CLIMATE:

Energy and Commerce panel's Dems seek united front to pass cap-and-trade bill

The House Energy and Commerce Committee is expected to pass legislation this week that would overhaul U.S. energy and global warming policy, assuming Democrats can stay united in the face of hundreds of GOP amendments.

Unveiled Friday, H.R. 2454 includes items long sought by environmentalists, including a cap-and-trade program to curb greenhouse gas emissions and a nationwide renewable electricity standard. The 932-page bill, also comes with the support of President Obama, who applauded the "historic agreement" after weeks of intense negotiations among Democrats representing vastly different regions and economic sectors.

"It's another promising sign of progress, as longtime opponents are sitting together, at the same table, to help solve one of America's most serious challenges," Obama said during his weekend radio address. "For the first time, utility companies and corporate leaders are joining, not opposing, environmental advocates and labor leaders to create a new system of clean energy initiatives that will help unleash a new era of growth and prosperity."

Democrats plan to make their case for the bill by arguing it would help tackle global warming, create jobs and strengthen national security. Those points will be juxtaposed during the markup against a nearly united Republican front focused on a vast expansion of domestic energy production.

Besides offering their own alternative measure, Republicans also are preparing as many as 450 amendments designed to target individual Democratic members who they hope will be uncomfortable supporting such stringent new environmental requirements.

"This is not going to be one of these pro forma gentlemanly perfunctory markups," Energy and Commerce Committee ranking member Joe Barton (R-Texas) told reporters last week. "We're prepared for it to take weeks or months."

Republicans have no shortage of ideas, according to a draft amendment list obtained last week by E&E.

Some of the GOP amendments would have sharp partisan bite: making underground storage facilities for carbon dioxide at Nevada's Yucca Mountain and at the Presidio -- a national park in House Speaker Nancy Pelosi's San Francisco district. Others would make significant changes to the underlying legislation, including the same less aggressive greenhouse gas emission reduction target of 6 percent by 2020 that some moderate House Democrats originally had requested.

Republicans have also drawn up dozens of changes that would allow individual states the choice of opting out of the climate law -- or allow a state to give free allowances to their local electric utilities.

Despite the temptation, several Democrats on the committee said they would resist the GOP proposals, even those that could look good back home in their districts.

"That will not lure me into their obstructionism," Rep. G.K. Butterfield (D-N.C.) said in an interview in which he also pledged to vote for the overall bill. "That won't impress me one bit."

'Legislative Susan Boyle'

Energy and Commerce Chairman Henry Waxman (D-Calif.) will have the final say on just how long this week's markup lasts. Democratic aides said they are preparing for late nights on Tuesday, Wednesday and Thursday, with final passage at some point Friday before lawmakers leave Washington for the weeklong Memorial Day recess.

Democrats have a 13-seat advantage on the committee, which means Waxman can lose six Democrats and still pass the bill by a single-vote margin absent any GOP defections. Waxman last week predicted passage in committee, and Rep. Rick Boucher (D-Va.) said he expected a party-line, 36-23 win.

Waxman is on the verge of victory thanks in part to several weeks of closed-door talks and concessions to satisfy moderate and conservative Democrats from the South, Rust Belt and Intermountain West.

Butterfield, for example, said he signed off after winning language that dedicates about $10 billion in auction revenue every year toward low- and middle-income Americans to help offset increases in energy bills and related goods and services. "I've compromised," he said. "I've had some very strong views from the beginning. They've accepted many of my recommendations."

Other concessions made last week include removing a low-carbon fuel standard that made several oil-patch lawmakers nervous, including Rep. Gene Green (D-Texas), as well as less aggressive 2020 emission targets and a renewable electricity standard that allows states the option of meeting their requirement with energy efficiency measures.

Even Obama did not get what he wanted when it comes to a complete 100 percent auction of emission credits, a compromise that will force the administration to rework earlier budget projections that had assumed $650 billion in new government revenue over the life of the cap-and-trade program.

"It is not the bill I would have written," said Rep. Lois Capps (D-Calif.). "But listen: That is not the way it works here in Congress. We need to pass a bill. We need to change the direction of our energy policy and this significantly changes it."

Capps added, "I applaud my colleagues from districts where this is a tough vote. ... It never was a tough vote for me."

Some Democrats have yet to say how they will vote, including Reps. Charles Melancon of Louisiana, Baron Hill of Indiana, Jim Matheson of Utah and Zack Space of Ohio. Also, Rep. Mary Bono Mack (R-Calif.) said last week that she is still undecided -- the only panel Republican to take that stance in public (E&E Daily, May 15).

