Negotiators Agree on Tax Breaks in Energy Bill

By Justin Blum
Washington Post Staff Writer
Wednesday, July 27, 2005

House and Senate negotiators raced yesterday to complete work on $14.5 billion in tax breaks, the final element of a major energy bill Congress wants to send to President Bush this week.

Negotiations took place behind closed doors, with lawmakers divvying up tax breaks to encourage domestic production of oil and natural gas, development of cleaner-burning sources of electricity, and conservation measures, among other things.

Members of the conference committee agreed to the non-tax provisions of the bill late Monday night and early yesterday as leaders took pains to jettison provisions that might prompt a Senate filibuster similar to one that killed an energy bill two years ago.

Negotiators omitted a provision that would have granted manufacturers of the gasoline additive MTBE protection from product-defect lawsuits -- a measure that was unpopular in the Senate.

They also dropped Senate provisions requiring that more electricity be produced from renewable sources and calling on the president to cut oil consumption by 1 million barrels a day by 2015.

After years of failed attempts to approve an energy bill -- a top priority of the Bush administration -- lawmakers said they expect final votes in the House and Senate this week.

The bill seeks to encourage more domestic energy production, improve the reliability of the electrical grid, spark development of nuclear power plants and cleaner-burning coal facilities, and encourage more imports of liquefied natural gas. But the legislation includes scores of other measures as diverse as extending daylight saving time, requiring an inventory of offshore U.S. oil and natural gas reserves, and government-funded research to help the oil industry drill in deep water.

"This is a darned good bill, and this is going to help this country," said Rep. Joe Barton (R-Tex.), chairman of the conference committee. "The sooner we get it implemented, the better."

Some Democrats and environmentalists said the bill would shower subsidies on the energy industry, including many companies that have reaped record profits because of high oil prices.

"This is a huge giveaway for the oil and gas industry," said Rep. Edward J. Markey (D-Mass.). "The bill just tips the American consumer and taxpayer upside down and shakes money out of their pockets. The bill is an historic failure."

Energy Secretary Samuel W. Bodman and other administration officials urged rapid passage of the legislation.

Lawmakers said leaders of the House Ways and Means Committee and the Senate Finance Committee were working through differences between the House and Senate tax breaks. People familiar with the discussions said that negotiators were planning ways to generate $3 billion in revenue to partially offset the $14.5 billion in tax breaks. They said the cost of the package is expected to be $11.5 billion over 10 years -- more than the $6.7 billion favored by the Bush administration.

Sen. Jeff Bingaman (N.M.), a member of the Finance Committee and the ranking Democrat on the Energy and Natural Resources Committee, said the tax package includes less than he wanted for efficiency and conservation

The negotiators agreed Monday night to a provision that calls for seismic work to be done on federal offshore lands to determine how much untapped oil and natural gas exist. Opponents saw it as a first step toward drilling in off-limits areas.

Although that measure upset Florida lawmakers and others, several said they would not seek to derail the bill. "It will pass," said Sen. Bill Nelson (D-Fla.). "But it won't pass with my vote."

The measure approved by conferees calls for a significant increase in the amount of ethanol and other agriculture-derived fuels. Supporters said the requirement would help decrease reliance on foreign oil, but opponents said it would raise gasoline prices in some parts of the country.

The conference agreement includes a measure designed to improve reliability of the electrical grid by creating mandatory rules for utilities. It would also give the federal government more authority to approve power-line siting.

The measure gives the federal government ultimate authority over approving new terminals that can receive imports of liquefied natural gas. Opponents said the provision could force terminals on communities that do not want them.

The bill also includes $500 million over 10 years for research into recovering oil and natural gas from ultra-deep water and from unconventional drilling.


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