The Matthew Shepard Act would have expanded federal hate crimes laws to include sexual orientation and provided $10 million to local law enforcement agencies. The measure would have allowed the Justice Department to assist local hate crime prosecutions, as well. It was attached to a Pentagon policy measure that would have provided more money for the Iraq war.

Hate crimes provisions have been stripped from defense bills in both 2000 and 2004.

In a press release, Judy and Dennis Shepard, whose gay son Matthew Shepard was murdered in Wyoming in 1998, said, "We are truly dismayed to find that Congress now will put aside its leadership on passage of federal hate crimes legislation that includes sexual orientation and gender identity.

"At this time of year that fills us all with hope for humankind, we are sad to find that a Congressional majority of each House who have already adopted the Matthew Shepard Act cannot yet come together.

"If not here, where? In not now, when?"

Sen. Edward Kennedy, D-Mass., sponsored The Matthew Shepard Act, and in September, the U.S. Senate passed the measure, 60-39, as an amendment to the Department of Defense Authorization bill. This followed the House's passage of the Local Law Enforcement Hate Crimes Prevention Act, 237-180, in May.

Democratic leaders decided to dump the measure, citing some Democrats' refusal to support the bill because of their opposition to the war, as well opposition from conservatives and President George Bush.

Kennedy called it "an extraordinary missed opportunity," reported the New York Times.

U.S. House Speaker Nancy Pelosi, in a statement, said that it became apparent that attaching the measure to the defense bill would not be successful, but promised to continue working towards hate crimes legislation.

"I am strongly committed to sending the hate crimes legislation, passed by the House earlier this year, to the President for his signature," Pelosi said. "House Democratic leaders will work with our Senate colleagues to make certain that a hate crimes bill passes the Senate and goes to the President's desk."

The news comes in light of a recent FBI report, which revealed that the number of hate crimes reported to law enforcement agencies increased almost 8 percent in 2006. According to the report, over 15 percent of the reported crimes involved sexual orientation.

The Anti-Defamation League ( ADL ) stated in a press release that it is "profoundly disappointed" the measure was stripped from the bill.

Jon Hoadley, executive director of the National Stonewall Democrats, urged pro-measure officials to not give up on the hate-crimes bill. He stated in a release that " [ i ] f the National Defense Authorization Act is not the appropriate vehicle for passage, then we encourage the Democratic leadership to work with our community to find the most expedient way to place this legislation on the President's desk within this Congress."

Human Rights Campaign expressed its concern over removal of the measure. "Today's decision is deeply disappointing, especially given the historic passage of hate crimes legislation through both Houses of Congress this year," said HRC President Joe Solmonese in a statement. "After more than ten years and several successful bipartisan votes, it is heartbreaking to fall short this close to the finish line."