House Passes Energy Bill Amid Cost Concerns

Despite concerns about the bill’s rising cost, the House on Thursday passed legislation sought by President Bush to overhaul U.S. energy policy.

The bill, approved 249 to 183, would provide tax breaks and other financial incentives to promote domestic production of oil, gas, coal and nuclear energy; authorize drilling in a portion of Alaska’s Arctic National Wildlife Refuge; establish rules to ensure the reliability of the electric grids; mandate greater use of ethanol in gasoline; and extend Daylight Saving Time by two months.

The broad legislation also includes $8 billion in tax breaks, mostly for energy producers, and a raft of spending programs, including $8 million to study producing fuel from sugar cane.

In 2003, a similar bill passed the House but died in the Senate. The current bill’s price tag could create problems for the proposal as it goes to the Senate.

Some congressional Republicans who have supported Bush’s efforts to overhaul energy policy have expressed concern about the costs, which are likely to grow once senators add their pet causes and projects.

But the bill’s proponents say prospects for Senate passage have brightened because of high gas prices and last year’s election, which increased the Senate’s GOP majority. Senate leaders plan to begin writing their bill next month.

Bush urged the Senate to move swiftly “so that I can sign a bill into law by August.”

There were some defections on each side in the House, with 22 Republicans voting against the bill and 41 Democrats voting in favor of it. The California delegation split mostly along party lines; all Republicans except Rep. Edward R. Royce of Fullerton voted in favor of the bill and all Democrats except Rep. Joe Baca of San Bernardino voted against it.

“I voted against it because of the pork-barrel subsidies that inflated the cost of the bill,” Royce said.

Many Democrats and some Republicans who oppose the bill said it didn’t do enough to promote energy conservation and wouldn’t achieve its goal of reducing U.S. dependence on foreign oil.

“GOP surely means gas, oil and petroleum,” said Rep. Bob Filner (D-San Diego).

One measure in the bill designed to save energy had bipartisan support: adding two months to Daylight Saving Time. Instead of running from early April to late October, it would begin the first Sunday in March and end the last Sunday in November.

House approval of the energy bill came after the Republican majority narrowly beat back a Democratic effort to strip the bill of a controversial provision to limit the liability of manufacturers of a fuel additive blamed for contaminating water supplies from California to New Hampshire.

The legal shield has been championed by House Majority Leader Tom DeLay (R-Texas), whose state is home to several manufacturers of methyl tertiary-butyl ether, or MTBE. Democrats, including a number of Californians representing districts with MTBE-tainted water supplies, contend that the energy bill would force their taxpayers to pay the cleanup costs.

But the tax breaks and spending measures also have generated concern among some of Bush’s usual Republican allies. And taxpayer watchdog groups have joined environmental groups as among the most vocal critics of the bill.

“Republicans shouldn’t be doing this,” said Rep. Jeff Flake of Arizona, who was among the Republicans who voted against the bill.

Keith Ashdown of Taxpayers for Common Sense, a nonpartisan watchdog group in Washington, called the bill a “package of pork projects stitched together in a calculated political attempt to secure passage.”

His group pegged the bill’s price tag over 10 years at about $92 billion. But the bill’s proponents said it wouldn’t cost anywhere close to that, noting that Congress often authorized money for programs but didn’t always follow through on appropriating it.

Among spending measures in the bill: as much as $1.7 billion to help MTBE producers retool plants to make other gasoline products as the additive is phased out; $1.3 billion for an Idaho nuclear reactor that would produce hydrogen; and $750 million for ethanol producers to construct production facilities. The bill also would provide a federal loan of as much as $125 million to fix problems at an experimental power plant in Alaska.

Bush has described the tax breaks and subsidies for the energy industry as excessive.

During the debate, Democrats brought to the House floor a chart featuring, in large letters, the Bush comment: “With oil at more than $50 a barrel ... energy companies do not need taxpayer-funded incentives to explore for oil and gas.”

“I am torn,” said Rep. Zach Wamp of Tennessee, another Republican who voted against the bill. During the debate he said he backed the president’s goal of overhauling energy policy but wanted a larger share of the tax breaks to go toward promoting energy efficiency and developing alternative energy sources, such as solar and wind power.

Kateri Callahan, president of the Alliance to Save Energy, a Washington nonprofit coalition favoring energy efficiency, said her group hoped to see the Senate include in its bill a “full array of market-friendly tax incentives to encourage use of energy-efficiency technologies,” including tax credits to promote the purchase of fuel-efficient hybrid-electric cars.

One target of criticism is a DeLay-backed provision that would provide $2 billion for research into recovering oil and gas from deep areas in the Gulf of Mexico.

The bill’s proponents say the cost of that and other tax breaks and incentives in the bill should be measured against the need to reduce U.S. dependence on foreign oil and prevent fuel price spikes and supply shortages.

Without financial incentives to promote drilling in high-risk deep water in the Gulf of Mexico, Rep. Bobby Jindal (R-La.) said, pressure might increase to undo a long-standing moratorium on new drilling in other regions, such as off the California coast.

“Given that we need domestic sources of energy, it makes sense to give incentives in a part of the country where the local governments are welcoming that activity,” Jindal said.

Among the items that angered Flake was $8 million to study producing fuel from sugar cane, advanced by Hawaii’s congressmen.

“The stated purpose [of the energy bill is] to bring down the cost of energy,” he said. “And here we are employing programs that will simply make you pay 1.) more at the pump and 2.) more in taxes because you are supporting this kind of subsidy.’

Rep. Neil Abercrombie of Hawaii, one of the Democrats who supported the bill, said the sugar cane project would reduce U.S. dependence on foreign oil. “If it fulfills its promise, everyone in Hawaii will benefit through a stronger economy, a cleaner environment and lower gas prices,” he said.

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Bill highlights

Major provisions of the energy bill passed 249 to 183 by the House:

* Open the coastal plain of the Arctic National Wildlife Refuge in Alaska to oil drilling.

* Provide $8 billion in tax breaks over 10 years, mostly for oil, gas, nuclear, coal and electric utilities.

* Provide product liability protection for makers of MTBE against lawsuits stemming from the gasoline additive contaminating drinking water.

* Require refiners to use 5 billion gallons of corn-based ethanol by 2012, a 20% increase over what the industry is expected to produce this year.

* Expand Daylight Saving Time by two months. It would start on the first Sunday in March and end on the last Sunday in November.

* Require mandatory reliability standards for electric power lines, instead of industry self-regulation.

* Give the Federal Energy Regulatory Commission clear authority to override states and local officials in locating liquefied natural gas import terminals.

* Provide $2 billion in royalty relief to oil and gas industry over 10 years for research on ways to recover oil and gas from deep waters of the Gulf of Mexico.

* Provide a tax credit of as much as $2,000 for homeowners who install more energy-efficient windows, doors and insulation.

Source: Associated Press

Los Angeles Times