Senators unveil bipartisan energy plan

WASHINGTON —  In a possible breakthrough on energy, a bipartisan group of senators unveiled a compromise Friday that would preserve the oil-drilling ban off the West Coast while easing restrictions on exploration off the East Coast and in the Gulf of Mexico.

The proposal also would provide billions to greatly expand the availability of vehicles powered by alternative fuels.

In unveiling the ambitious plan, the senators -- five Democrats and five Republicans who call themselves the Gang of 10 -- hope to break a partisan standoff that sent lawmakers home on their monthlong summer recess Friday without action on major legislation to address high gasoline prices.

But the proposal’s pros pects appear remote this election year, with time running out on the congressional session and the parties highlighting their differences on energy.

And a number of the proposals remain controversial -- expanding drilling off Florida, reviving the nuclear industry, boosting efforts to convert coal into fuel for motor vehicles.

At home, lawmakers are likely to hear from voters about canceled vacations and tighter family budgets because of high gas prices.

When Congress returns to Washington in September, “we hope that colleagues will have heard from their constituents that something has to be done, and done before Congress finishes its business this year,” said Sen. Kent Conrad (D-N.D.), a leader of the bipartisan group that forged the plan.

The proposal is the first sign of progress on an issue that has stirred anxiety and animosity on Capitol Hill.

Senate Majority Leader Harry Reid (D-Nev.) said he was hopeful the compromise “can begin to break the current legislative stalemate on the Senate floor.”

The proposal would offer concessions to Republicans who have called for increased domestic production: An area of the Gulf of Mexico, 50 miles off Florida’s coast, would be open to drilling; and Virginia, the Carolinas and Georgia could decide whether to allow drilling 50 miles off their shorelines.

The senators excluded efforts to lift the long-standing ban on new drilling off the California coast or to open Alaska’s Arctic National Wildlife Refuge to energy exploration as too contentious and likely to complicate passage of the plan.

In a significant shift, the group’s Republicans agreed to repeal a key oil industry tax break and force oil companies to pay billions in royalties to the U.S. Treasury for drilling in the Gulf of Mexico.

Democrats have tried to repeal industry tax breaks in the past but have been thwarted by a GOP-led Senate filibuster.

But a number of Republicans are finding it hard to defend the tax breaks while oil companies record high profits.

An estimated $30 billion that would be paid by the oil companies over 10 years would help fund initiatives such as $7.5 billion to help U.S. automakers expand the production of alternative-fuel vehicles. Funding also would be provided for tax credits to encourage consumers to buy more fuel-efficient cars and for extending tax credits to promote energy efficiency and cleaner energy sources, such as sun and wind power.

In a statement, Sen. Barack Obama of Illinois, the likely Democratic presidential nominee, welcomed the proposal, saying it included measures he had advocated such as repealing oil industry tax breaks. But he said he remained skeptical that new offshore drilling “would bring down gas prices in the short term or significantly reduce our oil dependence in the long term.”

And in an interview with the Palm Beach Post in Florida, Obama said he might support limited additional offshore drilling as part of a comprehensive policy to promote fuel-efficient autos and alternate sources of energy.

Sen. John McCain of Arizona, the presumptive Republican presidential nominee, has called for lifting the offshore drilling ban. In a statement, his campaign said the country needs an “ ‘all of the above’ approach” and chided Obama for opposing expansion of offshore drilling.

White House Press Secretary Dana Perino said the Bush administration would consider the legislation.

“We would need to see a bill that would increase the supply here in our own country, across the board, in a comprehensive way,” Perino said, adding that “alternatives and renewable energies” are needed too.

Sen. Saxby Chambliss (R-Ga.) initiated the bipartisan talks several weeks ago, approaching Conrad after another day of partisan warfare in the Senate over energy policy.

Chambliss acknowledged that the bipartisan talks irked party leaders. “The fact that they’re uncomfortable means we’re doing the right thing,” he said.

But though the proposed compromise enjoys bipartisan support, the five Democrats who endorsed it hail from states that voted for Bush in 2004.

Other senators putting forth the plan are Democrats Mary L. Landrieu of Louisiana, Blanche Lincoln and Mark Pryor of Arkansas and Ben Nelson of Nebraska; and Republicans Johnny Isakson of Georgia, Lindsey Graham of South Carolina, Bob Corker of Tennessee and John Thune of South Dakota.

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richard.simon@latimes.com