House OKs sweeping energy bill

Tax breaks, state projects attract some Democrats

battle looms in Senate

November 19, 2003|By Richard Simon | Richard Simon,LOS ANGELES TIMES

WASHINGTON - By a healthy margin, the House approved yesterday 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 shortages and price spikes.

Billed as a response to the 2000-2001 California electricity crisis, this summer's Northeast power blackout and high gasoline prices throughout the United States, the legislation won approval not only because it would promote national oil and gas production, but because its Republican authors made sure to watch out for lawmakers' hometown interests.

"It's the leave-no-lobbyist-behind bill," said Sen. John McCain, an Arizona Republican. Rep. Lois Capps, a California Democrat, added: "So much for fiscal discipline."

The bill passed the House 246-180. Its fate in the Senate, where the GOP holds 51 of 100 seats, is less certain because of concerns about its potential cost and impact on the environment. Several senators have discussed using a filibuster to block consideration of the bill, 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 objects 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 contaminating 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 that a provision to double the amount of ethanol, a corn-based fuel, that has to be added to the nation's gasoline supply will help drive passage of the bill.

"I don't know if there are too many places in this country where corn isn't grown," said House Majority Leader Tom DeLay, a Texas Republican.

Other measures were added to the bill to win support. One authorizes tax-exempt bonds to help finance "green" projects on abandoned industrial sites at a cost of $227 million over 10 years.

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, an Iowa Republican, 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 said many of the projects would demonstrate new technology to produce or conserve energy. They also said the projects would create jobs.

Rep. Jim McCrery, a Louisiana Republican whose district has a mixed-use development of retail, office, hotel and entertainment space that is a candidate for the green bonds, said it was good for the economy and the environment. "It would be good for Republicans to put a good foot forward on environmental issues," he said.

But not everybody said the bill was 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 weren't worth the paperwork to claim the credit.

Taxpayer groups have joined in the criticism. "Eight years ago, Republicans in Congress were calling for the elimination of the Department of Energy," said Tom Schatz, president of the Council for Citizens Against Government Waste, a Washington-based taxpayer watchdog. "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 contended that most of the provisions were 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 are 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 that would 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 overload power lines; and give utilities new incentives to modernize the grid.

The Los Angeles Times is a Tribune Publishing newspaper.

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