Finish line remains distant for reform legislation

Source: Geof Koss and Christa Marshall, E&E reporters • Posted: Tuesday, April 26, 2016

House and Senate lawmakers may have already defied expectations by passing comprehensive energy reform bills in their respective chambers, but they still have miles to go in reconciling competing versions and winning President Obama’s signature in an election year.

Cognizant of the political constraints of legislating on a hot-button issue like energy with a Republican-led Congress and a Democratic president, House Energy and Commerce Chairman Fred Upton (R-Mich.) and Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) tried to eschew the most controversial issues when writing their bills.

Both versions also generally track the other thematically, with heavy emphasis on boosting energy efficiency, speeding natural gas exports, and streamlining permitting for pipelines and other projects. And both versions borrow heavily from the administration’s first Quadrennial Energy Review in sections to strengthen energy infrastructure.

But the Senate’s S. 2012 is much broader than the House’s more narrowly tailored H.R. 8. Murkowski’s bill also includes a reform to federal mineral laws and a permanent reauthorization of the Land and Water Conservation Fund, a move with an abundance of skeptics among House conservatives (E&E Daily, April 21).

“It’s just fair to acknowledge that there are some big differences just in terms of approach that we took between the House version and the Senate version,” Murkowski said in an interview last week.

“I think issues can be resolved,” she said. “We just need to be sitting down with one another and figure out not only what the priorities are but what is possible.”

Murkowski said steps were already underway to set up meetings ahead of a formal House-Senate conference committee, but she was not certain about the timing for Senate leaders to appoint conferees.

A spokeswoman for House Speaker Paul Ryan (R-Wis.) did not respond to a request for comment on when that chamber will move to go to conference.

An ‘interesting exercise’

Following last week’s overwhelming 85-12 Senate vote to pass S. 2012, the biggest challenge for the conference will be assembling a compromise that’s capable of passing the House and earning the White House’s support (Greenwire, April 20).

“This is going to be an interesting exercise,” Murkowski said. She added: “What I’m trying to do is get a conference report that the president will sign.”

ClearView Energy Partners LLC, in an analysis released following the vote, said that if Senate Majority Leader Mitch McConnell (R-Ky.) wanted to “demonstrate competent GOP governance” by passing a bill that will likely become law, “we would suggest the final text will probably need to look more like the Senate version.”

The House also easily approved its version of energy reform with a 249-174 vote last December. All but three Republicans supported the measure (Greenwire, Dec. 3, 2015).

But just nine Democrats voted for the bill. The minority deserted the legislation en masse on the floor after helping write it at the committee level.

Energy and Commerce ranking member Rep. Frank Pallone said last week that he would press for the legislation to include funding to upgrade the electric grid and pipelines — long a sticking point for the New Jersey Democrat (E&E Daily, April 21).

One provision that helped secure Republican support in the House was the inclusion of an amendment to lift the decades-old ban on crude oil exports — a top priority of industry and its congressional allies. That issue soon became moot after lawmakers repealed the ban in a compromise spending bill weeks later.

Still, both the House and Senate energy bills contain language setting a 30-day deadline for the Department of Energy to make final decisions on exporting liquefied natural gas to non-trade partners, a provision that also has strong support from companies and lawmakers in both parties.

Ken Irvin, who helps lead Sidley Austin LLP’s energy practice, said last week that the provision, along with language intended to expedite the permitting process for infrastructure projects, would help provide companies with regulatory certainty.

“Anything that helps streamline those regulatory approvals I think is a net positive,” he said.

Irvine noted that both the House and Senate bills were constrained because of the tough political conditions their authors had to contend with.

“Energy is important, it’s important for all facets of what the country is about and our life, and even if it’s just modest incremental improvements, we should do those,” he said, applauding lawmakers for their efforts.

Even though the LNG provisions may win support from fossil fuel backers, they are also among the many objections environmentalists had with the House bill, outlined in a letter last December.

The White House did not mention LNG exports in its Statement of Administration Policy issued before the House vote. Still, the administration found enough problems to threaten a veto. The Senate version did not elicit the same reproach.

Efficiency disputes

The House bill veto threat echoed many of environmentalists’ chief concerns, including controversial provisions related to energy efficiency, despite it being an area of general bipartisan agreement in recent years.

One sticking point is a proposal that the White House says would weaken Section 433 of a 2007 energy law, which requires new and significantly renovated federal buildings to meet benchmarks in reducing fossil fuel use (Greenwire, Jan. 29).

Another chief concern for efficiency advocates and environmentalists is language in the House bill sponsored by Reps. Marsha Blackburn (R-Tenn.) and Kurt Schrader (D-Ore.) that would impose procedural requirements on DOE for setting building efficiency codes.

Kateri Callahan, president of the Alliance to Save Energy, said last week that the provision would upend three decades of DOE’s work in setting building codes.

The Senate’s version, which includes the remainder of the efficiency package championed for years by Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio), would “strengthen” DOE’s hand, she said.

The House went “in the exact opposite direction,” Callahan said, noting that the alliance opposed H.R. 8 over the disagreement.

Callahan is looking to the conference committee to resolve the issue, noting that a number of the alliance’s honorary board members are sitting members of Congress who will likely end up on the panel.

There’s also a major gulf between the two bills on a pending efficiency rule for residential gas furnaces that has divided industry groups and environmentalists (Greenwire, July 14, 2015).

Efficiency groups prefer the language in the House bill, which would allow a limited negotiation period but does not delay the rulemaking timeline. Advocates note that a 2011 legal settlement called for a final rule this spring.

The Senate language, on the other hand, would make action on a final rule contingent on an advisory group convened by the secretary of Energy. That could delay the rule indefinitely, analysts say.

“It sets a bad precedent,” said Dan Bresette, director of government relations for the alliance.

Another provision in the Senate bill would provide an alternative to U.S. EPA’s Energy Star third-party certification requirement for some consumer technology manufacturers.

“For an industry built on lightning-fast innovation and facing constantly-evolving markets, third-party certification is an unnecessary obstacle,” the Consumer Technology Association said in praising the language.

Coal, biomass

After the Senate bill’s passage, Sen. Joe Manchin (D-W.Va.) praised numerous coal provisions, including language that would amend the Energy Policy Act to list carbon capture, use and storage as a specific objective for DOE’s Fossil Energy Office.

The legislation would also require DOE to study the effectiveness of recommended changes to its loan program, including $8 billion in untapped funds for fossil fuel projects. Environmentalists have pointed to sluggish interest in the money.

Greens are also slamming Senate language to establish a new program at DOE to support converting coal to other products like transportation fuel.

In a letter this month, groups ranging from American Rivers to Physicians for Social Responsibility wrote in a letter that the coal language was “incompatible with climate protection.”

The House language on carbon capture is less broad and calls for the administration to conduct an annual evaluation of projects and recommend whether funding for them should continue.

Another key sticking point in the negotiations is language in the Senate bill — adopted as an amendment on the floor — that would instruct federal agencies to craft policies that reflect “the carbon-neutrality of forest bioenergy.”

Environmentalists strongly contest the suggestion that biomass is renewable and warned senators last week that they opposed the Senate bill over the provision, which is not in the House version (E&E Daily, April 21).

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