ELECTION 2014

ClearView's Book previews energy policy landscape following power shift

This week's power shift in Washington is expected to have direct impacts on some of the most debated energy and environment policies. Will a Republican-led Senate bring more partisanship or attempt to bridge the divide between the White House and Congress? During today's OnPoint, Kevin Book, managing director at ClearView Energy Partners, discusses committee shake-ups, the future of U.S. EPA air and water regulations, exports policy, and Keystone XL. He also gives his take on Tom Steyer's effectiveness in the midterms and talks about how the environmental community should refocus its spending strategy heading into 2016.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Kevin Book, managing director at ClearView Energy Partners. Kevin, always good to have you here.

Kevin Book: Always good to be here, Monica.

Monica Trauzzi: All right, Kevin, this week's power shift in Washington is expected to have direct impacts on some very debated energy and environment policies. Are you anticipating more partisanship or an attempt between the White House and congressional Republicans to work together?

Kevin Book: Can I pick both answers?

Monica Trauzzi: OK.

[Laughter]

Kevin Book: There's room for partisan stances. One of the things that you might see in the near term would be a strong push against the Clean Power Plan, for example, which would be led by Republicans and with probably very few Democrats in the current environment immediately signing on to that. But on the other hand there's room for cooperation as well. There are smaller measures that might be possible in this context, and there's -- it's early days. We'll have to see what shapes up in the new Congress, but there's incentives for cooperation really on both sides.

Monica Trauzzi: So let's dig in to some of the details. Senate EPW and Energy and Natural Resources are in for some big changes, EPW arguably more so. What will we see emerging as the top agenda items out of these two committees come January?

Kevin Book: Well, I think for EPW incoming chairman -- returning Chairman Jim Inhofe is probably going to want to have some significant discussion about the underpinnings of the Clean Power Plan. In the past this has been something that's been marginalized by Barbara Boxer in her leadership, essentially minimizing a lot of the debate that Inhofe will almost certainly bring back, but also looking ahead at the next sectors that might be regulated. There's a bigger discussion here, one important for Oklahoma about methane.

In Energy and Natural Resources I think there's a lot of expectations that you'll see motion on crude oil exports and we don't think so. We think that whereas Murkowski might be able to move the bill out of committee, she also knows what a risk it means to bring something like that to the floor early in the tenure for Mitch McConnell -- might not be pushing that so hard.

Monica Trauzzi: So on EPA regulations -- and we'll get back to those crude oil exports, but EPA regulations, power plant standards -- the Clean Power Plan, and waters of the U.S. -- those are the two pieces of regulation that are most likely to be vulnerable to congressional intervention. If the House and Senate are able to put pressure on the president on those two items, do you think we'll see him relent a bit on executive action?

Kevin Book: That's exactly what we think we'll see, relenting a bit. So essentially the three mechanisms available to EPW and the Republicans in general -- Congressional Review Act, stripping away funding by appropriations, or modifying the Clean Air Act to interdict the Clean Power Plan -- none of those possible because of the veto power the president has to protect his legacy. What is possible? Oversight, repeated hearings bringing EPA executive leaders into the Congress and asking them to explain themselves. It doesn't usually take too many such hearings before EPA starts to become more pragmatic about getting a rule really done.

Monica Trauzzi: In his victory speech Mitch McConnell highlighted coal mining jobs as a key element of his re-election campaign. What will the McConnell effect be on EPA's Clean Power Plan?

Kevin Book: On the Clean Power Plan, probably still very little. McConnell's ability to actually change things beyond the symbolic and rhetorical assault, very limited by the numbers in the Senate because of where things are. But where he probably can make an influential dent may be on some of the other coal-related measures that are out there, questions of whether or not the NEPA, the National Environmental Policy Act, considers upstream and downstream emissions, something very possible the administration could pursue in the final two years -- McConnell likely to weigh in on that. And when it comes to mountaintop mining, something near and dear to the production in Appalachia, that's something where we think McConnell might say, "Hey, look, here's an appropriations rider on a bill that the president can't afford to veto." Not a very high-probability option -- riders against presidents' wishes don't usually succeed -- but definitely in the arsenal.

Monica Trauzzi: How close is the GOP now to 67 votes, a veto-proof majority, on Keystone XL?

