Legislative Watch January 6, 2011
Posted January 5, 2011
Several pieces of legislation with environmental implications were passed during the surprisingly productive “lame duck” session that marked the end of the 111th Congress. Despite progress on some environmental issues, Congress adjourned without passing most of the spending bills for the fiscal year that began on 10/1/10, instead passing another “continuing resolution” that maintains spending at previous levels until 3/4/11. As a result, the new Congress will turn almost immediately to spending debates, which may include attempts to block regulations through provisions on spending bills. The 112th Congress convened on 1/5.
The legislation that President Obama signed on 12/17/10 that extends the Bush-era tax cuts (H.R. 4853) also extends several tax provisions related to energy. The bill extends for one year a program designed to encourage the development of renewable energy by allowing renewable energy companies to receive grants in lieu of tax credits, which is critical for companies without tax liability. The bill also extends the ability of transit users to use before-tax dollars for commuting up to $240 per month, the same as the tax provisions for parking at work. Without the extension, tax benefits for driving and parking would have been double those for transit commuters.
In addition, the bill extends a couple of tax incentives that are harmful to the environment, which led NRDC to oppose the bill. One incentive, the Volumetric Ethanol Excise Tax Credit for ethanol producers -- who already benefit from government requirements to blend ethanol and gasoline -- is extended at its current rate of 45 cents per gallon. The good news is that the subsidy is extended for only one year, and a bipartisan bloc emerged that opposes future extensions. The second incentive is the 50 cents per gallon tax credit for liquid coal transportation fuels. While a fuel qualifying for the credit has to come from a facility that captures and disposes 75 percent of the carbon dioxide pollution emitted during the production process, the carbon pollution from using the fuel is still higher than conventional fuels. NRDC opposes incentives that would help ramp up a liquid coal industry.
A number of other expiring incentives for renewable energy were not included in the final tax package, including one that enabled companies to establish, re-equip and expand factories in the United States to manufacture advanced energy technologies. Such incentives were included in a tax bill Senate Finance Committee Chair Baucus (D-MT) was unable to get through the Senate earlier in the year. Energy and Natural Resources Committee Chair Bingaman (D-NM) has promised hearings in early 2011 on how to encourage renewable and energy efficiency projects.
On 12/22/10, the Senate approved the New START Treaty by a vote of 71-26, with 13 Republicans joining all Democrats to provide the two-thirds majority the Constitution requires for treaty ratification. The treaty between the United States and Russia, which would be in effect for 10 years, would limit each side to 1,550 deployed strategic nuclear warheads on intercontinental ballistic missiles, submarine-launched ballistic missiles and heavy bombers. Although the decreases are modest, the treaty would strengthen verification and build confidence between the two countries, and future reductions could follow. The United States has been unable to inspect Russia’s nuclear arsenal since the original START Treaty expired a year ago; New START would allow on-site inspections and data exchanges, and require regular notifications related to strategic offensive arms.
Senators approved four amendments to the resolution for ratification, recognizing the Obama administration’s commitment to move ahead with the development of missile defense systems, to address tactical nuclear weapons in the next round of negotiations with Russia, and to modernize the nation’s nuclear weapons arsenal as well as the complex that supports it. These amendments do not alter the text of the treaty.
On 12/16/10 and 12/21/10, the Senate and House passed the Diesel Emissions Reduction Act (H.R. 5809). The bill authorizes $500 million for grants to localities to modernize diesel trucks and buses over the next five years. This year’s bill follows on the Diesel Emissions Reduction Act of 2005, which authorized up to $200 million per year, for five years, to help accelerate the cleanup of today’s dirty diesel engines. Over the course of the last five years, Congress appropriated roughly a half billion dollars in funds for the program, including a one-time $300 million infusion in the 2009 stimulus bill. By encouraging state and local matches for the program’s federal funding, every dollar spent creates at least three dollars of investment. Over the past five years, thousands of communities have used these funds to retire, replace, retrofit or repower the oldest, dirtiest diesel vehicles. In 2008 alone, the program took 50,000 tons of pollution out of the air and, as a side benefit, helped communities save more than 3.2 million gallons of fuel.
On 12/21/10 and 12/22/10, the Senate and House passed S. 3481, co-sponsored by Sen. Cardin (D-MD) and Sen. Inhofe (R-OK), which requires federal agencies to pay fees imposed by localities to cover the cost of treating and managing polluted stormwater runoff. This legislation, which amends the Clean Water Act, clears up ambiguity as to whether the federal government is required to pay such fees. Some federal entities claimed that such fees were taxes that the federal government is not obligated to pay to states or municipalities. This bill makes it clear that these fees are a “reasonable service charge,” which the federal government is required to pay, and not a tax, so that federal facilities will pay their share to protect surface waters from stormwater pollution, as do all other facilities in such communities.
Montana Sens. Baucus and Tester introduced legislation (S. 3864) that would exempt gray wolves in Idaho and Montana from protections under the Endangered Species Act. This legislation would have set a dangerous precedent for Congress to remove endangered species protections from individual species. The senators were not able to get the legislation voted on in the waning hours of the 111th Congress, partly because Congress did not take up the spending bill that would have served as a vehicle for the legislation.