Republicans Agree on a Sweeping Energy Bill

Times Staff Writer

Congressional Republican negotiators agreed Friday on the first overhaul of national energy policy in more than a decade, bringing President Bush closer to a victory on a top priority heading into the 2004 presidential campaign.

The agreement bears the fruit of a nearly three-year effort launched by Bush during the California energy crisis to produce comprehensive energy legislation. The approximately 1,700-page measure, written behind closed doors, includes a number of the recommendations made by the 2001 White House energy task force headed by Vice President Dick Cheney.

Among the bill's major provisions are tax breaks worth between $16 billion and $20 billion to promote domestic production of oil, natural gas, coal and nuclear energy and encourage energy conservation and development of alternative sources such as wind power.

The bill drops President Bush's proposal to open Alaska's Arctic National Wildlife Refuge for drilling.

For lawmakers who wanted to be seen as doing something about last summer's Northeast blackout, there are new rules aimed at strengthening the electric grid. The bill includes incentives for building a pipeline to transport Alaskan gas to the lower 48 states. And it would mandate greater use of corn-based ethanol in the nation's gasoline supply, a popular provision among farm-state lawmakers.

Sen. Pete V. Domenici (R-N.M.), who presided over the negotiations as chairman of the Senate Energy and Natural Resources Committee, said he hoped to see the bill clear Congress and reach the president's desk before Thanksgiving.

The legislation's approval is less than certain, however. First it must clear a House-Senate conference committee, whose minority Democrats have complained bitterly about their exclusion from the negotiations.

Next it would go to the full House, which is expected to pass the bill easily, and the Senate, which is not.

In the closely divided Senate, many Democrats who complain that the bill favors production over conservation have hinted at trying to block it with a filibuster. They could be joined by Republicans displeased with the bill's cost -- as much as $100 billion over 10 years -- and a provision that would limit the liability of manufacturers of a fuel additive blamed for contaminating water supplies from California to New Hampshire.

Sen. Charles E. Schumer (D-N.Y.) called the bill a "grab-bag of goodies for special interests" and said it should be "stopped in whatever way possible." But other Senate Democrats reportedly remained undecided about whether to try to kill the measure.

The bill denies ex-oilman Bush one of his top priorities: the opening of the arctic refuge to oil and gas drilling. And it carries a much higher price tag than he had wanted.

But Bush, who has called the energy policy critical to economic growth and national security, welcomed the agreement. "America will be safer and stronger with a national energy policy that will help keep the lights on, the furnaces lit and the factories running," he said in a statement.

Republican leaders, intent on delivering Bush a victory, packed the bill with provisions eagerly sought by lawmakers from both parties. "This is in essence a jobs bill," said House Energy and Commerce Committee Chairman W.J. "Billy" Tauzin (R-La.).

With details of the bill not due to be released until today, Sen. Jeff Bingaman of New Mexico, the top Democrat on the Senate Energy and Natural Resources Committee, said he would look to see if "on balance, there is more good in it than bad." But he said that the provision to limit the liability of manufacturers of the fuel additive methyl tertiary-butyl ether, or MTBE, would give "heartburn" to a number of a senators.

Bingaman, who was among those shut out of negotiations, said: "I think we're being asked to take it or leave it."

Others didn't wait for the details before condemning the bill.

"This bill falsely presumes that we can drill and strip-mine our way to energy independence," said Rep. Edward J. Markey (D-Mass.).

Like the last major energy bill, passed in 1992, this measure is aimed at reducing U.S. dependence on foreign oil, especially from the politically unstable Middle East. But experts disagree over how much of a dent the measure would make in oil imports, which account for more than half of U.S. oil consumption -- up from 36% during the 1973 Arab oil embargo.

Critics note that the legislation fails to increase fuel economy standards for vehicles. Proposals to increase mileage have faced resistance from both Republicans who abhor more government regulations and Democrats who represent vehicle-producing states.

But Lee Fuller, vice president of government relations for the Independent Petroleum Assn. of America, said a tax credit for marginal oil and gas wells would "save the loss of 20% of our domestic oil production and about 10% of our domestic gas production" if energy prices fell; he added that the expedited approval process for leasing of federal lands could spur new drilling in the West.

"This bill is a good bill for independent producers," he said. "It makes big steps forward to keep us supplying what we are supplying and then it gives us opportunities to increase that."

The farm belt is as enthusiastic about the legislation as the oil patch.

Besides the ethanol provision, the measure includes tax incentives to promote the production of fuel from soybean oil.

The agreement on the bill came only after weeks of often-tense negotiations, largely between the tax writers. And it came only after House and Senate leaders and Cheney intervened.

Consumer, environmental and taxpayer groups complained that the agreement among Republicans, despite sparing the arctic refuge, would leave much other federal land in the West more vulnerable to drilling.

They said it would subsidize the energy industry without addressing global warming.

An analysis by Rep. Henry A. Waxman (D-Los Angeles) concluded that the bill would cost more than $100 billion over the next decade. Included is $29 billion that critics estimate would be the cost shifted to taxpayers to clean up water supplies if the liability of MTBE producers is limited.

Although Bush's call to open the arctic refuge to energy exploration was dropped in the face of a threatened Senate filibuster, the measure includes a number of other presidential initiatives: $2 billion to develop pollution-control technology for coal-fired power plants; a cap on the nuclear industry's liability for accidents; repeal of a Depression-era law that has prevented utility companies from expanding; and $1.8 billion to promote Bush's goal of developing hydrogen fuel-cell vehicles.

The measure includes benefits for some lawmakers' political constituencies back home.

The bill is believed to include $1 billion for a nuclear-hydrogen project in Idaho sought by Sen. Larry E. Craig (R-Idaho); an $800-million federal loan guarantee for an experimental coal-to-gas power plant project in Minnesota sought by Sen. Norm Coleman (R-Minn.); and a federal loan of up to $125 million to fix problems at an experimental Alaska power plant pushed by Sen. Lisa Murkowski (R-Alaska).

The measure also is thought to include a provision sought by Rep. Joe Barton (R-Texas) that would allow the Environmental Protection Agency to give metropolitan regions, including Dallas-Fort Worth and Beaumont-Port Arthur, Texas, and Baton Rouge, La., extended deadlines for reducing ozone pollution.

The legislation deals with a number of problems spotlighted by the California electricity crisis and the collapse of Enron Corp. Among them: strengthening the power of federal energy regulators to order refunds for electricity overcharges and boosting from $5,000 to $1 million the fine for violating federal laws governing power markets.

Negotiators dropped a proposal to authorize an inventory of offshore oil and gas resources. Opposed were many coastal-state officials, including Florida Gov. Jeb Bush, who said it could threaten a long-standing moratorium on new drilling in most U.S. coastal waters.

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