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Deal Is Near on Overhaul of Energy Policy

Times Staff Writer

House and Senate negotiators worked into the early morning hours today on what is expected to be the first overhaul of national energy policy to pass Congress in more than a decade -- a far-reaching measure aimed at boosting domestic fuel supplies and providing relief, over the long term, from high prices.

The bill, long sought by President Bush, would provide tax breaks and other incentives to spur domestic production of oil, natural gas, coal and nuclear power and promote conservation. It also would strengthen electricity grids, a response to the 2000-2001 California electricity crisis and the 2003 Northeast blackout.

Negotiators worked past 2:30 a.m. EDT to complete the legislation, a display of the bipartisan anxiety over possible political fallout from high gasoline prices. House and Senate tax writers separately neared completion of a package of about $11 billion in energy tax breaks

The full House and Senate are expected to approve the bill this week, before Congress breaks for its summer recess.

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Prospects for final passage brightened after negotiators on Sunday deleted a contentious provision that doomed the measure in 2003: protection for the manufacturers of methyl tertiary-butyl ether -- a gasoline additive blamed for polluting groundwater supplies around the country -- from environmental lawsuits seeking money for cleanup. The bill approved by the conferees two years ago contained the liability suit protection, and the Senate refused to pass it. Critics have questioned whether the bill will achieve its goal of reducing U.S. dependence on foreign oil, which accounted for about 58% of America’s consumption last year.

Though the bill contains a wide range of measures, including extending daylight saving time and promoting energy projects on Indian land, environmentalists have complained that it lacks any requirement to increase miles-per-gallon standards for vehicles or strong measures to cut emissions blamed for global warming.

Subsidies in the bill also drew criticism.

“What has happened to the Republican faith in the free market?” said Rep. Edward J. Markey (D-Mass.), assailing “one big pork-barrel section” that he said would provide federal loan guarantees for “just about everything under the sun.”

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Rep. Henry A. Waxman (D-Los Angeles), another senior member of the House Energy and Commerce Committee, called the bill a “giveaway” to the energy industry.

“It’s a bad bill,” he said. “It wastes taxpayers’ money. It doesn’t make us any more energy self-sufficient. We’re still going to have increased demand for importing oil from the Middle East.”

But lawmakers from both parties have appeared more eager this year than in the past to pass a bill because of high gasoline prices, which in California reached a record-high statewide average of $2.592 for self-serve regular April 11 -- although the measure would provide little immediate relief. It does include a provision to require a government investigation into complaints of price gouging

During the hectic final hours of work, negotiators attached a measure -- prompted by a Chinese-government-owned oil company’s bid to buy Unocal Corp. -- that would delay completion of an administration review of the purchase of a U.S. energy company by a Chinese company while other studies are conducted on the effect of China’s energy pursuits on the U.S. economy and national security.

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They also included a provision to create an inventory of offshore oil and natural gas resources, over the protests of a bipartisan group of coastal-state lawmakers who warned that it could lead to undoing the long-standing moratorium on new drilling in most U.S. coastal waters.

“Coastal states will now, more than ever, need to stand firm in defense of the annual moratorium on new offshore leasing that has protected our shoreline economies for a quarter-century,” said Richard Charter, co-chair of the National Outer Continental Shelf Coalition, in a statement after the amendment was approved.

Drilling opponents argued that the survey could damage other marine life because of sonic blasts of air used to gather a seabed’s geologic profile. “An inventory is not a harmless activity,” said Rep. Cliff Stearns (R-Fla.).

But Sen. Mary L. Landrieu (D-La.) told reporters Monday, “We cannot reasonably discuss how to best lessen our dependence on Middle Eastern oil unless we fully understand what alternatives exist here at home.”

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Negotiators also added language sought by the Bush administration to provide government-backed “risk insurance” as part of an effort to revive the nuclear power industry. The insurance would help pay additional costs faced by investors because of delays beyond their control.

The bill includes a number of recommendations made by the energy task force headed by Vice President Dick Cheney in 2001, but it also reflects the parochial interests of Democratic and Republican members of Congress.

One example of that is a requirement to nearly double, to 7.5 billion gallons, the amount of ethanol added to the nation’s gasoline supply by 2012. That provision is particularly popular among farm-state lawmakers.

A measure backed by environmentalists was dropped from the bill: a requirement that 10% of the nation’s electricity be generated from renewable sources, such as solar and wind power, by 2020.

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