Energy provisions again help derail US government spending plan

Washington (Platts)--9Mar2011/508 pm EST/2208 GMT

US lawmakers Wednesday again failed to pass legislation to fund the federal government for the remaining six months of the current fiscal year, as political differences over federally funded energy and environmental programs once again contributed to the stalemate.

The US Senate voted down two so-called "continuing resolutions" that would have kept the US Department of Energy and other federal agencies operating until September 30, the last day of fiscal 2011.

The government is currently operating on a short-term CR that expires at midnight March 18. The Senate and the US House of Representatives must agree on some sort of spending plan before then, or the government will shut down.

The first CR that the Senate defeated Wednesday was from House Republicans, who have vowed to cut at least $61 billion in federal spending this year to chip away at America's $1.5 trillion budget deficit. This CR (H.R. 1), would eliminate billions of dollars in DOE programs designed to support wind farms, biofuels and other clean-energy technologies. H.R. 1 also would derail first-ever greenhouse-gas regulations that the Obama administration put in place earlier this year for electric utilities, oil refineries and other energy-intensive industries.

The Republican-controlled House passed H.R. 1 last month in a near party-line vote. But on Wednesday, the measure garnered only 56 of the 60 votes it needed to pass the Democrat-controlled Senate.

Senator Jeff Bingaman, the New Mexico Democrat who heads the Energy and Natural Resources Committee, said H.R. 1 would inflict "devastating harm" on America's clean-energy energy future.

Bingaman said the bill would force DOE to lay off some 4,500 scientists and engineers "working on basic endeavors in the area of energy science." It also would derail a DOE initiative to develop small modular nuclear reactors, as well as a program to mix coal with biomass, he added.

Senator Ben Nelson, a Democrat from the corn-producing state of Nebraska, said he voted against H.R. 1, in part, because it would effectively reverse a recent Obama administration policy that allowed petroleum marketers to increase the level of ethanol in conventional gasoline to 15%, a 5% hike from the decades-long 10% threshold.

Nelson denounced that Republican-authored provision in H.R. 1 as a "sneaky attempt to push a political agenda," saying it "aims to block allowing the use of more American-made ethanol in our cars and trucks."

"Cutting back on ethanol at a time when gas prices are above $3.50/gal nationwide and rising fast is the wrong thing to do," Nelson said. "Worse, it's a gift to foreign oil."

The White House also weighed in on the debate, issuing a statement saying President Barack Obama would veto H.R. 1 if it reached his desk because it would "undermine our ability to out-educate, out-build, and out-innovate the rest of the world."

But Senate Democrats also failed in their bid Wednesday to pass their own CR to fund the government for the rest of the fiscal year. That measure, which would not make any deep cuts to energy-related programs, garnered just 42 of the 60 votes it needed to advance under Senate rules.

Republicans said the Democrats' plan, which would cut federal spending $8.7 billion this year, fell far short of what is needed to curb America's ever-increasing national debt.

"Democrats' steadfast refusal to cut another dime from the bloated Washington budget has left them no choice, it seems, but to propose raising taxes on American families and small businesses so that they can continue spending at unsustainable levels," said Senator Mitch McConnell of Kentucky, the chamber's top Republican.

With the defeat of the two competing CRs on Wednesday, House and Senate leaders are expected to negotiate another short-term funding measure to keep the government operating beyond March 18. Lawmakers on both sides of the aisle say they do not want the government to shut down, but if they cannot agree on a spending plan, it will.

--Brian Hansen, brian_hansen@platts.com

To subscribe or visit go to:  http://www.platts.com