SENATE:

Baucus' exit sets off game of musical chairs

And you thought proposing to eliminate more than three dozen energy tax breaks would be yesterday's most exciting piece of news involving Sen. Max Baucus.

Instead, reports swept through the Capitol yesterday evening that the Montana Democrat would be nominated by President Obama to serve as the next U.S. ambassador to China.

The news set off a wave of speculation about what the move would mean for the comprehensive tax reform push Baucus had hoped to make his legacy, whether Democrats would be more likely to hold onto the seat now, and the domino effect his exit would have on committee chairmanships.

Assuming he departs the Senate before the end of next year, he will leave an opening atop the Finance Committee. Next in seniority for that post is Commerce Chairman Jay Rockefeller (D-W.Va.), who told reporters yesterday that he is quite content in his current position. Behind him is Energy and Natural Resources Chairman Ron Wyden (D-Ore.), who has long been rumored to have his eye on the Finance gavel. A Wyden spokesman declined to comment yesterday.

If Wyden takes the Finance gavel, that would open the door for Sen. Mary Landrieu (D-La.) -- perhaps her party's staunchest supporter of the oil and gas industry -- to become chairwoman of the Energy Committee. Sen. Tim Johnson (D-S.D.) is ahead of her in seniority, but he already leads the more powerful Banking Committee and has announced plans to retire at the end of the term.

Landrieu, meanwhile, is locked in a tough re-election fight, and a chairman's gavel could provide an elevated platform for her to promote policies important to industries that carry substantial sway in her state (E&E Daily, April 26). And the senator has made no secret of her desire to take the position (E&E Daily, Sept. 25).

Still, some Democratic observers suggested the dominoes might not fall quite that way. Senate Majority Leader Harry Reid (D-Nev.) may not want to cause so much commotion in the middle of the session, and Sen. Chuck Schumer (D-N.Y.), who is behind Wyden on Finance in terms of seniority, has also been the subject of some speculation as a possible next chairman.

Schumer declined to comment when approached by a reporter yesterday, and aides to Reid did not respond to requests for comment. Democratic aides dismissed speculation over whether Schumer would try to jump Wyden to claim the Finance gavel after Baucus announced his intention to retire, and the Senate historian noted that seniority has dictated committee succession in all cases where Democrats controlled the chamber since 1913, according to an April article in The Hill newspaper.

The speculation is sure to continue in the coming days.

"It would help Landrieu in the election if she were chair -- that said, Reid does not really care about Landrieu," GOP energy strategist and lobbyist Mike McKenna said via email. "But no sane person wants Schumer to run Finance. And Reid is still (borderline) sane."

For her part, Sen. Lisa Murkowski (R-Alaska), the top Republican on the Energy Committee, said she is a big fan of Landrieu, a fellow proponent of letting states take a larger share of oil drilling revenues.

"Mary and I have worked together on a lot of things. I think we have a good working relationship. Our staffs work well together," Murkowski told reporters yesterday. "So if, in fact, the dominoes should fall that way, I think it could be very interesting and a lot of fun to work on some of the issues that we both care a great deal about when it comes to the oil and gas sector."

Daniel Weiss, a senior fellow at the Center for American Progress, suggested that Landrieu's pro-industry bent would be tempered by the broader caucus.

"It is difficult to imagine that a Chairman Landrieu would immediately pursue a big oil agenda, such as seeking drilling in the Arctic National Wildlife Refuge, since such proposals won't be brought to the Senate floor due to strong Democratic opposition," he said in an email yesterday.

"Instead, she would be more likely to pursue her goal of increasing states' share of offshore oil and gas production royalties."

Meet Sen. Walsh

Montana Gov. Steve Bullock (D) will be tasked with appointing a successor to Baucus' seat once the Democratic lawmaker formally steps down.

A Democratic source knowledgeable about the decision, but who spoke on the condition of anonymity, said Bullock will choose Lt. Gov. John Walsh (D).

Walsh is one of a trio of Democrats -- along with former Lt. Gov. John Bohlinger and rancher Dirk Adams -- already campaigning for the party's nomination to succeed Baucus in next year's election. Rep. Steve Daines (R) is widely expected to be the Republican nominee in that race.

Under Montana election law, Walsh will serve in the Senate until next year's general election.

University of Montana political science professor Robert Saldin acknowledged that the appointment will likely bolster Walsh's name recognition -- he did not hold elected office in the state prior to his 2012 win with Bullock -- but said it may not necessarily boost his prospects in the general election.

"A lot of people who have been appointed to Senate seats don't fare very well when they have to run on their own," Saldin said. "It doesn't always go as well as people seem to think it will."

He pointed to the fact that lawmakers must compile voting records, something that Walsh, as a state constitutional officer, hasn't had to do.

"Once you're back in Washington, you're in a position where you have to cast votes and you have to cast votes that make people angry," Saldin said. "Sometimes it's easier to be able to play to crowds without the burden of having cast some of those votes that your opponent can turn around and use to attack you."

But an incumbency could help Walsh overcome Daines' current financial advantage in the contest. The freshman House lawmaker reported more than $1.1 million in the bank at the end of September. Walsh, who announced his bid in October, has yet to file a fundraising report.

It also remains to be seen whether Bohlinger will drop his Democratic primary bid.

The former lieutenant governor has previously asserted that Reid had asked him to drop his campaign, which he declined to do.

In a statement posted on his campaign's Twitter feed yesterday, Bohlinger indicated that he would not oppose former Gov. Brian Schweitzer (D) were he to be appointed to the seat, but did not mention Walsh.

"Obviously, I wouldn't run against Senator Schweitzer," Bohlinger wrote.

Tax reform no more?

Baucus' impending exit seems to put the final nail in the comprehensive tax reform coffin, at least for this term. The news broke less than six hours after he unveiled a widely anticipated draft bill to overhaul dozens of incentives for the energy sector.

The proposal represented a radical rethinking of the tax code -- and perhaps the most ambitious effort to shape energy policy since the failed effort to enact a cap-and-trade law in 2009 and 2010. Baucus envisioned replacing at least 42 existing incentives -- some temporary, some permanent -- with a trio of tax credits to promote clean electricity, clean transportation fuels and carbon capture and sequestration.

The credits would have been allotted based on the greenhouse gas intensity of a given energy source and would be set to phase out when their targeted recipients -- utilities, transportation or coal-fired power plants -- achieved a 25 percent reduction in their emissions intensity (Greenwire, Dec. 18).

While the tax reform push was a long shot even without Baucus' impending exit, the need to install a new chairman virtually ensures that there will not be enough time to complete the effort before the end of this Congress.

Speaking to reporters before the Baucus news broke, Wyden called the proposal a "promising start" that was in line with his two main goals: providing stability and technological neutrality to the tax code. But he said he was still reviewing the details and wanted to further examine how the proposal would affect energy efficiency, which would see many of its tax breaks ultimately eliminated.

Reporter Elana Schor contributed.

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