Quiet Little Wars Rage Over Omnibus Budget Bill

THIS week, a House-Senate conference committee will begin the Herculean task of forging a compromise "Omnibus Budget Reconciliation Act of 1993."

Most of the public's attention will focus on the "reconciliation" part of the title - an attempt to bring federal spending and revenues in line with the president's goal of $500 billion in deficit reduction over five years. But arguably just as important is the word "omnibus," which points to the vast variety of measures included in the legislation. The House-Senate conferees will have to resolve major differences not only on energy taxes and Medicare cuts but also over bovine growth hormones and tax bre aks for Indian reservations.

One of the more-heated, but little-noticed, conference battles will be over a provision that has triggered a lobbying war between rural electric cooperatives and city-owned utilities. The measure, inserted into the bill by Rep. Glenn English (D) of Oklahoma, would prevent cities from staging hostile takeovers of rural electric co-op facilities. The federal government already prevents hostile takeovers of rural sewage and water services.

The issue is an "emotional hot-button" for many of the nation's 1,000 rural electric co-ops, says Richard Larochelle, a lobbyist for the National Rural Electric Cooperative Association in Washington. Under state provisions, many cities have annexed adjoining territory and then used "eminent domain" laws to take over electric facilities originally set up by customer-owned co-ops with the help of federally subsidized loans.

"The co-ops work hard to develop rural areas ... where no municipal utility company is willing to invest," Mr. Larochelle says. "Then a city comes in and grabs the developed area for itself. It violates the idea of fairness. It's an arrogant use of government power."

Not surprisingly, municipal utilities see the situation in a different light. They argue that the federal government should not preempt 50 state statutes that regulate these utilities' territorial rights.

"What's being attempted is that co-ops would like to freeze the territory to avoid competition from other utilities," says Larry Hobart, executive director of the American Public Power Association, which represents 1,700 municipal utilities. "But the country is becoming more urban. Annexations are a natural response to the desire of people on the fringes of municipalities to get city services."

That the territorial provision was included at all in the House reconciliation bill is a tribute to one congressman's ability to stretch the parliamentary rules. Normally a reconciliation bill is only supposed to meet deficit-reduction goals. It's not designed to conduct substantive legislative business.

BUT Representative English got around that obstacle with an ingenious argument: Rural electric co-ops receive federal subsidies ($117.3 million this year). Annexation of their facilities by cities imperils their ability to pay back government loans. Therefore the provision will save the government money - although there is no evidence that any co-op has ever defaulted on a loan because of a hostile annexation.

The provision sailed through the House because opponents say they were caught off guard by English's last-minute amendment. But the public utilities mobilized a campaign to convince the Senate Agriculture Committee not to include the measure in its reconciliation bill. "The munis did a pretty good job of scaring the daylights out of the folks in the Senate," says one House staff member, by arguing that the territorial provision would harm publicly owned utilities.

Now it's up to a handful of House-Senate Agriculture Committee conferees to decide the fate of the legislation. It will not be an easy choice. Both rural co-ops and municipal utilities have good arguments on their sides - and plenty of political muscle. But if one side has an advantage, it's definitely the co-ops.

The National Rural Electric Cooperative Association is run by Bob Bergland, a secretary of agriculture in the Carter administration who is close to top administration officials. The co-ops spend about $450,000 annually on a nationwide advertising campaign to build goodwill. And their political-action committees, called ACRE, donated $648,879 to congressional candidates during the 1991-92 election cycle, including $10,000 donations to each of nine senators and $4,200 to English.

Co-op officials deny their contributions buy votes.

"I don't believe senators are for sale for $10,000," scoffs Wallace Tillman, chief counsel of the co-op association. Nevertheless, the group's assiduous cultivation of Congress has yielded tangible results. President after president, the latest being Bill Clinton, has called for the elimination of the co-ops' federal subsidies, which date from the New Deal. But Congress continues to approve the subsidies, albeit in reduced form.

The co-ops' association has told members to call, write, and visit their lawmakers, and the American Public Power Association has done the same. Although the latter's political-action committee donated only $32,550 during the last election, the public utilities can call on the political influence of mayors and other elected officials who run municipal power companies.

Nobody knows which interest group will triumph behind the closed doors of the conference committee. "Members are friendly to rural co-ops and public utilities," says Alan Richardson of the public utility association.

"This forces members to choose between two friends. It's a tough political decision," Mr. Richardson says.

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