POLICY:

Obama budget proposal pushes climate regulations forward

Both climate regulatory and climate adaptation programs won cash infusions in President Obama's budget proposal yesterday, despite a tough budget year that saw overall cuts at environment, natural resource and land management agencies.

Environmentalists said the budget underscored the administration's seriousness about its climate change agenda, even when the programs were not linked directly to clean energy and jobs initiatives.

"The president's putting his money where his mouth is," said Franz Matzner, climate change legislative director with the Natural Resources Defense Council.

Some funds will help U.S. EPA with what many consider to be a heavy lift for its air office as it proceeds to flesh out a climate regulatory program.

EPA seeks $43.5 million more for climate regulation

While its overall $10 billion budget sustained a $300 million cut compared to 2010, EPA will request from Congress $43.5 million in new funding for climate regulatory efforts in fiscal 2011 for a total of $56 million.

Overall, the $1.1 billion devoted to EPA's clean air and global climate change program -- one of five funding priorities for the agency -- represents about 12 percent of the agency's budget. Of that, the proposal sets aside $169 million to reducing greenhouse gas emissions.

Over the next two years, EPA's climate team has a lot stuffed onto its plate. On its agenda are plans to catalog major greenhouse gas (GHG) emitters for the first time, implement GHG limits for cars and light-duty trucks, write new GHG limits for other mobile sources such as aircraft, finish permitting rules, and give technology guidance for large industrial emitters. On top of that, it may propose new GHG emissions performance standards for some categories of industrial emitters.

The budget includes new or increased funds for all of these efforts: $21 million for the GHG registry, $5 million for EPA to write permitting guidance for GHG reduction technologies, $6 million for implementing and developing mobile-source climate regulations, and $7 million to investigate performance standards regulations.

Additionally, more than $7 million would be devoted to carbon capture and sequestration work at EPA, including funds for a new framework to permit carbon capture projects under the Clean Air Act, according to the agency.

Perhaps most important, several observers said, is a new $25 million proposed to help state air pollution agencies process a potential influx of tens of thousands of new GHG permits for the construction, upgrade or operations of large industrial emitters. In parallel with a similar EPA-level proposal, many states also need to tailor their laws to streamline permit applications and exempt smaller businesses and facilities.

Bill Becker, who heads a national association of state air pollution agencies, thanked the administration for the "sorely needed" funds.

Could spark a partisan fight in Congress

Jeff Holmstead, EPA's former air office head during the George W. Bush administration and now an industry attorney, questioned whether the funds were enough, given the scope of EPA's agenda. EPA's capacity to process the new permits was industry's biggest concern, he said. "You have to engage in this process that can go on and on," he said.

One uncertain question is exactly when -- this year or next year -- the permit processing would be triggered under the Clean Air Act, Holmstead said. "If in fact CO2 permitting begins this year, I don't know there is an amount of money that would ease that transition," he said.

Congress would have to approve all of these funds. Senate and House Republicans have so far fought tooth and nail against EPA's climate regulations. Sen. Lisa Murkowski (R-Alaska) plans to call a vote on a resolution that would stop EPA in its tracks next month. Some lawmakers renewed their protests yesterday and vowed to stop new funds for climate regulations (E&ENews PM, Feb. 1).

Meanwhile, climate change science and adaptation programs and land conservation programs also got a boost at the Interior Department, which received a slight overall cut with a proposed $12 billion budget.

Alan Rowsome, a budget analyst for the Wilderness Society, said the climate funding was one of the highlights of tough budget year that, in his view, saw disappointing cuts in the operations and maintenance budgets for national parks and wildlife refuges.

USGS gets new carbon-related funds

Interior's budget request includes a total of $171 million for adaptation initiatives, an increase of more than $35 million from 2010 levels. That includes $14 million to establish eight climate science centers around the country, where scientists will identify areas most vulnerable to climate change and craft adaptation strategies.

The biggest chunk of the adaptation funds, $78 million, went to the U.S. Geological Survey, including a new $8 million funds for National Climate Change and Wildlife Science Centers and $2 million to expand its carbon sequestration program.

The biggest increase, nearly $19 million higher than 2010 levels, was proposed for the U.S. Fish and Wildlife Service. Under the plan, that agency would get $9 million in support of its new landscape conservation cooperative initiative and $8 million for a new, publicly accessible FWS monitoring program. Some focus regions include "mission critical" areas on the Gulf Coast and FWS's national wildlife refuges, according to Interior.

Broader land conservation and acquisition programs, which many see as important in the context of climate change, also won more funding.

Drawing relief from environmentalists, President Obama continued progress toward his campaign promise to fully fund the Land and Water Conservation Fund, at $900 million a year, by 2014.

In his 2011 budget, he proposed additional funds within the Interior and Agriculture departments' budgets, for a total of $620 million, $140 million more than 2010 levels.

Other budget boosts will also indirectly help the department plan for climate change.

Funding doubled for local water supply programs

As water shortages and water use conflicts increase in Western drought-prone regions, Interior has proposed to double funding for its WaterSMART program to $73 million. Between the Bureau of Reclamation and the USGS, the funds will be used to help local communities stretch and manage water supplies and to study current and future water supplies and needs. Funding for coastal restoration projects in the Everglades, California Bay-Delta, Gulf Coast, and Chesapeake Bay would also increase by $71 million.

Obama also continued his drive to reconfigure the U.S. energy economy, adding $14 million to the Interior Department's effort to expedite renewable energy permitting on federal land and waters. A total of $74 million will be used to meet the "aspirational" goal of permitting at least 9,000 megawatts of new solar, geothermal and wind projects by the end of 2011, Salazar said.

"It is a very significant amount of energy. But we are confident that if we stay on task, that we will be able to get these projects permitted and they will be constructed," said Salazar.

To raise more revenue to meet Obama's proposed discretionary spending freeze, the Interior proposal also increases fees for oil and gas drilling permits and leases and also would eliminate tax breaks for oil, gas and coal companies to raise almost $40 billion over 10 years.

Asked about whether domestic oil and gas production would suffer, Salazar noted recent record profits for the industry and projected its healthy future in years ahead. "I think the oil and gas industry will do just fine," he said.

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