Congress down but not out on climate debate next session

Congress will not sit out the climate change debate next year -- even as regulatory battles play out at federal agencies, in the courts and at the state level.

With Congress almost certain not to enact climate legislation this year, environmentalists and industry have shifted their attention to the courts and U.S. EPA as it prepares to implement a rule next year to limit greenhouse gas emissions on stationary sources under the Clean Air Act.

But lawmakers will hardly be silent on the matter.

Opponents of EPA climate regulation will look to pre-empt any action by the courts or the agency through the legislative process, especially if the Republicans take the majority in the House after the November election. Annual spending bills will be prime targets for lawmakers looking to slash at EPA's authority.

"Regardless of which party is the majority in the House or Senate, attacks on EPA authority to limit global warming will continue and intensify," said Daniel Weiss, senior fellow and the director of climate strategy at the Center for American Progress Action Fund.


Frank O'Donnell, president of Clean Air Watch, said advocates of climate change policy "are going to be on the defensive and are redeploying to defend EPA authority."

The lowered expectations for a climate and energy bill next year may also provide opportunities for industry to up its ante in negotiations. A successful bill to address climate change may include a deal on limits of "conventional air pollutants," coal ash regulation and water intake rules.

Lawmakers still hope to pass some sort of climate and energy bill next session, although perhaps a slimmer version or in a piecemeal fashion. Both Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), authors of the climate bill that passed the House in 2009, have said they will work on bills to address the climate issue next year.

Sens. John Kerry (D-Mass.), Jeff Bingaman (D-N.M.), Tom Carper (D-Del.), Susan Collins (R-Maine) and Lindsey Graham (R-S.C.) told Greenwire they are also still planning to make headway on climate and energy policy next session. The senators said they plan to offer bills and policies similar to legislation they separately offered this year.

"I have worked on it for 25 years. I am not going to stop now," Kerry said as he left for the October recess. "I intend to do the legislation that [Sen. Joe Lieberman (I-Conn.)] and I and others have been working on. ... It would be different obviously. We need to change it so that we can attract more votes, and we will work on that," Kerry said. He declined to provide details on what the changes would be although he said he knew what they were.

Collins said the Senate should start with energy and then address climate issues. "I've always maintained that it would have been best had the [Senate Energy and Natural Resources Committee] bipartisan energy bill been brought to the floor," she said. "Then we would have been able to offer different proposals, and I still think that would be a good way to proceed."

But Kerry, Collins and others will find a different negotiating field next year, according to a lobbyist who works for a utility that supports regulating carbon emissions.

"I think the change in Congress changes the dynamics of those who were being reluctantly dragged along" during this year's climate discussions, he said. "They feel like they have a new set of demands and concerns to be addressed. You see them coming in and saying, 'Let's deal with all the regulations.' They think that if they are going to swallow carbon it's got to be done in the context of resolving the overall regulatory picture."

"If Kerry wants to continue to work on a carbon-specific bill, he can do that, but you know it is not going anywhere in the House," the lobbyist added.

Party like it's 1995?

Khary Cauthen, director of federal relations at the American Petroleum Institute, contends the threat of EPA regulation of greenhouse gases is retarding negotiations on climate legislation.

"Once the immediate threat of EPA moving forward with regulating stationary sources is lifted, I believe people can then focus on what good legislation would be. I think those discussions can happen," Cauthen said. "With the noise about EPA regulating greenhouse gas gases aside, we can focus on how to move forward on U.S. policy toward climate change."

EPA is set to implement the "tailoring rule" on Jan. 2, 2011. The rule would limit greenhouse gas emissions from the largest stationary facilities including power plants and refineries. Opponents of the measure are desperate to delay implementation of the rule, which they say will hurt jobs and the economy.

Sen. Jay Rockefeller (D-W.Va.) has proposed a resolution that would delay the tailoring rule by two years. Senate Majority Leader Harry Reid (D-Nev.) has promised a vote on his resolution during the lame-duck congressional session set to begin on Nov. 15, according to Rockefeller.

Sen. Kit Bond (R-Mo.) has also promised to attach the resolution to any piece of legislation that is moving in the Senate. The prime target would be an omnibus appropriations bill to fund all 12 agencies for fiscal 2011 that Congress is expected to approve next month.

The White House has already said it will veto any such resolution. Lawmakers who support EPA authority say they would also consider countering Republican efforts to sabotage appropriations by attaching EPA's current tailoring rule as an amendment to the resolution.

This will be only the beginning of the appropriations battle if Republicans win a majority in the House, CAP's Weiss said.

It echoes the GOP takeover of the House in 1995 when Republicans attempted to strip EPA regulatory authority over pollutants, water and other oversight through more than a dozen environmental riders on appropriations bills. The riders were part of the stand-off between President Clinton and then-House Speaker Newt Gingrich (R-Ga.) that brought the government to a standstill for three weeks in December 1995, Weiss noted.

"One could easily imagine the same thing occurring again as the House Republicans test the president's willingness to have a confrontation on pollution controls," Weiss said.

