House OKs New Energy Policy

Times Staff Writer

By a healthy margin, the House on Tuesday approved the biggest overhaul of U.S. energy policy in a decade, sending to the Senate legislation designed to strengthen the nation's electric grid and prevent fuel supply shortages and price spikes.

Billed as a response to the 2000-01 California electricity crisis, this summer's power blackout in the Northeast and high gasoline prices around the country, the legislation was a top priority of the Bush administration. In an effort to assure approval of the bill, its Republican authors kept an eye out for lawmakers' hometown interests.

"It's the leave-no-lobbyist-behind bill," Sen. John McCain (R-Ariz.) griped. Rep. Lois Capps (D-Santa Barbara) added: "So much for fiscal discipline."

The bill passed the House, 246-180. All California Democrats voted against it, with the exception of Tom Lantos of San Mateo, who did not vote, and Joe Baca of San Bernardino and Calvin Dooley of Hanford, who voted yes. In the GOP delegation, Doug Ose of Sacramento and Dana Rohrabacher of Huntington Beach broke ranks and voted no; all others voted yes.

Its fate in the Senate, where the GOP holds 51 of 100 seats, is less certain because of concerns about its potential cost and effect on the environment. Several senators had discussed using a filibuster to block its consideration, but it was unclear whether they would have the 41 votes needed to sustain a filibuster.

The tax breaks for energy conservation and production -- primarily to promote oil, natural gas, coal and nuclear power -- would cost $25.7 billion over the next decade. That is three times what President Bush wanted, according to a revised estimate.

A bipartisan group of senators, including Democrats Barbara Boxer and Dianne Feinstein of California, also object to a provision that would provide legal protections from environmental lawsuits to makers of methyl tertiary-butyl ether, or MTBE, a fuel additive blamed for tainting water supplies from California to New Hampshire.

Despite his concerns about the cost, Bush praised the House action. "Reliable and affordable energy is critical to our economic security, our national security and our homeland security," he said in a statement issued by the White House.

The bill's GOP authors hope a provision to double the amount of corn-based ethanol that must be added to the nation's gasoline supply will help drive its passage. "I don't know if there are too many places in this country where corn isn't grown," said House Majority Leader Tom DeLay (R-Texas).

Other measures were added to the bill to win support from smaller numbers of lawmakers.

One would authorize tax-exempt bonds to help fund "green" projects on abandoned industrial sites at a cost of $227 million over 10 years. Projects in several states could benefit from this.

Also included in the bill: $1 billion for building an "advanced" nuclear reactor in Idaho that would produce hydrogen; an $800-million federal loan guarantee for an experimental coal-to-gas power plant project in Minnesota; authorization for a demonstration coal-fired power plant to develop new technologies using a type of coal widely found in North Dakota; and a federal loan of up to $125 million to fix problems at an experimental Alaska power plant.

An effort by Sen. Charles E. Grassley (R-Iowa) to include tax-exempt bonds for an indoor rain forest in Iowa was dropped in the face of objections from House Republicans, but an aide to Grassley said he would look for other ways to help the project.

The bill's supporters say that many of these projects will demonstrate new technology to produce or conserve energy. They also say the projects will create jobs.

Rep. Jim McCrery (R-La.), whose district has a mixed-use development of retail, office, hotel and entertainment space that would be a candidate for the green bonds, said the project would be good for the economy and the environment. Also, he said, "It would be good for Republicans to put a good foot forward on environmental issues."

But not everybody believes the bill is a boon.

An investor in a Carthage, Mo., plant that would convert 200 tons a day of turkey carcasses into energy said the tax breaks for production of energy from agricultural and animal waste wouldn't be worth the government paperwork to claim the credit.

"The provisions in the energy bill do very little to encourage investments in cutting-edge technologies like ours that deal with waste and also provide meaningful amounts of renewable energy," said Brian Appel, chairman and chief executive of Changing World Technologies.

Taxpayer groups have joined in the criticism as well.

"Eight years ago, Republicans in Congress were calling for the elimination of the Department of Energy," said Tom Schatz, president of Citizens Against Government Waste, a Washington-based taxpayer watchdog group.

"Today, instead of repealing the regulations that stifle innovation in the energy market, they use 'national energy policy' as a cover for cushioning home-state interests with federal money."

The bill's supporters contend that most of the provisions are necessary to achieve the twin goals of making the nation's electrical transmission system more dependable and reducing U.S. dependence on foreign oil.

Among the marquee sections were provisions that would double the amount of ethanol that must be added to the nation's gasoline supply over the next decade; provide up to $18 billion in federal loan guarantees for building an Alaska-to-the-Midwest pipeline to tap significant natural gas reserves; set up an industry self-regulatory organization to oversee operations of the electrical transmission system, with the power to fine utilities that overloaded power lines; and give utilities new incentives to modernize the grid.

But Feinstein, who plans to vote against the bill, said the legislation would "do very little to prevent a future blackout, does nothing to protect consumers from the manipulation and gaming of the system that we experienced in California, does nothing to improve our nation's energy security by increasing fuel economy standards, and is a giant boondoggle to special interests, particularly the ethanol, MTBE, oil, gas and nuclear power industries."

She called it a "giant holiday gift basket for the energy industry."

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