The House bill to be marked up this week in the Energy and Commerce Committee has also been referred to eight other committees: Foreign Affairs, Financial Services, Education and Labor, Science and Technology, Transportation and Infrastructure, Natural Resources, Agriculture, and Ways and Means. Details on how the measure will make its way through every one of those committees remain unclear since several of the panel's leaders have previously said they did not know how they would approach climate legislation.

Others have not been so shy. Ways and Means Chairman Charles Rangel (D-N.Y.), for example, has said he would work on provisions dealing with international trade and how to distribute auction revenue. Agriculture Chairman Collin Peterson (D-Minn.) earlier this month threatened to lead a farm-state revolt against climate legislation after U.S. EPA drafted regulations implementing a nationwide biofuels mandate. Peterson's committee has also passed legislation giving the Commodity Futures Trading Commission oversight over a future carbon market. And the Science Committee will mark up language Wednesday that would create a national climate service (see related story).

Still, it is the regionally diverse Energy and Commerce Committee that House Democrats see as the biggest stepping stone for passage in the full House, as well as the Senate.

"What we have in front of us now and we will next week is the legislative Susan Boyle," Energy and Environment Subcommittee Chairman Ed Markey (D-Mass.) said Thursday, referring to the British amateur singer who shocked audiences with her professional voice last month.

"Everyone underestimated it until it started to sing," Markey said. "And today you see the chorus up here that will be singing the praises of this piece of legislation. And it's a partnership we think can be sustained on the House floor and then used in the Senate as a template for passage of companion legislation that we can put on the desk of the president."

Bush's CEQ chief: 'A highly credible first step'

With the exception of Greenpeace and Friends of the Earth, most environmental groups lined up last week behind the climate legislation, explaining that while they would prefer a stronger bill, they would take what they can get.

"It's always going to be the case that the bill would look different if we wrote it ourselves," said Steve Cochran, national climate campaign director at the Environmental Defense Fund. "Having said that, this is damn good progress."

Industry leaders have also been saying positive things about the House climate bill.

"We may be on the brink of something astounding in Washington," Exelon CEO John Rowe said Friday during a speech at the National Press Club.

"We believe it is vital that this important legislation move out of committee and to the House floor for consideration this summer," added Mayo Shattuck, the CEO of Constellation Energy, a Baltimore-based electric utility that produces more than 60 percent of its power via nuclear energy.

Even Jim Connaughton, the former chairman of the White House Council on Environmental Quality under President George W. Bush, called the bill a "highly credible first step." He also praised the Democrats' legislative process, which included significant concessions to Boucher and coal-state Democrats.

"It was a real sorting out of differences and bridging some gaps," said Connaughton, who now manages energy and environmental issues as a Constellation executive vice president. "That bodes well in trying to bring some Republicans on board down the road. If they can keep that spirit of accommodation, that's a good thing."

Officials from several other major electric utility companies said they would make public statements on the House bill as early as today, including Duke Energy Corp. and PSEG Inc.

Some other industry groups are urging changes to the proposal. American Petroleum Institute President Jack Gerard, for example, released a statement Friday that found fault with the details on distributing emission allowances, which are heavily geared toward the electric utility industry and energy-intensive manufacturers.

"Unfortunately, while the proposal is meant to solve a serious environmental challenge and spur growth in our weak economy, its inequitable system of allocations will have a disproportionate adverse impact on consumers and producers of gasoline, diesel fuel, jet fuel, crude oil and natural gas," Gerard said.

Oil refineries would get 2 percent allowances for free, starting in 2014 and ending in 2016. API had initially requested as many as 30 percent of the allowances for free, according to Rep. Green.

The National Association of Regulatory Utility Commissioners applauded Democrats for sending 35 percent of the allowances for free to local distribution companies that service electric utilities. However, NARUC's leaders said they had concerns about allowances going to merchant generators "who are not regulated and therefore have no obligation to share benefits with their consumers."

Charles Territo, a spokesman at the Alliance for Automobile Manufacturers, focused on only a small provision in the bill and stopped short of any endorsements. "We're pleased the legislation recognizes the need to reinvest in the industry and importance of a harmonizing fuel economy/greenhouse gas programs at the state and federal level," he said.

Click here to read a summary memo of the House climate bill.

Schedule: The markup begins with opening statements at 1 p.m. today in 2123 Rayburn. Late nights are expected Tuesday and Wednesday, with Thursday's session expected to stretch into Friday morning.

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