newly passed bill, H.R. 4503, is virtually identical to H.R. 6, the comprehensive energy policy legislation the House passed last November. The bill failed to receive enough votes for cloture in the Senate last November and again in January.
Although Democratic senators have kept the bill bottled up in the Senate because of objections to the liability waivers for producers of the gasoline additive MTBE, the House bill received the support of some Democratic representatives, including Rep. Charles Stenholm of Texas.
“I'm glad we were able to work through our differences to shape an energy bill that makes great strides to insure all Americans have access to reliable and affordable energy,” Stenholm said. “Now the Senate needs to move forward and approve this legislation, just as the House has done on two occasions in less than a year.
“This legislation is, no doubt, one of the most important measures to come out of the Congress in recent months, and it will have lasting benefits for west Texas,” Stenholm said. “For years, I've worked hard to make sure the oil patch's voice was heard, and I'm glad this legislation includes the right incentives for continued domestic energy production.”
H.R. 4503, just like H.R. 6, includes a number of provisions to increase domestic oil and natural gas production, increase the use of renewable sources of energy, and provide incentives for consumers to embrace energy conservation technologies. The legislation will diversify America's energy portfolio and make the country less dependent on foreign petroleum sources, according to supporters.
“I am pleased this legislation balances traditional domestic energy production with adequate conservation measures and more incentives for renewable energy production, including ethanol and electricity generated from wind,” Stenholm said.
“This bill will bring real economic growth to west Texas by insuring continued production from our oil and gas fields. This bill sets the stage for more oil and gas production in west Texas, and, therefore, our hospitals and schools will benefit from the increased royalties associated with this production.”
Stenholm served on the national energy policy bill conference committee that worked to reconcile the House and Senate versions of the energy legislation and form a final conference report last year.
The House passed the conference report for the bill in November, but the Senate was unable to cut off debate and bring it to the floor.
Stenholm's staff released a list of the bill's provisions that would be important to west Texas.
- Stormwater runoff from oil and gas construction sites is exempt from additional Environmental Protection Agency permitting which allows independent producers to continue the exploration and production of oil and natural gas as they have in the past.
- Hydraulic fracturing is redefined in the Safe Drinking Water Act to allow drillers to continue injecting fluids underground. This bill clarifies legislative language so that EPA cannot prevent producers from using traditional techniques to extract gas from complex formations. Hydraulic fracturing poses no threat to drinking water supplies.
- Rural electricity distribution cooperatives are exempt from full Federal Energy Regulatory Commission regulation, thus protecting consumers from unfair electricity rate increases.
- Most of the oil and gas production in west Texas is from marginal fields. The bill includes a counter-cyclical tax credit of $3 per barrel for oil, and $0.50 per 1,000 cubic feet for gas produced from marginal wells. This goes into effect when the price of oil drops below $15/bbl for oil and $3.00/mcf for gas.
- Includes a one-year suspension of the limitation on 65 percent of taxable income limit from marginal wells.
- Delay rental payments related to oil and gas development are deductible over a 24-month period from the date that the payment was incurred.
- Geological and geophysical expenditures are deductible over a 24-month period from the date those expenses were incurred.
- There is a temporary repeal of the Alternative Minimum Tax (AMT) preference for intangible drilling costs. This expires Jan. 1, 2006.
- A three-year wind energy production tax credit (PTC) is included in the bill. The credit is 1.8 cents per kilowatt hour. With this PTC, wind energy generation in West Texas will increase and the region will be able to diversify its energy portfolio.