Republicans Reach Energy Accord

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House and Senate Republicans reached agreement on the first overhaul of national energy policy in a decade, clearing the way for likely final action on the bill next week, congressional sources said Friday.

The GOP energy draft was to be presented to Democrats for review, but is unlikely to be changed significantly given the Republican majority in the House and Senate conference.

The legislation calls for billions of dollars in tax breaks for energy industries and would double the use of corn-based ethanol as a gasoline additive, a boon to farm states.

The compromise bill largely reflects President Bush's energy agenda, although it does not include a Bush proposal to open an Arctic wildlife refuge in Alaska to oil drilling. It became clear that the refuge issue would jeopardize the bill in the Senate, where Democrats and moderate Republicans want the Alaska refuge protected.

An agreement on the bill, which is expected to total more than 1,700 pages, came after weeks of wrangling over tax breaks for ethanol, certain types of petroleum and the nuclear power industry, as well as how much support the government should give a proposed natural gas pipeline in Alaska.

While a clear estimate on the cost of the bill won't be available for some days, House and Senate tax negotiators have been discussing between $16 billion and $19 billion worth of tax incentives, a majority earmarked to boost energy production.

Sen. Pete Domenici, R-N.M., chairman of the energy conference, and his House counterpart, Rep. Billy Tauzin, R-La., scheduled a news conference for later in the day to release some additional details of the legislation.

An aide to Domenici said language of the compromise bill was not expected to be available until Saturday at the earliest.

Democrats have largely been left out of the energy negotiations, although they had some involvement in the tax issues. Domenici said he would give Democrats in the conference 48 hours to review the massive bill before calling a meeting for a formal vote.

Once the bill is approved by the conference it must be given final approval by both the House and Senate.

Energy legislation has been a top priority of the White House. President Bush said he wanted a bill this year, calling it both an economic and national security issue. Pressure on lawmakers to push through a bill increased last August when a power blackout hit all or parts of eight states in the Midwest and Northeast.

But getting a bill has been anything but easy.

Both the House and Senate passed significantly different versions of the bill earlier this year. Sharp differences remained between House and Senate Republicans over the expanded use of ethanol and some of the tax provisions.

Vice President Dick Cheney intervened personally a week ago to get an agreement on ethanol taxes, an issue that threatened for a time to scuttle the bill.

The compromise legislation will largely mirror an energy agenda outlined by the White House more than two years ago and place heavy emphasis on boosting energy production.

But Republicans were forced to abandon a measure that would have opened the Arctic National Wildlife Refuge in Alaska to oil development. Domenici said the refuge issue would have prompted a successful filibuster in the Senate, dooming the entire bill.

The bill could still prompt sharp debate in the Senate, however. It includes liability protection for makers of the gasoline additive MTBE, which has been found to contaminate drinking water. At last one senator has promised a filibuster over the issue, although Republicans said they have votes to beat back the MTBE protest.

A majority of the bill's tax breaks would boost development of oil, natural gas, coal and nuclear power. Some tax breaks will go to promote energy efficiency and renewable energy sources such as power from wind turbines.

Democrats have sought more support for renewable energy sources. They criticized the legislation for not requiring electric utilities to produce a certain amount of power from renewables and not taking steps to curtail fuel used by automobiles.

The legislation takes steps to improve the reliability of the nation's electricity grid by for the first time imposing government reliability standards and penalties on the transmission system.

To promote more energy development, the GOP bill will speed up permits and ease environmental restrictions for developing oil and gas on federal land. It also will provide royalty relief for companies that pursue natural gas in deep waters of the Gulf of Mexico and some tax benefits for construction of a $20 billion pipeline to bring gas from Alaska's North Slope.