Moderate Dem bucks party orthodoxy, aims to exemplify 'all of the above'

Coming from a state that is among the windiest and most oil-rich in the nation, and having just left the board of a coal gasification company, Heidi Heitkamp knows a thing or two about the path to an "all of the above" energy policy.

The freshman North Dakota senator is still settling into her new job, which she won in one of the closest victories for Democrats last year. But she already is staking out a middle ground on energy -- bucking her party on issues like the appropriate role of U.S. EPA in regulating fossil fuel use while backing strong support for wind and solar.

"I like to tell people, I truly believe in all of the above," Heitkamp said in a recent interview from her relatively small, unadorned office on the ground floor of the Dirksen Senate Office Building.

"You know, I think that there's people on the right who think that you can do it all with fossil fuels, and there's people on the left who think it's all about renewables," she added. "And the reality lies somewhere in between, in that we need the entire mix."

Heitkamp, 57, won her Senate seat in a squeaker over then-Rep. Rick Berg (R-N.D.), riding to a late-breaking victory on a margin of fewer than 3,000 votes at the same time as President Obama was losing the state by almost 20 points. She helped Democrats add to their Senate majority in the 113th Congress and relied on help from some heavy hitters during the campaign -- including former President Clinton, who recorded a radio ad for her.

But her effectiveness on the campaign trail was in part due to her ability to separate herself from national Democratic orthodoxy, so don't expect her to be a loyal team player in the coming congressional battles over energy and environment policy.

While environmentalists swooned over Obama's forceful pledge to confront climate change in his inaugural address, Heitkamp is more concerned with ensuring the president sticks to his earlier promises to support another industry that is important to her state.

"I think the president has over the years said that he would support clean coal technologies -- figuring out how we can use coal within the constraints that he would like to impose on carbon," she said. "I'm going to hold him to that."

At EPA and the Department of Energy, Heitkamp says, she has sensed a "hostility" to coal that has resulted in domestic producers looking abroad to sell their products, and she worries about the industry succumbing to "death by a thousand cuts" from increasingly stringent regulations.

Heitkamp wasted little time in demonstrating her willingness to go her own way on energy issues. She was one of nine Democrats, including fellow freshman Sen. Joe Donnelly (Ind.), to join 44 Republicans in sending a letter to Obama last week urging approval of the Keystone XL pipeline, which would transport crude from Alberta's oil sands to refineries along the Gulf Coast (E&ENews PM, Jan. 23). Heitkamp touted her support for the pipeline during the campaign, along with her opposition to "cap and trade" legislation to limit greenhouse gas emissions.

She has forged an early bond with fellow moderate Sen. Joe Manchin (D-W.Va.), who also does not hesitate to go after regulations he views as harmful to his state's coal industry.

"Oh she's wonderful. We have a lot in common," Manchin said of Heitkamp. "We're just looking for a balance, and I think it's so nice to have someone like Heidi there to balance things out. You know, we're just saying that we should use technology; we should be able to use all the resources we have in the country, that's all."

Heitkamp said she also has spent a lot of time talking to the two Democrats from neighboring Montana, Sens. Max Baucus and Jon Tester, as well as her fellow North Dakotan Sen. John Hoeven, a Republican who bested Heitkamp in the 2000 gubernatorial election. And in her brief time in Washington, Heitkamp has had an introductory meeting with Energy and Natural Resources Chairman Ron Wyden (D-Ore.), who will have among the most decisive roles in upcoming energy policy debates.

The meeting with Wyden was "kind of introductory -- where I am, what my experience has been, what I believe, because I would like to play a role in that next generation of energy policy in this country," Heitkamp said.


While she is not a member of the energy committee, nor Environment and Public Works, which has jurisdiction over EPA, Heitkamp's position toward the center of the Senate's ideological spectrum and her roots in an energy-producing state could give her outsized influence in upcoming policy debates.

Another top issue for the freshman is the return to a debate over the farm bill, which wasn't able to make it across the finish line last year. Heitkamp snagged a seat on the Agriculture Committee and said diving into the farm bill will be her No. 1 priority in the coming months. Of particular concern will be trying to counter some perceived hostility toward the farm bill's energy section to ensure that it continues to support biomass, biofuels and ethanol, she said.

Before joining the Senate, Heitkamp served on the board of the Dakota Gasification Co., which processes coal into natural gas. She said carbon dioxide emissions from the facility were compressed and shipped to Canada to be used in enhanced oil recovery -- a model that could potentially be applied elsewhere.

"I've seen where utilization of coal can in fact be done in ways that would address concerns that people have about carbon, but still play a very significant and important role in diversifying our energy economy," she said.

Heitkamp was North Dakota's attorney general from 1993 to 2001, where her responsibilities included sitting on the state's Industrial Commission, which is responsible for regulating the oil and gas industry.

Earlier in her career, she worked for former Sen. Kent Conrad (D-N.D.) on issues including taxation of the oil and gas industry -- providing experience that she could soon have an opportunity to tap, as the treatment of those industries is likely to arise in impending debates over tax reform and the budget.

While Obama and Democratic leaders have repeatedly pressed for the elimination of "subsidies" for the oil industry -- such as companies' ability to deduct "intangible drilling costs" from their tax bills -- Heitkamp's view is closer to that espoused by the industry.

"A lot of what is unfortunate is the label of 'intangible' because a lot of what we're talking about in terms of these expenses are not subsidies," Heitkamp says. "What they are is they're deductions for fuel, they're deductions for every other thing a company could deduct. ... We've got this notion that this is somehow a subsidy, when it's no different than any other industry receives."

Massive oil production growth from the Bakken Shale formation has allowed North Dakota to maintain low unemployment and become one of the largest oil-producing states in the country. Although many in the oil industry supported her opponent in last year's election, they are confident that she will be on their side in Washington.

"Certainly everybody in North Dakota knows that Sen. Heitkamp has a great understanding of ... the importance of the Bakken to North Dakota, and the technology advancement that's been able to bring this resource to productivity," said Ron Ness, president of the North Dakota Petroleum Council.

The intangible drilling deduction is key to producers in the state, which would see a 35 percent decrease in available capital without it, Ness said in a recent interview.

"I think she fully grasps the importance" of maintaining that deduction, he said.

Heitkamp also presents herself as a strong defender of other energy-related subsidies, such as the production tax credit for wind and various incentives for biofuels. She said she was glad to see the PTC get a one-year extension as part of the "fiscal cliff" deal earlier this month, but would like to see Congress enact a longer-term extension combined with a phaseout of the credit.

Wind provided nearly 15 percent of North Dakota's electricity in 2011, and there was more than 1,600 megawatts online or under construction there as of the third quarter of last year, according to the American Wind Energy Association. The state is one of the windiest in the country, in overall potential, but constraints in building transmission from North Dakota to population centers have limited development. Heitkamp said she would be interested in exploring ways to create a smart grid, comparing difficulty building electrical transmission to the fight over the Keystone XL pipeline in that it is becoming more difficult to transport all types of energy.

"Some people would say, 'Oh, she's pro-fossil fuel' -- there's a lot of truth to that. But I'm also very pro-renewables," Heitkamp said. "I've said for years that I think the country that is in the next generation of energy technology will be dominant in this century. And you know I don't talk about affordable energy; I talk about cheap energy. I think we can have cheap, safe, clean energy in this country."

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