Different natural gas provisions in Senate energy bill

Pipeline & Gas Journal, August, 2005

The Senate energy bill turned out well for the natural gas sector, both because it includes an eagerly sought amendment and excludes two other unappetizing amendments. But the bill also fails to give the Federal Energy Regulatory Commission (FERC) the kind of clear, unimpeded primary authority for approving pipeline permits which INGAA sought.

Pipeline permitting has been an important issue for INGAA, though it has played second fiddle in terms of media attention to the more controversial issue of liquefied natural gas (LNG) terminal siting, which the Senate bill addresses. On LNG siting, the Senate bill is clearer than the House bill in granting exclusive authority to FERC, says Martin Edwards, an INGAA spokesman, though he differentiates between siting and permitting.

The Senate bill is weaker than the House bill on LNG and pipeline permitting. The Senate bill specifies that FERC take the lead under the National Environmental Policy Act and set the schedule for permitting reviews. But it doesn't go as far as the House bill which adds two other mandates: that the record amassed by FERC be used in any appeal of an LNG or pipeline permitting decision, and that any appeal go to the Court of Appeals for the District of Columbia. Moreover, the Senate bill funnels permitting appeals to the White House and the president. INGAA opposes that. However, the Senate did beat back an amendment that would have allowed governors to veto siting of an ENG terminal in their state.

The Senate also defeated an amendment which would have canceled a requirement for an offshore natural gas inventory, which natural gas groups support. The inventory was hotly opposed by two Florida senators, Mel Martinez (R) and Bill Nelson (D). They argued that an inventory would lead inexorably to offshore development and ensuing coastal environmental damage. After the vote, Martinez and Nelson pledged to work to convince the House-Senate conference committee, which will try to reconcile differences between the two energy bills, to drop the inventory provision which is not included in the House bill.

The Senate also defeated a proposal imposing greenhouse gas (GHG) emission caps on energy producers. Don Santa, Jr., president of INGAA, says interstate pipelines opposed the amendment because it unfairly singles out the pipeline industry as the "regulated fuel distributor" for natural gas.

"In other words, natural gas pipelines would be responsible for purchasing emissions credits and passing these costs through to downstream GHG emitters, such as power plants and factories," Santa explains. Eventually, the Senate rejected the amendment, sponsored by Sens. John McCain (R-AZ) and Joseph Lieberman (D-CT) and instead endorsed a "Sense of the Senate" resolution saying mandatory GHG caps should be adopted some time in the future.