Drilling bill is expected to clear House

As the curtain prepared to fall on the Republican-controlled Congress, GOP leaders on Thursday pushed for approval of what is likely to be the last major pro-drilling bill during the Bush presidency -- a measure that would open a large swath of the Gulf of Mexico to energy exploration.

The drilling provision was part of a $45-billion tax and trade bill that was expected to pass the House today and be sent on to the Senate as the lame-duck Congress wrapped up business.

The bill includes a trade agreement with Vietnam -- another White House priority -- and renewal of popular tax breaks. Among these are a tax credit for research and development costs that California Gov. Arnold Schwarzenegger called “an essential component” of the state’s efforts to nurture innovative companies.

Most of the tax breaks and the oil drilling measure were sought by business groups, giving the GOP a last opportunity to please an important constituency before Democrats take control of Congress in January.

The energy exploration provision was more modest in scope than a measure the House approved this year that would have relaxed the decades-long ban on new drilling off much of the U.S. coasts, including the Pacific.

The scaled-back provision would allow new production in about 8.3 million acres in the Gulf of Mexico -- an area thought to contain more than 1.2 billion barrels of oil and 5.8 trillion cubic feet of natural gas.

The more sweeping drilling measure was driven by political anxiety over high energy prices, but it stood little chance of clearing the Senate. House Republicans came under pressure from business groups to rein in their ambitions and accept the drilling provision that dealt solely with the Gulf Coast before adjourning for the year.

Environmentalists opposed the legislation, arguing that it would do little to lower energy prices or wean the U.S. from dependence on foreign oil. The Sierra Club called the drilling provision “one last gasp for Big Oil.”

The measure was strongly supported by Gulf Coast Republican and Democratic lawmakers, whose states would receive a large chunk of government royalty payments from businesses in return for permitting the drilling off their shores.

The measure was tucked into the bill that would extend the tax breaks and establish the trade pact with Vietnam as part of an effort to win majority backing for all the items in one fell swoop. The legislation also contains healthcare-related proposals.

The bill is “a bipartisan compromise that is ‘must-do’ work in Congress this year,” said Rep. Bill Thomas (R-Bakersfield), who as chairman of the Ways and Means Committee helped draft the catch-all approach. “It will prevent tax increases on millions of Americans and improve the Medicare program. “

Renewal of the research and development tax credit, which expired last year, has been a priority for the technology industry.

The credit saves business about $7 billion a year and is considered vitally important to Silicon Valley. High-tech companies have lobbied hard to extend and expand the credit, arguing that without it, U.S. firms’ ability to compete globally is hampered.

The legislation would extend the existing credit retroactively for research and development costs incurred this year, and then expand the credit to make it available to more companies.

The bill also would extend tax deductions of as much as $4,000 a year for parents paying college tuition and a credit covering up to $250 for classroom supplies that teachers pay for out of their own pockets.

The bill would keep at current levels the government payments to about 700,000 doctors who treat seniors through the Medicare program. Without that provision, payments to the doctors would drop 5.1% in 2007.

The American Medical Assn. has been lobbying hard to block the cut from taking effect.

In other pending business, Congress today is expected to take up a civilian nuclear cooperation deal with India, another Bush priority.

But no action was expected on a raft of individual spending bills needed to fund most government agencies during the fiscal year that began Oct. 1. Those offices are operating under a stopgap spending measure, and the Republicans who control the House and Senate have decided to let next year’s Congress -- and its Democratic leaders -- hammer out final agreements on the new funding packages.

Democrats did not pass up the opportunity to scold the GOP over this move.

“They are going to leave a mess as they go out,” said incoming House Speaker Nancy Pelosi (D-San Francisco).

She added: “And as they go out the door, they are going to validate the decision of the American people that change was necessary.”

richard.simon@latimes.com

jim.puzzanghera@latimes.com