Amid logjam, energy issues stand as potential bright spot

Source: By Nick Juliano, E&E reporter • Posted: Wednesday, November 5, 2014

Following an election that put Republicans in control of both chambers of Congress, there are a few opportunities for potential compromise — including approval of liquefied natural gas exports or new pipelines and power lines — if President Obama and congressional Republicans find it in their mutual interest to bargain.

To be sure, the midterm election is unlikely to diminish gridlock’s hold on Washington, and sources in both parties are girding for potentially extensive battles over controversial regulations from U.S. EPA and other agencies. Soon-to-be Majority Leader Mitch McConnell (R-Ky.) has vowed to fight at every turn, including with appropriations riders that raise the specter of another government shutdown. And the White House has signaled that Obama will continue using his executive authority to combat climate change, moves sure to rankle McConnell and other Republicans on Capitol Hill.

But energy-focused export and infrastructure legislation, along with smaller proposals, carries the best hope for success in the next two years.

Several unpredictable factors will affect the outcome. At least four GOP senators are reportedly preparing to run for president in 2016, where they will have to sway the party’s most conservative voters in hotly contested primaries. But at the same time, seven Republicans will have to fight for re-election in states Obama won twice, requiring a more moderate set of positions.

It is too early to say definitively how Republicans will use their new majority. Most lawmakers have not spent more than a few consecutive days in the capital since midsummer, and detailed legislative strategizing was mostly put on hold for the campaign.

Attention will turn first to the lame-duck session set to begin next week, during which Congress is expected to pursue a relatively light legislative agenda, while outgoing Majority Leader Harry Reid (D-Nev.) likely will fill the Senate’s calendar with as many of the president’s nominees as he can confirm before handing over his majority in January.

The continuing resolution expires Dec. 11, requiring new spending legislation to keep the government running beyond then, and lawmakers from both parties have indicated a desire to reinstate some lapsed business tax breaks.

It remains to be seen whether lawmakers agree on an omnibus appropriations bill for the remainder of fiscal 2015 or a shorter-term continuing resolution that would give a new GOP Senate majority another crack at shaping spending policy for this year.

The tax landscape is similarly uncertain. The House has voted to make permanent just a few of the perennially expiring breaks known as “tax extenders,” such as the research and development tax credit, and GOP leaders there say they would like to end most of the incentives that are typically combined in an extenders package. In the Senate, Democratic leaders are pushing for a broader bill that won bipartisan support in the Finance Committee to continue all of the extenders through the end of next year, including provisions for renewable energy and biofuels.

Negotiations were largely on hold until the election but are expected to pick up steam once lawmakers return Nov. 12 for the lame-duck session.

A familiar agenda for next year

Looking ahead to next year, the top-line expectations are relatively easy to set — legislation approving the Keystone XL pipeline and appropriations riders blocking EPA rules on greenhouse gases, wetlands regulation and acceptable ozone levels should again sail through the House and stand a better chance of success in a McConnell-run Senate.

“From an energy landscape, from our end, you’re going to see a lot of what you saw before,” a senior House Republican aide said yesterday.

But with 60 votes still necessary to overcome a filibuster, nothing is guaranteed passage, and it is exceedingly unlikely that the two-thirds margin to overcome a presidential veto could be achieved on any measure.

Therefore, if Republicans want legislative success, they likely will have to turn from hot-button ideological fights to smaller measures that could help the economy.

Reid said he hopes to find areas of agreement with the new majority leader.

“I’d like to congratulate Senator McConnell, who will be the new Senate Majority Leader,” Reid said in a statement last night. “The message from voters is clear: they want us to work together. I look forward to working with Senator McConnell to get things done for the middle class.”

A possible return from this year that could win bipartisan votes and the White House’s backing is a bipartisan efficiency bill from Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio), S. 2262. It emerged as a bright spot of substantive bipartisan agreement on policy but nonetheless failed amid partisan bickering over Senate procedure and wrangling over the Keystone XL pipeline (E&E Daily, May 7). Shaheen won re-election last night against former Massachusetts Sen. Scott Brown (R), whom she accused of lobbying against the efficiency bill in the campaign’s final debate (Greenwire, Oct. 31).

With McConnell pledging a return to “regular order” in how he would run the Senate, the bill could be a vehicle for a variety of pent-up amendments that were denied votes last year, including efforts to block EPA climate rules; however, if Republicans are successful in attaching controversial amendments, it could provoke Obama to veto the relatively modest underlying bill.

One top priority for Republicans, on which they could find willing partners in the White House, is the effort to export abundant U.S. energy commodities. The more immediate focus is on liquefied natural gas exports, for which the Obama administration has seemingly picked up its pace of LNG export terminal approvals.

