Negotiators reach pact on a broad energy bill
Overhaul aimed at spurring output
WASHINGTON -- Congressional negotiators reached agreement yesterday on a sweeping overhaul of the nation's energy policies, with a sprawling package of tax breaks, subsidies, and regulation changes designed to spur production of oil, gasoline, and other energy sources.
The agreement brings a national energy plan close to passage in Congress, more than a decade since the last one was passed, and after President Bush had lobbied extensively for it throughout his presidency. If House and Senate leaders meet their goal and approve the measure by week's end, it would hand a major victory to the president, whose second-term agenda has stalled on Capitol Hill.
With gas prices rising well past $2 a gallon and domestic security concerns exacerbated by dependence on Middle East oil, Bush has made energy policy a cornerstone of his domestic plan. The package announced yesterday cobbles together $11.5 billion in tax breaks with other incentives and deregulation efforts to help the industry produce more energy from sources such as oil, gas, and coal.
It rejects Democrats' calls for tighter emissions controls and for further encouragement of renewable fuel technologies.
''It's a transformational bill," said the House Energy and Commerce Committee chairman, Joe Barton, a Texas Republican.
Barton called the measure the most comprehensive energy legislation in 40 years. ''This balanced bill will lower energy prices for consumers, spur our economy, create hundreds of thousands of jobs, and take unprecedented steps to promote greater energy conservation," he said.
The measure, however, continued to draw fire from lawmakers wary of its impact on their states, and Senate Democrats have not decided whether or not to try a filibuster to block it. The bill has been stripped of provisions that sank similar legislation in previous years, and both sides acknowledge that the GOP-controlled Congress is likely to approve it.
Environmental groups and some Democrats said that the legislation does nothing to bring down soaring gas prices, that it won't cut US oil imports, and that it doesn't significantly advance renewable energy technologies or address global warming, which some scientists have linked to the use of fossil fuels.
Representative Edward J. Markey, a Malden Democrat who was on the panel that negotiated the bill, called the product ''an historic failure" that increases profits for big-money energy conglomerates.
''This bill is a huge giveaway to the wealthier interests in this country," Markey said. ''It is a political and moral failure."
Karen Wayland, legislative director for the Natural Resources Defense Council, said Congress intends to reward big oil and gas companies and clearly supports keeping the energy industry rooted in sources of the past rather than planning for the future.
''What's the point of an energy bill that doesn't save energy?" Wayland said. ''It will prolong and possibly worsen our dangerous dependence on oil. . . . Clearly nothing good can come from this bill."
Under the measure, the federal government would give tax benefits to companies to spur energy production and conservation, would ease construction of nuclear power plants and liquefied natural gas terminals, and would double the use of ethanol, a corn-based fuel, in the gasoline supply within seven years, among a wide swath of other provisions.
Barton acknowledged that it could take a year for the bill to affect gas prices by increasing domestic production. But he said the measure would make strides in promoting cleaner-burning energy sources.
Tax breaks for the wind and solar energy industries, along with higher efficiency standards for commercial appliances, were paired with support for nuclear plants and ''clean-coal" technologies, Barton said.
''You're going to see clean energy sources become a growing part of our energy base," he said.
The measure could usher in a new era for the nuclear power industry, which has not commissioned a new plant in more than 30 years.
Two nuclear power plants are planned, and the industry would get billions of dollars in loans, research and development grants, along with special ''risk-guarantee" insurance that would guard against delays in winning licenses for new plants.
The bill requires producing an inventory of current offshore oil and gas resources by authorizing limited drilling in coastal areas that are now off-limits, particularly off California and Florida.
The measure also provides $500 million in government money over 10 years to research ''ultra deepwater and unconventional drilling" --an item that GOP leaders tucked into the measure early yesterday morning, after the conference committee had finished its work, Markey said.
In a provision that could have a major impact on proposed liquefied natural gas facilities in New England and elsewhere, the measure gives a federal agency the exclusive power to approve construction of such facilities, even if governors and local officials object. That could accelerate 40 proposed LNG terminals in coastal areas across the country, including one in Somerset and another in Pleasant Point, Maine. This drew criticism from state officials.
''The federal government should not be forcing energy projects on us without giving us a say," Attorney General Thomas F. Reilly said yesterday.
Looking to reduce energy consumption in the spring and fall, the legislation would change daylight saving time, moving it three weeks earlier and extending it a week longer.
Starting in 2007, under the bill, the time change would begin on the third Sunday in March, and would last until the first Sunday in November.
The bill does away with the Public Utility Holding Company Act, an obscure, Depression-era federal law that the electrical industry has long disliked.
The statute limits the types of investments that electricity holding companies can make, to prevent any concentration of electrical utilities under one corporate umbrella that could jeopardize the nation's power supply and potentially devastate financial markets. Removing the statute gives energy companies more flexibility and makes them potentially more attractive to investors.
Notably, the bill does not include a proposal that would have shielded manufacturers of the gasoline additive methyl tertiary butyl ether, or MTBE, a suspected carcinogen, from legal liability, and would create an $11.3 billion trust fund to clean water supplies contaminated by the substance. Several House and Senate members from New England states have denounced the provision as too soft on the energy industry; a similar proposal contributed to the bill's defeat in the last session of Congress.
But the bill does include what environmental groups call another safeguard for MTBE manufacturers. This item would allow them to have MTBE lawsuits heard in federal or state courts.
That shift is expected to make lawsuits more expensive and longer to resolve because federal judges are less familiar with local issues, said Christy Leavitt, clean water advocate for the US Public Interest Research Group.
''The oil companies have a back door to get off the hook for their widespread contamination," Leavitt said. ''It makes it harder for the plaintiffs -- for the injured parties -- to succeed."
The bill does not deal with drilling at the Arctic National Wildlife Refuge in Alaska, another disputed measure that helped sink the energy bill last year. But the House and Senate budget resolutions gave the go-ahead for drilling in the refuge; final approval is expected in September.
With tax breaks, research grants, and regulatory changes that would benefit a wide range of industries, the bill appears designed to pick up support from members of Congress from across the nation, increasing its odds for approval, Markey said.
The Senate minority leader, Harry Reid, Democrat of Nevada, said that he isn't sure if he'll support it, but added that no Democratic senators seem interested in targeting it for a filibuster.
''It's scrapple -- a collection of all the pieces of pork -- and it's going to be tasty, unfortunately, to a lot of Democrats," Markey said.
But because the bill touches on everything from windmills to corn production to daylight saving time, there's plenty for lawmakers to dislike, too.
''I think to say the bill tries to micromanage the entire energy economy is a larger compliment than the bill deserves," said Senator John E. Sununu, Republican of New Hampshire, who added that he is leaning against the bill.
Rick Klein can be reached at rklein@globe.com. 