House-Senate negotiators on a $92 billion-plus FY06 emergency war and hurricane relief bill are likely to drop a $700 million rail project backed by the Mississippi delegation, GOP officials said. But the measure would make Senate Appropriations Chairman Cochran's life easier in other ways. GOP leaders have signed off on including in the bill an $873 billion spending cap for FY07, the same cap the House adopted last week. That is $9 billion less than the Senate budget resolution, but putting it in must-pass legislation like the supplemental spending bill could circumvent critics who feel it is too little. The final supplemental bill also might preserve some element of Cochran's language allowing shipbuilder Northrop Grumman Corp. to recoup losses suffered as a result of Hurricane Katrina-related contract delays, aides said.

Appropriations staff spent the weekend working on the supplemental, with the goal of wrapping up negotiations this week. But the House has a packed floor schedule and its leaders have not yet named House conferees so the formal conference can be convened. House Majority Leader Boehner said last Friday he hoped a conference agreement would be ready this week, "but I think they have a big job ahead of them."Senate Majority Leader Frist said on the floor today that he has been urged by Pentagon officials to get the bill done quickly. "It is clear that this money is needed. And we need to work together to accomplish that this week," Frist said. "We're working very, very hard in that regard." Negotiators have been stymied largely on the Gulf Coast rebuilding portion of the bill. Cochran included the railroad provision as part of his committee's version, arguing that relocating CSX Corp.'s railroad tracks inland would protect it from future hurricane damage and make room for necessary economic development on the coast. The funds made it through the Senate despite a close vote on an attempt to kill it by Sen. Tom Coburn, R-Okla., who said the proposal was an expensive boondoggle that should not be paid for by the federal government.

The Bush administration and House leaders have made it abundantly clear they will not allow a bill to come out of conference with the provision intact. "The railroad is out," said one GOP lawmaker familiar with the discussions. Republican aides said negotiators have not yet formally agreed to strip the project, but that it would probably not make it into the conference report. Cochran's spokeswoman, however, disputed the contention that negotiators have agreed to drop the CSX project. She said it was "still on the table" but added it was "certainly open for negotiations." If Cochran were to concede removal of the rail project, it might allow for a more favorable resolution to the Northrop Grumman dispute. As drafted, the language would direct funds to Northrop to compensate for losses at Pascagoula, Miss., and New Orleans shipyards that are currently tied up as a result of a court battle with the firm's insurer. The total has not been specified, but Northrop says it would be no more than $200 million. The House and White House oppose the provision, but aides said they were trying to work out a compromise