July 28, 2008

On July 25th, Senate Democrats came up short of the 60 votes necessary to move forward on a bill that would curb “excessive” oil market speculation by expanding Commodity Futures Trading Commission (CFTC) regulation. The bill has become the center of the current energy debate, a debate that Republicans insist must be wide-ranging and include multiple amendments, in contrast to the limited amendment process offered to them by Senate Majority Leader Harry Reid (D-NV). All but two Senate Republicans voted against invoking cloture, a procedure that limits debate and would have moved the process forward.

At the heart of the disagreement are two issues:

1. Offshore drilling restrictions: Democrats seek to maintain current restrictions, while Republicans are pushing to relax them.
2. Oil market speculation: Whereas Democrats are focusing on curbing speculation as means of reducing energy costs, Republicans say speculation is at most a small part of the problem, and that the only way to reduce cost is to increase supply.

Two days earlier, Democrats unveiled a broad energy proposal to offer to the speculation bill. It included the following:

• “Use it or lose it”: In response to calls for offshore drilling, many Democrats argue that oil companies aren’t doing enough to develop existing leases. This plan would allow the Interior Department to shorten lease terms, raise rental rates on new leases, and require that oil companies meet progress “benchmarks” in order to keep their leases. Democratic leaders say the bill makes sense because oil companies have tens of millions of acres under lease that could come into production. Industry officials, however, say the plan shows a failure to understand the lease development process, and that current restrictions keep many promising areas off-limits. The House version of this legislation recently fell short of the two-thirds vote needed for passage under expedited rules.
• Heavy-for-Light Strategic Petroleum Reserve (SPR) Swap: Selling light crude oil from the SPR and replacing it with heavier crude, which is less valuable. Proceeds from the swap would fund low-income energy assistance. On July 24, this measure fell 16 votes short of passage in the House. President Bush also threatened to veto it, stating that the SPR is for “severe supply disruption” and using the reserve now would jeopardize national security.
• Accelerated lease sales in areas not covered by leasing moratoria.
• Promotion of public transit, “smart investments in the clean, renewable fuels and battery technologies,” and curbing of offshore royalty incentives.

Alternately, the GOP leadership’s energy proposal would:

• Increase CFTC oversight of oil market speculation, albeit not as extensively as Democrats deem necessary
• Allow states to make decisions on federal drilling off their shores
• Lift a moratorium on commercial oil shale leasing
• Take measures to boost commercialization of plug-in hybrid cars

With the August recess approaching, however, impetus for an energy deal this year is limited despite high oil prices, because no new policies would offer immediate relief, and a new administration and Congress will soon be in place.

Ultimately, a resolution may hinge on the November election, and whether the parties see greater advantage in a deal, or believe they can successfully cast the other as standing in the way of policies to bring down gas prices.

On July 24, a Republican boycott prevented Senate Environment and Public Works Chairwoman Barbara Boxer’s (D-CA) attempt to subpoena a key U.S. EPA global warming document. In order to hold a subpoena vote, Boxer would need the support of at least two Republican senators. Meanwhile, the Bush administration has allowed House investigators to review the document so long as they do not discuss it in public.

The document in question is the draft EPA endangerment finding, which concludes that climate change threatens public health and welfare. The finding, which has yet to be publicly released, stems from the April 2007 Supreme Court decision in Massachusetts v. EPA, which ordered the federal government to consider greenhouse gas emissions as pollutants subject to regulation under the Clean Air Act. If EPA were to finalize the document, it would likely trigger a sweeping series of regulations to control greenhouse gases.

Former EPA Deputy Associate Administrator Jason Burnett recently testified that Bush officials at one time agreed to issue the endangerment finding, but later rescinded after hearing arguments from oil industry lobbyists and Vice President Cheney that the ruling could tarnish the President’s anti-regulatory legacy.

Burnett said Bush officials convinced EPA to announce plans for a much broader regulatory announcement in response to the Supreme Court decision—these new plans were to include a public comment period on many different ideas related to greenhouse gas emissions.

Earlier this month, EPA opened a six-month public comment period on greenhouse gas rules, a move that effectively punts the issue to the next administration.

Senators Boxer and Patrick Leahy (D-VT) had also requested EPA Administrator Stephen Johnson to testify before the Senate Judiciary Committee, but Johnson declined. Leahy has since called for a U.S. EPA inspector general investigation into the Bush administration’s global climate change decisions.

Last month in the House, Appropriations Chairman David Obey (D-WI) refused to bring the Interior bill before the full committee because of Republicans’ desire to use the spending bill as a platform for their energy amendments. On July 22, the Senate Appropriations Committee cancelled markups of the Interior appropriations bill and an emergency supplemental spending bill.

Republicans were expected to propose amendments to the Interior spending bill aimed at increasing domestic energy production, including opening up more of the outer continental shelf (OCS) to drilling. Although an OCS amendment would have not likely made it through the subcommittee led by Senator Dianne Feinstein (D-CA), a fierce opponent of offshore drilling, the markup would have given Republicans another stage on which to assail Democrats for not addressing the energy crisis.

Chairman Robert Byrd (D-WV) said he took the markups off the calendar due to the short amount of time before the August recess, as well as the current Senate floor debate on oil price speculation, a debate that Democrats say would be a more appropriate place to address drilling amendments.

Senate Majority Leader Harry Reid (D-NV) told reporters earlier this month that most of the pending appropriations bills, including the Interior, Energy and Water, Transportation, and Commerce measures, would likely not be considered until next year. Meanwhile, those departments would be funded by a continuing resolution— that is, the current levels of funding—possibly until March 2009.

The cancellation also delays an emergency supplemental spending bill, which was to include funding for response to natural disasters including the recent Midwest floods and California wildfires. Senate Democrats will attempt to bring it up in September, Byrd said.

