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Energy Bill Handily Passes Senate by 3-to-1 Margin, Next Stop White House

Long-awaited omnibus energy legislation is headed to the White House after it cleared the Senate by a nearly three-to-one margin Friday and was voted out by the House a day earlier, crossing the finishing line ahead of the Aug. 1 deadline set by President Bush.

By 74 to 26, the Republican-led Senate approved the bipartisan energy bill conference report (HR 6) that overhauls U.S. energy policy for the first time in 13 years. The measure seeks to bolster production of oil, natural gas, electricity and renewable fuels, as well as the construction of new liquefied natural gas (LNG) import terminals, pipelines and gas storage facilities. It also repeals the Public Utility Holdings Company Act of 1935, seeks to upgrade the reliability of the power transmission grid, includes provisions to expand the nuclear industry in the U.S. and contains $14.5 billion in energy tax incentives.

The favorable vote ended a four-year stalemate in the Senate and came one day after the House approved by 275 to 156 the energy conference report, which was completed by House-Senate conferees last Tuesday.

The decision to drop liability protection for producers of the gasoline additive methyl tertiary butyl ether and drilling in Alaska's Arctic National Wildlife Refuge (ANWR) paved the way for the easy victory in the Senate. The measure would likely still be hung up in the chamber if the two issues remained.

The legislation is a significant victory for Bush, who has been pressing for a national energy policy since he first took office in early 2001. He is expected to sign the bill into law even though it fails to deliver some key items, such as drilling in ANWR and fewer tax incentives for oil and natural gas companies amid record energy prices. A date for the signing of the bill by the president has not been scheduled yet.

Before voting on the conference report, the Senate defeated a procedural motion raised by Sen. Russ Feingold (D-WI) that held the energy measure violated the Budget Act by exceeding the amount allotted for the bill. The Congressional Budget Office estimated that enactment of the bill would increase direct spending by $2.2 billion over the 2006-2010 period, which was $200 million more than what the Senate Budget Committee allowed.

Noting that the amount was just $200 million, Sen. Pete Domenici (R-NM) called Feingold's motion a "nothing point of order," and motioned for a waiver of the Budget Act. The Senate agreed to the waiver by a vote of 71 to 29.

With this bill, "we will enhance our supply of natural gas," and stabilize prices, said Domenici, the chief Senate negotiator on the conference panel and chairman of the Senate Energy and Natural Resources Committee. "Our electrical system will be...safer and more sound," and "we will have diversity of energy [sources]," he said prior to the Senate vote.

The natural gas industry echoed those sentiments. "This energy bill paves the way for new efforts to bring natural gas prices down for everyone," said David Parker, president of the American Gas Association, which represents local distribution companies. But relief will not come immediately. "The energy predicament we find ourselves in did not happen overnight. Fixing it will take hard work by the industry and cooperation from government. The industry is up to the challenge," said Joseph A. Blount, chairman of the Natural Gas Supply Association, which represents major producers.

FERC Chairman Joseph Kelliher said the new energy bill gives the Commission "significant new responsibilities to oversee and enforce mandatory power grid reliability rules, to protect against market manipulation and the exercise of market power, to reform the hydropower licensing process and to strengthen our nation's energy infrastructure -- particularly the interstate [gas and electric] transmission grid and liquefied natural gas import facilities."

"I feel very strongly that the positives outweigh the negatives in this bill," said Sen. Jeff Bingaman (D-NM), a top Senate negotiator on the conference committee. "Overall, it is a very balanced piece of legislation," echoed Sen. Mary Landrieu (D-LA).

"This is a great day," said Rep. Joe Barton (R-TX), chairman of the House-Senate conference panel, as the House began its final lap on the energy bill last Thursday. This is the "best bill that's ever been before the Congress."

But House Democrats decried the bill, saying it was "chock full of giveaways" and special-interest favors for big oil and gas, put the interests of energy companies ahead of those of consumers, was a "missed opportunity" for ensuring the energy security of the nation, and was a "dog of a piece of legislation."

Rep. Edward Markey (D-MA) led the charge against the legislation, saying it was packed with royalty relief, tax breaks, and loan guarantees as oil and gas companies were reporting their largest quarterly profits ever. He contends the energy tax breaks and royalty relief would be financed on the back of the Social Security trust fund. Congress "[is] erecting a huge oil rig" on top of that fund.

In response to the House critics, Barton noted that the majority of Republicans and Democrats on the House-Senate conference committee signed the final conference report, signaling their approval.

While the measure does not include exploration and production on the coastal plain of ANWR and does not "go far enough" to increase domestic production, it is a "great start," said Rep. Richard Pombo (R-CA), chairman of the House Resources Committee.

Rep. John Dingell of Michigan, a key Democratic negotiator on the conference panel, agreed that although the bill was not perfect, it was a "solid and good beginning." He urged Democrats to vote for the measure.

Also expressing support for the bill was Rep. Bart Stupak (D-MI), who noted he personally liked the provision that would permanently ban oil and natural gas drilling on the U.S. side of the Great Lakes. But he said he would have preferred fewer tax breaks for corporations.

Rep. Bobby Rush (D-IL), who voted for the bill, said it would increase authorized funding for the Low-Income Home Energy Assistance Program to $5.1 billion.

Rep. Jim McGovern (D-MA) criticized the measure for extending the reach of the federal government into what he said should be state and local decisions on the construction of new LNG terminals. To the chagrin of the states, the legislation gives the Federal Energy Regulatory Commission "exclusive" jurisdiction over the siting of onshore LNG terminals.

"I think we could have done much, much better," he said, in urging House lawmakers to defeat the bill.

Rep. Lois Capps (D-CA) rapped the energy bill primarily because it authorizes the federal government to conduct an inventory of oil and natural gas resources on the Outer Continental Shelf (OCS), which she said was an "attempt to begin dismantling" the congressional moratorium on drilling on much of the federal offshore. "We shouldn't start down that road to drilling off the coast," echoed Rep. Henry Waxman (R-CA).

A number of House lawmakers representing coastal states, such as Reps. Cliff Stearns and Michael Bilirakis of Florida, sought assurances from Pombo that an inventory would not upset the existing moratorium. Pombo told the lawmakers he would work with the coastal states that could be affected.

Rep. Gene Green (D-TX) said many House lawmakers opposed the bill because they claimed it wouldn't do much to hike domestic energy output. But ironically, he noted that these are the same lawmakers who are against oil and natural gas drilling in the United States.

Key natural gas features of the sweeping energy bill:

The entire House-Senate conference report on the energy bill is available at http://energy.senate.gov and http://energycommerce.house.gov.

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