GOP House, in last hurrah, pushes for oil exploration

Drilling provision folded into measure that would renew tax breaks, extend trade

December 08, 2006|By Richard Simon and Jim Puzzanghera | Richard Simon and Jim Puzzanghera,LOS ANGELES TIMES

WASHINGTON -- As the curtain prepared to fall on the Republican-controlled Congress, GOP leaders pushed for approval of what is likely to be the last major pro-drilling bill during the Bush presidency - a measure that would open a large swath of the Gulf of Mexico to energy exploration.

The drilling provision was part of a $45 billion tax and trade bill that was pending before the House. If that chamber passed it before the night ended, it would likely go to the Senate today as the lame-duck Congress wrapped up its business.

The bill includes a trade agreement with Vietnam - another White House priority - and renewal of a number of popular tax breaks. These include a tax credit for research and development costs that California Gov. Arnold Schwarzenegger called "an essential component" of the state's efforts to nurture innovative companies.

Most of the tax breaks and the oil drilling measure were sought by business groups, giving the GOP a last opportunity to please an important constituency before Democrats take control of Congress in January.

The energy exploration provision was more modest in scope than a measure the House approved earlier this year that would have relaxed the decades-long ban on new drilling off much of the U.S. coast, including the Pacific.

Scaled back, the provision would allow new production in about 8.3 million acres in the Gulf of Mexico - an area thought to contain more than 1.2 billion barrels of oil and 5.8 trillion cubic feet of natural gas.

The more sweeping drilling measure was spurred by political anxiety over high energy prices, but it stood little chance of clearing the Senate. House Republicans came under pressure from business groups to reign in their ambitions and accept the drilling provision that dealt solely with the Gulf Coast before adjourning for the year.

Environmentalists opposed the legislation, arguing that it would do little to lower energy prices or wean the United States from dependence on foreign oil. The Sierra Club called the drilling provision "one last gasp for Big Oil."

The measure was strongly supported by Gulf Coast Republican and Democratic lawmakers, whose states would receive a large chunk of government royalty payments from businesses in return for permitting the drilling off their shores. The measure was tucked into the bill that would extend the tax breaks and establish the trade pact with Vietnam as part of an effort to win majority backing for all the items in one fell swoop. The legislation also contains health care-related proposals.

The bill "is a bipartisan compromise that is `must-do' work in Congress this year," said Rep. Bill Thomas, a California Republican who as chairman of the House Ways and Means Committee helped draft the catchall approach. "It will prevent tax increases on millions of Americans and improve the Medicare program."

Renewal of the research and development tax credit, which expired at the end of last year, has been a priority for the high-technology industry.

The credit saves business about $7 billion a year and is vitally important to Silicon Valley. High-tech companies have lobbied hard to extend and expand the credit, arguing that without it the ability of U.S. firms to compete globally is hampered.

The legislation would extend the existing credit retroactively for research and development costs incurred this year, and then expand the credit to make it available to more companies.

The bill also would extend tax deductions of as much as $4,000 a year for parents paying college tuition and a credit covering up to $250 in expenses for classroom supplies that teachers pay out of their own pocket.

The bill would keep at current levels government payments to about 700,000 doctors who treat seniors through the Medicare program.

Richard Simon and Jim Puzzanghera write for the Los Angeles Times.

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