Efforts to produce an agreement that would allow the Nation’s debt ceiling to be raised intensified, with daily discussions between the President and Congressional leaders; so far, the main protagonists in the debate seem unwilling to compromise – the President insisting on a “balanced” approach that includes both spending cuts and new revenues and House Republicans vowing to block any deal that includes new taxes. By most accounts, a breakthrough will need to occur by the end of this week to allow the time necessary to draft, debate and pass a measure by August 2. As negotiators continue searching for a magic formula this week, the House will be debating their “Cut, Cap and Balance” bill, legislation that among other features would require that a balanced budget constitutional amendment be submitted to the states for ratification and a super majority vote in Congress be obtained for any tax increase.
Elsewhere, the Nuclear Regulatory Commission’s special task force investigating the nuclear emergency at Fukushima Daiichi released its so-called 90-Day Report last week. The report, while noting the continued safe operation of U.S. reactors, nonetheless termed the existing regulatory regime as “patchwork” and made several recommendations for regulatory changes that are likely to spark debate on Capitol Hill. Congressional Committees were busy on energy policy matters last week: the House Appropriations Committee cleared a spending plan for FY ’12 that would delay action on a number of regulatory initiatives by the Environmental Protection Agency (EPA), including any rules pertaining to section 316(b) of the Clean Water Act; the House Energy and Commerce Committee reported legislation that establishes an interagency panel to study the combined economic impact of pending EPA air regulations and a second bill that establishes a regulatory regime for coal combustion residuals that prohibits EPA regulation of such material as a hazardous waste; the House Natural Resources Committee reported legislation that promotes offshore wind energy development; the Senate Energy and Natural Resources Committee reported several bills, including legislation that establishes a new entity to provide financing for clean energy projects; and two House hearings examined pipeline safety issues, as well as a new draft bill to reauthorize the federal pipeline safety regulatory program.
Some Details
Initial reaction to the NRC task force report has been muted, likely due to the educational effort involved in understanding the potential implications of a report that proposes a number of new regulatory initiatives. We should begin to get a better sense of Congressional reaction to the report in the coming weeks. Chairman Jaczko is scheduled to appear at a monthly “newsmakers” luncheon hosted by the National Press Club this coming Monday; the full Commission will be briefed by the task force during a meeting on Tuesday morning; an afternoon stakeholders meeting is scheduled for July 28; and Senator Boxer (D-CA) indicated last week that she will hold a hearing on the report on August 2.
Of the measures advanced in various Committee actions last week, two especially noteworthy items are the coal combustion residual (CCR) bill and the so-called TRAIN Act, both of which achieved healthy bi-partisan votes. During consideration of the TRAIN Act (which establishes an interagency group to review the cumulative impact of certain EPA regulations), the Committee adopted an amendment by Rep. Whitfield that would delay both the Utility MACT and Cross-State Air Pollution Rule by 18 months. Due to Committee jurisdictional issues, the revised TRAIN Act does not include regulations under 316(b) of the Clean Water Act among those subject to review. The CCR legislation generally establishes a state administered program for regulating coal ash and prohibits regulation as a hazardous waste.
One short take:
Deficit reduction/debt ceiling issues remained the overarching central focus of the President and Congress last week. The President opted out of invitations to separate caucus meetings and invited a bi-partisan, bi-cameral group of legislators to the White House for a session mid-week that gave rise to varying opinions about the prospects for agreement, although all sides generally recognized that time is beginning to run short. Speaker Boehner’s announcement on Saturday that he was abandoning efforts to reach a longer-term solution likely forces all parties into a series of negotiations over stopgap measures designed to keep the fiscal ship of state afloat until sometime after next years’ elections. The House, back in session after the July 4 recess, matched the show of purpose put forward by the Senate last week by canceling its next recess – originally scheduled for the week of July 18. Senate Democrats, continually belittled by Senate Republicans for having gone more than two years without producing a budget, allowed press reports to leak late in the week about the outline of a proposal from Senate Budget Committee Chairman Conrad (D-ND). The proposal, said to reduce deficits by close to $4 trillion over 10 years, relies on large defense spending cuts and increased taxes on the wealthy; Conrad said it shows “how easy” it is to attain deficit reduction “in a balanced manner.” On other policy fronts, Congressional reaction to EPA’s release of its final Cross-State Air Pollution Rule (CSAPR) followed predictable political and regional fault lines; Senator Inhofe was among the critics, Senator Carper among the supporters. The House Energy and Commerce Energy and Power Subcommittee marked up legislation that that establishes an interagency group to conduct a comprehensive analysis of costs associated with several regulations recently developed, or under development, by the EPA.
