U.S. Congress to oppose EU law on aircraft emissions

WASHINGTON (Reuters) - The U.S. Congress will formally express its opposition to a European law aimed at reducing pollution from jetliners, a thorny diplomatic issue that has threatened to escalate transatlantic trade tensions.

House and Senate negotiators have agreed to a provision in sweeping aviation legislation that would put Europe on notice over its mandate for airlines worldwide to pay for carbon emissions from their planes while flying in Europe.

The bill is expected to be passed by Congress in the coming weeks.

Compromise language expressing opposition to the law is less strident than a House-passed bill in October that sought to exempt U.S. carriers entirely from the EU measure that took effect January 1.

The modification is intended to align Congress with Obama administration sentiment and present a unified U.S. position on the politically charged environmental controversy.

Airlines say the EU law amounts to a new tax at a time when they are wrestling with historically high fuel costs and softening demand in domestic flights, especially in the United States.

China, India and other countries have called the EU law a violation of sovereignty.

Europe has said any congressional action over the law could harden diplomacy on both sides of the Atlantic and potentially lead to a trade fight.

The administration is considering retaliatory steps on its own to pressure Europe to retreat and negotiate a global carbon emissions policy for aircraft at the United Nations.

Members of an EU delegation to the United States were scheduled to meet this week with State Department officials to review the latest developments.

A State Department spokeswoman would not comment on recent correspondence from the EU delegation to U.S. officials.

Transportation Secretary Ray LaHood, however, said on Tuesday that there "are a lot of discussions going on" and "we need to continue to talk to them."

LaHood called the EU law a "very bad scheme" for airlines.

"I've told my colleagues (in Europe) that Congress is very upset," he said.

U.S.-based carriers affected by the EU policy are American Airlines, US Airways, United Airlines and Delta Airlines. U.S. carriers have raised fares to cover costs of complying with the change.

(Reporting By John Crawley; Editing by Eric Beech)