CLIMATE

Moderate Senate Dems build 'Gang of 16' to influence cap-and-trade bill

Moderate Senate Democrats with close ties to business and organized labor are aiming to take charge of the global warming debate next year.

The "Gang of 16" represents a critical cross-section of industries and interest groups, including labor, agriculture, coal and manufacturing, setting up an intriguing political dynamic for the next administration and even some of their own party colleagues who typically side with environmental groups. The lawmakers come from the Midwest and Rust Belt and also extend into the Rocky Mountain states.

Senate staff from the new coalition buckled down this summer to study the ins and outs of cap-and-trade legislation in response to a proposal from Sens. Joe Lieberman (I-Conn.), John Warner (R-Va.) and Barbara Boxer (D-Calif.) that fizzled on the floor in June.

"I don't think it's betraying a lot of secrets that there wasn't a lot of cooperation and acceptance in the way our views were considered," said one Senate Democratic aide working with the group.

Hours after the Senate climate bill was pulled from the floor, 10 of the senators fired off a letter to Boxer and Senate Majority Leader Harry Reid (D-Nev.) outlining their reservations. The group said they would not have supported final passage of the legislation and warned that cap and trade was "perhaps the most significant endeavor undertaken by Congress in over 70 years and must be done with great care."

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Signing the letter were Sens. Debbie Stabenow and Carl Levin of Michigan, John Rockefeller of West Virginia, Blanche Lincoln and Mark Pryor of Arkansas, Jim Webb of Virginia, Evan Bayh of Indiana, Claire McCaskill of Missouri, Sherrod Brown of Ohio and Ben Nelson of Nebraska.

In the four months since the Senate floor debate, staff to another half dozen senators -- Jeff Bingaman of New Mexico, Robert Byrd of West Virginia, Kent Conrad and Byron Dorgan of North Dakota, Tim Johnson of South Dakota and Ken Salazar of Colorado -- have joined the meetings to get a better grip on global warming policy.

Aides to the new "Gang of 16" acknowledged that it will be difficult to keep climate change in front of their bosses in 2009 given the economic crisis that will be atop the agenda for the next Congress and the new president. But they have nonetheless honed in on four key topic areas should cap and trade remain a priority on Capitol Hill: international competition, technology, cost containment and offsets.

"We wanted to collect our own thoughts and get ourselves up to speed," said another Senate Democratic aide from the "Gang of 16." Looking back on the Lieberman-Warner-Boxer debate, the aide added, "We were forced to learn a whole lot in a very short amount of time. We wanted our own process for a while to gather information."

Traditionally, groups of senators working on a contentious issue cross party lines to come up with consensus proposals, as seen in the recent "Gang of 20" that recommended an expansion to domestic offshore drilling. In the case of climate change, several Republicans are likely candidates for such a bipartisan campaign, including Bob Corker of Tennessee, Norm Coleman of Minnesota, Arlen Specter of Pennsylvania and John Sununu of New Hampshire, although Coleman and Sununu face tough re-election fights.

But Senate Democratic aides working on the "Gang of 16" said they were keeping their contacts with Republicans to a minimum until after the November elections.

'They're going to have a say'

The group of Democrats represents a valuable political coalition that must be heard if a cap-and-trade bill can net the 60 votes needed to beat a filibuster. These members are going to be especially important if the Senate climate debate works out of more than one committee, a sharp contrast from the Lieberman-Warner-Boxer bill that was written only in the Environment and Public Works Committee.

"They're going to have a say, there's no two ways around it," said Bob Baugh, director of the AFL-CIO's Industrial Union Council.

Already, aides to senators involved in the group have touched base with Senate staff of Democratic presidential nominee Barack Obama. And they have met with several nonpartisan voices in the climate debate, including the U.S. Climate Action Partnership, Pew Center on Global Climate Change, Resources for the Future and Duke University's Nicholas Institute for Environmental Policy Solutions.

Labor groups such as the United Auto Workers, United Mine Workers of America and United Steelworkers of America have also responded to queries from the Senate offices.

"I'd make a sharp contrast between these members and people like [Sen. James] Inhofe," said Alan Reuther, legislative director for the United Auto Workers, referring to the Oklahoma Republican who questions the science linking man-made emissions to climate change. "These aren't members who wanted to scuttle the package. They have concerns they want addressed."

For now, the "Gang of 16" doesn't have a leader. Aides maintained that wasn't necessary but conceded that some likely candidates could emerge, including the Energy and Natural Resources Committee Chairman Bingaman, Brown, Rockefeller and Stabenow.