Three short takes:
The reaction of companies heavily dependent on the use of coal for the generation of electricity is typified by the comments of the American Coalition for Clean Coal Electricity, found here. The reaction of environmental organizations is typified by the comments of the Sierra Club, found here.
]]>With the House in recess, and the Senate largely hamstrung by partisan politics, formal action on policy issues slowed to a crawl. The President and Senate Republicans took turns at the microphones during competing press conferences mid-week, each attempting to paint the other as tone deaf in regards to what it will take to pass a budget deal to reduce the deficit and raise the national debt ceiling. The only concrete outcome of the back and forth was a decision by Senate Majority Leader Reid to cancel the Senate's July 4 recess week, citing the “responsibility” that comes with liberty. Senator Reid’s statement mirrored that of Senate Republicans, who cited similar civic responsibilities when they sent the Majority Leader a letter in late May urging cancellation of the Memorial Day recess; of course, the intervening month only served to narrow the options and intensify the rhetoric as the parties scramble for the political high ground. Any meetings that occur after the July 4 holiday might be informed by the promised release of a proposal from Senate Budget Committee Chairman Conrad (D-ND), who said last Thursday that he had reached a consensus among Democrats on that panel. Elsewhere last week, the full Senate approved the nomination of William Ostendorff to a second term as a member of the Nuclear Regulatory Commission (NRC); and the Senate Environment and Public Works Committee heard from EPA Assistant Administrator Gina McCarthy, who told the panel that the agency planned to release its so-called Transport Rule by the middle of this week. A relatively light schedule is on tap in the Committees this week: Senate panels were expecting to be in recess and House Chairmen are still assessing next steps in light of the dozens of hearings held so far this year on the Administration’s regulatory agenda and the fact that the Senate has so far ignored or defeated those legislative initiatives developed and passed in response. The House floor will see debate on the FY ’12 Defense and Energy and Water Development appropriations bills; the Senate will attempt to debate a resolution dealing with U.S. involvement in the NATO-led operation in Libya.
Some Details
It took a full court press to overcome the last minute objections of Vermont Independent Bernie Sanders, but William Ostendorff was finally confirmed for a second term at the NRC, hours before the expiration of his first, partial, term. Sanders was objecting to what he had been told was a 3-2 (privileged and confidential) vote by the Commission to advise the Justice Department that it should intercede in litigation between Entergy Corporation and the State of Vermont over Vermont’s assertion that it can legally order the closure of the Vermont Yankee nuclear plant. Sanders relented on Thursday when the Justice Department informally indicated that it was not likely to seek participation in the litigation. Ostendorff’s new term will expire on June 30, 2016.
The Senate Environment and Public Works hearing on the proposed Clean Air Transport Rule (CATR) and the Utility MACT regulation generally followed well-established scripts, with Republican Members focusing on adverse job and economic impacts raised by critics and Democratic Members focusing on positive health impacts raised by supporters. During his opening statement, Chairman Carper reiterated his oft-expressed desire to address the inherent unfairness to downwind states that suffer the effects of transported air pollution. He also cited letters from the Institute for Clean Air Companies and the American Federation of Labor indicating that labor availability will not be an issue in complying with the new rules. Senator Lautenberg used his opening statement to agree with the Chairman about health and air transport concerns, and cited the December 2010 letter to the Wall Street Journal from Clean Energy Group CEOs as evidence that we can and should do more to reduce emissions under the Clean Air Act (CAA).
During her testimony, EPA Assistant Administrator McCarthy said the proposed CATR and MACT standards are affordable, achievable, and can be met using control technologies that are well understood and available and that inexpensive natural gas provides an opportunity for keeping compliance costs low. She noted the adverse health effects of emissions and the fact that power plants are the largest source of SO2 and mercury, and the largest stationary source of NOx. McCarthy also noted that the Bush Administration had recognized the need to address these issues through regulations, citing the history of the Clean Air Interstate and Clean Air Mercury rules. Responding to Chairman Carper, she suggested that a significant number of the plant retirements recently announced by AEP were due to market factors and had already been committed to in a consent agreement the company entered into during the Bush Administration.
