Reid Tables Cap-and-Tax Legislation

Reid Tables Cap-and-Tax Legislation
August 6, 2010

Bonner R. Cohen

Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position... (read full bio)

Senate Majority Leader Harry Reid (D-NV) has announced he is indefinitely tabling legislation to restrict carbon dioxide emissions throughout the nation. The announcement has sent cap-and-trade supporters scrambling to find ways to salvage the crown jewel of their global-warming agenda.

Reid, whose staff is known for its vote-counting prowess, acknowledged in his July 22 announcement  he didn’t have the 60 votes necessary to break a Republican-led filibuster on global warming legislation. Instead, Reid will push ahead with a more modest energy-related bill that does not directly limit CO2 emissions.

New Taxes Proposed
Reid’s new bill includes, among other things, $5 billion in rebates for energy-efficient retrofits in homes (dubbed “cash for caulkers” by its critics), $3.8 billion to encourage the use of trucks powered by natural gas, $400 million to study the feasibility of electric cars, and hundreds of millions of dollars for the Land and Water Conservation Fund (LWCF), a federal program for buying up private land and having it managed by Washington.

All told, the bill has a price tag of $15 billion and would be paid for by new taxes on the oil industry.

Reacting to the BP oil spill in the Gulf of Mexico, the bill also includes the removal of the $75 million economic liability cap on offshore oil spills. Under the bill, BP would be held retroactively liable for all costs associated with the April 20 explosion at the Deepwater Horizon drilling rig even though the cap was in place while the drilling was done and the leak occurred.

Although there is little sympathy for BP in Congress, senators from Gulf states joined the oil industry in vigorously opposing unlimited liability, arguing it would drive out small and mid-sized companies from offshore drilling operations.

Just before adjourning for its August recess, the House narrowly passed its own “spill bill,” known as the CLEAR Act. It included, among other things, an end to the liability cap for spills, restrictions on offshore drilling techniques, and a LWCF provision.

Renewables Mandate Dropped
Not included in Reid’s scaled-down bill is a renewable electricity standard (RES) that would require utilities to boost the use of renewable fuels. As with restrictions on greenhouse-gas emissions, Reid says he doesn’t have 60 votes to overcome a filibuster of an RES.

Dropping the RES sent shockwaves through the renewable energy industry, which counts on federal mandates and subsidies to keep it afloat. The American Wind Energy Association announced July 27 new wind power development fell 71 percent in the first half of 2010 compared with last year.

Environmental activists express hope the Senate will pass an energy bill that can then be merged, during a House-Senate conference committee by a lame duck Congress after the upcoming November elections, with elements of the just-passed House “spill bill” and the Waxman-Markey cap-and-trade bill passed by the House last year.

Power of Public Opinion
“Senator Reid’s announcement that he is shelving cap-and-trade for now is proof positive that Congress does itself no favors if it underestimates the American people,” said Dan Simmons, director for state policy at the Institute for Energy Research. “We won’t be fooled by Capitol Hill spin or marketing schemes, especially when it comes to our families’ budgets, jobs, or the health of the economy. Across America, as Americans made their voices heard, Congress finally listened.”

That message does not appear to have reached the Environmental Protection Agency (EPA), however. EPA Administrator Lisa Jackson announced on July 29 her agency was rejecting 10 petitions asking the agency to reconsider its “endangerment” finding, the basis for its plan to regulate greenhouse gases under the Clean Air Act.

The petitioners argued leaked e-mails from the University of East Anglia’s Climate Research Unit, which showed data manipulation and suppression of contrarian viewpoints, undermined the scientific case for for the proposed draconian regulations.

Undaunted by EPA’s rejection, the petitioners are challenging EPA’s decision in the U.S. Court of Appeals for the District of Columbia. The court is not expected to rule on the case until next year at the earliest.

Bonner R. Cohen, Ph. D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.

Bonner R. Cohen

Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position... (read full bio)