Beltway Roundup

by Jeff Genzer

The big change in Washington, D.C. in January 2015, has been the start of the new Republican-led 114th Congress. As everyone knows, the Senate flipped to Republican control and the House strengthened their Republican majority. The first order of energy business was the House passage of a Keystone XL pipeline bill, which would approve its development. The Senate has been mired in a debate on Keystone, which began almost as soon as the new Congress convened. The “open amendment” process could only go on so long. The Senate spent three days debating the “science of climate change,” as well as who or what caused it and whether it exists at all. New Senate Majority Leader McConnell (R-KY) has filed a cloture motion and that could be voted on as soon as Monday, January 26th (which is obviously before this article goes to print – so you will know the results!). The President has threatened to veto the proposed bill, and even made a tangential reference to it in his State of the Union address on January 20th.

Since this is the first real “open” energy debate in several years, some of the amendments that were filed to the bill are instructive of future activities and proposals. Senator Flake (R-AZ) introduced an amendment that purports to call for the examination of the consolidation of 100+ “green building-related” programs. In fact, it would essentially push for consolidation (and elimination) of the State Energy Program, the Weatherization Assistance Program and the Low-Income Home Energy Assistance Program. In addition, Senator Hatch (R-UT) has proposed a bill that would effectively consolidate the Low-Income Home Energy Assistance Program and the Weatherization Assistance Program. On the positive side, Senator Coons (D-DE), Collins (R-ME), Reed (D-RI) and Shaheen (D-NH) reintroduced their proposal to reauthorize the State Energy Program and the Weatherization Assistance Program. In addition, while a three-item portion of the Shaheen-Portman (R-OH) bill was added to the Keystone bill, they are planning on reintroducing their energy efficiency bill soon, and the new Chair of the Senate Energy and Natural Resources Committee, Lisa Murkowski (R-AK), has promised energy efficiency legislation would move forward in the spring. Chair Murkowski has also indicated a push for streamlining permitting, improving the electric grid and improving access to domestic oil and gas. There will also be a debate on exports of oil from the U.S. IN addition to approving Keystone, the House has also passed a bill requiring the Federal Energy Regulatory Commission (FERC) to take no more than one year to approve natural gas pipelines.

The President’s budget for FY’16, will be released in early February, and it is expected to continue support for the State Energy Program (SEP), the Weatherization Assistance Program (WAP) and the Low-Income Home Energy Assistance Program (LIHEAP). The final FY’15 consolidated appropriations bill included $50 million for SEP, $193 million for WAP (an increase from $174 million in FY’14) and $3.3 billion for LIHEAP. There will be significant pressure with the new Republican majorities in the House and Senate for cuts in domestic discretionary programs and increases in the defense discretionary programs. This will involve modifying the budget caps under the present law, which were modified in FY’14 and FY’15 by the Ryan (R-WI)/Murray (D-WA) agreement of a couple of years ago, which does not carry-over into FY’16.

It is likely that the fight over policy, budget and other priorities between Capitol Hill and the President will play out in the budget and appropriations process. Both the House and the Senate will attempt to include modified budget caps and some policy changes through so-called “Budget Reconciliation.” This is relevant in the Senate, where only a simple majority vote is required. Essentially, this will set the parameters for House and Senate legislation. However, the President still holds the veto pen. This means that in order to get priorities enacted, ultimately, the appropriations bills (or more likely an omnibus appropriations bill) will include Congressionally-directed initiatives. Flash points will include: 1) immigration; 2) the Affordable Care Act; 3) entitlement “reform”; 4) lifting of the debt ceiling; 5) domestic v. defense discretionary spending; and 6) some energy/environmental policy provisions, including Keystone, reining in some of the EPA rules (like the existing power plant rule – 111d of the Clean Air Act). The negotiations with the White House and Congress will revolve around how much the White House is willing to accept in order to get a “must-pass” appropriations bill. In addition, the new Republican majority wants to pass tax reform – likely only corporate tax reform in the near term. The White House and the Republican-led Congress are on very different pages on tax reform. In addition, it appears that the White House and the Republican-led Congress can agree on moving for international trade reform.

The Administration is moving forward with a slightly-delayed existing power plants rule under 111d of the Clean Air Act. That is now scheduled for final release during the summer of 2015. It is unlikely that the Administration will accept legislation that prevents that rule from moving forward, so it would appear that the courts will decide this issue. The President also appears to want to continue to move forward on climate change efforts led by EPA.

The Administration is also scheduled to release the portion of the Quadrennial Energy Review (QER) dealing with infrastructure. The lion’s share of the work on that activity has been led by the Department of Energy, and especially the EPSA office under Melanie Kenderdine. The QER representatives have been working closely with the states.