The Senate on Tuesday passed a sweeping, bipartisan energy bill, bringing the Congress to the critical, do-or-die point of trying to reconcile the widely divergent House and Senate versions of the energy measure. Congress has failed at this task twice in recent years.

Following two weeks of debate, the Senate voted 85 to 12 to approve an $18 billion energy industry-friendly bill (HR 6) that removes roadblocks for natural gas transportation, liquefied natural gas (LNG terminaling and storage; reinforces FERC’s exclusive authority over the siting of LNG terminals; calls for an inventory to be conducted of all Outer Continental Shelf (OCS) oil and gas resources; provides incentives for oil and gas producers; and repeals the Public Holding Company Act of 1935, among other things (see Daily GPI, June 23).

“I hope there will be a new and reinvigorated supply of natural gas” as a result of the energy bill, which will reduce the pressure on gas prices, said Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee, preceding the vote. “The most important thing this bill does is to help stabilize and lower the price of natural gas,” echoed Sen. Lamar Alexander (R-TN).

But the Industrial Energy Consumers of America (IECA) attacked the measure for failing to take on natural gas prices directly. “The Senate and House energy bills both fail to include provisions that will bring resolution to the natural gas crisis and the high prices that have crippled U.S. manufacturing competitiveness,” said IECA Executive Director Paul N. Cicio.

The biggest disappointment is that neither energy bill relaxes the congressional moratorium on oil and gas drilling in much of the OCS, he noted. IECA said it was “heartened” by the significant OCS debate that took place on the Senate floor in the past two weeks. It added that every senator should know by now that the OCS access issue is not going away and they should give willing coastal states the opportunity to opt out of the moratorium and benefit from leasing royalties.

The Senate’s overwhelming approval on Tuesday was in stark contrast to last year when the energy bill failed to capture enough votes for passage and stalled in the chamber. In prior years, the energy bill collapsed under the weight of the differences in the measures in the House-Senate conference.

This is the “first major [energy] bill in a long time,” Domenici said Tuesday. Although the measure enjoyed “good bipartisan support” in the Senate, Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the Senate energy panel, cautioned that “we still have some major hurdles to overcome” in the House-Senate conference on the bill.

“Our task now is to keep our bipartisan bill from being undermined in conference. Twice before, the Senate has sent an energy bill to conference, only to see it fail in conference or on the floor. But I am confident that we may yet succeed” this year, Bingaman said.

The Senate action was a significant victory for President Bush, who has called on Congress to deliver an energy bill to the White House before leaving for an August recess. The House and Senate likely will begin reconciling their versions of the energy bill in conference sometime in July, which observers inside and outside Capitol Hill concede will be a difficult task.

“I urge the House and Senate to resolve their differences quickly and get a good bill to my desk before the August recess,” Bush said following the passage of the Senate energy bill.

The Senate bill and House energy bill that passed in April have substantial differences, which could prove difficult to resolve in conference (see Daily GPI, April 22). Some of the more intractable issues are likely to be the House’s provision on product liability protection for the producers of the gasoline additive methyl tertiary butyl ether (MTBE), the Senate’s mandate for 10% of electric supplies to be sourced from renewable energy by 2020, the Senate’s provision on conducting an OCS inventory, and the differences in the House and Senate language with respect to FERC’s jurisdiction over the siting of LNG facilities.

In addition, the Senate bill provides for $16 billion in tax incentives over a 10-year period, mostly for renewable fuels, conservation and energy efficiency, while the House measure provides $8 billion in tax breaks for mostly traditional fossil fuels.

Reports last week indicated that Rep. Joe Barton (R-TX), chairman of the House Energy and Commerce Committee, was considering possibly pulling the most fractious issue — MTBE — from the energy bill. Energy analysts applauded the news, saying that removing MTBE would significantly help to get the energy bill enacted this year.

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