The Senate last week passed by voice vote legislation that could make it tougher for foreign companies to buy U.S. electric power companies and other domestic energy assets.

The Senate measure (HR 556) would revamp the operations of the inter-agency Committee on Foreign Investment in the United States (CFIUS), which reviews the national security implications of foreign acquisitions or takeovers of companies involved in interstate commerce in the United States.

The House passed a similar bill to strengthen U.S. reviews of foreign investments in late February. A formal House-Senate conference to reconcile the two bills may not be necessary, given their similarities and the strong bipartisan support for the legislation, CQ Today reported.

Lawmakers called for reforms last year when CFIUS approved the sale of a U.S. port operator to Dubai Ports World, a United Arab Emirates-owned company, without conducting the required investigation into the national security implications of the deal. Also raising concern was China’s CNOOC Ltd.’s politically charged $18.5 billion bid for Unocal in 2005. The offer by CNOOC, China’s largest producer of offshore oil and gas, came under intense scrutiny in Washington, with lawmakers clamoring for hearings into the transaction (see Daily GPI, Aug. 3, 2005).

Both the House and the Senate last year passed measures that would have implemented changes, but the legislation failed in conference.

CFIUS is chaired by the secretary of the Department of Treasury. Committee members include representatives from a number of other agencies, including homeland security, commerce, defense, state, the U.S. attorney general’s office and national intelligence. The Senate bill adds the secretary of the Department of Energy as a CFIUS member.

In addition, the Senate measure would strengthen the role of the director of National Intelligence in investigating threats to national security posed by foreign purchases of U.S. assets, mandate the designation of a lead agency for each transaction, and provide a 30-day review of transactions covered by CFIUS to determine their effects on national security.

The bill cleared the Senate just days after Spanish-based powerhouse Iberdrola SA agreed to acquire Portland, ME-based Energy East for an estimated $4.5 billion (see Power Market Today, June 26). The New England utility serves 1.8 million electricity customers and 900,000 natural gas customers along the East Coast in Maine, New Hampshire, Massachusetts, Connecticut and New York.

With the Energy East transaction, the enterprise value of Iberdrola would surpass the$112 billion mark, and it would become one of the world’s largest electricity operators.

In unrelated action, Australia’s Babcock & Brown Infrastructure (BBI) has submitted a revised offer after Montana regulators turned down an initial bid of $2.2 billion for state utility NorthWestern Energy (see Daily GPI, June 28). The state’s governor told BBI to get out of town.

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