Cantor Weighs Tying Debt Ceiling to Renewable Fuel Bill: Taxes
House Majority Leader Eric Cantor may attach legislation to alter renewable fuel standards to a package to raise the U.S. debt ceiling.
The House Energy and Commerce Committee is considering options for revising the standard, a part of the 2007 energy law that requires petroleum refiners and importers to blend billions of gallons of renewable fuel into the motor fuel supply. Cantor, a Virginia Republican, is weighing whether to tie changes to must-pass legislation this fall, spokeswoman Megan Whittemore told Bloomberg BNA in an e-mail.
The rules have been condemned by groups representing big companies like Chevron Corp. (CVX) and Exxon Mobil Corp. (XOM) The standards would join a growing list of Republican ideas for items they want tie to approving an increase in the debt ceiling in mid-October. Others include approving the Keystone pipeline and delaying or defunding the president’s health-care law.
The standards, expanded by the Energy Independence and Security Act of 2007, require 36 billion gallons of ethanol or renewable fuel in the nation’s fuel supply by 2022.
Possible changes include lowering the requirement for advanced biofuels. Committee members’ staff will have ideas for lawmakers when they return this month, said Republican Representative John Shimkus of Illinois, one of four committee members leading the revision efforts.
Democrats and Republicans are arguing over everything from tax policy and corporate rates to funding health-care exchanges ahead of the next round of budget fights in Congress. Putting not just Keystone but broader energy policy into the mix may complicate an already tense situation.
A full repeal of the standard, which requires 16.55 billion gallons of renewable fuels into the nation’s fuel supply in 2013, is unrealistic, Shimkus said. The Democrat-controlled Senate and President Obama wouldn’t support such a move.
While a spokeswoman for the House Energy and Commerce Committee said a timetable for overhaul legislation has yet to be established, attaching whatever bill emerges from the committee to legislation needed to increase the debt ceiling would essentially fast-track the bill.
The Treasury Department said last month the federal government will hit its $16.7 trillion debt ceiling in mid-October, exhausting the government’s ability to borrow.
Republicans are trying to tie their others ideas to three fiscal deadlines coming by the end of the year: to raise the nation’s debt limit; fund the government for the rest of fiscal 2014; and replace about $1 trillion in across-the-board spending cuts, known as sequestration.
Among the “immediate concerns” likely to be addressed by those efforts is the volatility of credits used to show compliance with the standards known as known as Renewable Identification Numbers, or RINs, said Shimkus, chairman of the Subcommittee on Environment and the Economy.
A RIN is a number assigned to a batch of biofuel to track its production. The Energy Information Administration, the Energy Department’s statistical arm, said in July that prior to 2013, RINs had “consistently ranged” between $0.01 per gallon to $0.05 per gallon, before climbing to highs of about $1.00 per gallon in early March.
That’s because the market expects increases in the cost of blending biofuels to meet the statutory volumes, the government said.
Shimkus also said he expected any new measure to address the “blend wall,” the point at which the standard requires that the amount of ethanol mandated to blended into the gasoline supply exceeds 10 percent, the maximum approved level for all vehicles on the road.
Cantor broached the idea in a July meeting with executives from the petroleum industry, although no commitments were made.
“The Majority Leader discussed a number of options to fix this issue, and one option was if we came up with a good bipartisan reform agreement out of the Energy & Commerce Committee, then possibly moving it in a debt ceiling package or other must pass legislation,” Whittemore said.
Groups including the American Petroleum Institute, which represents companies such as Marathon Petroleum Corp. (MRO), Phillips 66 (PSX) Co., Chevron and Exxon Mobil, have pushed for repeal of the standard, arguing it is fundamentally flawed and unworkable.
Senator Barbara Boxer, the California Democrat who is chairman of the Senate Environment and Public Works Committee, also plans to hold hearing on the renewable fuel standard this fall. She told BNA that “appropriate oversight” is needed.
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