The White House was also noticeably silent earlier this year when the House approved H.R. 6, which would have put a 30-day deadline on future approval decisions, making it one of the only energy bills considered in the lower chamber not to receive the threat of a presidential veto.

Of course, midterm politics may have been at play in that decision, as Sen. Mark Udall (D-Colo.) had introduced nearly identical legislation in the midst of his unsuccessful re-election campaign against GOP Rep. Cory Gardner, the House bill’s sponsor. But a Department of Energy official had previously testified that the legislative deadline was achievable, and the administration has indicated no overt hostility toward exports in general.

“When you talk about that low-hanging fruit, that’s LNG,” the House aide said, also listing bills to promote pipeline construction as a potential area of agreement.

Along the same lines, the debate over lifting the nearly four-decade-old ban on exporting crude oil is likely to remain a top focus this year, but major policy changes are not expected for quite some time.

Sen. Lisa Murkowski (R-Alaska), who is expected to become chairwoman of the Energy and Natural Resources Committee, is a key proponent of lifting the ban, but she and her supporters have acknowledged that they still have to convince skeptics that exports would not increase gasoline prices, a point that has been made in several recent studies. Murkowski will likely convene hearings and continue to publish reports focused on crude exports, although legislation may not come until the following Congress.

“Sen. Murkowski has repeatedly said that she believes the Obama administration has the authority — without any additional action by Congress — to end the outdated ban on exporting domestically produced oil,” Energy and Natural Resources Committee spokesman Robert Dillon said in an email, adding that Murkowski would consider legislation if the administration doesn’t act but has not decided when she might introduce a bill.

Murkowski may have a new ally in Sen.-elect Tom Cotton (R-Ark.), the one-term House member who handily defeated Sen. Mark Pryor (D) last night. Among the bills Cotton co-sponsored in the lower chamber was H.R. 4349, the “Crude Oil Export Act.”

Other priorities for Murkowski would include returning the committee to regular order, even if that means holding tough votes on controversial bills and conducting more oversight of the agencies under the ENR Committee’s jurisdiction, including the Department of Energy and Federal Energy Regulatory Commission. Additional policy proposals were detailed earlier this year in Murkowski’s “Energy 20/20” paper, which will continue to be a blueprint for the committee, Dillon said.

Infrastructure as area of agreement?

White House spokesman Josh Earnest yesterday declared that any legislation with a chance of making it through Congress next year “is going to require bipartisan agreement,” and suggested some areas where he thought that would be possible, such as boosting education funding.

“We’ve talked quite a bit about infrastructure over the last several months,” he said in yesterday’s daily briefing. “That would be another opportunity for Democrats and Republicans to agree on a program that would create jobs in the short term and strengthen our economy over the long term.”

An energy-focused infrastructure push, dubbed the “architecture of abundance” by Energy and Commerce Chairman Fred Upton (R-Mich.), who was easily re-elected last night, already has been gaining steam in the House.

So far, House Republicans have focused largely on facilitating construction of more pipelines to transport newly abundant supplies of oil and natural gas. In a recent memo outlining the coming year’s agenda, House Majority Leader Kevin McCarthy (R-Calif.) said he was “confident” that previously passed pipeline-streamlining bills “won’t be ignored in the Senate” under GOP control.

To draw more support to an infrastructure bill, it could also be expanded to include a focus on electric transmission needs, perhaps to account for the growing number of solar panels on the electric grid or address reliability concerns in the wake of EPA climate rules.

It remains to be seen whether Republicans would embrace big Democratic priorities for the sake of enacting bipartisan legislation, such as providing incentives for renewable electricity transmission lines or addressing methane emissions from natural gas drilling and transportation. But industry has resisted methane rules, complicating a potential deal to trade expedited pipeline construction for emissions limits.

“The only legit regulatory threat out there that I think gets people nervous is the idea that you’re going to regulate methane in some important way,” said a Republican lobbyist who represents various industry clients.

Even a package that would try to combine oil and gas pipelines with wind and solar transmission lines could run into resistance from green groups worried about modifying the National Environmental Policy Act or other bedrock laws.

“It’s always a tension between eliminating environmental regulations in exchange for expedited permitting or development, so that gets a little bit dicey,” said Chris Miller, a former senior adviser to Reid.

Upton is seen as interested in getting an infrastructure bill done next year and has demonstrated an ability to work with Democrats in the past. So anything is possible, though myriad details remain to be worked out. An Energy and Commerce Committee spokeswoman said it was too early to discuss specifics but noted that infrastructure would remain a priority for the year ahead.

“We enjoyed a lot of bipartisan success this Congress with infrastructure bills,” Charlotte Baker said in an email, “and we expect to build on that success next year with continued support in the House and willing partners in the Senate.”