Federal versus states rights took center stage during the second day of mark-up of comprehensive energy legislation before the House Energy and Commerce Committee Tuesday.

Undoubtedly, the most controversial amendment was offered by Rep. Edward Markey (D-MA) to strike language in the energy bill that would give the Federal Energy Regulatory Commission, not states or local communities, exclusive jurisdiction over the siting of liquefied natural gas (LNG) import terminals. The Markey amendment had not been voted on at press time, but it was expected to be defeated.

“To strip the language from the bill is extremely short-sighted,” said Rep. Joe Barton (R-TX), chairman of the House Energy and Commerce Committee. “This is one of the most important elements in the bill.”

In addition giving sole siting authority to the Commission, the energy bill requires FERC to consult with states during the approval process for LNG facilities, and guarantees the states the right to inspect newly constructed LNG facilities once in operation. “I want the states involved” in this process, Barton said. FERC Chairman Pat Wood has commented he is concerned because the bill’s language gives the states more authority than they have under current law.

Federal preemption of LNG import terminals is necessary because FERC has the expertise in this area, said Rep. Ralph Hall (R-TX). But states have not been ignored; they have been given a “strong role.”

The energy bill’s LNG provision imposes “troubling and completely unwarranted restrictions” on the states, countered Rep. Lois Capps (D-CA). She noted FERC’s “arrogant disregard” of the California Public Utilities Commission’s position on the planned Long Beach, CA, LNG terminal has driven the issue into the courts.

By a vote of 29 to 19, the House energy panel earlier defeated an amendment, offered by Rep. Jim Davis (D-FL), that sought to strike a provision in the energy bill that would require coastal states to base their appeals of energy project approvals on the record established during a FERC proceeding.

The existing provision in the energy bill is aimed at shortening the process when states appeal a FERC certificate ruling to the Department of Commerce, claiming that the project is inconsistent with their rights under the Coastal Zone Management Act (CZMA).

The energy measure, “The Energy Policy Act of 2005,” would “take away the voice of the states” during the appeal process, Davis said. Barton opposed the Davis amendment, saying that any appeal should be based on the FERC record, and not “some new information that is thrown over the transom at the last minute.”

States should have the ability to “move beyond” FERC’s record, countered Rep. Frank Pallone (D-NJ). “I think it is outrageous the language” in the omnibus energy bill.

“We are preempting [states’ rights] like crazy in this bill,” said Rep. Anna Eshoo (D-CA).

Rep. Capps argued that the FERC record with respect to an energy project is a “limited record skewed toward development,” and cuts out the rights of states to protect their coastlines. If states can’t introduce new information during the appeal process, they would be unable to potentially stop “dangerous projects” from being sited in their backyards, she said.

On another issue involving federal-states’ rights, the House energy panel opposed an amendment, sponsored by Rep. Bart Stupak (D-MI), that called for Congress to prohibit directional oil and natural gas drilling underneath the Great Lakes.

The existing energy bill encourages surrounding states to bar drilling under the Great Lakes, but Stupak asked lawmakers to go one step further and impose a federal ban. The existing moratorium expires in 2007.

“I think it’s hypocritical” to allow drilling in Texas, Louisiana and other coastal states, but ban it in the Great Lakes, said Barton, who opposed the Stupak amendment. It’s also “bad public policy” to preempt states. “We are preempting states all of the time in this bill,” Stupak responded.

By a vote of 26 to 23, the committee instead approved an amendment to Stupak’s amendment, which was sponsored by Rep. Mike Rogers (R-MI), that called for drilling decisions in the Great Lakes to be left to the states’ governors and legislatures. The federal government “should keep its nose out” of drilling in the Great Lakes.

Rogers’ amendment “doesn’t make anything mandatory,” countered Stupak, adding that it essentially keeps the language in the energy bill the same. “We want to see a permanent ban.”

Rep. Charlie Norwood (R-GA) argued that if the Great Lakes states opposed energy exploration, then their energy consumption should be reduced. “If you want to go by candlelight, that’s none of my business.”

Rep. Gene Green (D-TX) said the Stupak amendment “was going in the opposite direction” of the House energy bill, which sought to increase oil, natural gas and electricity supplies.

“We need to not be closing the doors” on energy production, agreed Rep. Charles “Chip” Pickering (R-MS).

At press time, the committee has nearly completed the first three titles of the energy measure. It was expected to resume work on the energy bill Wednesday morning. The House Resources Committee and House Ways and Means Committee also will mark up their portions of the energy bill Wednesday. The measure would be referred to the House Rules Committee, which would merge them into one major bill and send it to the House floor for consideration next week.

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