Lawmakers wage battle over subsidies for ethanol, pipeline

WASHINGTON - Some of Congress' most powerful lawmakers are battling each other over proposed tax subsidies for both corn-based ethanol and a new Alaska natural gas pipeline, making agreement on a broad energy bill all the more difficult.

It's "a battle royale," says Sen. Pete Domenici, R-N.M., chairman of the energy negotiations, who has been frustrated at the inability to get agreement on a handful of tax disputes and other issues holding up the legislation.

Domenici on Friday postponed a meeting planned for Tuesday to begin voting on a compromise energy package, citing the inability of House and Senate Republicans to agree on a range of issues including ethanol tax subsidies, tax breaks for clean coal technology and the future of a gasoline additive, MTBE, which is contaminating drinking water supplies.

Alluding to the opposition among Senate Democrats and some Republicans to some of the House GOP demands, Domenici said he had no intention of putting together a bill "that cannot pass the Senate."

But even the Senate's top leaders so far have been unable to impose enough pressure to get warring lawmakers to overcome their differences - in part because those who are at loggerheads also wield considerable influence and power on Capitol Hill.

In recent days, the energy talks have been hung up because of a sharp disagreement between Congress' two principal tax writers - Sen. Charles Grassley, R-Iowa, and Rep. Bill Thomas, R-Calif. - over ethanol tax credits.

Because of its wide political support, ethanol has been viewed by many lawmakers as the linchpin of the massive energy legislation. The bill calls for doubling ethanol use in gasoline to 5-billion gallons a year, a huge boon to farmers.

A dispute over tax subsidies for a proposed $20-billion pipeline that would bring natural gas from Alaska's North Slope to the Midwest also involves one of the Senate's most powerful members.

Sen. Ted Stevens, R-Alaska, chairman of the Appropriations Committee, has insisted that the bill include tax incentives and loan guarantees to get investor interest in building the 3,500-mile pipeline.

The White House supports most of the pipeline incentives, including loan guarantees, but not a proposed tax credit on Alaska gas that would kick in if natural gas prices fall below a certain level.

© 2006 • All Rights Reserved • St. Petersburg Times 490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111 Contact the Times | Privacy Policy Standard of Accuracy | Terms, Conditions & Copyright