There are already several Republicans threatening to use the appropriations process to overturn another Democratic priority, the health care reform bill.

Republicans are also likely to hold a significant number of oversight hearings on EPA authority. Rep. Frank Lucas (R-Okla.), ranking member of the House Agriculture Committee and one of the co-chairmen of the House Rural Solutions Working Group, told reporters last month he expects oversight hearings involving EPA authority "once a week" (E&E Daily, Sept. 30).

Clean Air Watch's O'Donnell said EPA managed to endure the 1995 attacks remarkably well. "EPA was under attack all the time and yet it still made progress. ... If Congress keeps its hands off EPA, we will at least make some progress" on climate change next year, he said.

Regulation grand bargain?

Industry and the GOP are not the only ones targeting EPA's tailoring rule, but also several other pending regulations that could significantly affect industry next year. EPA is preparing to regulate or tighten limits on mercury, coal ash, water intake at power plants and other air pollutants including sulfur dioxide and nitrous oxide (Greenwire, Aug. 25).

Some utilities are suggesting that a holistic approach to all of these upcoming regulations could spur progress on a policy to limit heat-trapping emissions.

The industry faces "a regulatory train wreck" that forces companies to "navigate through a myriad of regulations while trying to plan large investments for the future," Nick Akins, an executive vice president for generation at American Electric Power Co. Inc., said during a panel discussion at Columbia University last week. AEP, based in Columbus, Ohio, has the largest portfolio of coal-based generation in the United States.

AEP wants a two-year independent, interagency federal study on standards for capacity retirement or retrofitting that would take into consideration labor needs and other economic factors, Akins said. Lawmakers and industry "have to be able to come together and decide on what is a rational plan going forward," he said.

A multiregulation approach was part of the energy bill offered by Sen. Richard Lugar (R-Ind.) last spring. The bill, S. 3464, included regulatory exemptions for certain coal-fired power plants if utilities promised to retire them by 2018, unless closing the plants endangered electricity reliability. The bill also had incentives for electric and natural gas vehicles, energy-efficiency standards and boosted nuclear loan guarantees.

Graham and Sen. Lisa Murkowski (R-Alaska) co-sponsored the measure. Graham said he plans to offer a bill similar to Lugar's next session but "maybe a little bit more aggressive, maybe a little bit more robust."

"I think that is the game next year. That is a way to lower emissions and stimulate jobs," Graham said.

Environmentalists rejected Lugar's bill and the exemption bargain, saying it was all risk and no reward: The exemption clause was clearly a loophole that would let coal-fired plants continue to pollute.

But the proposal could get a second look next year, especially as the issue of jobs and the economy have taken center stage during the elections. Utilities raised the possible inclusion of "conventional air pollutant" regulations during negotiations last summer when senators considered a climate bill that focused solely on emissions from power plants, which ultimately failed (E&ENews PM, July 15).

"Look, we are not looking to stop the regulation; it's just in some circumstances a delay may be necessary to plan the retirements," a lobbyist from a utility with significant coal generation said. "We are just looking for an organized resolution of how the rules impact and make sure that we are doing this in a coordinated fashion that doesn't hurt us and doesn't hurt [EPA]" because of a backlash if jobs are lost and electricity prices rise sharply, he said.

"I think you also have to take into consideration if you can put forward an approach that has a legitimate argument that it could create jobs and a funding mechanism to create jobs that it has to be taken seriously by the Congress," the lobbyist said.

But Weiss said even such a grand regulatory bargain could be in doubt if Republicans view it as a victory for President Obama.

Chunks and other bits

Even on issues with bipartisan agreement, such as energy efficiency or nuclear power, stakeholders are not holding their breath.

Obama said last month he will prioritize energy policy that cuts greenhouse gas emissions "in a meaningful way" next year, even if it is done in "chunks." On the other side, Sen. Lamar Alexander (R-Tenn.), a member of the Senate Environment and Public Works Committee and chairman of the Senate GOP caucus, said a smaller voting margin between Democrats and Republicans may enhance chances for passage of energy legislation.

"I see people are going to do stuff in chunks and stuff, I don't know what that means. I think it is just bravado," O'Donnell said. "I would say the chances are slim to none. Closer to none."

The problem with "chunks" is that everyone wants their issues to be addressed first, so piecemeal legislation quickly becomes a comprehensive bill, a "Christmas tree" for lawmakers' priorities, an energy lobbyist said.

Another obstacle: the nation's debt. There may be general bipartisan support for legislation to create a clean energy bank to finance carbon-cutting technologies, to expand research on the nuclear fuel cycle and small modular reactors, and to offer energy efficiency incentives and standards, but programs that cost money are not likely to be popular next year.

"I think the challenge on things like [small modular reactors] and other stuff like that with the deficit and with Republicans in control of either the House or Senate, I think you are going to see a lot more fiscal discipline on the budget and appropriations, and it is going to make it harder," said Marv Fertel, president and CEO of the Nuclear Energy Institute, the lobbying arm of the nuclear industry.

"I think it is hard to see how legislation goes anywhere fast."

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