CLIMATE:

House cap-and-trade bill remains in holding pattern

House Democrats still lack agreement on key details of a comprehensive global warming and energy bill despite intervention from several top Obama administration officials, diminishing the chances that the measure will pass off the floor this week before the start of the Fourth of July recess.

Energy and Commerce Chairman Henry Waxman (D-Calif.), one of the legislation's lead co-authors, told reporters late Friday that he remained at an impasse with rural Democrats over which government agency -- U.S. EPA or the Agriculture Department -- should manage projects that pay farmers to conduct environmentally friendly conservation practices.

Without agreement on this issue and many others, Waxman and his allies remain short of the 218 votes needed to advance one of President Obama's signature domestic agenda items.

"I think it's less and less likely we'll go next week, but I don't want to say absolutely not," Waxman said following a two-hour, closed-door meeting with Agriculture Chairman Collin Peterson (D-Minn.) and several Obama officials, including White House energy adviser Carol Browner and Phil Schiliro, the president's chief legislative counsel. Agriculture Secretary Tom Vilsack also participated via telephone.

"There has to be an agreement, and members have to feel comfortable that they understand, not just the agreement on this issue, but how the whole bill works," Waxman added.

Waxman and other top House Democrats wanted to bring the climate bill to the floor this week as a way to keep the momentum going on what is one of the most complicated issues before Congress in decades. And with the July Fourth recess on the horizon, Waxman saw the break as an opportune benchmark to transition from energy into Obama's health care reform plans, which many expect to dominate the Capitol Hill agenda next month alongside the fiscal 2010 appropriations bills.

Even if they cannot get the bill on the floor this week, top Democratic leaders insist that there will still be time for climate change early next month.

"Everything is going great," House Speaker Nancy Pelosi (D-Calif.) told E&E on Friday. "It's the legislative process. It's going great, and I feel good about it all. We're going to reach our goals. And it's pretty exciting as a matter of fact. I'm really very excited about the Democratic response. It's been very, very positive. And Collin and Mr. Waxman and other chairs have worked very constructively to bring us to a good place."

While the Democratic chairmen are busy trying to resolve their differences over the agriculture issues, others are trying to determine exactly how the vote count shapes up.

"We're getting there," Majority Whip James Clyburn (D-S.C.) said last week. "It's a close vote."

Clyburn said his whip operation started two weeks ago in preparation for the floor debate with a large focus on the farmers. "I think there are some real concerns that the rural communities have, especially the co-ops, as to how they are faring, and the states that they represent, how they fare in all of this as opposed to larger states," he said. "And so we've got to work out all of those equity issues."

Several of the farm state Democrats said they have the impression their every word is being monitored.

"I don't think its paranoia, but I feel like when the speaker's talking now maybe she's zeroing in on me," said Rep. Tim Walz (D-Minn.), a member of the Agriculture Committee. "Because the minute I said I don't think the Senate is going to pick it up or we're moving fast enough, we had a sophomore meeting where the speaker said the Senate's moving along and we're going to take it up next week."

Peterson, who forged a close relationship with Pelosi during last year's farm bill negotiations, has been in constant contact with the House speaker on the global warming legislation. "She wants the farmers' concerns to be addressed," Peterson told reporters last week. "And she wants them to be on board with what we're doing."

Trolling for details

Waxman and Peterson have largely dodged questions about the specifics of their negotiations, leaving other Democrats to fill in the blanks. But those members usually speak with the caveat that it is best to check with the committee chairmen for final confirmation.

Consider the critical issue of how to distribute emission allowances to rural electric cooperatives. Peterson last week said the issue had surged to the top of his list of concerns about the House legislation, ticking off several reasons why the bill adopted in late May in the Energy and Commerce Committee (H.R. 2454) did not take into account the regional concerns of rural lawmakers.

Democrats who worked out the details of the Energy and Commerce Committee's bill defended their approach but also signaled a willingness to open up their own formula if it meant bringing along more votes.

"I think they needed 0.7, and I heard they got it, or they got what they needed," Rep. Mike Doyle (D-Pa.) said Friday, regarding the percentage of emission allowances reportedly being sought by the National Rural Electric Cooperative Association.

"From my perspective, there has been very substantial progress," added Rep. Rick Boucher (D-Va.), an Energy and Commerce Committee member who helped negotiate the overall language on emission allowances. "I am very hopeful that in the not too distant future we will be in a position to move the bill to the House floor."

But both Waxman and Peterson on Friday stopped short of saying a deal was done on this issue. "I don't want to verify anything until it's nailed down," Waxman said.

"None of it is settled until all of it is settled," was Peterson's reply.

