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Pro-Development Energy Bill Passed

The House approved sweeping incentives Friday for oil and gas production, including a green light for drilling in an Alaska wildlife refuge, despite complaints that the legislation gives too much to energy companies and does little to promote conservation.

The bill, approved 247-175, now awaits action by the Senate, which is expected to consider a less industry-friendly energy bill next month.

Republican leaders called the legislation a fair balance that is designed to spur development of traditional fossil fuels as well as renewable energy such as wind power through a mix of tax breaks, federal royalty relief and opening new areas of production such as the Alaska refuge.

"It advances a balanced approach to energy production and use," said Rep. Billy Tauzin, R-La., the bill's floor leader.

An attempt Friday to strip the measure of many of its incentives for oil and gas development was rejected 251-171. It was one of a string of Democratic amendments, including one that would have required increased fuel economy for automobiles, that were defeated.

The oil and gas subsidies "will put hundreds of millions of dollars into the already deep pockets of the major oil companies," complained Rep. Ron Kind, D-Wis. The bill's supporters said most of the benefits will go to small, independent producers who otherwise would not pursue deep drilling or develop marginal wells.

In all, the bill provides $18.7 billion in tax breaks, mostly aimed at the oil and gas, nuclear and coal industries.

The White House strongly supported the House bill, which mirrors many of the energy priorities developed two years ago by Vice President Dick Cheney's energy task force. But the administration raised concerns about the breath of the tax breaks, which are nearly twice what the administration had wanted.

As it did two years ago, the House called for opening the coastal plain of the Arctic National Wildlife Refuge to oil development, a top priority of the administration, despite strong protests from environmentalists. The Senate last month rejected drilling in the refuge and Democrats there have vowed to block any energy legislation that would lift the current drilling ban.

An attempt to remove the ANWR language in the House was defeated 228-197.

House Republicans, both during committee action and on the House floor, turned back attempts to tilt the legislation more toward energy conservation and away from incentives for production, chiefly fossil fuels.

Although the bill contains some tax breaks for buying solar heating equipment and more efficient appliances, a proposal to require automakers to produce cars that burn 5 percent less fuel by 2010 was rejected 268-162. Cars burn 40 percent of the country's oil.

"How can we be silent on auto fuel efficiency if this bill is going to do anything at all?" asked Rep. Sherwood Boehlert, R-N.Y.

The legislation also includes provisions that benefit everyone from corn farmers who want to produce more ethanol to automakers seeking to develop hydrogen fuel cells and utilities that want to reduce their cost of building power lines.

Among the provisions:

  • A requirement to double the use of the use of corn-based ethanol - to 5 billion gallons a year by 2015.
  • A $1.8 billion program to promote development of hydrogen as a fuel for cars and electricity production.
  • A measure that lets companies avoid federal royalty payments on natural gas taken from very deep wells in the Gulf of Mexico.
  • Authority for federal energy regulators to direct the siting of electric power lines if states fail to do so. Utilities also would get tax breaks to reduce the cost of power lines.
  • A streamlining of the licensing process for hydroelectric dams.

    Tauzin hailed the legislation as a way to give "a good shot in the arm" to the nation's struggling economy and a major step toward improving energy security by reducing U.S. dependence on foreign oil.

    Democrats argued it would do little to cut oil imports which in the coming years are expected to grow to 60 percent of U.S. oil consumption, about 20 million barrels a day. The way to curtail oil imports is to focus on ways to get people to use less energy, they said.

    Under the bill, homeowners would get a $2,000 tax break for installing solar heating systems, but a similar credit for buying hybrid gas-electric automobiles - an incentive touted by the White House as a major energy saving initiative - was not included.

    In an attempt to gain support from GOP moderates, the House on Thursday night limited the total area for oil development in ANWR to 2,000 acres. Critics said the limits were misleading because the acres could be spread, like a spider web, across the entire 1.5 million-acre coastal plain that holds the oil.

    Rep. Ed Markey, D-Mass., sponsor of the anti-drilling amendment, criticized putting that oil "into SUVs that get 10 to 13 miles a gallon." If lawmakers are unwilling to improve auto fuel economy "we have no right to jeopardize a pristine wilderness that should be preserved for the next generation," he said.

    Rep. Don Young, R-Alaska, says those who argue against developing the refuge's oil don't have the facts and have not visited the area on Alaska's North Slope, just east of the oil-rich Prudhoe Bay fields.

    By H. Josef Hebert

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