Kevin Book: Well, presumably they're closely than the notional 62 that you got on a budget that wasn't ever going to go anywhere. We've always been skeptical of that 62 watermark. So we would say that you probably don't have 67 when it comes down to a partisan push and shove. Let's assume that Harry Reid keeps his job, remains minority leader, rallying his caucus from a position of having lost a stinging defeat. Are Democrats going to rush to cross the aisle? Maybe not as much as they would have been when they were in the majority.

Monica Trauzzi: So let's go back to exports. Will there be more momentum on crude oil and also ramping up the speed at which LNG exports happen?

Kevin Book: Okay, well here, back to oversight again. Legislation, very unlikely on crude oil exports for all the reasons you might imagine. Members don't want to touch this right now given the political sensitivity of the issue. But oversight, absolutely an opportunity for the administration moving ahead to receive input, timely input, perhaps even polite input as Murkowski has done so far, not critical of the administration so much as suggesting ways to expand crude oil exports. If it becomes a partisan issue, if it becomes a big fight that Republicans take to the floor with legislation, it could be the next Keystone. It's not clear that Republican leadership wants to stop crude oil exports by making it into such an issue.

LNG -- well, here's the difference, right? If you look back a couple of years ago, it wasn't a political issue. But there is something coming up, something important, which is EIA's study of the future of LNG exports beyond 12 Bcf a day. What is -- or not just EIA's, but DOE's study, and what is that study going to say? If it's not obvious that DOE's going to proceed with a green light, then we think we're going to get some pressure, yes, from Lisa Murkowski.

Monica Trauzzi: What are the broader impacts of the fracking ban ballot initiatives in Texas, California and Ohio?

Kevin Book: Absolutely the biggest news probably out of the election from an energy policy perspective, looking at oil and gas anyway, because Denton, Texas, overlies the Barnett Shale. And even though there hasn't been necessarily distributional parity for everyone who's benefited from the shale, pretty much everyone has indirectly benefited, and they still passed with an overwhelming majority a fracking ban. That is going to have symbolic value looking ahead. San Benito County in California -- not a big producing area. Had it been Santa Barbara County it would've been more meaningful, but stinging nonetheless. Ohio -- well, look, the big prize was Youngstown. Seeing that Athens has gone the way of fracking bans doesn't change a lot of minds.

But this is a rallying cry. For environmentalists the goal isn't just to make a symbolic mark, but actually to fragment the formation, to ruin the scale economies of producing the shale by breaking it up region by region.

Monica Trauzzi: Many analysts suggest we could see a shake-up in the White House. Do you think we could see some new voices on energy and environment?

Kevin Book: One thing that tends to happen in any administration in years seven and eight is a cycling out of the old guard for the new. There's a fatigue factor. There's an opportunity factor where a lot of new voices come in. You saw a tremendous moderation in the stances of the Bush administration on energy and environment in the last two years, and you might see something different here. There's been nothing but pragmatism, give a little, take a little for some time, relatively limited environmental activism. They might step up their environmental activism.

Monica Trauzzi: What rating would you give Tom Steyer on his effectiveness in terms of money and messaging?

Kevin Book: Well, it depends on what your goal is. I think Jack Girard has already spoken perhaps clearer than anyone -- certainly clearer than I might as an impartial analyst. But I would say that Steyer spent a lot of money to get not very much. If, on the other hand, you were looking at the idea of introducing the issue, raising consciousness beyond the symbolic, creating the dynamic a stand on where third-party, single-issue activists can come in and truly take a stand on energy in a meaningful way in races, I think as a prototype it may be useful for environmentalists going forward.

Monica Trauzzi: So how would you advise the environmental community to refocus its spending and its messaging heading into 2016?

Kevin Book: Well, it looks like targets of symbolic opportunity are becoming pricier, so looking at fracking bans in key producing areas seems to be one of their major priorities. They're also looking at hydrocarbon exports, still continuing to go after the doors that connect upstream resources to global markets. I think that that probably will continue to pay for them the biggest dividends and is probably worth their time.

Monica Trauzzi: All right, very interesting stuff. Thank you for coming on the show.

Kevin Book: Thanks for having me.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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