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Oil exports last obstacle to spending bill, Reid says

🕐 4 min read

WASHINGTON – A dispute over ending the 40-year-old U.S. crude oil export ban is the last remaining major obstacle to agreement on a spending bill to avoid a government shutdown, Senate Democratic leader Harry Reid said Tuesday.

It’s up to Republicans to decide whether they’ll agree to environmental measures sought by Democrats in exchange for lifting the export ban, Reid of Nevada said on the Senate floor.

“If Republicans think reducing our carbon emissions and encouraging the use of renewable energy is an unacceptable price to pay, we can move the rest of the package without the oil export ban,” Reid said. “It’s decision time.”

House Speaker Paul Ryan said congressional leaders expect to unveil a $1.1 trillion government spending bill later Tuesday for a possible vote on Thursday. Current government funding ends at the end of the day Wednesday, and the speaker said a short- term extension will be needed to keep the government operating.

“I think we’ve been pretty clear we’re not going to have a shutdown,” Ryan of Wisconsin said during a Politico event in Washington.

Congressional negotiators have been working on the spending bill and an accompanying package of as much as $750 billion in business and low-income worker tax breaks. A resolution has been delayed by disagreements over a variety of policy changes sought by Republicans, including lifting the oil export ban.

“They know if we don’t support it, it won’t pass,” second- ranking House Democrat Steny Hoyer of Maryland said on the talks with Republicans on the spending bill.

President Barack Obama opposes legislation lifting the crude oil export ban but doesn’t rule out letting such a provision survive in a final spending bill, White House spokesman Josh Earnest told reporters. The White House has “acknowledged an omnibus bill will be a compromise,” Earnest said.

Hoyer raised objections to the tax-extension measure even though he said it would make permanent an expansion of the earned income tax credit and the child tax credit — both priorities for Democrats. It also would continue tax breaks for business research and investment as well as charitable contributions, he said.

Still, Hoyer said he opposed the plan because its cost wouldn’t be paid for, citing a “misguided double standard that investments in the growth of jobs and opportunities must be offset, but tax cuts are always free.”

Senate Majority Leader Mitch McConnell, a Kentucky Republican, said lawmakers were making progress.

“That doesn’t mean negotiators have surmounted every obstacle, but it does signal a sign of forward momentum,” McConnell said on the Senate floor.

Sen. Jon Tester, a Montana Democrat, said he wasn’t sure whether an effort to lift the oil export ban would make it into the year-end legislation.

“I honestly don’t know if it’s in or out, and I would tell you if I did,” Tester said in an interview.

The deal being discussed would lift longstanding trade restrictions on U.S. crude oil exports in exchange for extending renewable energy tax credits and allowing the U.S. to pay into an international fund to help developing countries cope with climate change, according to three energy industry lobbyists familiar with the negotiations.

U.S. oil producers, including Continental Resources Inc., Pioneer Natural Resources Co. and ConocoPhillips, have been pressing for an end to the trade restrictions that block exports of most raw, unprocessed crude but don’t restrict foreign sales of gasoline, diesel and other refined petroleum products.

Lawmakers are near agreement on a plan that would extend a production tax credit used by wind power developers for five years, the lobbyists said. A similar five-year extension would be allowed for the solar investment tax credit, which covers 30 percent of the qualified costs associated with those projects, they said. The 50-year-old Land and Water Conservation Fund, which helps pay for land acquisitions and expired in September, also would get a two-year extension.

Sen. Ed Markey, a Massachusetts Democrat, said members of his party are demanding an increased contribution to the global climate fund.

Shares of U.S. clean-power companies jumped Tuesday as negotiators sought to reach a deal on the solar and wind tax measures.

“It’s the most important policy in the country for renewable energy,” Bryan Miller, vice-president for policy at the San Francisco-based rooftop solar developer Sunrun Inc. said in a telephone interview. Along with rules requiring utilities to buy power generated by solar and wind arrays, the credits are “key bricks of the foundation” for both industries. “If you take away either, the foundation crumbles.”

Renewable energy tax credits are “one of the problems” holding up a tax-extender package, said Senate Finance Committee Chairman Orrin Hatch of Utah. He said his goal is to file the legislation tonight.

Leaders are also considering an expansion of a domestic manufacturing tax deduction for refiners that may be harmed by oil exports — possibly increasing it by 3 percentage points and allowing those facilities to count up to 55 percent of their transportation costs toward the deduction, the lobbyists said.

Kevin Book, managing director of ClearView Energy Partners, told clients in a research note Tuesday that he anticipates the final bargain will require “Republican agreement to drop most — but probably not all — of the policy riders that would have constrained Obama administration environmental rules.”

James Rowley, Erik Wasson, Alex Nussbaum, Brian Eckhouse and Justin Sink contributed.

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