Energy bill offers breaks to industry
WASHINGTON - Two-thirds of the $23 billion in tax breaks in the Republican-drafted energy bill would go to the oil, gas and coal industries.
Congressional estimates released Monday put the cost of the package, the first overhaul of the nation's energy priorities in a decade, at $32 billion over 10 years, including about $9 billion for nontax-related measures and revenue losses.
Democrats slammed the legislation, one describing it as "a hodgepodge of subsidies for the politically well-connected."
A House-Senate conference began considering a string of Democratic amendments, but few if any were expected to survive. GOP conference leaders said they were determined to complete the legislation so the House could take it up as early as today.
"This is a solid agreement," Sen. Pete Domenici, R-N.M., declared as he opened the conference where House and Senate conferees were to cast their final vote on the bill. He said the GOP bill, which includes 1,148 pages, was the product of delicate compromises between the House and Senate, and changes could jeopardize the package.
"I don't think we can take a risk of undoing this," said Domenci.
Final details of the bill's tax section were completed during the weekend to end closed negotiations on the bill that spanned 212 months.
Among the bill's major provisions:
• Tax incentives total $14.5 billion for oil, natural gas and coal industries.
• More than $5.2 billion in tax credits and other tax benefits over 10 years for developing renewable energy sources, including tax breaks for corn-based ethanol.
• Doubled use of ethanol in gasoline, a boon to farmers and widely supported by both Republicans and Democrats.
• Federal rules and standards for high-voltage power lines to lessen the likelihood of cascading power failures like the one that produced last August's blackout from Michigan to New York and into Canada.
• A $1.8 billion research project to develop clean coal technology and tax benefits for a new generation of nuclear power plants to ensure diversity in energy sources for electricity production.
• Provisions to speed up permits and ease environmental rules to develop of oil and gas resources on federal land.
"We provide billions of dollars in dozens of ways to reduce our dependance on foreign oil," Rep. Billy Tauzin, R-La., chief of the House negotiators, said.
Democrats argued the legislation falls short of what is needed.
Rep. Jeff Bingaman, D-N.M., said the bill lacks enough incentive to promote domestic production or foster energy conservation to reduce America's reliance on oil imports or guard against problems in the electricity industry that led to soaring power prices in the West two years ago or the blackout last August.
"The tax goodies go to huge energy conglomerates, and most subsidize things that the companies already are doing," complained Sen. Ron Wyden, D-Ore., another of the conferees. He described the bill as "a hodgepodge of subsidies for the politically well-connected."
Republicans countered that the tax incentives, estimated to total $22.9 billion over 10 years, and other provisions amount to a blueprint for diversifying the nation's energy sources and improve the reliability of electricity transmission systems.
Most of the tax incentives and other financial benefits - loan guarantees, royalty relief or direct government spending - would go to energy industries. Only about $1.5 billion in tax breaks over 10 years is earmarked for energy efficiency.
Other measures in the legislation include:
• Spending $2 billion over eight years to help the manufacturers of the gasoline additive MTBE, which is found to contaminate drinking water, and pay for transition expenses as the additive is phased out.
• Providing $1.1 billion to six states that have offshore oil and gas development to deal with coastal erosion. More than half of the money would go to Louisiana, a major oil and gas producer.
• Loan guarantees of up to $18 billion to carry natural gas from Alaska's North Slope to the Midwest.
• Tax credits for biodiesel fuel made from soybeans or restaurant grease.