Democrats in the House of Representatives are looking to fulfill one of their "Six for '06" campaign promises this week with a bill aimed at investing in alternative fuels and reigning in big oil's profits.

The bill, which was unveiled on Friday and is scheduled for a vote on Thursday, is called the "Creating Long-Term Energy Alternatives for the Nation" or "CLEAN" Act. One major focus of the bill is to eliminate a royalty loophole for Gulf of Mexico drillers:

The issue stems from an error — or perhaps something more nefarious, though nothing more has been proven — in which the Interior Department failed to include in 1998-99 leases the required language that would have forced the oil companies to pay the government royalties on the oil and gas taken if prices reached a certain level.

The contracts, which involved deep-water drilling leases in the Gulf of Mexico, exempted the company from having to pay royalties as a way to stimulate exploration of the deep water areas of the Gulf of Mexico. That was OK as long as oil and gas prices stayed low as they did in the 1990s.

Times and oil prices changed, but the contracts did not. House Majority Leader Steny Hoyer (D-MD) has estimated that closing the loophole will mean $9 to $11 billion in additional income for the federal government, which Hoyer also said would be used to fund alternative fuels research and development.

The proposed bill would also disallow oil companies from being classified as manufacturers, thereby excluding them from a massive 2004 tax credit for manufacturers. This component of the bill will cost oil firms $4 billion over the next ten years. Furthermore, a tax cut under the Energy Policy Act of 2005 would be repealed for the six largest American oil companies, adding another $1 billion to federal coffers over the next decade.

The Independent Petroleum Association of America (IPAA), which represents more than 5000 mostly small oil and natural gas producers in the US, is not amused:

If the goal is to lessen our dependence on foreign oil, then this bill falls far short," said IPAA President Barry Russell. "The American oil and natural gas industry is our most precious and primary defense against increased oil imports. This is a time to encourage American investment in energy projects here at home, not discourage it. This bill takes capital from U.S. oil and natural gas companies that otherwise would be spent on domestic energy exploration.

It should be noted that the Russell isn't talking about clean alternative fuels exploration and development, but simply exploration of domestic fossil fuels.

To the delight of energy policy wonks everywhere, the CLEAN Act in the House is being joined on the Senate side by an Obama/McCain/Lieberman greenhouse emissions cap proposal and by Alaska Republican Sen. Ted Stevens' (surprising?) bill proposal that would drastically increase CAFE fuel mileage standards. It's shaping up to be a great week to introduce your TiVo to C-SPAN.