House lawmakers worked into the night Wednesday, vigorously debating the Republican-focused omnibus energy bill, with GOP legislators touting the environmental, conservation and supply features of the packed energy initiative, while Democrats assailed the $33 billion in tax credits being offered to producers. Because debate was expected to last 12 hours, Capitol Hill observers did not expect a final vote until late Wednesday at the earliest.

At press time, the House had defeated an amendment, offered by Rep. Gene Green (D-TX), that sought to abolish the authority of the California regulators to designate certain in-state gas pipelines as Hinshaw exempt, which excuses them from FERC oversight. The issue triggered a regional dispute between Texas and California lawmakers.

Green argued that his measure would begin “the process of rescuing California” from the high prices for natural gas within its borders. Given the state’s reliance on the Hinshaw exemption for its in-state pipelines, he claimed that the “real villains” for the abnormal gas prices seem to be closer to Sacramento, CA, than outside of the state. Green, as well as Texas Republican Joe Barton, further said the disparity between interstate gas pipeline capacity into California and the in-state pipe capacity would be significantly reduced by the measure.

Rep. Henry Waxman (D-CA) countered that the state’s Hinshaw exemption authority had no bearing on the state’s gas prices and capacity situation, but instead he pinned the blame on alleged price manipulation by El Paso Natural Gas. “From a California perspective, this [Green proposal] is a very dangerous amendment,” he said. The proposal would put California “at the mercy of FERC” even more than it is now, Waxman claimed.

The House approved by 281-148 a manager amendment sponsored by Rep. W.J. “Billy” Tauzin (R-LA) which, among other things, would direct the energy secretary and FERC chairman to jointly study the location and extent of anticipated demand growth for natural gas consumption in western states.

Key House Democrats signaled Wednesday they were marshaling their troops in an attempt to defeat the comprehensive energy bill, after having been denied an opportunity to offer for consideration a Democratic substitute to the Republican measure.

The Democratic substitute, which the Rules Committee rejected, would have made the energy legislation “fiscally responsible, more balanced in terms of conservation, and targeted [production] incentives more towards smaller producers,” said a spokesman for Rep. Martin Frost (D-TX). Because of the Rules panel’s action, “a lot of Democrats will vote against final passage” of the massive energy bill, entitled Securing America’s Future Energy Act of 2001 (H.R. 4).

Frost, chairman of the Democratic Caucus energy task force, criticized the Republican bill for failing to explain how it will fund the $33 billion in energy tax credits that were being proposed. The measure will result in a “head-long…raid on the Medicare Trust Fund,” he said. Republicans “want to put everything on the national credit card.”

From the House floor, Frost said Democrats Edward Markey of Massachusetts, and Charles Stenholm and Max Sanlin of Texas offered a solution to the problem, proposing that the tax cuts recently passed by Congress be adjusted to pay for the proposed energy tax incentives. But the Republican-controlled Rules Committee dismissed it for consideration on the House floor, he noted.

Other Democrats called the energy tax incentives a “$33 billion grab bag,” and “fiscally irresponsible.” They warned that Congress has already dipped into the Medicare Trust Fund this year, and was dangerously close to doing the same with Social Security.

Critics who claim that the Republican energy bill “raids the Social Security Trust Fund [are] either intentionally misleading the public, or [are] exhibiting a lack of understanding of the Social Security Trust Fund and Medicare Trust Fund,” countered Rep. Jim McCrery (R-LA), chairman of the House Ways and Means subcommittee on select revenue measures.

The House Rules Committee had okayed 17 amendments to be debated and voted on by the House, including one to prohibit oil and natural gas drilling in the Arctic National Wildlife Refuge (ANWR). The committee rejected consideration of the balance of the 140 amendments that had been proposed by lawmakers.

The massive, 510-page energy bill incorporates individual bills that were voted out by four House committees last month: Energy and Commerce, Resources, Ways and Means, and Science.

The Rules panel cleared three ANWR-related amendments for consideration: one that would strike an existing provision in the House Republican energy bill to open the Arctic refuge to drilling; a second that would limit oil and gas activity in ANWR to 2,000 acres; and another that would earmark federal funds derived from drilling in ANWR for renewable energy research and development, and eliminating the maintenance/improvement backlog on federal lands. The House had not yet taken up the amendments by press time yesterday.

Most Capitol Hill observers believe striking ANWR from the legislation is essential if the House is to pass an omnibus energy bill before it leaves for its traditional August recess at the end of the week. Majority Whip Tom DeLay (R-TX) and other House leaders have vowed to approve the bill by then.

The Rules Committee also cleared for floor consideration an amendment, sponsored by Rep. Waxman, to direct the Federal Energy Regulatory Commission to impose cost-of-service rates on power generators selling to the western market for 18 months, until new power supplies comes on line.

An amendment that evoked considerable controversy on the House floor yesterday called for an increase in the combined corporate average fuel efficiency (CAFE) standard for passenger automobiles and light trucks to 27.5 miles/gallon beginning in 2007, with an intermediate rise to 26 miles/gallon in 2005. The bi-partisan amendment, which hadn’t been voted on by press time, was proposed by Reps. Markey and Sherwood Boehlert (R-NY).

Another key amendment directed the federal government to study and evaluate the availability of gas and oil deposits located off the coasts of Louisiana and Texas.

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