- The Washington Times - Thursday, July 19, 2001

The House Ways and Means Committee last night passed legislation that would provide $33 billion over the next decade in energy tax breaks.

The vote passed on party lines 24-17. While there are a handful of provisions that apply to individual taxpayers, the bulk of the tax breaks are targeted at businesses and most are focused on increasing energy production from oil, gas and other traditional fuels.

"This bill represents a well-balanced package," Ways and Means Committee Chairman Bill Thomas, California Republican, said. It promotes "conservation, reliability and production," he said.

The bill will be combined with a series of energy-related measures being considered by other committees and brought to the full House for a vote sometime this summer, Mr. Thomas said.

Democrats say the bill is filled with "rifle shots" — provisions aimed at helping one or two businesses. However, Democrats focused their criticism on the bill's effect on the budget.

"If we were writing the bill, it would be different," one Democratic committee aide said.

He and other Democrats argued that the measure should be offset with other tax increases to assure that federal budget surpluses do not shrink to the point of relying upon Medicare and Social Security trust funds to keep the budget in balance.

House Budget Committee Chairman Jim Nussle, Iowa Republican, has said no such offset is necessary.

The legislation would extend through 2006 the tax credit for energy produced from wind, chicken manure and plants grown solely for energy production. It would create a new income tax credit for alternative fuel vehicles. It would also create a 10 percent tax credit for investments in electric plants run with "clean coal technology."

The measure received glowing responses from industry groups.

"Thank you again for your forward thinking efforts to achieve energy and water conservation through innovative tax policies," Maytag Chairman and CEO Ralph Hake wrote in a July 17 letter to Mr. Thomas. His business will benefit from a five-year tax credit for energy-efficient refrigerators and washing machines.

A coalition of Western diesel refiners also wrote to thank the chairman for including a 10-year, $96 million provision that would allow them to write off the expense of complying with Environmental Protection Agency low-sulfur diesel requirements.

The bill would save oil and gas companies $5 billion over the next decade by accelerating the rate at which they can depreciate the costs of pipelines and refineries.

Another $8 billion would go to provide tax credits for oil and gas production from marginal wells, to allow oil and gas companies to carry losses back five years and to ease their minimum tax rules.

The measure does not include administration-backed proposals to extend the income tax credit for ethanol, to provide a tax credit for energy produced from landfill gases, and to offer tax credits for investments in combined heat and power systems that use waste heat to produce further energy.

Still, Deputy Treasury Secretary Mark Weinberger said the administration supports the bill because it puts Congress a step closer to enacting a comprehensive energy plan.

In another development, the Energy and Commerce Committee rejected a measure that would have brought automobile fuel economy to 37.5 miles per gallon (mpg) in 10 years, arguing that such an increase is not currently achievable and would damage the automobile industry. Supporters said that Congress can't properly address energy conservation without substantially cutting back on sport utility vehicles and other automobile gas guzzlers.

But the committee in a bill late last night agreed to require that sport utility vehicles be held to more stringent fuel economy rules with a requirement they cut gasoline use by 5 billion barrels during the next six years.

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