CLIMATE:

Waxman, Peterson inch closer to consensus on cap-and-trade bill

House Democrats are within sight of agreement on a comprehensive energy and global warming bill, but it is still unclear if they have satisfied enough rural and fiscal conservative lawmakers to guarantee the votes for floor passage by next week.

"I think we made some real progress," Rep. Ed Markey (D-Mass.) told reporters yesterday as he left a meeting with House Speaker Nancy Pelosi (D-Calif.), Energy and Commerce Chairman Henry Waxman (D-Calif.) and Agriculture Chairman Collin Peterson (D-Minn.). "There's still black smoke going up. The white smoke, however, we might be able to send some up, but only after we have resolved these final issues. We made some real progress in that meeting. But it's not final yet."

Waxman described a "conceptual understanding that we're now looking at in more detail" with Peterson, adding that the work now rests on staff to come up with legislative language that could be unveiled as soon as today or Monday.

Peterson also sounded an optimistic note yesterday about the negotiations. "We got a couple things resolved," he told E&E. "They came up with a new idea that has good possibilities. We're going to take a look now and see if it works."

The Democrats directly engaged in the talks did not go into specifics. But several other farm state lawmakers offered details on the issues now on the table.

Waxman, for example, offered to give additional emission allowances to rural electric cooperatives, according to Rep. Jim Costa (D-Calif.), a member of the Agriculture Committee. Peterson had first raised the allocation issue earlier this week, telling reporters Wednesday that he was pressing for less than 1 percent of the overall pool to be given for free to the power companies that service about 42 million Americans.

"What I basically said to those guys is, look, this is not a huge amount, fix it," Peterson said. "Find some way to fix this. That's what you've got to do here."

Peterson's demand requires a difficult balancing act for Waxman and Markey as they try to come up with additional allowances without also breaking the delicate agreement reached last month to get the bill (H.R. 2454) out of the Energy and Commerce Committee.

"We're continuing to try and resolve the issues within the existing framework," Markey said yesterday when asked about Peterson's request for free allowances.

It is unclear exactly what Waxman will tinker with to satisfy the farm state lawmakers, though one candidate is the 15 percent of allowances initially set aside for auctioning.

Asked if the Energy and Commerce Committee leaders had kept a secret stash of allowances for just such an emergency, Rep. Rick Boucher (D-Va.) replied, "I think if that were true and generally known, there'd be a whole lot of interest."

Changes in the works on offsets and renewable fuels

Addressing another farm state concern, Waxman has suggested an expanded role for the Agriculture Department on the offset projects that pay farmers to conduct environmentally friendly conservation practices.

"All I can tell is it relates to USDA's jurisdiction vis-à-vis conservation, and its relationship working with agricultural producers," said Rep. Stephanie Herseth Sandlin (D-S.D.). "I don't know if it means some existing conservation or some proposing some new conservation that'll be established."

Herseth Sandlin also said Democrats have made progress in efforts to address farm state lawmakers' concerns with a draft U.S. EPA biofuels rule. Ethanol backers are dismayed over EPA's calculations of biofuels greenhouse gas emissions in a May proposal to implement the renewable fuels standard expanded under a 2007 energy law.

That 2007 law requires that ethanol and other biofuels, to varying degrees, have lower "lifecycle" greenhouse gas emissions than gasoline and diesel fuel. EPA, under the statute, must examine both direct and indirect emissions, including indirect emissions from land-use changes.

An example would be carbon released through clearing tropical rainforests for croplands to compensate for increased use of U.S. farmland for biofuels feedstocks. EPA, when releasing the draft rule, also said it would ensure there is outside review of its methods. Peterson and other opponents say the science behind such measurements is hazy and wrongly casts biofuels in a negative light.

"The progress has been as it relates to EPA's calculation of international indirect land-use changes and stopping them from doing what they did," Herseth Sandlin said. "So it might pre-empt their peer review process simply because we don't think their models hold up.

"Now it could be something more innocuous than that," she added. "It could be a transparency issue that they have to make public the models that they're using so there's more transparency in that peer review process."

Herseth Sandlin said she did not have specifics on the latest legislative plan, adding, "I'll trust Chairman Peterson when he tells me we made progress on that front."

Ethanol industry allies are fighting EPA's emissions calculations on several fronts. The House Appropriations Committee narrowly turned back an amendment last night that would have blocked EPA from addressing the issue in the biofuels rule (see related story).

But environmentalists are fighting efforts to bar calculation of these land-use change emissions, arguing that such calculations are needed to ensure that increased biofuels production does not worsen global warming and cause deforestation.

Herseth Sandlin and Peterson are also seeking to further ease limits on sources of biomass that can be used to make fuels under the expanded RFS, arguing restrictions in the 2007 law are excessive.

The Waxman-Markey bill would ease the restrictions to some degree for both the 2007 biofuels mandate and biomass that can be used for electric power under their bill's renewable electricity standard (E&ENews PM, May 18). But Herseth Sandlin said further changes are part of the climate negotiations.

"They've made progress on renewable biomass," she said, adding, "I'll see it when I believe it. I can't get fooled twice on this deal. It's been a year and half trying to fix language from before."

'The pressure is building up'

Several rank-and-file farm state Democrats acknowledged pressure from Pelosi to wrap up negotiations on the climate bill, though they also warned that they won't sign off until they see legislative text.

"It's a work in progress," said Rep. Leonard Boswell (D-Iowa), a senior member of the Agriculture Committee. "The pressure is building up as you can well appreciate. And I think at this point we're not there. We haven't seen anything in writing and one thing I've tried to learn around here and appreciate is you better see it in writing before you sign off."

"I support the leadership trying to move the agenda," added Rep. Dennis Cardoza (D-Calif.). "It's important to have timetables. But it's more important we get it right than we get it done by a certain date."

Some Agriculture Committee Democrats are a long way from voting for the climate bill -- no matter what gets negotiated. "I haven't been budged from my firm 'no' since Day 1," said Rep. Bobby Bright (D-Ala.).

Rep. Earl Pomeroy (D-N.D.) said he did not expect a unified vote from the committee's Democrats. "The chairman is not in any way holding us as a voting bloc," he said. "We'll make our own decisions."

Given the fluid whip count, Pelosi yesterday would not commit to a floor date for the climate bill.

Asked about the floor timing for the global warming bill, she first cited Republican efforts yesterday to halt significant floor action on the fiscal 2010 Commerce-Justice-State Appropriations bill by forcing more than eight hours of non-stop voting on a House record 52 amendments (see related story).

"I don't know about that," she said of the climate bill's timing next week. "You see how the floor is here. I can't speak for that. But we're within range."

Rep. Tim Walz (D-Minn.), a member of the Agriculture Committee, said the negotiations have accelerated to the point he now expects the floor debate to go next week. And he is hoping to bring legislative text back to his district this weekend for meetings with constituent groups.

"I think so now," he said. "As we've been talking this week, I didn't think so. But I get the impression yes. I think it is going to go next week."

Senior reporter Ben Geman contributed.

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