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Repeal of Tax Breaks, Pro-Drilling Measure Fail in Senate

Senate Republicans Tuesday pushed back a Democratic effort to repeal $21 billion in oil and natural gas tax breaks for the five largest producers over the next decade. And Democrats responded Wednesday by erecting a barrier to Republicans' pro-drilling measure.

Democrats needed 60 votes to advance their bill (S. 940), but only garnered 52. Three Democrats -- Sens. Mary Landrieu of Louisiana, Mark Begich of Alaska and Ben Nelson of Nebraska -- crossed the aisle to oppose the bill, while two Republicans -- Sens. Susan Collins and Olympia Snowe, both of Maine -- and Independent Sen. Bernie Sanders of Vermont voted with Democrats to support the measure.

"The Senate was right to reject this bill," said Bruce Josten, executive vice president for government affairs for the U.S. Chamber of Commerce.

The bill, sponsored by Sen. Robert Menendez (D-NJ), sought to revoke the tax breaks for Chevron, BP, Royal Dutch Shell, ConocoPhillips and ExxonMobil. Few people on or off Capitol Hill believed that the bill had a chance of clearing the Senate (see Daily GPI, May 18; May 13a).

Senate Majority Leader Harry Reid (D-NV) signaled Tuesday that he wants to see the legislation resurface. "I am confident that before we finish our budget negotiations here in anticipation of raising the debt ceiling, that that [repeal of oil, gas taxes] will be part of it...There's no justification for giving these [tax breaks to] companies that are making so much money," said Reid in a CQ Today article.

At a hearing Tuesday Sen. Lisa Murkowski of Alaska, the ranking member of the Senate Energy and Natural Resources Committee, expressed concern that a proposal raising oil and gas taxes could be tacked onto energy legislation voted out of committee. "Many of us are wary [of this]," she said.

By a vote of 42-57, Democrats Wednesday blocked a GOP measure aimed at promoting drilling in the Gulf of Mexico and offshore Virginia and Alaska. Republicans failed to get the 60 votes needed to head off a Democratic filibuster of the pro-drilling legislation.

The bill (S 953), which was sponsored by Senate Minority Leader Mitch McConnell (R-KY), mirrored the trio of pro-drilling bills that the House passed earlier this month (see Daily GPI, May 13b). Ironically the bill, which Democrats opposed, proposed some of the same measures advocated by President Obama -- directing the Interior secretary to conduct previously scheduled offshore lease sales in the west and central Gulf of Mexico, Virginia and Alaska; and extending the lease terms for Gulf leases that were suspended by the 2010 moratorium (see Daily GPI, May 17). It also called on Interior to act on permits within 30-60 days, and in the event of a denial, to provide an explanation to a producer.

The Senate's rejection of the measure "was a missed opportunity to address America's stagnant economy and growing energy insecurity," said Karen Harbert, president of the U.S. Chamber of Commerce's Energy Institute. "One would hope that the high gasoline prices currently burdening families and businesses would serve as a call to action, as it did in the House, but unfortunately the Senate is off to a disappointing start."

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