House to Link Energy and Transportation Bills

POLITICS

FEBRUARY 2, 2012

By KEITH JOHNSON

Bloomberg

Offshore oil production, as with a rig near Santa Barbara, Calif., above, would be boosted by a House committee bill passed Wednesday.

WASHINGTON—A House committee Wednesday passed three measures to boost domestic energy output, and Republicans prepared to attach them to a $260 billion transportation package, the latest sign energy policy is shaping up as an election-year battleground.
The GOP bills would jumpstart offshore oil production, open the Arctic National Wildlife Refuge to drilling and promote more exploration for oil shale, an expensive but potentially big source of American crude.
The bills will face opposition in the Senate, where Democrats have the majority. But they could form the basis for negotiations as Republicans seek support for their energy agenda in exchange for their support for the transportation bill.

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Reuters

The GOP remains supportive of an extension of the Keystone oil pipeline, above.

The bills represent the latest effort by House Republicans to advance their energy policies by marrying them to legislation favored by the White House. In December, the GOP tried to pave the way for the Keystone XL oil pipeline from Canada to the Gulf of Mexico by linking its approval to a measure requiring a presidential decision in 60 days to a payroll-tax cut extension.
But President Barack Obama rejected Keystone. House Speaker John Boehner (R., Ohio) has said GOP lawmakers plan to tie Keystone's approval to other, must-pass legislation.
The Republican efforts—and pushback from Democrats and environmentalists—shows the potential for energy policy as a potent issue this year, because it touches on economic growth, job creation and the role of government regulation.
Four years ago, high oil and gasoline prices made energy a powerful topic on the 2008 campaign trail and led to chants of "Drill, baby, drill." Since then, both major parties have changed their energy agendas.
Republicans, whose nominee in 2008, Sen. John McCain, co-sponsored legislation to limit greenhouse-gas emissions, have opposed any climate-change policy in Washington, and are promoting even more aggressive domestic oil and gas production.
Democrats had hoped to use the congressional majorities they enjoyed in 2009 to pass climate and energy legislation, including a plan to cap greenhouse-gas emissions. But that plan died amid GOP opposition.

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Associated Press

The bill also would open drilling in the Arctic National Wildlife Refuge.

Mr. Obama, in his State of the Union address last week, took what he described as an "all of the above" approach, backing environmentally safe oil and gas production while vowing to double down on federal support for wind power and solar energy.
The five-year transportation bill provides funding for highway and transit funding, slashes Amtrak's budget, streamlines the environmental-review process, and consolidates scores of federal transportation agencies to save money, among other things.
The bills passed Wednesday in the House Committee on Natural Resources "would create American jobs by removing regulatory hurdles to American energy production," said the panel Chairman Doc Hastings (R., Wash.).
Opponents said it would sweep away some environmental protections for energy development, such as studies that assess a project's impact on groundwater. David Goldston, government affairs director for environmental advocacy group Natural Resources Defense Council, called the add-ons "an inventory of all the worst ideas they've had for the last two decades."
At the House hearing Wednesday, Democrats, led by New Jersey Rep. Rush Holt, assailed plans to open up to drilling parts of what Mr. Holt termed the "pristine" Arctic National Wildlife Refuge.
California Republican Rep. Tom McClintock compared the proposed drilling sites to "five postage stamps on a football field," and said Democratic opposition to drilling there exemplified what he called the "radical extremism" of the environmental movement.
The energy bills are the House GOP's solution for a looming funding gap in the highway and transportation legislation. Maintenance for highways and bridges in the U.S. is paid for via the 18-cents-per-gallon federal gasoline tax. But highway spending outstrips tax revenue, leaving a shortfall the Congressional Budget Office estimates at $10 billion.
The bills could create more revenue for the federal government by making more leases available for oil and gas exploration, including in the Atlantic Ocean, the Pacific Ocean and the Arctic refuge.
Rep. Doug Lamborn (R., Colo.), the chairman of the Energy and Natural Resources subcommittee, said drilling in a small part of the Arctic refuge could bring in up to $150 billion in new revenue and help produce more than 1.4 million barrels of oil a day.
Critics of the legislation—including conservative Sen. James Inhofe (R., Okla.)—argue that future royalty revenue will take years to materialize and won't address the transportation-funding shortfall in the meantime.
Write to Keith Johnson at keith.johnson@wsj.com