What to watch as the Senate considers the reconciliation bill

Now that the bipartisan infrastructure bill is law and the House has passed a $ 1.7 trillion budget reconciliation plan, the Democrats’ agenda is squarely in the hands of the Senate, the senses Joe Manchin and Kyrsten Sinema playing a decisive role.

The chamber will inevitably change – and potentially shrink – the reconciliation bill ahead of its final passage in December if Majority Leader Chuck Schumer (DN.Y.) gets his wish. The House will then have to ratify whatever the Senate produces.

Schumer’s schedule is ambitious. Next month, lawmakers will also need to consider upcoming budget deadlines. The government’s spending authority expires on Friday. The debt ceiling is also a looming concern.

Senator Amy Klobuchar (D-Minn.) Said on ABC’s “This Week” that she was confident the budget reconciliation would be done by Christmas. “I am,” she said. “Senator Manchin is still at the negotiating table, talks to us every day, talks to us about voting rights, pushes this bill forward, reinstates the Senate. He talks to us about this bill.”

Senator Bill Cassidy (R-La.), On the same show after Klobuchar, called it a “bad, bad, bad bill.”

For months, Democratic leaders sought a deal with Senate moderates. Progressives in the House wanted assurances before moving forward. But in the end, West Virginia’s Manchin and Arizona’s Sinema – who seem willing to abandon the process if they don’t get what they want – might have the final say.

Here are the issues to watch out for:

1. VE credits

The House and Senate are also still negotiating tax incentives for electric vehicles, a major focus of Biden’s infrastructure program and which enjoys broad support within the Democratic Party.

However, the House’s inclusion of a bonus credit of $ 4,500 for cars and trucks assembled in the United States by unionized workers remains a notable sticking point.

Manchin, who chairs the energy and natural resources committee, questioned the union bonus. Its home state of West Virginia is home to a manufacturing plant owned by Toyota Motor Corp., which opposes the premium for electric vehicles made by unions.

Representative Dan Kildee (D-Mich.), Who helped draft the union clause, said that although talks are underway, Manchin is not “in a position where he can have it all”.

“It’s a little hard for me to take some of his criticism on behalf of Toyota when the people I represent are making cars that we’ve never been able to sell in Japan,” Kildee told E&E News earlier this month. this month.

“They’re using every tool they can to shut down their markets,” Kildee said. “And all we’re trying to do is say we need a level playing field for workers. Toyota has unions everywhere except the United States.

Toyota’s opposition to EV credit also drew a meteoric reaction from the Center for American Progress and major environmental groups earlier this month.

Kildee declined to discuss what a potential compromise would look like. “We have ideas,” he said. “I would like to know if it is open to some of them.”

House Ways and Means chairman Richard Neal (D-Mass.) Said the EV bonus is just one of many open issues Democrats are hoping to compromise on with Manchin.

“We will give Senator Manchin a chance,” Neal told E&E News earlier this month.

Another obstacle to the availability of EV bonuses is international trade agreements, which generally limit government subsidies favoring domestic products. Already, Mexico and Canada have suggested that the union bonus could go against the United States-Mexico-Canada Agreement (USMCA) – the successor treaty to the negotiated North American Free Trade Agreement. by the Trump administration (Climate wire, November 18).

Kildee, a member of the Ways and Means Committee that oversees trade policy, said he was more concerned about Canada’s concerns over supply chain issues, but dismissed criticism from Mexico.

“Until Mexico fully implements the provisions of the USMCA, it is quite difficult to accept criticism from them,” he said. “I mean, they still have bogus unions so they still have a long way to go before they’re on high moral ground.”

2. Tax on methane

The reconciliation bill’s methane tax – the only punitive measure remaining to reduce greenhouse gas emissions – could also be the subject of debate when it passes the Senate.

Democrats struck a compromise on policy last month at the behest of moderates Manchin and Texas House. The “methane emission reduction program” would combine a charge on emissions from oil and gas facilities, reaching $ 1,500 per tonne in 2023, with $ 775 million in grants and loans to help industry reduce methane .

But it remains a tough pill for Texas moderates representing oil and gas interests to swallow, given an active lobbying campaign against it by the American Petroleum Institute, and it is not yet clear that Manchin has signed on.

Representative Henry Cuellar (D-Texas) said this month that he plans to continue pressuring Manchin to rescind the provision.

The Senate climate hawks are pushing to add a separate carbon tax to the package, but this is another area where they could face a tough climb with Manchin.

3. Drilling reforms

The House-passed reconciliation bill will arrive in the Senate with a provision that would repeal the wording of the Republicans’ Tax Act of 2017 – which was also brought forward through the reconciliation process – which opened the Arctic National Wildlife Refuge to the United States. oil and gas drilling. Democrats are now seeking to close the area to energy exploration in the name of environmental protection.

While Manchin opposed the inclusion of the ANWR allowance in the 2017 measure, in the same year he supported stand-alone legislation sponsored by his close friend, Senator Lisa Murkowski (R-Alaska), who would have had the same effect. It is not yet known where Manchin will be staying this time (Green wire, November 15, 2017).

Manchin, however, expressed sympathy for the increase in royalties for onshore and offshore oil and gas drilling on federal lands for the first time in 100 years, which is also addressed in the House bill (Energy wire, September 16).

The royalty rate increases are part of a series of other major reforms to the federal fossil fuel rental program that would cumulatively generate $ 2.3 billion in new revenue, according to a recent estimate from the Congressional Budget Office (Daily E&E, November 18). This would include establishing a new minimum offer for lease sales and ending the non-competitive lease.

These policy proposals are contested by most Republicans and industry officials, but were substantiated by a report on oil and gas drilling released by the Home Office on Friday.

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