Lawmakers Reach a Deal on New Energy Policies

July 26, 2005

By CARL HULSE

WASHINGTON, Tuesday, July 26 - House and Senate negotiators came to agreement on broad energy legislation early today, hoping they have put together an overhaul of national energy policy that can clear Congress after years of stalemate.

"We hope to have the bill on the House floor on Wednesday and I think the Senate is going to put it up on Thursday,'' said Representative Joe Barton, Republican of Texas and chairman of the Energy and Commerce Committee, as he concluded negotiations shortly before 3 a.m. Eastern time.

The measure touches on virtually every aspect of American energy production and consumption, including the electrical grid, hybrid cars, traditional oil and gas drilling, and incentives to develop new energy sources. But it does little to immediately lower the price of gasoline at the pump.

As they wound up their talks, lawmakers agreed to a significant new requirement to add corn-based ethanol to the gasoline supply, which will build support for the measure from farm state lawmakers.

Working furiously to try to strike an energy deal, the negotiators killed two major provisions aimed at curbing consumption of traditional fossil fuels like oil, natural gas and coal. They also agreed to slow the potential takeover of Unocal by a Chinese oil company to allow for a study of the national security and economic implications of the acquisition.

In a decision that could cost support for the bill from some coastal state lawmakers, negotiators beat back efforts by Florida and California House members to strip from the measure a provision that would allow an inventory of offshore oil and gas resources. Some lawmakers view the inventory as a precursor to a push to allow drilling off states that have opposed it.

"I'm here to say that the people of North Carolina right now don't want drilling,'' said Senator Richard Burr, Republican of North Carolina. "We can force it on them or wait until they are ready.''

The House and Senate reached similar agreement on energy legislation in 2003, but the measure stalled in the Senate over objections to a plan to provide producers and distributors of the gasoline additive MTBE some legal immunity from lawsuits. In a decision that helped the bill's prospects this year, lawmakers on Sunday abandoned that plan. Hoping to dodge another obstacle, senators on Monday rejected a House proposal to relax some clean air standards.

Approval of the legislation would be a victory for President Bush, who has pressed for a new energy policy since taking office in 2001 and urged lawmakers to deliver a plan before leaving at the end of this week for a monthlong summer recess.

"Four years is long enough to wait for comprehensive energy legislation," the White House spokesman, Scott McClellan, said Monday.

The final version of the energy plan is certain to come under attack by some lawmakers and conservation groups who consider it too heavily skewed in favor of traditional oil and gas companies, which it showers with billions of dollars of aid and tax breaks at a time when high oil prices are producing huge profits.

As the nine-hour negotiating session was nearing an end, Representative Edward J. Markey, Democrat of Massachusetts, failed in an effort to eliminate some of the relief from drilling royalties that the industry would receive through the bill, arguing that it was wrong to let oil companies escape fees for drilling on public land. "We might as well be giving tax breaks to Donald Trump and Warren Buffett here tonight,'' said Mr. Markey. The Republican-led House majority on the conference committee quickly rejected his proposal.

In a disappointment for environmental advocates, House members on Monday rejected an effort to incorporate a plan passed by the Senate to require utilities to use more renewable energy like wind and solar power to generate electricity. They also defeated a bid to direct the president to find ways to cut the nation's appetite for oil by one million barrels a day within 10 years.

Backers of the initiative to identify the oil savings said it was an alternative to the politically difficult approach of increasing automotive gas mileage standards and would demonstrate that Congress was serious about cutting the nation's dependence on oil imports.

"We are having an energy bill that is doing so much on the supply side that we need to address the demand side," said Representative Henry A. Waxman, Democrat of California, who said the goal was the "bare minimum of what we ought to be doing."

But Republican opponents of the plan said the fuel savings target could lead to unpopular restrictions like mandatory car pools and put too much responsibility for achieving the goal in the hands of the president.

"Just telling the president to wave a magic wand and tell each and every one of us that we need to conserve may sound good," said Mr. Barton, who was in charge of the House-Senate negotiations, "but those of us elected by the people every two years have a different view of that."

Senator Jeff Bingaman of New Mexico, the senior Democrat on the Energy and Natural Resources Committee, said his plan to require power plant operators who now rely on coal, oil and natural gas to increase their use of renewable fuels was a low-cost, market-driven approach to cutting demand for fossil fuels and easing air pollution.

Under the proposal, which has repeatedly passed the Senate, utilities would have to generate at least 10 percent of their electricity through renewable fuels by 2020.

But opponents of the initiative, known as the renewable portfolio standard, said it would drive up the cost of electricity, conflict with similar state initiatives and put a burden on utilities in some regions where acceptable alternative fuels are in short supply.

While House and Senate negotiators on energy policy met into the night in an effort to agree on an energy measure that could clear the House and Senate this week, a separate group of lawmakers was trying to hash out the tax elements of an energy proposal.

Lawmakers and aides said they expected the tax breaks and incentives to cost in the neighborhood of $11.5 billion: more than sought by the House and White House but less than approved by the Senate. Should lawmakers agree on that figure, the tax package was expected to include a substantial emphasis on tax credits for energy efficiency.

Copyright 2005 The New York Times Company

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