GOP unveils bill tying drilling royalties to highway funding

House Republicans on Tuesday unveiled a five-year, $260 billion infrastructure bill that is drawing fire from some for its provisions to expand oil-and-gas production and use the resulting royalties to pay for some of its costs.

The House GOP bill would reauthorize spending on highway and mass-transit programs for five years from the Highway Trust Fund, which finances the surface-transportation projects. The fund could go dry in 2013, according to the Congressional Budget Office, because incoming revenues haven’t kept up with spending, leaving a nearly $60 billion gap that must be covered in Rep. John Mica’s bill to keep spending at current levels. The bill proposes expanding oil-and-gas production into new areas offshore and on some federal lands and using resulting royalties to help cover some of the costs.

The bill not only provides five years of certainty and funding to create jobs but also is fully paid for, Republicans told reporters outside the Capitol.

“The American people are counting on this as our jobs bill,” said Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee.

But critics are unloading on the bill’s oil-and-gas provisions. Senate Environment and Public Works Committee Chairwoman Barbara Boxer, D-Calif., has warned against including “controversial items” such as expanded drilling in a surface-transportation bill.

Royalties from expanded oil-and-gas production not only would take time to trickle in, but also would cover less than 10 percent of the projected Highway Trust Fund gap, said Deron Lovaas, federal transportation policy director at the Natural Resources Defense Council, an environmental group.

“Not only is this scheme the worst-ever proposed scheme for funding transportation in terms of environmental damage, but it’s entirely impractical and it won’t work,” he told reporters by phone Tuesday.

Republicans today insisted the bill is fully paid for but didn’t go into specifics. Asked by Fuel Fix to elaborate in response to the criticisms, Mica said other House committees would handle the issue. The House Natural Resources Committee will take up the energy-related provisions on Wednesday.

Mica said he hoped the bill could come to the House floor sometime in February, ahead of the March 31 expiration of surface transportation programs. Since 2009 the U.S. has operated on a series of short-term extensions of a previous law.

Complicating matters further politically is that House Speaker John Boehner, R-Ohio, has said language to approve the Keystone XL oil pipeline would go into the House bill if the project isn’t otherwise approved before the chamber moves that legislation.

The Senate Environment and Public Works Committee unanimously cleared its own surface transportation bill last fall. The bill, which would cost $109 billion over two years, passed with such strong support because it avoids controversy, Boxer said.

She criticized Boehner for considering a provision that could derail legislation that, in her estimation, could save 1.8 million jobs and add an additional 1 million.

“Speaker Boehner has to explain to the American people why he would jeopardize 2.8 million jobs by putting such a controversial amendment in there,” Boxer told reporters Tuesday in the Capitol. “It’s not related to the bill … It doesn’t make any sense.”

Senate Majority Leader Harry Reid, D-Nev., said the Senate Finance Committee will try to close a projected $12 billion gap in Boxer’s bill next week.

He also told reporters he flatly opposed any Keystone XL measures as they’re currently written because the oil could leave the U.S.

“If they want to have Keystone, I’ll take a look at it if the oil is not sold to other countries,” Reid said. “But until that’s the case, I think I and most Democrats feel the same way.”

Boxer rejected the notion the House bill would jeopardize her chamber’s bill.

“We’re not changing it, it’s already been out there, it’s going to be paid for next week, so I’m not fearful that it would collapse,” Boxer said.

After the chambers pass their respective bills, House and Senate leaders would have to confer to resolve the differences. Some of the controversial oil-and-gas provisions in the House bill — including a provision to open some areas of the Arctic National Wildlife Refuge — have long been opposed by environmental groups and liberal Democrats.

Asked whether his bill’s drilling provisions would survive a so-called conference committee, Mica said: “I don’t know, I haven’t sat down with them yet, but we’re going to work with folks on creative ideas.”

Mica said the House and Senate bills share a lot of similarities, including provisions that consolidate and eliminate some federal programs and speed up the process for approving projects. They both also expand a federal program that provides credit assistance for transportation projects.