Despite the threat of a White House veto, the House yesterday approved energy legislation that would authorize the issuance of $5.5 billion of taxable tax-credit bonds, including up to $2 billion of a new type of clean renewable energy bond for public power providers, electric cooperatives, and states and localities. The House passed the bill, which is designed to increase production of energy from renewable sources, by a 235-to-181 vote following an afternoon of spirited debate. House Speaker Nancy Pelosi, D-Calif., called the bill “historic” and said “this vote on this legislation will be a shot heard around the world for energy independence for America.”The bill now goes to the Senate where Majority Leader Harry Reid, D-Nev., said at a news conference yesterday that he plans to schedule a vote on Saturday to limit debate on the energy measure.But the legislation is expected to face significant opposition in the Senate in part over provisions in the bill that would roll back $13 billion in tax subsidies to the oil and gas industry to pay for most of the $21 billion tax package, which includes the authorization for $5.5 billion of tax-credit bonds. Earlier this year, senators representing oil-producing states held up energy tax legislation over a similar provision. Detractors of the measure claim that the oil and gas tax provisions will reduce domestic exploration and increase gas prices. The provisions are among the reasons why President Bush would veto the bill. The president also said he opposes the clean renewable energy bonds, or CREBs, as well as two other tax-credit bond programs authorized by the bill.“Current law already provides sufficient federal assistance to encourage these efforts,” the White House said in a statement threatening a veto.Created in 2005, CREBs are taxable tax-credit bonds that municipal issuers can use to finance renewable energy projects, such as projects that generate electricity using the sun or wind. Tax-credit bonds provide the holder with an income tax credit in lieu of tax-exempt interest payments. Congress has authorized issuance of $1.2 billion of CREBs to date.The bonds would differ from previous CREB authorizations, which were divided between governmental entities and electric cooperatives with no separate category for public power utilities. The bill does not include a time limit on issuance of the debt. Of the $2 billion of new CREB authority, one-third would be used for public power projects and one-third would be used for electric cooperative projects. The rest would go to non-utility state and local government projects, such as transit agencies, which have shown interest in the program.During debate on the measure, House Minority Leader John Boehner, R-Ohio, and other Republicans reiterated their criticism that the legislation does not contain enough limitations on the projects that may be financed with CREBs and could easily be abused. The bill also includes two new categories of tax-credit bonds. Under one bond program, states and localities would be allowed to issue up to $3 billion of qualified conservation bonds to fund initiatives designed to reduce greenhouse gas emissions. The other would authorize issuance of up to $500 million of bonds for projects designed to acquire land for forestry conservation purposes. Republicans yesterday also took aim at the $500 million tax-credit bond program, claiming that it is designed to facilitate the sale of Plumb Creek Timber Co.’s Montana land holdings to the Nature Conservancy. Details of exactly how the deal would work were not immediately available.Meanwhile, Senate Democratic leaders are working on a deal with Republicans to pass a one-year “patch” to the individual alternative minimum tax to prevent it from applying to an additional 23 million taxpayers this year.The AMT proposal does not include an offset. The compromise proposal was offered by Reid after a failed effort to limit debate on legislation approved by the House last month that would provide AMT relief and pay for the provision.Sen. Judd Gregg, R-N.H., rejected the deal on behalf of Republican leaders after Reid suggested it following the failed vote to limit debate. However, Gregg said that he hoped that a compromise could be worked out soon. The AMT applies to interest earned on private-activity bonds as well as some governmental and 501(c)(3) bonds.
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