Lawmaker looks to broader reform debate to pass bill eliminating energy credits

Source: Nick Juliano and Manuel Quinones, E&E reporters • Posted: Wednesday, January 16, 2013

Rep. Mike Pompeo (R-Kan.) yesterday reintroduced legislation aimed at eliminating tax credits for energy producers and suggested he could support broadening the scope of his effort to also target other incentives, such as deductions enjoyed by the oil and gas industry, in an effort to attract bipartisan support to eliminate all energy-related favors as part of a broader tax reform push.

Pompeo’s bill, H.R. 259, introduced yesterday with 11 Republican co-sponsors, is virtually identical to legislation he introduced in the previous Congress. It would eliminate more than a dozen tax credits, most notably the production tax credit for wind and other renewable sources, as well as credits for biodiesel, alternative fuels and electric cars.

At a news conference yesterday, Pompeo stressed that his legislation is technology-neutral, pointing to oil industry credits designed to promote “enhanced oil recovery” and production from marginal wells. But critics point out that those credits do not actually provide any benefit because they are triggered only when oil prices fall far below their current levels.

The bill leaves untouched more lucrative incentives for the oil and gas industry that are not technically tax credits, such as the so-called depletion allowance and the ability for oil companies to deduct “intangible drilling costs” from their tax bill.

Pompeo said he wanted to keep the bill focused on credits at the outset but remained open to adding to the list of incentives to eliminate. He said he was awaiting a response to a letter he and other members of the House Energy and Commerce Committee sent last year requesting a Government Accountability Office audit of energy subsidies and tax benefits (E&ENews PM, Oct. 10, 2012).

“I’m prepared to take that wherever it goes,” he said of the impending GAO analysis of energy incentives. “We should not be subsidizing energy sources in a nation that has the capacity for energy independence.”

Pompeo’s legislation never gained much traction in the last Congress, although its language was included in a Senate amendment offered by former Sen. Jim DeMint (R-S.C.) to the transportation bill that failed 26-72 (E&ENews PM, March 13, 2012).

DeMint has since left the Senate to lead the conservative Heritage Foundation. Pompeo said he is still searching for a senator to sponsor the bill this year, and he mentioned freshman Sen. Jeff Flake (R-Ariz.), who was a co-sponsor of the House bill last year, as one member he has spoken to about introducing the bill

While Pompeo’s efforts to eliminate energy credits were unsuccessful last year, he said he was optimistic about its chances with Congress poised to debate broader tax reform this time around. The House and Senate may have voted at the last minute to extend the PTC and other energy incentives, as part of the broader “fiscal cliff” deal, but Pompeo pointed to the intense focus on the merits of that credit leading up to the extension as a sign of progress in itself.

“The fact that we now have long discussions when you see folks in these energy sectors having to spend millions of dollars lobbying to protect these things … it’s already a sea change in the way this House thinks about these kinds of issues,” he said. “So I think we’re making enormous progress both in educating the American people and members here in Congress about how bad this set of policies are.”