BUDGET:

Supercommittee failure portends yearlong limbo for energy, environment programs

After four months of pressure campaigns and prognostication, the failure of the so-called congressional "supercommittee" to agree on $1.2 trillion in long-term spending cuts leaves energy and environmental programs in much the same position that they were after the August debt-limit deal: an uneasy limbo.

The flameout of the 12-member panel, created in the hopes of surmounting political acrimony to slash both parties' prized programs, puts domestic discretionary agencies -- such as U.S. EPA and the Energy Department -- in line for two rounds of automatic cuts, both potentially punishing. The first would come about three months into the 2013 fiscal year, when an estimated $39 billion sequester of already-approved spending would hit all agencies in equal proportions. The second would take the form of lower budget caps until 2021.

Whether the threat of the Pentagon taking a hit as sizable as EPA or the Interior Department compels leaders of both parties to make progress where the supercommittee could not remains an open question. But environmentalists most active in pushing the defunct panel to pursue new revenue, chiefly through the repeal of oil tax breaks, appear unlikely to change their strategy, with another year of more unpredictable fiscal maneuvers remaining before the sequester starts.

The end of the supercommittee means "we'll have to continue to do what we've been doing," Natural Resources Defense Council (NRDC) Government Affairs Director David Goldston said in an interview.

"Obviously, everything is going to have to take some cuts," he added, but greens' goal is to "make sure [relevant agencies] are not hit disproportionately or in ways that will hurt services the public rightly expects. On the revenue side, we will continue to make the case for why, in this budget environment, subsidizing industries that are pretty far past the infant stage now does not make sense, from either a policy or financial perspective."

That continued emphasis on villainizing Big Oil while warning of the consequences for popular programs like national parks and state clean-water funds should the sequester take effect suggests that conservation groups see little hope in pressing for legislative exemptions from the pending round of new funding cuts -- a tactic some defense-minded lawmakers vowed to pursue despite a veto threat from President Obama.

Goldston declined to predict "a lot of effort" would be expended on calling for energy and environmental agencies alone to be spared the budgetary ax. The National Wildlife Federation's Washington director, Adam Kolton, urged a brighter spotlight on the fallout from the supercommittee's discord on balancing spending cuts with revenue.

"The Grinch stole Thanksgiving for those of us who care deeply about clean air, clean water and the outdoor recreation economy," Kolton said in an interview, adding that greens "are not out there saying, 'Solve the problem, but don't focus on us.'"

Many moving pieces

On its face, the $39 billion cut that the nonpartisan Congressional Budget Office (CBO) projects would be exacting from domestic discretionary spending in 2013 seems to represent a flash point at least as great as the August debt deal that pushed the CBO baseline $40 billion below the level set after April's government shutdown drama (E&E Daily, July 28).

House Democrats split evenly on that August spending pact, 95-95, while all but six of the party's more liberal senators supported a deal crafted in part by Majority Leader Harry Reid (D-Nev.). House Republicans voted 174-66 in favor of it, while a narrow majority of GOP senators fell in the yes camp.

For the moment, both parties' leaders are declining to embrace any attempt to partially unravel the 2013 sequester, a move that Obama already has vowed to greet with his veto pen.

Senate Minority Leader Mitch McConnell (R-Ky.) yesterday hailed the coming round of spending cuts as "good news," one day after the Senate's No. 3 Democratic leader said the sequester would keep alive the prospects for a broad deal outside of the supercommittee process.

"The fear that those knives would come into effect is supposed to bring us to an agreement, and I think, actually, we can get an agreement in 2012," Sen. Charles Schumer (D-N.Y.) told NBC.

But even if lawmakers can agree on a plan to avert the sequester during a high-stakes election year with a trillion-dollar package of deficit cuts, EPA, DOE and Interior could face fiscal pain on par with the pared-back budget levels set in April and August. Another unpredictable variable is the 2012 appropriations season, which saw the House and Senate agree on a spending blueprint for commerce, agriculture, transportation and related programs but is likely to end in other agencies' being funded by either a massive omnibus bill or a continuing resolution (CR).

"We hope to work this process through so we don't have to do a CR," Reid told reporters yesterday, naming an omnibus for the remaining appropriations bills as the preferred alternative.

If House GOP leaders are unable to minimize conservative defections from an omnibus and a series of CRs are needed to keep the government solvent into early 2012, however, the liberal-leaning group OMB Watch recently warned that the sequester could have the unanticipated impact of temporarily stripping all money from certain agencies.

Should the percentage cut exacted by the 2013 sequester equal or exceed the funding given to an agency such as EPA through a short-term CR, "basically everything goes to zero," OMB Watch budget analyst Sam Rosen-Amy said in an interview.

While OMB Watch wrote in August that "Congress could use this convoluted situation to target specific agencies or programs to effectively shut them down, at least the duration of a CR," Rosen-Amy noted that the very parameters of the supercommittee-induced sequester, combined with an uncertain appropriations process, represent uncharted territory.

"This has never happened before," he said. "So we're not quite sure if [effective defunding] is what happens."