In a bizarre turn of events on Capitol Hill earlier this week, Senate Minority Leader Tom Daschle (D-SD) and Sen. Pete Domenici (R-NM) took steps that set the stage for critical votes on the policy portion of the Senate’s stalled energy bill on Thursday.

First, Daschle offered a crucial energy bill amendment, which would increase the use of ethanol in U.S. gasoline, as part of Internet tax legislation (S. 150) that is currently being considered on the Senate floor.

Domenici, chairman of the Senate Energy and Natural Resources Committee, responded by proposing the policy portion of the Senate energy bill (S. 2095) as a second-degree amendment. The amendment includes all aspects of the energy bill, except the 10-year, $13 billion tax package, which was piggybacked to a corporate tax cut measure earlier this month (S. 1637).

Late Tuesday, Senate Majority Leader Tom Frist (R-TN) filed three cloture motions to cut off debate and vote on the Daschle/Domenici amendments, as well as a substitute amendment offered by Sen. John McCain (R-AZ). The McCain initiative, if successful, not only would mean the end to the Daschle and Domenici amendments, but conceivably the bulk of the energy bill (except the tax package), Senate Majority Whip Harry Reid (D-NV) told Congressional Green Sheets. The votes on the three amendments are scheduled for Thursday.

The Senate first will consider Daschle’s amendment to the pending Internet legislation. “No one we know believes this is likely, but if Daschle has 60 votes, his amendment would be incorporated into the Internet bill,” said energy analyst Christine Tezak of the Washington Research Group with Charles Schwab & Co. Inc. She believes Daschle offered the proposal to improve his re-election chances, and to blunt GOP charges that Democrats are to blame for holding up the energy bill in the Senate.

“[McCain], who has been trying to broker a delicate compromise on the pending Internet tax package which is chock-full of its own problems, ardently opposes the ethanol program. We cannot imagine McCain is anything but displeased by this turn of events,” she said.

“Many of our sources agree with…Reid (D-NV), who predicted on the Senate floor [Tuesday] evening that both [Daschle-Domenici] amendments would likely fail on Thursday,” Tezak noted.

But Republicans believe that Domenici’s amendment may fare better. Domenici would need to garner 60 votes to get the amendment adopted under the terms of cloture.

A favorable vote for either the Daschle or Domenici amendment “would functionally result in an opportunity for interested legislators to add additional energy-related amendments during cloture-limited debate (i.e. 30 hours),” said Tezak.

If an impasse should develop during the debate over the energy-related amendments, she noted the Internet tax bill could be held hostage. This could force the Senate to strip the contentious energy amendments from the Internet legislation. The energy bill, in effect, would be back where it started — in limbo.

Another vote for cloture on the pending corporate tax cut bill, now the vehicle for the energy tax package, also faces an uncertain future, Tezak believes. Senate leaders still are trying to reduce the unwieldy number of first-degree amendments (80) to the bill. In addition, McCain has threatened to filibuster the energy tax portion of the measure, she said. The Senate has penciled in a cloture vote on the corporate tax measure for the week of May 3.

Despite the “parliamentary gymnastics,” she still thinks the prospects for an omnibus energy bill to emerge from Congress this year are “poor.” She noted that neither the Daschle nor Domenici amendment addresses the key substantive differences in the House and Senate energy bills — a liability waiver for producers of the gasoline additive, methyl tertiary butyl ether (MTBE), and the size of the energy tax packages. In addition, the Senate measure, not the House version, would provide subsidies for gas produced in Alaska and transported over a proposed Alaskan gas pipeline to the Lower 48 states.

“The significant issues related to MTBE liability and the tax package remain if both the Internet bill and the ‘JOBS bill’ clear the Senate in roughly their current forms…The House leadership has been wanting to see some compromise…before it will commit to resuscitating the energy bill on its side of Capitol Hill…We are negative on the prospects for split legislation being ultimately enacted into law,” Tezak said.

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