Reporters Roundtable:

E&E Daily reporters examine the next wave of energy legislation including NSR changes

A bill to encourage new refinery construction is slated for debate on the House floor later this week. But the measure also includes controversial changes to the Clean Air Act's New Source Review program. Does the refinery bill have enough support to make it through both chambers of Congress? Can Rep. Richard Pombo (R-Calif.) strike a deal with Florida lawmakers about offshore drilling? Will high energy prices hurt Republicans at the polls next year? E&E Daily reporters and editors tackle these and other issues as members of Congress continue their efforts on energy legislation.

Transcript

Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining us today for a reporters roundtable is Colin Sullivan, editor of E&E Daily and reporters Darren Samuelsohn and Ben Geman. Guys thanks a lot for being here. Darren, let's start off with you. There's a refining bill headed to the House floor probably later this week. A lot of people talking about the refinery component of it, but there's also a major Clean Air Act section as well. Tell us what's in it.

Darren Samuelsohn: I mean you could call it a rider per se, a Clean Air Act rider that's been stuck in there. It's basically the Bush administration's New Source Review reforms that he finalized two, three years ago that were stopped by the D.C. Court of Appeals. And these would have basically allowed for all industries, not just refineries, but for power plants, pulp and paper mills, the ability to conduct routine maintenance at levels that are pretty high that enforcement cases going forward wouldn't be able to be brought like you saw during the Clinton administration. So that's the major, most controversial thing that's in there for the refining bill.

Brian Stempeck: Now who's pushing for that to be in the bill?

Darren Samuelsohn: Well, the White House is the one who apparently, Joe Barton, the chairman of the committee, he said of the White House that was the most important thing that they wanted in the bill. And President Bush, I think a couple of days ago, last week, he was saying that the refining capacity wasn't being able to be upgraded because of New Source Review. Now there's a considerable debate about whether or not President Bush is right in what he's saying there, but I mean the Bush administration is saying that they want this. And primarily the reason you can go back is this Court of Appeals decision, from a couple of years ago, which has stayed implementation of the Bush administration rules. We're going to see an actual court case evolve out of this with briefings and then arguments in the D.C. Circuit before three judges and a decision, but that's about a year or so away. So in the meantime these have been the big reforms, the 20 percent loophole, or the capital spending threshold that industry can spend this much money. So that's why they're pushing it through and then Barton wants it just as much.

Colin Sullivan: A big part of why the White House wants it too is because it's really the major component of Clear Skies that they would like to see pass on Capitol Hill. Other components of Clear Skies have passed essentially through regulation, through EPA, whether CAIR or the mercury regulation. Now that the NSR stuff passed, they have essentially moved Clear Skies without moving the entire Clear Skies.

Brian Stempeck: Now this has been, as Darren says, this is almost a rider on the bill. This has nothing really to do with the hurricane. Are they going to be able to pass this bill? There's a lot of interest in the refining section, but what about the clean air part?

Colin Sullivan: Well, as with everything we cover nowadays, I think it will come down to the Senate. I think they can move it through the House, but it will probably be a slow walk through the Senate. Chairman Domenici, of the Energy and Natural Resources Committee, is having a hearing this week and they're going to start putting together a bill. I don't think that their bill would be as far reaching as Barton's bill would be in terms of New Source Review or the refinery stuff. So it'll come down to the Senate. It depends on how long the session goes. It also depends on how high natural gas prices go this winter, how soon that happens, whether or not that happens early in November versus December versus January. And then you start getting into an election year in January, and I don't know if they can move another energy bill then.

Brian Stempeck: Now Darren there's been some opposition in the Senate, already I know Senator Jeffords has spoken out about this.

