A coalition of five Senate Republicans and five Democrats — known as the “Gang of 10” — Thursday unveiled comprehensive, bipartisan legislation offering what appeared to be the first real compromise on offshore drilling, proposing to open additional Gulf of Mexico areas and allow the states of Virginia, North and South Carolina and Georgia to opt into leasing off their shores. The measure would not open coastal areas off states such as New Jersey and California, which have bitterly opposed offshore drilling.

The Energy Reform Act of 2008 would bar production up to the 50-mile limit from shore and would require all new production to be used domestically. It also would create a commission to make recommendations to Congress on future areas of the Outer Continental Shelf (OCS) that should be considered for leasing. And the bill would provide for revenue sharing with states that allow leasing off their coastlines.

In addition to the OCS access, the measure lays the groundwork to transition the nation’s motor vehicle fleets to fuels other than gasoline and diesel and includes provisions on conservation and consumer tax credits.

Specifically the legislation would fund a $20 billion “Apollo Project-like” effort to support the goal of transitioning 85% of America’s new motor vehicles to non-petroleum-based fuels within 20 years. It would allocate $7.5 billion for research and development (R&D) on the major technological barriers to alternative fuel vehicles; $7.5 billion to help U.S. automakers and parts makers retool and re-equip to become the world leader in making alternative fuel vehicles; and provide consumer tax credits of up to $7,500 per vehicle as an incentive for Americans to buy advanced alternative fuel vehicles and up to $2,500 to retrofit existing vehicles with advanced alternative fuel engines.

In addition, the measure would extend the renewable energy, carbon mitigation and energy conservation and efficiency tax incentives, including the production tax credit, through 2012 to create greater certainty and spur investment. It also would offer consumer tax credits of up to $2,500 to buy highly fuel efficient vehicles; extend and expand the $2,500 tax credit for hybrid electric vehicles; allocate $500 million for R&D into new materials and other innovations to improve vehicle fuel efficiency; fund $2.5 billion for R&D on next generation biofuels and infrastructure; offer tax incentives for the installation of alternative fueling stations, pipelines and other infrastructure; and expand transmission capacity for power from renewable sources.

The Gang of 10 includes Sens. Kent Conrad (D-ND), Saxby Chambliss (R-GA), John Thune (R-SD), Lindsey Graham (R-SC), Blanche Lincoln (D-AR), Mary Landrieu (D-LA), Johnny Isakson (R-GA), Bob Corker (R-TN), Mark Pryor (D-AR) and Ben Nelson (D-NE).

A coalition of House lawmakers, led by Reps. John Peterson (R-PA) and Neil Abercrombie (D-HI), took similar action Thursday, introducing a bipartisan, comprehensive energy bill to lift the congressional moratorium on oil and natural gas drilling in closed areas of the OCS (see Daily GPI, Aug. 1).

The House bill would open waters 25 miles and beyond from shorelines to exploration and production, but would give coastal states the option to pass legislation banning activity between 25 miles and 50 miles offshore. Beyond the 50-mile limit, all waters would be open to drilling. The measure also would repeal the 125-mile moratorium on natural gas and oil production in the eastern Gulf of Mexico.

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