Prospects are good that the Democratic-controlled Senate will pass comprehensive energy legislation early this year, but there are no guarantees a divided Congress will agree on final legislation, a key Senate lawmaker told reporters and financial analysts Mar. 4.
Meanwhile, Republican leaders say there is a 70:30 chance the Senate can reach consensus and pass sweeping energy legislation.
Senate Energy and Natural Resources Chairman Jeff Bingaman (D-NM) told a Deutsche Banc Alex. Brown Inc. teleconference he was "reasonably optimistic" the Senate can pass a bill, despite potentially polarizing issues such as automobile fuel efficiency standards, clean fuel regulations, electricity reform, and public land access in Alaska.
But questions remain whether Congress can give the White House final legislation.
Last August the Republican-led House passed a bill that has a heavy emphasis on boosting domestic energy production, including leasing a portion of the Arctic National Wildlife Refuge in Alaska. The Senate bill, if passed, likely will not contain an ANWR leasing provision but is expected to have a stronger emphasis on conservation. Bingaman, however, stressed that his bill also promotes domestic production of traditional and renewable fuels. Both bills provide new tax incentives for US energy production, although the House version is more generous to industry.
"We'll have to see if we can find common ground," Bingaman said.
Unknown ANWR variable
The moderate New Mexico senator also declined to speculate whether the White House would veto an energy bill that does not have an ANWR leasing provision. "It's way too soon to determine that," he said, although he indicated doubt that the administration would ever publicly say it was taking that position.
In recent speeches across the country, President George W. Bush said it is important for both national security and economic reasons to give industry a chance to explore the ANWR coastal plain. However, some Bush administration officials privately have speculated to oil and environmental lobbyists that the president is unlikely to veto an energy bill simply because ANWR leasing is absent (OGJ Online, Feb. 28, 2002).
But the bottom line for now at least is that no one-including the White House-is quite sure what the White House will accept, lobbyists on both sides of the ANWR issue say.
Meanwhile, Bingaman and other Senate lawmakers are preparing for a busy few weeks of debate. At least 36 amendments have been filed, and dozens more are expected to be considered before the end of the month.
Along with the seemingly endless debates over fuel efficiency, pipeline safety, clean fuel rules, and other long-standing issues remains the question of how Congress will react to the political fallout from the financial collapse of Enron Corp. Bingaman himself has not called for any wholesale changes to existing rules that govern energy markets. Nevertheless, he said that he supports efforts to make energy markets more open and transparent and wants to work on something that "can be supported by the majority of the Senate."
Energy derivatives
Western senators led by Dianne Feinstein (D-Calif.) and Maria Cantwell (D-Wash.) last week were expected to seek an amendment that increases regulation of over-the-counter energy derivatives (OGJ Online, Feb. 14, 2002).
Feinstein said her legislation gives regulatory oversight authority to the Commodity Futures Trading Commission over futures trades (without delivery) of all energy commodities in multilateral markets and electronic trading platforms. Last month the New York Mercantile Exchange asked lawmakers to undo the exemptions used by EnronOnline, Enron's former online trading platform, through the recently enacted Commodity Futures Modernization Act. That law allows internet-based trading platforms such as Atlanta-based IntercontinentalExchange to avoid the same reporting requirements that NYMEX follows. CFTC still has the power to punish an electronic platform but only if fraud is discovered.
The administration and the banking community have not endorsed Feinstein's proposal, arguing that tightening controls on derivatives will in essence kill some customized financial instruments, such as forward contracts, that some companies and municipalities use to manage risk.
One proposal the financial community may be more willing to accept, according to some Wall Street analysts, is to require those that sell energy derivatives to be registered and licensed by the Securities and Exchange Commission, much as brokers and dealers are.
Bingaman stressed energy market legislation is still "evolving," but he wants to ensure that any new legislation protects consumers without "overreaching."
