This news from 365 gay:

Thursday Senate conferees reluctantly agreed to strip the Shepard Act from the defense bill, realizing that they lack the votes to pass the measure.

In a private meeting Wednesday night, House Majority Leader Steny Hoyer (D-Md.) and House Democratic Whip James Clyburn (D-S.C.) told Sen. Carl Levin, D-Mich., that if the Senate continued to insist on the hate crimes provision the defense legislation would fail.

It looks like next year isn’t going to be a good one for gay issues either, with the election coming up.