Senate Passes Energy Bill

The Senate overwhelmingly approved energy legislation Tuesday that was embraced by both Republicans and Democrats, but its chance of becoming law depends on hard bargaining in the coming months with House GOP leaders who favor measures more favorable to industry.

After finishing most work on the bill late last week, the Senate approved the sweeping legislation 85-12. It includes a proposed $18 billion in energy tax breaks, an expansion of ethanol use and measures aimed at increasing natural gas imports to meet growing demand.

CBS News Correspondent Bob Fuss reports that the bipartisan Senate bill stands in stark contrast to the version passed in the House. The Senate requires more ethanol be used in gasoline and proposes $18 billion in tax credits to encourage clean and renewable sources of energy. The bill also requires 10 percent of the U.S.'s electricity to come from such sources by 2020.

The House bill has $8 billion in tax credits mostly to oil and gas companies and gives controversial protections from lawsuits to makers of a gasoline additive that has caused environmental damage, Fuss reports.

Lawmakers acknowledged that the measure would do little, if anything, in the short run to stem the soaring cost of energy including oil that this week has eclipsed $60 a barrel and gasoline that last week averaged $2.22 a gallon at the pump, according to the Energy Department.

"We still have many hurdles to overcome," said Sen. Jeff Bingaman, D-N.M., who led the Democrats in fashioning the massive bill. The bill passed by the House in April differs sharply from the Senate legislation over oil production and the degree of emphasis on conservation.

Sen. Pete Domenici, R-N.M., said the Senate bill would usher in "a new policy for the United States ... that energy should be clean, renewable and that we have conservation" to curtail energy demand. He said it would help assure a broad mix of energy sources in the future from nuclear power to wind energy.

But the Senate deliberately skirted some of the most contentious energy issues facing Congress.

The legislation says nothing about drilling in the Arctic National Wildlife Refuge in Alaska, although that's a top priority of the Bush administration. The House-passed bill calls for developing the refuge and assumes $2.6 billion over 10 years in federal revenue from refuge oil lease sales.

And unlike the House bill, it is silent on giving aid to larger oil companies and refiners who want protection against environmental lawsuits because one of their products, the gasoline additive MTBE, has contaminated drinking water in hundreds of communities. House leaders have insisted an MTBE waiver be part of energy legislation.

The Senate twice before in the last four years has passed energy legislation only to see the effort fall apart without a final agreement. Both GOP and Democratic lawmakers predicted that if a compromise is to be reached with the House and also be acceptable to the Senate, it will require in the close involvement of the White House.

President Bush has called on Congress to give him an energy bill by August. Most senators believe that is unrealistic, given the expected difficult discussions still ahead.

More environmentally friendly than the energy bill passed by the House in April, the Senate measure would funnel 40 percent of some $18 billion in tax breaks over 10 years to boost renewable energy sources such as wind and biomass. The Senate bill also would try to reduce energy consumption through tax incentives for efficient appliances and homes and for gas-electric hybrid cars.

Other fights are expected with the House over how much corn-based ethanol refiners would have to use — 8 million gallons a year in the Senate version vs. 5 million under the House bill — and whether utilities should have to produce at least 10 percent of their electricity from wind, solar or other renewable energy sources.

The cost of the Senate package also is expected to be an issue.

It would cost $16 billion over 10 years, according to a preliminary analysis by the Congressional Budget Office, compared to about $8 billion for the House bill. The White House wanted a $6.7 billion price tag. The House version is somewhat misleading, however, since it relies on $2.6 billion in revenue, not yet certain to be approved, from oil leases in the Alaska wildfire refuge.

"It's going to be a tough conference (with the House)," said Domenici, who as the bill's floor leader had seen months of tough negotiations go for naught two years ago. Then, the Senate also passed legislation that differed sharply from what had been approved by the House. After weeks of closed-door discussions, a compromise emerged only to have it fall apart in the Senate over the MTBE issue.

The Senate also passed energy legislation in 2002, when Democrats were in the majority, but saw efforts to get a compromise with the House evaporate when Republicans regained their majority in the Senate in that's year's November election.

The Senate bill, cobbled together during months of behind-the-scenes discussions and two weeks of floor debate, was viewed by its supporters as an attempt to expand and diversify the country's energy supply and reduce its reliance on oil.

How successful the effort will be is anybody's guess. Sen. Richard Durbin, D-Ill., argued that little progress can be made to wean Americans off foreign oil unless cars are required to be more fuel efficient. His attempt to include sharp increases in auto fuel economy was soundly defeated.

The bill would, however: