With the Democrats poised to take over leadership of the House at the start of the next session of Congress, questions are arising as to the amount of emphasis that will be placed on climate change and other environmental issues. During today's OnPoint, David Hayes, partner and Global Chair of Latham & Watkins' Environment, Land & Resources Practice and former deputy secretary of the Interior, says the new Democratic leadership will want to be progressive on the environmental front. Hayes sees a big push ahead on creating technologies for alternative energy but also talks of a vigorous drilling debate as the United States continues to try to meet its growing energy demands. Hayes also comments on how changes in the House Resources Committee will affect land conservation, water conservation and the Endangered Species Act.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is David Hayes, partner and global chair of Latham & Watkins Environment, Land & Resources practice. David is also a former deputy secretary of the Interior. David thanks for being joining me.
David Hayes: My pleasure Monica.
Monica Trauzzi: David, the midterm elections have set up an interesting two years for the remainder of the Bush administration. Let's start from the top. The next speaker of the House is likely to be Nancy Pelosi. How much of an impact will she have on the push for climate change legislation?
David Hayes: I think the answer is a huge impact. The House has basically been a dead-end zone for climate change in the last six years. Congressman Waxman, of course, had a bill that he introduced that essentially went nowhere because the leadership wouldn't allow it to go forward. Now we have a House with Democratic leadership and leadership that's going to want to show something progressive in the environmental field. And climate change is a logical centerpiece of the new speaker's agenda, so I think we'll definitely see climate change coming to the fore.
Monica Trauzzi: Pelosi is promising a lot of oversight. She says that's something that hasn't happened during the Bush administration's time in office. Will the next two years be consumed by oversight about energy policy and alternative fuels or will we also see action on these things?
David Hayes: Well, in terms of oversight, in terms of climate change, there's not that much to oversee, frankly, because there's not been that much activity that the administration has championed. So we won't see it in climate change. We will see it though in some other areas, particularly I think the oil and gas industry is going to need to be vigilant here. Issues of royalty, underpayments for example, accounting issues like that, also issues about the tax breaks that the oil and gas industry has gotten. I think you'll see that. And you have somewhat of a double hitter in Henry Waxman because he's interested in the energy issues. He's also going to be in charge of oversight for the House, so I definitely think we'll see some of that. And the oil and gas and industry is likely to be in the bull's-eye on that score.
Monica Trauzzi: And, of course, things like the Iraq war and stem cell research are going to have a big role early on.
David Hayes: Yes, that's right.
Monica Trauzzi: Will these take precedent over energy issues and climate issues because the Democrats are going to want to show that they can get a move on things and do more than the Republicans did?
David Hayes: Well, I don't think there's any question that the war in Iraq and some of the larger issues like healthcare, insurance, those sorts of bread-and-butter issues motivated this election more than environmental issues. And I do assume that they will be at the top of the Democratic agenda. What is really unknown, and we can only speculate about, is how much these environmental issues will bubble up. I think they will bubble up quite a bit because the progressives look to the environment as a bit of a surrogate for where they stand on issues of important social issues. They poll high in terms of normal voter's interest in things. And, certainly when it comes to climate change in particular, we've seen a dramatic shift in terms of the attention that folks put on climate change in the last three or four years. So the business community is going to need to be involved on the Hill over the next couple of years. Whether or not a bill comes out of a Democratic Congress and goes to the President's desk is one thing, but there's no doubt that there will be a lot of attention, a lot of hearings, and a lot of maturation of the debate I think on the subject.
Monica Trauzzi: And if a bill did get to the president's desk would there be cooperation on that front?
David Hayes: Well, that is the $60,000 question. We have sort of an analogy here in the Northeast with the RGGI program, the Regional Greenhouse Gas Initiative Program. Governor Mitt Romney, a Republican, pulled out of the program because he was concerned about the economic impact on his state. You go to the other side of the country and you have that Republican governor deciding to co-opt the climate change issue, Governor Schwarzenegger, work with the Democrats, come up with a bill that had a relief valve for industry and, by all accounts, become much more popular, and certainly with the California constituency, because of it. So we don't know what's going to happen with this President and I think that's one of the big questions today. Will President Bush reach out or will he continue to move forward with a less than cooperative view with Democrats?
Monica Trauzzi: And to that point, the U.N. is a holding its annual Climate Change Conference right now in Nairobi, Kenya. And at the conference member nations are trying to extend Kyoto past 2012. What's the likelihood that the U.S. will take part in an international treaty? And are we going to have to wait until after the 2008 elections to sign onto something?
David Hayes: Personally I don't think there's any question that this is a 2008 issue. I cannot imagine the Bush administration, given the markers that they put down about Kyoto, reversing course and being ready to enter into Kyoto. I do think that the presidential candidates on both sides of the aisle will be pushing for climate change legislation in 2008, that's my personal prediction. And of course the world community that's gathering in Nairobi recognizes those same tea leaves and is talking about essentially kicking the can down the road in terms of restrictions after 2012 in the hope that the United States will be at the table in 2009 or 2010, which I think frankly is a high likelihood.
Monica Trauzzi: As the next Congress tries to find a way to balance climate change and energy policy, I want to give you carte blanche, what do you think is the most successful way to have a good energy policy, but at the same time address climate change?
David Hayes: Well, it's a good question because those two issues are inextricably intertwined with each other. And I think there's a recognition of that and also a recognition that the energy policy we pursued in the last Congress did not acknowledge that inter-relationship, giving, for example, significant benefits to traditional energy sources. I think in this next iteration of both energy policy and climate change policy there's going to be much more serious attention on how to develop the technologies that are needed to have clean energy. And that includes not only the obvious forms, like solar and wind and putting those tax credits on a more permanent footing, but also, in particular, biofuels is going to be a huge opportunity I think that Congress is going to want to push toward. And there's a recognition that cellulosic ethanol could have a hugely affirmative benefit both on energy independence and on climate change. What's needed is a concentrated federal program of research and I think that will be the starting point and perhaps the core of the next energy bill coming out of Congress.
Monica Trauzzi: I'm looking ahead to 2007 farm bill, the push for ethanol and biodiesel could happen in that bill. What are you expecting from the Democrats on that front?
David Hayes: I think you will find strong Democratic support on that. In fact, this is an area where there should be bipartisan cooperation. And although we are here in the backwash of what looks like a huge Democratic victory, the fact is that legislation to pass this Congress, both Senate and House, is going to have to have a bipartisan aspect to it. And I think we'll see it. The other thing about the Farm Bill, I'm glad you mentioned it, is in addition to the ethanol piece of it, there's a climate change piece. Farmers are interested in sequestration opportunities and in essentially cashing in on the low-till farm uses and other ways of conserving their land. Right now the current Farm Bill provides some of these opportunities, there's not been funding, it's not really been an integrated program. I think there'll be a lot more attention on that. Senator Feinstein, in particular, has said she wants to make that a centerpiece of her thinking with the new Congress.
Monica Trauzzi: But in order to keep meeting the increasing energy demands a lot of people would argue that, OK, we should open up ANWR for oil exploration. We should go ahead with offshore drilling. How much is that going to play into the next Congress now that Democrats have the lead in the House at least?
David Hayes: Well, I think in terms of the Arctic Refuge, from my personal perspective, you have to realize I testified against oil drilling in the Arctic when I was in the Clinton Interior Department. I think that was more of a distraction, frankly, than a positive energy source, given the fact that it's so many years away under the best of circumstances. But you raise an important point. I mean the energy story does depend on domestic drilling. And we are going to have, I think, a vigorous debate on where and how much we drill here in the United States. I do think that the offshore drilling debate will narrow some, that some of the proposals to raise moratoriums on states like California, etc., will recede given the Democratic control. But continued discussion of deep drilling in the gulf, of other opportunities offshore, of appropriate places onshore to drill, will be part of the energy picture. But we all know that we need more than domestic oil and gas drilling in order to become energy independent. And I believe it's going to be in the area of alternative fuel development and conservation that we're going to see the most new thinking in terms of initiatives.
Monica Trauzzi: Switching gears for a moment, House Resources Committee Chairman Richard Pombo lost to Jerry McNerney in California's 11th District. What kind of impact is this going to have on the Endangered Species Act?
David Hayes: Well, it's a huge impact generally, let me say. Congressman Pombo, of course, was the chair of the Resources Committee, through which essentially all land and water related legislation went in the House or didn't go as the case may be. The fact that he was knocked off, and he was a powerful, a commanding voice in the House, the fact that he was knocked off it's going to have, I think, a huge impact generally, not only on the Endangered Species Act, but also on a number of land conservation initiatives and water conservation initiatives in the West in particular. As far as the ESA goes, I think it means, as a practical matter that we're not going to see the ESA in the front lines of legislative activity coming up. Congressman Pombo was a champion of changing, revising, reforming the ESA, but in a way that, I think, was quite divisive. My sense is that this Congress will not have the appetite to go to the ESA, a least for a while, now that he is no longer on the scene.
Monica Trauzzi: OK. We're going to have to end it on that note. Thanks for joining me.
David Hayes: My pleasure, thank you.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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