HELP NEEDED: DC Fight Over Trillions In Spending Continues – Oil and Gas in the Crosshairs

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Chris Kearney | NSWA Vice President, Governmental Affairs

Just prior to heading out on a two week recess in late September, House Democratic leaders again delayed a planned vote on the bipartisan Senate-passed $1.2 trillion infrastructure bill, evidence of continued struggles to hold together their two-track legislative strategy for passing both the infrastructure bill and the much larger $3.5 trillion budget reconciliation bill – where inclusion of  percentage depletion’s elimination and a methane tax on small producers is being pushed hard by powerful House Progressives – the funding cornerstones of President Biden’s “Build Back Better” agenda.   

At issue is a rift between the Progressives – the dominate legislative powerhouse caucus of members – and the politically weaker Moderates within the Democratic Party, which is most publicly pronounced in the House, but equally sharp in the Senate.  

The rift has spilled into a full-on standoff between the two groups, having begun several months ago when House Progressives said they could not vote for the bipartisan infrastructure bill on the September 27th deadline set by House Speaker Nancy Pelosi (D-CA) until they saw legislative text of a budget reconciliation bill that Senate leaders publicly committed to pass. Meanwhile, House Moderates have made clear they could not vote for the $3.5 trillion budget reconciliation bill until the House passed the bipartisan infrastructure bill.

In a sign of progress toward reaching a deal, Senate Energy and Natural Resources Chair Joe Manchin (D-WV), who has said he could not support the $3.5 trillion reconciliation package, publicly announced that his top-line number on reconciliation was $1.5 trillion. Progressives quickly dismissed that amount as inadequate to fund important parts of their social agenda, arguing that $3.5 trillion was a compromise for them and setting the stage for further negotiations. Sen. Kyrsten Sinema (D-AZ) also has raised issues with the $3.5 trillion bill.

In order to ultimately pass the reconciliation bill in the Senate, Majority Leader Chuck Schumer (D-NY) will need every Democrat (50) to vote for the bill as Republicans are united against the reconciliation bill at any funding level.  

Where we stand: It’s widely recognized that the $3.5 trillion number must come down – but to what level? The latest credible rumor puts it at $1.9-2.3 trillion. But nobody really knows. Rarely has the outcome of a major congressional action been so unclear.  

That said, assuming the reconciliation top line is ultimately lowered, House and Senate committees and negotiators in leadership will need to determine how to trim it down, including whether that means cuts to spending across the board or leaving specific programs out of the bill entirely (Progressives are pushing hard for the latter).  Speaker Pelosi has said that negotiations among the White House, House and Senate are to continue, with a timeline of October 31 as target for an agreement on the major elements of the budget reconciliation bill. That is widely recognized as unrealistic; however, there is extreme pressure on negotiators to reach an agreement on at least a top-line number by end of October, with passage of a bill that can be signed by the President by early December.   

As the process regarding reconciliation – and efforts at consensus – continues across the chambers and remains fluid in the weeks ahead, time is of the essence to communicate to Congress.

So, NSWA strongly urges all members to call and or email their member of congress and senator and ask the elected officials the following: 1) allow percentage depletion to continue to not be included in the FY22 Budget Reconciliation bill, and that 2) the methane tax proposal – which is gaining support in Congress and elsewhere – and is now included in the House reconciliation bill – be removed.   

Chris Kearney, NSWA’s VP of Governmental Affairs is available to assist with identifying key congressional members and their staffs, as well as consulting on talking points and other key information.

Again, time is of the essence. So, please don’t hesitate to reach out to Chris or NSWA board members for assistance.     

Chris Kearney

NSWA VP for Governmental Affairs

202-549-1583

Call or text anytime.   

Find your U.S. Representative here

Find your U.S. Senator here.

Background – How We Got Here

In late August, the House passed, by a party-line vote of 220-212, a multi-section procedural measure (H. Res. 601) which includes the adoption of the Senate-passed FY 2022 budget resolution or  “blueprint” (S. Con. Res. 14) and outlines a date certain for voting on the Senate-passed infrastructure bill.

With the House’s adoption of the FY22 budget resolution by both chambers, it officially kickstarted the budget reconciliation process that will allow congressional Democrats to pass a ten year $3.5 trillion annual expansive social spending and tax package aimed at implementing the President’s “Build Back Better” agenda, including large swaths of President Joe Biden’s proposed American Jobs and Families Plans unveiled earlier this year.

Once, the multiple bills are marked up and passed by the committees, the House Budget Committee will then bundle them together into a single, mammoth bill prior to a vote by the House.

Also, the House Energy and Commerce Committee has completed its work on the committee’s contribution to the budget reconciliation process.  

The committee’s bill includes a methane fee on the oil and gas industry that “recognizes the cleanest performers” and “holds individual companies responsible for their own leaks and excess methane pollution.”

Specifically, the committee by a vote of 31-26 approved a portion of the $3.5 trillion budget reconciliation measure that would direct the Environmental Protection Agency to impose a methane pollution fee on the oil and gas industry. Rep. Kurt Schrader (D-Ore.) joined Republicans in voting against the legislation.

The fee would vary depending on how much of the greenhouse gas a facility emits. Methane emissions are considered more toxic than carbon dioxide.

The amount of the fee, which would begin in calendar year 2023, would be $1,500 per ton of methane that a facility reports during the prior reporting period, based on the specific industry’s intensity threshold number.

The fee for petroleum and natural gas production, for example, would be based on the reported tons of methane emissions that exceed 0.20% of the natural gas sent to sale from such facility. The fee for nonproduction petroleum and gas industry would be on the reported tons of methane emissions that exceed 0.05% of natural gas sent to sale from the facility.

It is expected that Democrats and Republicans from oil and gas states – on and off the committee – will continue efforts to strike the fee from the bill as negotiations continue with the Senate . 

Senate action on a methane fee is unknown at this time, though leading Progressive members are expected to push for inclusion of a broad methane tax on oil and gas operations in the final reconciliation package. 

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