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Heated Debate Over LNG Siting Authority Expected During House Energy Bill Mark-Up

Siting authority over liquefied natural gas (LNG) import terminals will likely be the second most contentious issue facing the members of House Energy and Commerce Committee during mark-up of omnibus energy legislation, preceded only by the heated dispute over waivers for producers of methyl tertiary butyl ether (MTBE), said an official with a major natural gas pipeline group.

"I would anticipate it to be the most heavily debated topic other than MTBE," noted Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America (INGAA).

The House energy panel had an abbreviated markup session last week, adjourning before it got to the oil and natural gas title so committee members could attend the funeral of Pope John Paul II. It is expected to resume action on Tuesday.

In the current draft of the House energy bill, Edwards said lawmakers' intent is to house the LNG siting decisions at the Federal Energy Regulatory Commission, but allow the states to play a major role in permitting to protect the environment. By having jurisdiction over siting, the Commission alone would determine whether a proposed facility meets the public interest and where it should be located.

INGAA supports the House energy panel's draft measure "regarding the siting, permitting and regulation of [LNG] terminals. These provisions endorse an efficient process for the comprehensive review and siting of LNG import terminals, while maintaining a significant role for state governments in environmental permitting and safety/security oversight. The federal role in siting these facilities is of paramount importance to ensuring that there will be sufficient natural gas supplies to meet our future demands," wrote INGAA President Donald F. Santa Jr. in a letter last Monday to Rep. Joe Barton (R-TX), chairman of the House Energy and Commerce Committee.

In addition to backing the LNG siting provisions in the bill, Santa said the pipeline group supported a provision that would require the FERC administrative record, developed during its National Environmental Policy Act (NEPA) review, to be used as the exclusive record for all subsequent administrative and judicial appeals. It also endorsed expedited judicial review of permitting decision related to FERC-approved pipelines.

INGAA believes House lawmakers could make further improvements to the interstate pipeline approval and siting process in their bill, including clarifying FERC's "lead agency" status under NEPA and giving FERC the authority to establish a binding administrative schedule for all permitting decisions necessary to construct an agency-approved pipeline.

INGAA's Edwards expects the House energy panel to complete mark-up of its portion of the energy bill fairly quickly. The House Resources Committee has jurisdiction over the Arctic National Wildlife Refuge and other energy-related matters in the bill, while the House Ways and Means Committee oversees the energy tax package. The full House is expected to begin consideration of the energy bill during the week of April 18.

"It may be another month or so before they [the Senate] get started" on debating the energy bill, Edwards said. The Senate's top energy negotiators, Sens. Pete Domenici (R-NM) and Jeff Bingaman (D-NM), are trying to get a lot of the energy issues ironed out privately before they bring the bill to the floor, he noted.

Edwards expects the energy bill to sail through the House "without too much problem" this year. He believes that the GOP dominance in the Senate and the fact that Domenici and Bingaman are working together also "bodes well" for passage of energy legislation by the Senate this year.

In a related development, the Natural Gas Supply Association (NGSA) last Tuesday urged the panel to take "decisive action" and forward the measure to the House floor quickly.

"With a tightening balance between natural gas supply and demand, and energy costs increasing across the board -- putting additional financial strain on customers -- there is a clear and urgent need for an updated energy policy," wrote NGSA President R. Skip Horvath in a letter to Rep. Barton.

The NGSA, which represents producers and marketers, backed provisions in the bill that would allow for more offshore natural gas development, including offshore LNG facilities, and it urged the federal government to remove permitting barriers for new LNG facilities. It also called on Congress to clarify FERC's jurisdiction over the siting of LNG facilities.

In addition, the producer-marketer group favored increased producer access to non-park, non-wilderness federal lands, a move that a National Petroleum Council study estimated could save consumers up to $300 billion in natural gas costs during the next 20 years, according to Horvath. "Next, natural gas infrastructure must be sustained and enhanced to help the industry continue to improve reliability and to provide safe and efficient natural gas to customers."

Lastly, the NGSA "strongly supports" competitive and efficient gas markets, Horvath said. "We urge regulators to support physical and risk management tools that allow market participants to moderate the effects of price changes. Additionally, to create more efficient markets, we support improved price transparency and greater liquidity."

In the abbreviated mark-up session last week, the House Energy and Commerce Committee passed two "feel good" amendments to increase spending for a federal energy assistance program by 50% effective 2006 and extend Daylight Saving Time by a month at either end.

By a vote of 36-13, the House panel approved the amendment, sponsored by Rep. Bobby Rush (D-IL), to bolster funding for the Low Income Home Energy Assistance Program (LIHEAP) to $5.1 billion from $3.4 billion. Similarly, Rush's amendment authorized an additional $175 million for fiscal year 2006, an additional $200 million for fiscal year 2007, and $200 million more for 2008 for the federal Weatherization Assistance Program, which retrofits and weatherizes low-income households to help make them more energy efficient.

The proposal also raised the eligibility for both programs to 150% from 124% of the poverty level. If approved by the full House as part of a broader energy bill, the new funds would be available in 2006.

The House energy panel, however, defeated an amendment that sought to alter a formula for funding the LIHEAP by redirecting funds to help with the cooling costs in hot-weather states. The amendment, sponsored by Rep. Al Green (D-TX), "would effectively redistribute LIHEAP funds from cold weather states to warm weather states, neglecting the fact that low-income homeowner costs are approximately five times as much for heating as for cooling," said Rep. Edward Markey (D-MA), a vocal critic of the proposal.

In other action, the House committee approved an amendment that would extend Daylight Saving Time by two months. Under the proposal offered by Rep. Fred Upton (R-MI), the expanded daylight hours would begin on the first Sunday in March and would run through the last Sunday in November, Congressional Green Sheets reported last Thursday. Currently, Daylight Saving runs from 2 a.m. on the first Sunday in April to 2 a.m. on the last Sunday of October.

Proponents of the measure said it would result in more early evening activities and less electricity use.

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