Darren Samuelsohn: Yeah, I mean Senator Jeffords and Senator Wyden and a whole bunch of Democrats last week were saying this is a pretty egregious piece. And whether or not they have enough people to filibuster the whole bill over this particular piece, we'll find out as it moves through the Senate. And would it be the kind of thing where the Senate doesn't put it in their bill, the House does and then forces something in conference and maybe sticks it in and forces an up or down vote on an entire Katrina energy related package. And then puts these Democrats on the spot. Do they want to filibuster something just over New Source Review? Now clearly they've made New Source Review an issue throughout the whole term of President Bush. They had a rider appropriations vote a couple of years ago, when Senator Edwards was still in Congress, where this issue came up and it was the Bush reforms on the Senate floor. And actually the Bush administration's reforms won out in that vote. It was close. It was like 46 to 50. So the Dems have tried once before, but 46 votes, so they didn't show, a couple of years ago, that they do have a filibuster majority and that was just a vote on New Source Review. It wasn't on the whole big energy thing, so that'll ...

Colin Sullivan: I think it's a pretty safe bet the Democrats would stick together in filibustering New Source Review in the Senate.

Brian Stempeck: All right, we'll wait to see on that. Ben, I want to turn to you for a second. The refining bill is moving, but we're not hearing so much on the offshore section and talking about ANWR. Chairman Pombo of the Resources Committee is backing off of that a bit. Tell us what's the latest on that?

Ben Geman: Well, yes and no. What happened was there was a mark up last week in the House Resources Committee in which, no surprise, they moved a piece of an energy bill that would open up the Arctic National Wildlife Refuge to energy development as well as allow states to quote unquote "opt out" of the offshore moratoria. What happened was that was slated to be, the original plan I guess was to package that with Barton's bill and to have them both be considered on the House floor this week. Pombo and the Resources Committee decided they didn't want that bill to go forward this week. And I think a lot of it has to do with continuing negotiations on offshore issues.

Brian Stempeck: Now there's been a lot of opposition, especially from some of the House lawmakers in Florida, so Pombo is continuing to work with them. Do you see any potential for middle ground there?

Ben Geman: Yeah, here's what happened. It was very curious. In the Resources Committee you have, you're right, Pombo has been negotiating with several, mostly Republican, members of the Florida House. The delegation seems to be split from it a little bit, but you've got several of them that seem to be willing to support something like that that on the one hand could allow states to opt out of the offshore leasing bans. On the other hand it would also include, whether it being tagged as some stronger protections, some stronger coastal protections for Florida and other states that do not want to allow drilling off their coasts. Then what happened in committee was Representative Peterson of Pennsylvania introduced an amendment, which passed surprisingly on a voice vote, that would just include a blanket lifting of the offshore bans for natural gas drilling. So ultimately Pombo decided not to go forward. I think it had less to do with the Peterson issue as with Pombo trying to just work a little bit more with the Florida governor's office and with members of the Florida House to try and get something that everybody can live with. Because he does seem to gain some traction insofar as some of these Florida members would support something that would allow other states to opt out if they wanted, provided they felt they had some security to maintain or even expand some of their protections.

Colin Sullivan: It's also a little bit unclear that Pombo made that decision. I mean you had a pretty busy week in terms of the House leadership with Tom DeLay being indicted and Roy Blunt becoming the new temporary majority leader. It's not clear to me that Chairman Pombo made the decision to have this bill not included in Barton's bill. That might have been a leadership decision, where the House leadership said look, we're hurting on a number of fronts here. Let's not put this controversial stuff, the Barton stuff is controversial as it is. You put ANWR on the floor along with this offshore drilling stuff, along with the other stuff that's in there, there might have been a calculation at the leadership level to say no.

Ben Geman: Yeah, I think that's lately right. I think there's probably a number of factors. Another one was that Governor Jeb Bush of Florida, as well as some of these same Florida House members, had indicated that while they might be comfortable with the sort of broad brush framework that Pombo had put out there, they were also uncomfortable with a couple of specific things. For example, existing leases off the coast of Florida that were sort of in play before the moratoria took effect. Bush and some of the other, I believe Cliff Stearns and Michael Bilirakis of the Florida delegation have said OK, we might be comfortable with this thing overall, but we're really concerned about what would happen with those leases. It seems like there some more work to do before they can get something that would be even approaching some kind of consensus.

Colin Sullivan: What's interesting here too though is this never been any wiggle room with the Florida delegation. It's been hands off offshore. Don't even talk about it. Now they seem to be talking about it, which is different and it's not something the California delegation would be willing to do.