Two short takes:
While House floor action focused on patent legislation and the Senate attempted some bi-partisanship, starting work on legislation that would reduce (by roughly 200) the number of Presidential appointments requiring Senate confirmation, the big news was the status of the debt ceiling/deficit reduction talks being led by Vice President Biden. House Majority Leader Cantor and Senate Minority Whip Kyl surprised many observers to the process when they withdrew from the talks early last week, noting that an impasse had been reached as to whether new revenues would be a part of any package – an impasse that Cantor asserted could only be broken by direct conversations between the President and Speaker Boehner. The White House indicated that the President was ready to get involved in the talks, in fact they announced after the fact that a meeting between the two occurred Wednesday night. On Thursday, the Speaker reiterated his view that a deal with new taxes could not pass the House and Senate Tea Party supporters, led by South Carolina’s Jim DeMint, offered their own grim electoral predictions for any Republicans supporting such a package. The President will begin meeting, separately, with key legislators today and throughout the week. On other policy fronts, EPA Administrator Jackson continued to receive advice on a host of regulatory issues as more letters on various air issues popped up on Capitol Hill and a House Subcommittee marked up legislation that would prohibit the agency from regulating coal combustion residue (CCR) as a hazardous waste. Federal regulators charged with implementing the Dodd-Frank financial reform law received a strong letter from two important Committee Chairs regarding end-user exemptions from derivatives trading rules. With the House in recess, and the July 4 holiday weekend looming, the official schedule is light this week. The Senate Environment and Public Works Committee will hear from EPA Assistant Administrator Gina McCarthy on the agency’s plan for replacing the Clean Air Interstate Rule (CAIR) and the Clean Air Mercury Rule (CAMR). Unable to agree on an agenda, the Senate Energy and Natural Resources Committee cancelled its planned markup of pending energy legislation.
Some Details
104 Democratic members of the House wrote EPA Administrator Jackson last Tuesday supporting the agency’s efforts on the utility MACT rulemaking. The letter follows EPA’s announcement of the previous week that it would extend the comment period on the proposed rule for 30 days, but not alter its November deadline for issuance of a final regulation. Later in the week, the agency announced new timelines for its reconsideration of the industrial boiler MACT rule; draft rules are now due out this October, and final rules are to be promulgated by April 2012. The announcement on the industrial boiler rule followed the introduction of bi-partisan legislation that would give the agency 15 months for the development of new regulations.
Last Tuesday, the House Environment and the Economy Subcommittee, chaired by Rep. Shimkus (R-IL), adopted a substitute amendment to Rep. David McKinley’s (R-WV) coal ash legislation, the “Coal Residuals and Reuse Management Act.” The bill, supported by EEI, was adopted over the objections of the panel’s Democratic members. It prohibits EPA from regulating coal residuals as a hazardous waste and instead grants principle regulatory authority to the states, modeled after the so-called Subtitle D Solid Municipal Waste program. The full Committee was slated to take the measure up on Thursday, but further action was postponed until after July 4; Chairman Upton indicated he wanted to give the staff more time to determine if a bi-partisan proposal satisfying all interests could emerge from further discussions.
Also last week, Senate Agriculture Committee Chairman Debbie Stabenow (D-MI), and her House counterpart, Rep. Frank Lucas (R-OK), sent a letter to seven federal regulators outlining their thoughts on the implementation of the derivatives title of last year’s Dodd-Frank financial reform law. The letter notes “Congress was explicit in providing exemptions from mandatory clearing, exchange trading and margin for end-users hedging commercial risks. We are concerned that recent rule proposals may undermine these exemptions, substantially increasing the cost of hedging for end-users, and needlessly tying up capital that would otherwise be used to create jobs and grow the economy.”
Two short takes:
The House returned to Washington and continued working through the 12 regular appropriations bills for fiscal year 2012 (three have been completed), largely adhering to the Republican leadership’s call to refrain from attaching policy riders to the funding measures. We don’t expect such restraint to continue throughout the year, as the House approach to “regular order” runs up against a Senate which has yet to adopt an overall discretionary spending cap or begin work on the first appropriation bill; an omnibus spending bill or “continuing resolution” seems almost certain at this point and efforts to affect policy with “riders” will be as intense as debates over spending levels. Senate Democrats continue to rationalize their slow pace by pointing to the bi-partisan debt ceiling/deficit reduction talks being conducted by Vice President Biden. Specifics of those negotiations remain under close hold, but participants announced their intent to continue a stepped up pace of meetings over the next two weeks, with a goal of determining, by July 4, if a deal is even possible. An unflattering portrait of Chairman Jaczko of the Nuclear Regulatory Commission (NRC) was painted in House and Senate hearings held last week as Members probed a report of the agency’s Inspector General (IG) into certain official acts taken by him. A House Subcommittee prepared to push legislation that would prohibit the Environmental Protection Agency (EPA) from regulating coal combustion residue (CCR) as a hazardous waste, even as Administrator Jackson defended her agency’s agenda before the Senate Environment and Public Works Committee. The EPA announced that it was delaying publication of the proposed New Source Performance Standards (part of the new carbon emission regulatory regime) from July 26 to September 30. Beyond the House action on the CCR bill this week, Energy and Commerce Subcommittees will hold hearings examining actions taken by the NRC in its safety review of the DOE license application for Yucca Mountain and the role of the Office of Management and Budget in the implementation of the DOE loan guarantee program for clean energy technologies.
