House, Senate Republicans Clear Sticking Point on Energy Bill

House and Senate Republican negotiators settled a weeks-long dispute on energy legislation Wednesday, removing a significant stumbling block to the first overhaul of energy policy in a decade.

Completion of an energy bill, one of President Bush’s domestic priorities, had been stalled, largely over differences between the GOP chairmen of the House and Senate tax-writing committees over the lower gasoline-tax revenues that would result from the increased use of ethanol. Ethanol is a corn-based fuel championed by farm-state legislators.

A compromise was reached after Vice President Dick Cheney intervened to end the stalemate between Rep. Bill Thomas (R-Bakersfield) and Sen. Charles E. Grassley (R-Iowa).

Grassley called settlement of the ethanol tax issue “a big step” toward completing work on the bill.

The compromise involved a change in the way gasoline taxes are collected, to ensure that the $2 billion a year goes to the highway fund, while giving ethanol producers a tax credit.

“Congress needs to deliver an energy bill, and conferees are close to getting it done,” said Christin Tinsworth, a spokeswoman for the House Ways and Means Committee.

Monte Shaw, a spokesman for the Renewable Fuels Assn., added, “It’s exciting to see some movement.”

Although a few other tax issues still have to be worked out, drafting of the bill could be completed as early as today. Details of the measure were not made public.

The bill is expected to provide billions of dollars in tax breaks to promote production of oil, gas, coal and nuclear energy and development of alternative fuels, such as solar and wind power; establish rules to ensure the reliability of the nation’s electric grid; provide loan guarantees for a pipeline to bring natural gas from Alaska to the lower 48 states and mandate greater use of ethanol in the nation’s gasoline supply.

The legislation needs to go before a panel of House-Senate negotiators, where it is expected to draw sharp criticism from Democrats who are bitter over being shut out of negotiations.

But with Republicans in the majority in both chambers and anxious to deliver on one of Bush’s priorities heading into the 2004 presidential campaign, it is expected to be approved.

House Majority Leader Tom DeLay (R-Texas) said Cheney “played a major role in shuttle diplomacy between the House and Senate.”

Grassley said that under the agreement reached Wednesday, “the use of ethanol will no longer take money from the highway trust fund.”

The agreement was important because many lawmakers were skittish about supporting the energy bill if increased use of lower-taxed ethanol meant less money for highway projects in their states.

A congressional staffer said the agreement would preserve at least $600 million a year for highway projects in California.