Brian Stempeck: I mean how much of this has to do with energy prices? We've see natural gas hit a record high. Gas prices, as we know, are high. How long does that happen until Congress says we are going to do something? We are going to open up the offshore areas and do this.

Colin Sullivan: Well, I mean all these proposals that are out there in reaction to energy prices and in reaction to the hurricane, whether or not you believe it's political opportunism to move some of the stuff they've been wanting to move for a long time is the question. Democrats and environmental groups see this as political opportunism by Barton and Pombo, moving these provisions that they couldn't get into an energy bill that passed less than two months ago. So as we said, several times recently on this show and in our publications, that energy bill appears to have had a shelf life of two months and they're bringing back all these things they couldn't pass before. Whether or not they do anything to address gasoline prices in the short term, or natural gas prices in the short term is still an open question, but it depends on how you see this sort of political climate of what's going on.

Brian Stempeck: I was going to ask you about that. As you said, the energy bill passed and only lasted about two months. Is there a general sense on the Hill right now among lawmakers, among lobbyists, that that energy bill was pointless? I mean it really had no effect. We're not seeing much help for consumers right now.

Colin Sullivan: Well, I mean I think a lot of that stuff was long term. There's a lot of tax incentives in there, stuff to do with, the Alaskan natural gas pipeline, stuff like that, that just passed recently, over the last year or so. I think it's long term. One of the things the president said at the end was, well, this bill's going to pass, but it's not going to really do anything in the short term. And I think they were just facing reality knowing that it wasn't going to do anything. These are long-term energy problems and they're going to require long-term solutions. And I really don't know that Congress can do anything.

Brian Stempeck: Now Ben, what about the White House? What's their reaction been so far? President Bush really for the first time in his presidency has come out and said we need to think about conservation a bit here. And I know you followed some goings on with the Department of Energy today.

Ben Geman: Yeah, that's right it's sort of tiered off what Collins just said. There was an announcement early this week with Energy Secretary Sam Bodman and the Alliance to Save Energy and what they're announcing was a roll out of a sort of public education campaign to increase both home energy efficiency and also to work with different industrial facilities on trying to increase their energy efficiency. And it looked at both consumers use of gasoline and home heating fuel and natural gas to heat their homes, as well as some of these industrial, actually they're also trying to increase the efficiency of the federal government itself. And Bodman was actually fairly frank in saying that, look, we do have the energy bill, that's right. And I do think that will provide some type of relief, but, he said, it takes a long, long time, months, years, to get these things rolling from a piece of legislation. What we want to do are these types of radio spots, public education campaigns on conservation that people can implement right now.

Brian Stempeck: Now Darren, turning back to you for second, going back to NSR. As we talked about the White House coming under fire for energy prices, coming under fire for the management of the hurricane, why would they push something like in NSR, which is very a controversial thing? I mean the timing doesn't seem so great right now.

Darren Samuelsohn: It's the refining connection is what they're able to make and of course it says in the bill that it's not just refining, it's all industries. So it is sort of, there's a question of whether or not it's related. And as Colin said before, Clear Skies has been stalled for such a long period of time on Capitol Hill and they've tried to move some of these things regulation. I mean they tried to move New Source Review through regulation. All of them have been challenged in court. The mercury rule has been challenged in court. The Clean Air Interstate Rule has been challenged in court, so all of the different power plant proposals are tied up in court. If you can stick the New Source Review stuff, which is, I arguably would say is the most important thing that the Bush administration has wanted since day one. And Clear Skies was something that they sort of put out there as sort of like the nice piece that people maybe could bite on in order to get the New Source Review reforms as well. Now that never worked and of course carbon dioxide and the global warming debate was something that was clearly out there as well in 2001, 2002, 2003 and 2004 as they were debating.