No legislative language has been prepared, but lawmakers are expected to step up such efforts after next month's election. "I expect to have a very thoughtful proposal that we'll put forward at the beginning of the year," Stabenow said in an interview, referring to language that would allow farmers to earn credits in the carbon market through no-till practices and tree plantings.

The "Gang of 16" also could end up with an even bigger roster in 2009 if Democrats extend their majority. Several of the new senators would hail from states with constituents that have some of the same concerns about climate legislation. A month before the elections, Democrats are looking optimistically at winning seats now held by the GOP in Alaska, Colorado, Kentucky, Minnesota, New Mexico, North Carolina and Virginia.

Battling Boxer?

Paul Bledsoe, a spokesman for the National Commission on Energy Policy, said the "Gang of 16" was trying to sort through several hot-button issues that have long plagued the cap-and-trade debate, including how to distribute allowances to energy-intensive U.S. manufacturers and also ways to stimulate job creation through low-carbon energy technologies.

"This group is critical not only politically, as swing state moderates, but also because they are peeling back the key economic and budgetary issues that gave so many senators pause in June," Bledsoe said. "These issues will continue to be central, especially given concerns about the economy."

On cost containment, the senators are concerned with the uncertainty for business that comes from setting strict new environmental requirements. To date, several proposals have circulated on Capitol Hill to deal with the economic costs linked to climate legislation, including a "safety valve" that limits the price of a carbon allowance and a board that would operate like the Federal Reserve to oversee the new carbon market. Neither idea has proven popular.

In their June 6 letter to Boxer and Reid, the senators did not pick any one approach to dealing with the cost issue but suggested it would be among their top priorities. "While placing a cost on carbon is important, we believe that there must be a balance and a short-term cushion when new technologies may not be available as hoped for or are more expensive than assumed," they wrote.

For farmers, the senators want to incorporate language that pays landowners who plant trees, erect methane digesters or practice no-till farming. Lieberman-Warner-Boxer put a 15 percent limit on such offsets, but Stabenow has proposed greatly increasing the share available for such programs.

Stabenow's approach could yield a significant number of votes. Soils with the highest potential for carbon sequestration stretch from southern Minnesota across the Midwestern Corn Belt -- Iowa, Illinois, Indiana, southern Michigan and western Ohio. Land along the Mississippi River to the Gulf of Mexico also have areas with high sequestration potential. And scientific models show benefits from soil in Kansas, Oklahoma, eastern Colorado, Nebraska, Texas, North Dakota, South Dakota and across the Southeast

"That's a tremendously huge bloc," said Peter Goldmark, air and climate director at Environmental Defense Fund. "You go back and look at the Congress and ask yourself what laws have passed if the farm bloc hasn't been with it. That's a short list."

Other top-tier issues important to the "Gang of 16" includes helping low-income families by providing additional funds for electric utilities in states where prices are regulated and the promotion of "clean coal" technologies. Senate aides said they are looking to build off a House bill sponsored by Reps. Rick Boucher (D-Va.), Nick Rahall (D-W.Va.) and John Murtha (D-Pa.) that would have set up a $1 billion fund to promote the deployment of carbon storage projects.

For now, Senate aides to the "Gang of 16" said they are not digging into the question of what to do about state climate laws and whether they should be discarded in favor of a federal system. The so-called pre-emption issue is highly controversial and of particular importance to House Speaker Nancy Pelosi (D-Calif.) and Boxer, who will be facing her own re-election challenge in 2010.

But even if the "Gang of 16" dodges the federal-state issue, it is still sure to trigger debate with Boxer and other like-minded Senate Democrats who will want to push for an even more aggressive climate package. Aides from the "Gang of 16" and Boxer met shortly after the Senate floor debate in what several described as a "debriefing."

Scott Segal, an attorney representing the electric utility and petroleum refining industries, cautioned that the "Gang of 16" may push the legislation in a direction that is more responsive to business and labor interests, especially in a tender economy. But he warned that the push back from Boxer and her allies would be equally strong.

"If you wrote functional legislative language on each of the points raised in their letter, you begin to lose Democrats on the far left of the bill," Segal said.

A Senate Democratic staffer not affiliated with the "Gang of 16" acknowledged that there will be a tough debate ahead just within the Democratic caucus. "I'd look at it as one organized group that will have to work with other organized groups to come up with a common denominator," the aide said. "We're going to have to find a common ground between them all."

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