Senate changes tactics on gas line incentives

Senate Republicans add incentives to a 'jobs bill' they hope to pass

Posted: Friday, April 09, 2004

WASHINGTON - U.S. Senate leaders have switched tactics for providing financial incentives for construction of an Alaska natural gas pipeline.

For several years, financial incentives have been part of a national energy policy bill. That bill, however, has foundered for months over disputes between the House of Representatives and the Senate.

This week, Senate Republicans added several of the gas line incentives to a "jobs bill" they hope to pass.

Senate Republicans call the legislation a jobs bill because it cuts taxes for American manufacturers and resolves a trade dispute with the European Union.

The bill has had its own trouble for the past several days. Senate Republicans were unable to overcome Democratic opposition and move the bill to a floor vote Wednesday afternoon.

Sen. Byron Dorgan, D-N.D., said Democrats might let the bill move if Republicans allow an amendment blocking overtime changes to come to a vote.

The gas line provisions added to the bill include:

• A tax credit for a North Slope natural gas processing plant that would be built along with a pipeline.

• A faster depreciation schedule for the line, allowing bigger tax deductions for line owners in the early years of its operation.

• A tax credit for sales of North Slope natural gas if the wellhead price falls below $1.32 per thousand cubic feet.

John Katz, head of Gov. Frank Murkowski's Washington office, said the decision to put the provisions on the jobs bill was "a good sign."

"It means the leadership is thinking about how to pass important portions of the energy bill," Katz said. That holds true even though Democrats have succeeded in blocking the jobs bill, he said.

"I think you have to separate strategy from tactics," Katz said. "The strategy now appears to be to pass the noncontroversial portions of the energy bill. Unfortunately, the tactic of putting it on the jobs bill may not succeed for reasons unrelated to the gas line."

Of the three items added to the jobs bill, the low-price tax credit "is not expected to survive," Katz said.

President Bush and some House and Senate members have opposed the provision, saying it would disrupt gas markets. As a result, the low-price tax credit would likely be killed by any conference committee appointed to work out differences between House and Senate legislation.

Other incentives for the gas line remain in legislative limbo as long as the energy bill stagnates. Those include an $18 billion federal construction loan guarantee and provisions that would limit judicial reviews and speed permitting.

Those still could be added to other bills, Katz said.

"I think all of them taken together represent a good federal contribution to a successful federal project," he said.

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