From: H. Josef Hebert, Associated Press
Published April 14, 2005 12:00 AM

House Committees Advance Slimmed-Down $8 Billion Energy Tax Package

WASHINGTON — Lawmakers plowed through an energy bill Wednesday that would provide billions of dollars in tax breaks to industry, open an Alaska wildlife refuge to oil drilling and aid farmers by expanding the use of ethanol in gasoline.


House tax writers advanced an $8 billion package of energy tax breaks as two other committees moved closer toward approving non-tax sections of the massive legislation, which largely mirrors one the House approved two years ago only to see it die in the Senate.


Democrats failed in an attempt to remove a provision that would, for the first time, allow oil exploration in the Arctic National Wildlife Refuge in Alaska. Their effort was rebuffed 30-13 in the House Resources Committee.


"This is about making the country safer," said Rep. Don Young, R-Alaska, because it will increase domestic production and ease reliance on imports.


The government estimates about 10.4 billion barrels of oil beneath the refuge's coastal plain. Environmentalists complain oil drilling will harm caribou, migratory birds and other wildlife.


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The refuge drilling issue is all but certain to be rejected in the Senate, where opponents have vowed to block it by filibuster. Refuge drilling proponents in the Senate, instead, are hoping to get the measure passed as part of the budget process where the filibuster cannot be used.


The House has repeatedly favored opening the refuge, despite strong opposition from environmentalists. The full House was expected to take up the energy legislation next week.


The tax provisions, many of which would help energy companies, included more favorable tax treatment to spur expansion and modernization of the electric grid and construction of natural gas pipelines to meet growing demand for electricity and gas.


Democrats complained that the tax package, which advanced out of the Ways and Means Committee, provides little to promote renewable energy sources and reduce energy use while funneling tax benefits to energy companies that already are making huge profits from high energy prices.


"There is no provision ... that will lower the price of gasoline, only protect the profits of the oil industry," said Rep. Jim McDermott, D-Wash. "What do the American people get -- nothing but a raw deal."


Of the $8 billion in tax incentive over 10 years, less than $500 million would go to promote renewable energy sources or foster efficiency and conservation programs.


Rep. Bill Thomas, R-Calif., the Ways and Means Committee chairman, said he expects programs to be added during negotiations with the Senate. The final array of tax provisions "will look somewhat different," he said.


The tax incentives, approved 26-11, dwarfed proposals agreed to in energy legislation two years ago when lawmakers cobbled together more than $23 billion in tax breaks for energy development and conservation.


That bill died because of a dispute over a gasoline additive, MTBE, and because some Senate Republicans objected to the legislation's huge cost.


Separately, Republicans deflected an attempt by Democrats to include in the energy legislation tougher fuel economy requirements on automobiles -- a subject barely addressed in the GOP-drafted energy legislation.


A proposal, offered by Rep. Ed Markey, D-Mass., that would require the Transportation Department to boost fleet-wide auto fuel economy requirements to 33 miles per gallon beginning with 2015 model year cars, was defeated. The federal requirement is 27 mpg.


Markey said cars are less fuel efficient than they were eight years ago. "We are now moving backwards," he said.


The GOP bill, as did the legislation two year ago, would increase the use of ethanol as a gasoline additive, a major boost for farmers. It will require at least 5 billion gallons of corn-based ethanol to be used annually, about a third more than current production.


The legislation also would:


-- Require the Energy Department to stop oil from being added to the Strategic Petroleum Reserve if oil prices dip below $40 a barrel. The bill also calls for expanding the reserve from 700 million barrels, slightly more than it now has, to 1 billion barrels.


-- Give the Federal Energy Regulatory Commission clear final authority to approve liquefied natural gas import terminals, even over state or local objections.


-- A 20 percent tax credit up to $2,000 for homeowners who put in more energy efficient windows, doors and insulation.


-- Ease environmental reviews of alternative energy projects such as hydropower dams, offshore wind farms and waste incinerators used for making energy.


Source: Associated Press


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