The Obama administration may have won its first major environmental battle of 2011 only to give ground in the broader budget war, thanks to a spending deal that is set to avert a shutdown this week while handing House Speaker John Boehner's (R-Ohio) party a palpable political win.

In a bipartisan agreement reached hours before a shutdown deadline Friday night, lawmakers agreed to slash $38.5 billion in spending over the remaining half of the fiscal year -- more than half the total cuts pushed for by House Republicans. Democrats won their bid to excise a dozen-plus environmental policy limits added to the GOP's original spending bill, but it remains unclear how deeply the agreed-upon cuts would affect U.S. EPA, the Energy Department and other agencies.

Legislative language to carry out the eleventh-hour pact is expected to emerge quickly this week, since a "bridge" funding bill approved soon after Senate Majority Leader Harry Reid (D-Nev.), Boehner, and the White House reached accord Friday night lasts only until Thursday. While clearly disappointed at their failure to salvage the policy riders and $61 billion in cuts that compromised their Feb. 19 continuing resolution (CR), House Republicans were ready to declare victory this weekend.

"Sufficient? No. Significant? Yes," Rep. John Shimkus (R-Ill.), a House Energy and Commerce subpanel chairman, posted on Twitter just after the deal emerged. "We need to move past FY11 so we can focus on our FY12 Budget and do it the right way."

Indeed, the fiscal 2012 budget slated for House consideration later this week amounts to a significant step forward in the Republicans' push to roll back Obama administration energy and environmental programs. The framework unveiled by House Budget Chairman Paul Ryan (R-Wis.) would pare back non-defense discretionary spending to 2008 levels for five years while promoting expanded offshore drilling and promising further slashes at EPA (Greenwire, April 5).

Speaking Saturday in the House GOP's weekly radio address, Ryan began to pivot the congressional dialogue toward even steeper federal cuts for the next fiscal year, using the shutdown-stopping deal as a springboard. "The president started this year by proposing a freeze that would make no cuts at all," Ryan said. "But now bipartisan legislation is in sight to enact the largest spending cut in American history."

Although the GOP successfully steered the fiscal debate toward how much to cut, not where to spend, Democrats had some developments to cheer in the final deal. The demise of policy riders that would have kneecapped multiple high-profile EPA rules won a shout out from President Obama himself Friday night.

"We protected the investments we need to win the future," Obama said, citing "clean energy" among the priorities shielded from sweeping reductions in the agreement. "At the same time, we also made sure that at the end of the day, this was a debate about spending cuts, not social issues like women's health and the protection of our air and water."

Yet the pact was not entirely free of environmental policy limits. Language removing Endangered Species Act protections for the gray wolf in Western states, backed by Senate Democrats in their own CR, made it into the final 2011 spending plan (see related story).

What's more, Republicans are fully prepared to revisit many of the same White House efforts targeted by those riders during the 2012 budget and appropriations cycle. "The most important thing to me is getting to the right number," Rep. Mike Simpson (R-Idaho), chief of the House appropriations subpanel in charge of EPA, said last week. "There's always '12 -- a lot of these things will come back."

Environmentalists, who leaned hard on Democrats to beat back the spending bill's defunding provisions, acknowledged they face an ongoing battle even as they celebrated the absence of riders in the 2011 deal.

"In a race against the clock, our nation's leaders were able to defend essential environmental and health protections from multiple assaults," Sierra Club executive director Michael Brune said in a statement. "But this isn't the last we'll see of polluters' assault on the Clean Air Act and the EPA."

Squaring off over 2012

Ryan's budget blueprint envisions massive cuts to non-defense energy and environmental programs at DOE over four years, decreasing from $7 billion in budget authority and $16 billion in outlays in 2012 to $1 billion in budget authority and zero outlays in 2016. Natural resources accounts, including the Interior Department and EPA, would dip by $7 billion in budget authority and $9 billion in outlays between 2012 and 2016.

Obama this week will unveil his own long-term deficit reduction plan, administration officials said yesterday.

The White House 2012 budget request sought about $13 billion in budget authority and $23 billion in outlays for non-defense energy programs, with natural resources accounts slated for $5 billion more in budget authority as well as outlays than they would under the Ryan plan.

House Democrats, who plan to release an alternative budget of their own this week, already are blasting the proposed GOP cuts as a gift to conventional energy industries.

"It tells me they really aren't serious about energy independence," Rep. Barbara Lee (D-Calif.) said in an interview last week.

Citing the GOP move to seize upon rising fuel prices as a spur for more domestic oil and gas drilling, Rep. Lynn Woolsey (D-Calif.) last week charged Ryan's party with "think[ing] that, because the price at the pump is going up, the American people can be fooled into thinking that what they're doing will decrease costs."

"We're going to call them out on it every step of the way," Woolsey added.

That effort began in earnest before the shutdown threat had eased. Rep. Barney Frank of Massachusetts and other House Financial Services Committee Democrats on Friday blasted the GOP for planning a 34 percent budget cut at the Commodity Futures Trading Commission, which regulates oil-futures markets that they say are playing a role in the recent gas-price uptick (E&E Daily, March 17).

Speculation is not "the major driver of oil prices over the long term," Frank said, but "there are price spikes that cannot be explained by any economic reality. ... We want regulation that is equal to the sophistication of the activity being regulated, and that takes people and it takes technology."

CFTC officials have projected that two-thirds of its staff would have to be eliminated under the GOP budget proposal.