Landmark Bill on Energy OKd : Congress: Restructuring of the nation's policies emphasizes nuclear power and alternative fuels. President's approval is expected despite tax increases.


Congress approved far-reaching energy policy reforms Thursday, sending to the President a bill designed to increase the use of nuclear energy and spur the development of alternative and renewable fuels.

Two years in the drafting, the massive rewrite of the nation's energy policies cleared the last in a long and daunting series of hurdles when the Senate voted, 84 to 8, to halt a filibuster by senators from Nevada. The Nevadans bitterly objected to a provision in the bill easing obstacles to construction of a high-level nuclear waste dump in their state.

Over that protest, the Senate subsequently approved the bill by voice vote and sent it to the White House, where President Bush was expected to sign it despite the fact that it contains several tax increases.

Opponents of the legislation quickly countered that if Bush signs the bill he will break his "no new taxes" pledge a second time.

To finance energy development, the bill raises the tax rate on ozone-depleting chemicals, increases the withholding tax on gambling winnings from 20% to 28% and raises the amount that banks withhold on interest earnings from 20% to 31%.

It also imposes tighter reporting rules on seller-financed mortgages and eliminates the travel expense deduction for individuals who are away from home on a job for more than a year.

Attempting to avoid a tax controversy over a bill that enjoys widespread and strong support from both business and labor groups, Republican senators denied that the revenue provisions amounted to a tax increase.

The bill contains "tax restructuring," not tax increases, argued Sen. Malcolm Wallop (R-Wyo.), who noted that the increases had been offset by other tax deductions and incentives aimed at stimulating conservation and energy research. One such provision, for instance, nearly triples the tax deductibility of company-provided allowances to employees who commute to work by mass transit from $21 to $60 per month.

"Overall, this bill is revenue neutral," Wallop said.

"This bill is revolutionary," added Senate Energy Committee Chairman J. Bennett Johnston (D-La.), the legislation's chief sponsor. "This is the first time we've had a bill that emphasizes domestic resources of all kinds, the first time we've had a bill that emphasizes conservation."

Although it touches on virtually every sector of the energy industry, the main thrust of the 1,300-page bill is to decrease the use of oil, lessening America's dependence on imported petroleum by encouraging conservation and the exploitation of other energy sources, such as natural gas, geothermal power and solar energy.

The first cover-to-cover rewrite of the nation's energy policies in more than a decade, the legislation also seeks to revive the moribund nuclear energy industry and open up the monopoly-dominated electric utility industry to greater competition with the creation of a new class of independent, wholesale electricity suppliers. "With this bill, we will go from a monopoly market to a competitive market" in the utility industry "in one big step," Johnston predicted.

Despite such grandiose declarations, the energy bill as it finally emerged from Congress was a much more modest version of the legislation that was first introduced two years ago with the declared aim of drastically lowering the nation's dependence on Persian Gulf oil. To ensure passage, sponsors were forced last year to drop the original bill's two most hotly contested provisions calling for oil exploration in an Alaskan wildlife reserve and higher fuel efficiency standards for cars.

A moratorium on offshore oil drilling and several other conservation-oriented provisions also were dropped in conference, prompting environmentalists to withdraw support for the bill.

Democratic Sens. Richard H. Bryan and Harry Reid of Nevada voted for the bill when it first passed the Senate but turned against it when Johnston persuaded House and Senate negotiators to add a provision that would relax restrictions on radioactive emissions from a nuclear waste disposal site that the Energy Department wants to locate at Yucca Mountain, 100 miles northwest of Las Vegas.

"What we are talking about here is profit, money and greed, not public safety," argued Bryan, who said the relaxed standards would lead to increased cancer deaths that could be avoided if the government and the nuclear power industry agreed to pay the estimated $3.2 billion to meet the stricter standards.

The bill will expedite the construction of nuclear plants by streamlining the licensing procedures, conserve energy by setting better efficiency rules for most electrical appliances and spur the development of alternative fuels.

The Energy Package

Here are the key provisions of the energy bill sent to President Bush Thursday:

Streamlines licensing of commercial nuclear power plants, allowing a "one stop" permit for construction and operation.

Establishes new energy efficiency standards for lights, electric motors, shower heads and other products.

Calls upon states to develop building codes and banks to develop mortgages that promote energy efficiency.

Creates independent power producers to compete with utilities in the wholesale production of electricity, resulting in lower retail prices.

Requires federal and private fleets to buy more vehicles that run on fuels such as natural gas or on electricity; also tax breaks for the purchase of alternative-fuel vehicles.

Expands the government's Strategic Petroleum Reserve and makes it easier to use reserves to counter sharp price increases caused by severe supply interruptions.

Provides tax breaks for development of renewable energy sources such as solar and wind power to better compete with fossil fuels.

Gives independent oil and gas producers a $1.1-billion tax break over five years.

Removes restrictions on Canadian natural gas.

Source: Times wire services

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