House Dems push for more taxes on oil companies

WASHINGTON -- Newly empowered House Democrats sought to recoup billions of dollars in lost royalties from offshore drilling as they anticipated approval Thursday of a $15 billion package of fees, taxes and royalties on oil and gas companies. The money would be used to promote renewable fuels.\nThe House took up the energy bill as the final one of a string of high-priority issues that Speaker Nancy Pelosi vowed to address in the first 100 hours of Democratic control of Congress. She has characterized the energy measures as key to reducing government subsidies for the oil industry.\nThe bill is largely aimed at recovering an estimated $10 billion that stands to be lost to the government because of an error in deep-water drilling leases for the Gulf of Mexico issued in the late 1990s. Congressional auditors and the Interior Department's inspector general have said the mistake was ignored for six years by the Minerals Management Service, which oversees the leasing program.\nAs the House began debate on the energy measure, Interior Inspector General Earl Devaney told a Senate hearing Thursday that the minerals bureau showed "a shockingly cavalier management approach" in dealing with the leasing error, although the problem was known within the agency as early as 2000.\nIt's "a jaw-dropping example of bureaucratic bungling," he told the Senate Energy and Natural Resources Committee.\nThe White House on Wednesday expressed support for some of the tax and royalty proposals but said other provisions unfairly single out the oil industry or jeopardize domestic oil and gas production.\nThe legislation would impose a "conservation fee" on oil and gas taken from deep waters of the Gulf of Mexico, scrap nearly $6 billion worth of oil industry tax breaks enacted by Congress in recent years and seek to recoup royalties lost to the government because of an Interior Department error in leases issued in the late 1990s.\nDemocratic leaders estimate the measure would generate an additional $15 billion in revenue. Almost all of that money would be funneled into a research and development fund for renewable fuels such as solar and wind power, alternative fuels including ethanol and biodiesel and conservation incentives.\nThe legislation was expected to move through the House with broad support from Democrats and moderate Republicans. Its prospects in the Senate were uncertain, given the Democrats' narrow majority there and sharp opposition from some Republicans as well as the White House.\nSen. Maria Cantwell, D-Wash., said Wednesday she doubts the Senate would accept the package as written. She suggested the Senate might want broader legislation to fix what she characterized as an oil and gas royalty program "riddled with blatant mismanagement."\nWhile President Bush supports a rollback of some of the royalty breaks for deep-water drilling contained in the House bill, the White House said Wednesday it strongly opposes the new production fees and a provision that would bar oil companies from future lease sales unless they renegotiate and pay royalties under the flawed 1998-99 leases.\nThose measures could embroil the government's offshore oil and gas leasing program in protracted litigation, delay future lease sales and disrupt energy supplies, a White House official said.\n"We must be mindful of potential unintended consequences. Litigation could take years to resolve," Interior Assistant Secretary C. Stephen Allred told the Senate hearing. He said a three-year delay in leases would cut domestic oil production by 1.6 billion barrels and cost the government $13 billion in lost royalties over 10 years.