Senate passes truncated extenders bill before adjourning for year 

In one of its last items of business before adjourning for the year, the Senate last night reinstated a bushel of expired tax incentives, including the production tax credit for wind energy – for two weeks.

Following passage of the so-called tax extenders bill, the Senate confirmed dozens of nominees for key administration and judicial posts – including at the Interior and Energy departments (see related story). After that, the Senate adjourned for the year, joining the House, which ended its session last week. Congress returns Jan. 6.

The extenders outcome was well short of the goals of the lead tax-writers on both sides of the Capitol, who were ultimately unable to agree on anything more ambitious. So lawmakers landed on the last-ditch, better-than-nothing-but-not-much-else punt to allow taxpayers to claim the breaks for this calendar year.

The Senate cleared H.R. 5771 on a 76-16 vote. When the House sent over the extenders bill, it tacked on separately passed legislation to allow people with disabilities to establish tax-exempt savings accounts, a provision partially offset by a 9-cent-per-gallon fuel tax increase supported by the barge industry to boost the Inland Waterways Trust Fund (E&E Daily, Dec. 5). President Obama is expected to sign the legislation as soon as today.

Sen. Ron Wyden (D-Ore.), the outgoing chairman of the Senate Finance Committee who voted against the bill, lamented that he was unable to secure passage of his separate proposal to extend the more than 50 breaks through the end of 2015, which he said would provide an adequate cushion to enact tax reform legislation next year that would do away with the temporary provisions altogether.

Now, he says, attention will be divided next year between tax reform and the likely need for another extenders bill, which he also said would likely usher in the end to the production tax credit. The credit primarily boosts wind and a handful of other renewable energy sources. It enjoys bipartisan support, mostly from Republicans in windy states, but has become a target of conservative groups linked to the Koch brothers, which view it as a giveaway to a politically favored industry.

“If you look at all the internal debate within the Republican Party alone, I think – and this is one of the most troubling aspects of this – this puts issues like wind in a very tough spot next year,” Wyden told reporters after the extenders vote yesterday. “You’ve got a Republican caucus that for the most part has been opposed to the wind PTC. There’s been discussion of various kinds of transitions and the like. What I know is politically it is going to put them in a real spot.”

Sen. Michael Bennet (D-Colo.), who was chairman of the Finance Subcommittee on Energy, Natural Resources and Infrastructure this year, called passage of the truncated bill “another low point in the world of dysfunctional Washington politics” and pointed to its expected lack of benefit to the wind industry in particular.

“This bill does little to help families and businesses in Colorado, particularly our wind energy industry. Waiting until now to extend the wind PTC – and only for two weeks – generates nothing but more uncertainty for these businesses that employ thousands of Coloradans,” Bennet said in a statement. “This tax credit has been an economic driver for Colorado’s diverse energy industry, but Congress continues to inflict more economic damage by not giving businesses predictability to plan for the future.”

Developers have said that because projects take months to plan, they would be unable to benefit from a credit extension only through the end of this year. Still, the nonpartisan Joint Committee on Taxation says the credit will spur some activity, estimating that the $23-per-megawatt-hour incentive would cost the government more than $6 billion in lost revenue over the next decade.

Critics say the provision is too costly and benefits wind developers that no longer need it.

“We look forward to working with the new Congress to unwind this culture of cronyism that is embodied by handouts like the wind PTC,” said Thomas Pyle, president of the American Energy Alliance, which has been leading opposition to the credit. “The new Congress should resist Big Wind’s enticements and reject any attempt to extend the wind PTC.”

Last night’s vote was the coda to a year of negotiations over the more than 50 tax provisions, which also include incentives for biofuels and energy efficiency along with the PTC. Wyden initially put forward a proposal to extend all the breaks through next year, but his House counterpart, Ways and Means Chairman Dave Camp (R-Mich.), preferred an approach that would have made permanent a handful of incentives such as the research and development tax credit while eliminating most of the rest of the extenders.

Camp and Senate Majority Leader Harry Reid (D-Nev.) had reached a tentative agreement before Thanksgiving to make 10 credits permanent, extend the others through next year and phase out the PTC by the end of 2017. But objections from the White House and liberal Democrats such as Wyden scuttled the deal before it could formally be released (Greenwire, Nov. 26).

It’s possible that the PTC phaseout could return next year. It has support from senior Republicans including Sens. Chuck Grassley of Iowa and John Thune of South Dakota, the third-ranking member of GOP leadership. But it also has some powerful opponents.

“Maybe there will be support for a phaseout, but I think you’ve seen there’s a lot of political muscle behind the result tonight, which is to end the wind credit in two weeks,” Wyden said. “I think it’s going to be hard to get it back.”

Before adjourning sine die, bringing the 113th Congress to a close, the Senate unanimously passed a few minor bills:

• S. 1800, the “Bureau of Reclamation Transparency Act,” would require biannual reports on repair needs for the nation’s federally owned dams and other infrastructure (E&E Daily, Dec. 12, 2013). The bill was introduced by Sens. John Barrasso (R-Wyo.) and Brian Schatz (D-Hawaii).

• S. 684, the “Mni Wiconi Project Act Amendments,” introduced by retiring Sen. Tim Johnson (D-S.D.), would facilitate completion of the rural water supply system for which it is named.

• S.Res. 564, from Sen. Sherrod Brown (D-Ohio), honors conservation on the 100th anniversary of the passenger pigeon’s extinction. The resolution notes that populations of the bird once numbered above 3 billion, “with flocks so large that they could darken the skies for hours,” but that it went extinct due in part to a combination of “unregulated market hunting in the 19th century and deforestation.”