With Democrats pushing back the deadline for moving climate legislation through the Senate, what are the main hurdles to getting 60 votes? During today's OnPoint, Sheila Hollis, chairwoman of Duane Morris' Washington, D.C., office, gives her take on how far climate and energy legislation will go in the Senate this year. She explains how Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) is shifting her approach from last year's Lieberman-Warner debate. Hollis also explains how domestic action will affect the ongoing international negotiations.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Sheila Hollis, chair of the Washington, DC office of Duane Morris. Sheila, it's great to have you on the show.

Sheila Hollis: Thanks Monica for inviting me, pleasure to be here.

Monica Trauzzi: Sheila, coming off of the House passage of the Waxman-Markey bill the Senate is off to a slow start on climate. Senate Majority Leader Harry Reid, Senator Boxer, they've each changed the deadlines for climate and energy legislation making its way through the Senate. A lot of political capital is being put behind healthcare at this point. Do these shifts sort of foreshadow trouble ahead or a tougher hill to climb in the Senate than we may have previously thought?

Sheila Hollis: Well, it's been tough all along. I don't think it's gotten that much easier. The economy, while showing some signs of life is a drag on the progress of those two major initiatives, i.e. health and energy/climate change issues. So as the summer progresses and there's more opportunity to achieve the 60 votes necessary to make it happen I think you're going to see a lot more work put into it in the Senate and it's possible that the bill that ultimately comes out, if it comes out, may be more modest in its aspirations.

Monica Trauzzi: We're talking about a December floor action. Do we risk having another Lieberman-Warner like scenario where it's sort of rushed through the floor?

Sheila Hollis: It's possible, but I think that this time there's a desire to have it developed to the point, the legislation developed to the point where there won't be a misfire, where there will be some progress of some sort made and that there would be an indicia of progress. It may not be December, but at least in this Congress.

Monica Trauzzi: There are concerns that if the climate bill is weakened any further, which many believe needs to be done in order to get the 60 votes, that the environmental benefits will be erased. Is there a way to get those votes but keep this an environmentally strong bill?

Sheila Hollis: Environmental strength, of course, like so much else is in the eye of the beholder. I think to the extent that there is progress in the sense of recognition of the issue and embracing of the issue with perhaps very modest steps at the inception, but moving towards an accelerated consideration of the issues and having enough flexibility so that the issues could be taken on under the umbrella of climate change legislation, in an appropriate level of activity given the state of the economy, the employment situation in the country and sorting out some of the trade issues, the issues that have been raised by the unions, the issues that have been raised by the manufacturing states, central states to the economy.

Monica Trauzzi: Senator Boxer was criticized heavily last year for sort of mismanaging the way Lieberman-Warner went. What do you see as her main challenges this year and do you see a shift in the way that she's approaching climate this time around?

Sheila Hollis: Well, Senator Boxer certainly has very strong views on the necessity for the legislation and very pro-environmental climate change legislation obviously all the way through. However, I think that having been through the wringer last time that her views, while still strongly held,, may be tempered by the reality that she wants to achieve things and she wants to work within the context of a very difficult climate in the environment to achieve something that will pass muster as far as being environmentally appropriate, showing progress, but at the same time achievable in the political sense, because it's a world of compromise, particularly in the Senate. And the Senate is a very, very tall mountain to climb.

Monica Trauzzi: The allocation of allowances, it's going to continue to be a major sticking point as this makes its way through the Senate. How do you expect the distribution of allowances to change from the way it's handled in the House bill in the Senate bill?

Sheila Hollis: Well, I think that the necessity to recognize the role of the electric distribution companies is a key part of this and I think that the allocations to the distribution companies will be very strong as this goes forward. However, I know that the refiners and other players are very, very disturbed by to the low allocation that they've gotten. This may be handled via a slower roll out of the allocations and also through the regulatory steps that are taken to implement all those allocations and the oversight on those allocations, but it's a very difficult situation. If you're going to have the allocations, of course everybody is going to want their fair share and their fair share of course, again, is in the eye of the beholder.

Monica Trauzzi: One of the issues that emerged after the House of was this tariffs issue where foreign countries who are not regulating emissions would essentially have to pay a tariff for their products. President Obama has signaled that he'd like the provision to be removed, but manufacturing states want it in, in order to protect jobs here at home. Is this going to emerge as one of these major issues of contention in the Senate? I mean where do you see things going on this front?

Sheila Hollis: Well, one of the principles that the U.S. has been operating on for so long is free trade as a core principle. Now, we saw this issue come up previously in the NAFTA situation where NAFTA itself became a fulcrum for the problems associated with the environmental and related requirements on trade, semicolon; however, in this context it's even worse because as you saw the Michigan unemployment rate is 20 percent. Other states are well above the 11.5 percent level. I think this is going to probably be the central issue when all is said and done as to union support for the bill, what happens in the next election, whether this is an immediate issue in 2010 in the next election, 2012. If it is implemented and it is rolled out at some level and there's more damage to American jobs and American manufacturing at least as perceived by the voters, particularly in the manufacturing states, it's going to be a whole different scenario. It's very, very tricky and trying to balance those interests for the administration is an enormous challenge and I'm very empathetic with the difficulties of trying to make progress on climate, but at the same time not damage the employment situation which is of course the central issue on the front page of every paper right now. I've just come back from Detroit and I must say that it is a very sobering experience in Michigan, and particularly in Detroit where people truly are desperate for jobs, and when I say Detroit, that's a short-form version for the entire automobile manufacturing industry. Now, the solution of course as perceived by many is going to be electric vehicles, but much of the electric vehicle activity is taking place in China, is taking place in Japan. And how to deliver American jobs to automobile manufacturers and related is going to be one of the real challenges, because of course the Chinese have huge scalability capability and so on.

Monica Trauzzi: Final question here, let's tie it all back to the international negotiations that are coming up in Copenhagen at the end of the year. Has Congress done enough yet at this point to please the international community or do we really need to see some strong action coming out of the Senate in order for those nations to be happy and to feel like there is progress happening on the U.S. front?

Sheila Hollis: Well, some would say that perhaps it's impossible to make Europe happy under any circumstances, but that's another story. But I do think that there needs to be some progress, but the fact is that the inconvenient truth right now is the economy that's affecting people directly today. So I think there's a realistic realization that there's so far you can go in this environment with the world economy and the U.S. economy where it is and all the interdependencies that relate to that. So I think progress will be made. It will probably not be satisfactory. It rarely is, but there are other pressing problems in the world too, the nuclear situation, issues associated with poverty and basic poverty in a billion people in the world. So if you look back at what the G8 actually accomplished, there was tremendous focus on poverty issues, I think clean water issues, the worldwide water supply is going to be central to this upcoming Copenhagen issues as well. So there's a lot out there. I would not say that huge progress could be made, but any progress that would be made that would recognize the issue and build in flexibility going forward so that the U.S. can adapt, over time, at a reasonable pace to the demands of the international community. Now, obviously, that's not going to be satisfactory to other areas of the world, but I'd say for right now, a cautious approach would be one that probably is the one that will be embraced.

Monica Trauzzi: Okay, we'll end it right there. Thank you for coming on the show.

Sheila Hollis: Thank you so much Monica, a pleasure.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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