Colin Sullivan: Bigger picture, I mean Republicans might be vulnerable heading into '06 on energy issues and environmental issues. I mean you're seeing the Endangered Species Act moving, a lot of stuff the Democrats and the environmental groups don't like. And Democrats are decided that they're going to target energy and environmental issues in specific races. I think you're going to see that borne out in races like the Senate race in Arizona, the Senate race in Pennsylvania, maybe the Jeffords race-for the Jeffords seat in Vermont, a lot of House races. I think Democrats have made a strategic conscious decision to emphasize energy and environment headed into '06 and they think Republicans are vulnerable on the issue.

Brian Stempeck: How much trouble do you think Republicans are in right now? We saw Tom DeLay actually step down from his post last week, had the hurricane, had the energy crisis. How much trouble do you think they're in coming back in 2006? I mean this is a chance for Democrats to take back the House.

Colin Sullivan: I don't know about take back the House. I think the calculation is what, something like 25 seats are actually in play in the House. I think that Republicans have a year to sort of bounce back from their recent troubles. They have a lot of time to react, but there's a number of factors. There's the so called six year itch with President Bush in his sixth year, where the opposition party tends to gain seats. Republicans have been hit on a number of fronts, but I think they have a whole year to bounce back. So at this point I would say yeah they're vulnerable, but they, if the election was this year, sure, they'd be highly vulnerable. But they still have another year.

Brian Stempeck: All right, one last question for you guys. What else is on the table right now? We have energy finishing up possibly this week in the House. We're looking out further this fall. We have the new Supreme Court nomination from President Bush, plus the appropriations process. Give us a sense of what else to expect coming out.

Colin Sullivan: The Supreme Court nomination just came out so it's a little bit too soon to say. I'm not in a position right now to say if environmental groups are going to rally around that or not. We're tracking ESA, the appropriations process. Darren could probably talk about Senator Inhofe's environmental waiver bill, that's one thing.

Darren Samuelsohn: Senator Inhofe has a lot of things. He's been moving forward some hearings and there's a climate change hearing this week. There was a climate change hearing last week. Senator Inhofe is looking into Kyoto implementation and he's bringing together some people with international perspectives on how they've been able to implement Kyoto. Last week he brought in Michael Crichton to question the science behind climate change. So he's got that. On the environmental waiver side of things, I mean that's certainly out there and he keeps saying let me see what EPA needs in terms of waiver responsibilities for the Gulf Coast region. There's some language in the House bill that deals just with the fuel side of things. That's out there and I think that Inhofe would love to move this thing quickly through. I mean there's been some stuff moving through yea on this consent, related to Katrina off the Senate floor, but this is a controversial thing. We saw a House and a Senate counterproposal from Democrats last week, so on the waiver issue I think that would be a fight and it definitely wouldn't move through ...

Colin Sullivan: What's sort of more important is the fight over budget reconciliation, which Ben actually covers, the fight over ANWR. And what he's saying is this offshore fight might actually develop in the budget reconciliation process, not in the energy policy process.

Ben Geman: Yeah, that's right. When the Resources Committee, and possibly with some discussions going on with leadership it sounds like, when they pulled their energy policy off the floor and decided not to go forward on the floor this week, they said, look, ANWR is definitely going to show up in the reconciliation process, which is slated to go forward later on this month. And they're also saying that the offshore provisions could also show up there. And how far these offshore provisions can get, that's going to be a really interesting thing to watch because in the Senate it could be pretty close to dead on arrival. I mean Florida Senator Bill Nelson has said he will filibuster anything that he believes weakens the existing protections and he's also said point blank I think this proposal out there right now, his office has said this at least, does weaken those protections. In the House it's not clear. I've been asking around little bit about this and even though efforts to sort of change around the existing offshore protection structure have failed by considerable margins over the past few years, if you start to lose a lot of members of the floor to delegation, the people on both side of the issue have told me they think it's kind of a tossup. So for the first time in a long time, in the House, the landscape does seem to be shifting a little bit on these offshore issues.

Colin Sullivan: Also, most importantly, the Red Sox are going to lose in October.

Brian Stempeck: All right. We're going to stop there. Colin Sullivan, Darren Samuelsohn, Ben Geman, thanks a lot. I'm Brian Stempeck. This is OnPoint. Thanks for watching.

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