On July 17, the Senate Appropriations Committee cleared a spending blueprint that would reduce some of the funding boosts for conservation programs in the new farm bill. It is not uncommon for appropriators to turn to the farm bill to help offset spending increases elsewhere; in this case, both the Food and Drug Administration and food aid for the Women, Infants, and Children Program would see major increases.

The $20.4 billion fiscal year 2009 spending bill would place limits on some of the farm bill’s mandatory funds for conservation and renewable energy programs, most notably shaving off:

$285 million from the Environmental Quality Incentives Program

$15 million from the Grasslands Reserve Program

$11 million from the Wildlife Habitat Incentives Program

In spite of these cuts, the Senate bill gives significant increases to several discretionary conservation accounts; overall, farm bill conservation programs would still receive more money than last year. For example: although the bill cuts $5 million from a program that helps farmers start renewable energy projects on their land, at $50 million, the renewable energy program still has twice as much money as last year.

The bill would also restore funding for some watershed programs the Agriculture Department had cut entirely in its budget:

$51 million for resource conservation and development

$30 million for watershed and flood prevention

$2 million for the Healthy Forests reserve program

Under the Senate bill, conservation programs would receive a total of $867 million, which is $19 million more than the House and $72 million more than the White House budget request.

Recent reports indicating that climate change and population increases could lead to significant water shortages are spurring members of Congress to consider legislation to coordinate and improve federal water research programs.

At a July 23rd House Energy and Environment Subcommittee hearing, a host of witnesses said the coordination of federal, state, and local efforts will be essential if the United States is to solve its water resources problem.

Draft legislation aimed at improving coordination could mitigate the effects of population growth on water supply. House Science and Technology Chairman Bart Gordon (D-TN) stated that better conservation methods could reduce expected increases in water demand over the next 30 years from 62 percent, the current estimate, to as little as 29 percent.

Gordon’s draft bill would:

• Address concerns raised in the 2004 National Academies’ report on federal water research, which suggested the U.S. is not using research dollars efficiently due to a lack of coordination among agencies. According to the report, more than 20 federal agencies research water supply, water quality, or water management.
• Codify an existing interagency committee, along with the National Science and Technology Council’s Subcommittee on Water Availability and Environmental Quality, which the Bush administration established in 2003.
• Establish a national water initiative outreach office to support the interagency committee and serve as a hub for government agencies, academic institutions, and industry personnel to exchange information.
• Require the Subcommittee on Water Availability and Environmental Quality to develop a plan establishing federal research priorities for a four-year period. It would provide for a national water census that would compile water data in one comprehensive database.

The Ecological Society offers numerous scientific resources on this topic, including “Water in a Changing World” and a policy paper: “Meeting Ecological and Societal Needs for Freshwater”.

On July 16, the chairman of the Senate Foreign Relations Committee introduced a bill to create a fund that would deploy technology to developing countries in order to cut greenhouse gas emissions, as President Bush called for last year.

The legislation from Senator Joe Biden (D-DE) would create an International Clean Development Technology Deployment Board to administer $2 billion in appropriated funds from 2009 through 2011 to promote the use of clean technology in developing countries through direct assistance, indirect assistance from other institutions such as the World Bank, and technical assistance from the Energy Department.

The World Bank estimates it would cost $30 billion annually to deploy clean technologies to the power sectors of developing countries.

According to bill cosponsor Dick Lugar (R-IN) and Treasury Secretary Henry Paulson, the legislation would offer U.S. companies a new market for their technologies, and would prevent developing countries from investing in, and thus getting locked into, a “legacy of highly polluting, less efficient technologies.”

Some environmentalists have criticized the international clean technology fund, though, because it would cover clean coal power plants, which are more efficient but still emit a significant amount of carbon dioxide. House Speaker Nancy Pelosi also voiced concerns about this issue, which delayed the markup of a clean technology fund bill last month.

If even one of these bills is enacted into law in the coming year, it will be the first new environmental education bill passed in 18 years.

• No Child Left Inside Act (H.R. 3036): This legislation was originally supposed to amend the No Child Left Behind Act, but with NCLB stuck in both the House and the Senate, it was instead modified and passed by the House Education and Labor Committee to re-authorize the long expired National Environmental Education Act of 1990 for one year. The House is to vote on it shortly, although the bill will not likely make it through the Senate this year.
• Higher Education Sustainability Act (HESA): This legislation is now part of the House version of the new Higher Education Act, which it would amend to authorize a new $50 million grant program at the Department of Education. The program would support between 25 and 200 initiatives at higher education institutions, ranging from establishing multidisciplinary sustainability education programs to integrating green building and purchasing into administrative practices. The current Higher Education Act has been extended until July 31, 2008, to give the conference committee more time to finish the new bill. Depending on how things go, Congress may not pass the new legislation until 2009.
• Lieberman-Warner-Boxer Bill (S. 3036): Senators Murray and Snowe introduced an amendment to this bill that allocated 1 percent (increasing to 4 percent over time) of climate change “cap and trade” auction proceeds to climate change education. Although the bill was killed via Republican filibuster, a new Climate MATTERS Act (H.R. 6316) includes similar provision involving 0.4 percent of the proceeds.
• National Environmental Education Act: The House Education and Labor Committee has indicated that they intend to take up a more thorough updating of the NEEA in 2009.
• The 21st Century Green High-Performing Public Schools Facilities Act (H.R. 3021): The House passed this bill in June by a bipartisan vote—if passed by the Senate, it will supply grants and low-interest loans (up to $6.4 billion for 2009) for the construction and modernization of public schools using “green” design. Although it allows school districts to waive the green building standards where circumstances make them impracticable, it will ensure that at least 90 percent of funds will be used for green projects by 2013.