Texas tycoon, non-profit team up on state energy project

WASHINGTON — As T. Boone Pickens lobbies Congress to enact subsidies for the natural gas industry, the Texas oil and gas tycoon also is bringing his zeal for natural gas vehicles to Connecticut in a deal involving a non-profit corporation, two taxi companies and millions in stimulus dollars.

Clean Energy Fuels Corp., a company founded by Pickens, will finish construction on three new natural gas fueling stations in Connecticut this summer. As part of the project, two major Connecticut taxi companies also will soon have 110 natural gas-powered vehicles each, replacing almost their entire fleets of gasoline-fueled cabs.

“This is our entry into the Connecticut market,” said Mark Riley, general manager of Clean Energy’s eastern region.

That entry was made possible, in large part, by $13.2 million in federal stimulus money. A Connecticut nonprofit organization, the Connecticut Clean Cities Future Fuels Project, teamed with Pickens’ Clean Energy Corp. and the two taxi companies to apply for the stimulus funds.

“Once we get enough stations and infrastructure out, then the return on investment will be such that we won’t need federal funding to make it work,” said Lee Grannis, who helped win the federal funding and works as the coordinator for Greater New Haven Clean Cities. “But right now, we do.”

Grannis hit on the crux of a fierce lobbying battle unfolding in Washington right now over legislation, sponsored by Rep. John Larson, D-1st District, and others, to subsidize the natural gas vehicle industry.

The fight has pit some of the nation’s most influential conservative groups against Pickens, Larson, and more than 180 other House members, Democrats and Republicans alike, who say natural gas is America’s ticket to energy independence.

“Our bill has tremendous bipartisan support because it attacks head-on the national security threat of our OPEC oil dependence and the fiscal irresponsibility of sending nearly $500 billion a year out of this country for foreign oil,” said Jay Rosser, a spokesman for Pickens and the so-called “Pickens’ Plan.”

The other side’s view?

“It’s corporate welfare, plain and simple,” said Steve Ellis, vice president of Taxpayers for Common Sense, a fiscal watchdog group that has joined with 16 other organizations to oppose the bill.

He and others have noted that Pickens stands to benefit financially from the legislation. “Is he a big booster of natural gas? Absolutely,” said Ellis. “And does he have a big financial interest in it? Absolutely.”

Larson and others dismissed the conservative criticism and said it was the opponents who had a financial stake in this fight, including Charles and David Koch, wealthy brothers who own Koch Industries Inc., an oil refinery business.

“I’m shocked and appalled that we would find that the Koch brothers have been funding organizations who previously were for tax credits [and] who now, lo and behold, have had a change of heart,” Larson said.

The Kochs are generous conservative donors and have funded at least one of the groups, Americans for Prosperity, that has lined up in opposition to the natural gas bill. They’re trying to “pull out the stops” to kill the legislation, Larson said.

Spokesmen for both Pickens and the Kochs have said their interest in the natural gas bill is driven by political and economic philosophies, not personal financial interests.

The proposal at issue is the New Alternative Transportation to Give Americans Solutions Act, a measure sponsored by Larson, the chairman of the House Democratic Caucus, and John Sullivan, an Oklahoma Republican, among others.

It would provide tax breaks for the use of natural gas as a vehicle fuel, the purchase of natural-gas vehicles, and the installation of natural-gas refueling stations. For example, consumers and businesses would get a tax break of between $7,500 to $64,000, depending on the weight of the vehicle, for buying a natural gas truck or car.

The idea is to replace diesel and regular gasoline with natural gas, making it a “bridge” fuel to wean the U.S. off foreign oil during a transition period, until policymakers put in place a more comprehensive energy policy that exploits wind, solar and other sources. Larson said the measure bill would give natural gas a boost “that provides a foundation from which to build an energy policy.”

Although there are no natural gas wells in Connecticut, there are a half-dozen natural gas pumping stations in the state–and soon there will more. Clean Energy Fuels Corp., which Pickens first founded as Pickens Fuel Corp., is currently finishing work on a natural gas pumping station at Metro Taxi in West Haven and a second station Yellow Cab in Bloomfield.

The West Haven station will be done by the end of this week. Clean Energy expects to complete work on the Bloomfield station and a third pumping facility in Windsor Locks later this summer. Such projects would get a major boost if the Larson-Sullivan bill becomes law.

“We could see tremendously more penetration in the market with the incentives of the Natural Gas Act,” said Riley, of Clean Energy, in which Pickens now has about a 40 percent stake. “We need the Natural Gas Act and these incentives to… assist the industry in ramping up the infrastructure and increasing the number of [natural gas] vehicles on the road gas. And once we get 5 to 7 years down the line, we’ll see where we stand.”

The Larson-Sullivan bill had seemed on a fast track to passage, at least in the House. But in recent weeks, conservative groups have mobilized in opposition. From the Heritage Foundation to the Club for Growth, the bill has come under attack from critics who say that Congress should not provide federal tax subsidies that benefit one particular interest in the energy sector.

Larson’s bill would “provide billions of dollars in tax incentives for the production and use of natural gas vehicles,” Chris Chocola, the Club for Growth’s president, wrote in a recent blog item. Such tax breaks “destroy the system of free enterprise,” he wrote.

“We’re not against natural gas by any means,” Chocola, a former Republican congressman from Indiana, said in an interview. “We just don’t think you should have market-distorting credits picking winners and losers.”

Ellis, of Taxpayers for Common Sense, said the bill is a slippery slope. “Right now we’re all talking about trying to simply the tax code and roll back subsidies,” he noted. “This goes in the exact opposite direction.”

He found an irony in  that Democrats like Larson, who have railed against oil industry subsidies, are pushing a fresh set of “special interest carve-outs” for the natural gas industry. And he dismissed the suggestion by natural gas officials like Riley that after a few years, they might not need the subsidies and would let them expire.

The bill is “trying to foist this natural gas vehicle market” onto the American public, and once the breaks are on the books, the industry will work to keep them there, Ellis said. “When you add some of these special-interest provisions to the tax code, they are very insidious,” he said. “It’s almost impossible to eliminate these.”

As the Club for Growth and other groups ramped up their opposition, a handful of House Republicans who had signed onto the bill quickly withdrew their support. For example, Rep. Todd Akin, a firebrand Missouri conservative running for the Senate, said he’d taken a closer look at the legislation and decided he couldn’t stomach the tax breaks.

Proponents of the bill dismiss the defections, noting only a handful of Republicans have taken their names off the legislation so far.

“Despite all this pressure from the right to get out of the bill, we’ve lost just four people,” noted Rich Kolodziej, a spokesman for Natural Gas Vehicles for America, an industry lobby group. And other lawmakers have added their names, bringing the number of co-sponsors to 190. Kolodziej said he expects a Senate version to be introduced soon.

He said the conservative argument that the U.S. should defer to the free market when it comes to the nation’s energy market is off-base.

“There is no free market for transportation fuels,” Kolodziej said, noting that about 96 percent of the transportation fuel Americans now use is petroleum. “And petroleum is not a free market. It’s controlled by OPEC.” Letting the so-called “free market decide,” he said, is essentially ceding control to OPEC.

Larson said the conservative opposition wouldn’t stop the bill’s momentum. He predicted that it would soon have 218 sponsors: the number needed for House passage and a threshold that could catapult it to a vote.

But Ellis said that while the legislation “looked like a juggernaut for a while” as more and more lawmakers signed on, the tide has turned against it.

“It’s increasingly hard for lawmakers to defend the position that they are for eliminating wasteful spending and subsidies–and then on the other hand giving a handout to the natural gas industry,” he said. “It’s not going to get over the finish line.”