Also still unclear is exactly how much negotiation must be done on the management of the legislation's offset program.

Peterson said he was surprised Thursday when Waxman offered a new approach for dealing with the issue. He did not go into detail, but several other Democrats said Waxman's idea would have melded oversight between U.S. EPA in Washington and the Agriculture Department at the local level.

Initially, Peterson offered a positive comment about the concept. But he quickly backed away after meeting with Democrats on the Agriculture Committee. "Nobody understood it, for one thing," he said. "It is a whole new concept being brought in at the last minute. The attitude was, maybe we can look at this, but we don't see how this works."

Following his meeting early Friday evening meeting with Peterson, several top farm group officials and the Obama administration, Waxman acknowledged he needed to go back to the drawing board.

"There were some ideas that looked a lot more promising yesterday than they do today, and so we're going to have to re-evaluate some of those ideas as we look at the basic issue that has divided us," he said. "And that's the respective roles of USDA and EPA and how to assure the validity of the offsets and make the market work the way they should."

"There's a distrust that a lot of people in the farm country have about the role of EPA," Waxman added. "And we've got to figure out a way so that everyone feels comfortable with the definition of an offset, the scientific validity of it, and the authenticity of it so the whole program will work."

White House role

Obama's role in the climate debate remains a big question mark.

Administration officials are fanning out this week to push the president's volunteer initiative, with a small dose of energy and environmental issues factored into the equation. But Obama has yet to take a major public stand on the climate bill, raising questions about just how much time and energy he wants to dedicate to the issue compared with his health care agenda.

David Axelrod, Obama's top political adviser, insisted last week that it is not a competition between the two top-tier items. "Obviously, health care is in high gear right now, and we want to move that forward," Axelrod said. "But both of these are going to have a lasting impact on our future competitiveness, on our future as a country. So they're two valued children. We're not going to put one above the other."

Several Democrats said they think Obama is holding his fire for critical moments in the climate debate, including the final House floor vote and the much more difficult fight in the Senate.

"I think the reality is that the president will become engaged when and if he thinks that can be helpful," said Majority Leader Steny Hoyer (D-Md.).

Both Browner and Schiliro did not stop to talk with reporters following their meeting with the House Democrats on Friday. But Rep. Ed Markey (D-Mass.), Waxman's lead cosponsor of the climate bill, insisted that their presence helped. "It added a level of seriousness to the issue, and it also inflected how important this legislation is to the president," said Markey, who chairs the Select Committee on Energy Independence and Global Warming.

Looking ahead, even Democrats who are not ready to sign off on the House climate legislation say that they think the bill will cross the finish line.

"We put the farm bill together maybe 35 times and it fell apart 34 times and then it got vetoed twice and we had to override the vetoes," said Rep. Dennis Cardoza (D-Calif.), a member of the Agriculture Committee. "A bill this complex, with this many moving parts, is a tough bill to get right and it's a tough bill to pass."

CBO report

Meanwhile, Republicans are itching for a fight over the climate issue, which they see as a winner by the time voters get to the polls in November 2010.

"This is the largest tax increase in the history of the United States, and probably the world," Rep. John Mica (R-Fla.), the ranking member of the Transportation and Infrastructure Committee, told reporters during a Friday press conference that questioned the speed with which Democrats were trying to move the legislation.

Part of the GOP strategy centers over the economic costs, with industry groups and Republicans pointing to studies that say the legislation will cost Americans thousands of dollars per year in higher energy bills and other consumer goods.

Democrats, by contrast, were excited with the results of a Congressional Budget Office report released late Friday that shows the House bill's cap-and-trade provisions would cost a net $22 billion a year by 2020, or $175 for every household -- about the same as the cost of a postage stamp a day, read one Waxman press release.

CBO also broke down costs by different economic demographics, with the lowest of the five income quintiles seeing an average net benefit per year of about $40 in 2020. The highest quintile can expect to see net cots of $245 per year. As of press time, CBO had not explained what income levels constitute a quintile.

The second lowest quintile would be about $40 per year in added costs; $235 for the middle quintile and $340 for the fourth quintile.

CBO's assessment of the net costs takes into account the free distribution of greenhouse gas allowances and a number of other policies designed to lower the costs of the program, including offsets.

Without factoring in those provisions, CBO said the law would cost a gross of $110 billion in 2020, or about $890 per household. Also, CBO said prices of goods and services will go up across the economy based on the greenhouse gas emissions linked to their production and consumption, meaning electricity costs will go up more than food prices.

The CBO study did not include any assessment of the economic benefits from reducing greenhouse gases and any slowing of climate change. And it also ignored many of the bill's other energy provisions, including a nationwide renewable electricity standard.

Click here to read the CBO report.