Some Details
While the specifics of the budget negotiations led by the Vice President are being withheld from public release, participants have alluded to a “global spending cap” being pushed by Republican participants that would make implementation of a market-based greenhouse gas reduction program impossible absent offsetting spending cuts in other federal programs – even if the legislation’s cost was offset by revenues. The cap under discussion in the budget talks is said to be similar to the mechanism included in a constitutional amendment reported by the House Judiciary Committee last week and a similar amendment supported by all 47 Republican Senators.
House Republicans are beginning to call for the resignation of NRC Chairman Jaczko in the wake of the hearing this week before the Environment and the Economy Subcommittee chaired by Rep. Shimkus (R-IL). During the hearing, Republican Members pressed the IG on the legality of the Chairman’s actions, but the testimony of investigators refrained from making that conclusion although they were critical of his management style and stated that he had parsed information to his colleagues notwithstanding a statutory obligation to keep them fully informed on certain policy matters.
Senator Inhofe, ranking Member of the Senate EPW Committee, was harshly critical of the Chairman in an opening statement during that panel’s hearing into the lessons learned from the emergency at Fukushima Daiichi, but he stopped short of calling for Jaczko’s resignation. During the hearing, it became clear that Members, while generally satisfied with the level of safety exhibited at the Nation’s 104 nuclear plants, also believe that some lessons learned will lead to changes in current regulations. Based on comments of the Commissioners at the hearing, changes are likely in “coping time” required during a station blackout and certain actions developed voluntarily by industry to deal with accidents beyond the design basis of the plants are going to be captured in the regulatory program.
Chairman Whitfield of the Energy and Power Subcommittee held a hearing last week on legislation he has introduced proposing a two-year pilot project that would re-enrich uranium mill tailings at the Paducah Gaseous Diffusion Plant in Kentucky. The proceeds from the sale of that material would then be used to complete the clean up of other enrichment facilities no longer in use. Whitfield's approach stands in contrast to the Obama Administration’s proposal to reinstitute a fee levied against nuclear utilities to fund the clean-up effort. No date has been set for a mark-up of the bill.
Three short takes:
With the House in recess, official legislative action was confined to the Senate, which managed to hold two floor votes while beginning debate on a small business bill. The Senate Energy Committee held three more hearings, looking into small modular reactors, alternative fuels and alternative fuel vehicles, energy efficiency and the production of critical minerals and materials. The Senate Environment and Public Works (EPW) Committee unanimously approved the nomination of William Ostendorff to serve a five-year term on the Nuclear Regulatory Commission (NRC) and held a hearing looking at the links between air pollution and children’s health issues. Ostendorff’s nomination now joins a lengthy queue of nominees awaiting floor action. But the news of potentially the most immediate significance came from the House, where the Energy and Commerce Committee released a report by the NRC’s Inspector General (IG), which found that Chairman Jaczko, while operating within the bounds of the law in actions he took last year to accelerate the agency’s termination of its review of the Yucca Mountain license application, “was not forthcoming with the other Commissioners” and “strategically provided . . . varying amounts of information” about his intentions; the NRC IG is scheduled to testify before an Energy and Commerce panel this coming week. In addition to the House hearing, nuclear issues will stay in the forefront as the NRC Commissioners will receive an update from staff next Wednesday in regards to their investigation into the causes of the incident at the Fukushima Daiichi facility in Japan and the application of any lessons learned to the U.S. nuclear safety program The Commissioners are then scheduled for an appearance on Thursday before the Senate EPW Committee; we expect that the IG report might receive equal play with post-Fukushima issues during their appearance. On big picture issues, budget negotiators led by the Vice President are scheduled to meet three times this week in an effort to advance beyond the posturing stage.
Some Details
The IG report on NRC Chairman Jaczko is potentially more than the latest flashpoint between the agency head and Republicans upset over the Administration’s handling of the Yucca Mountain issue. The report touches on a variety of topics beyond its primary focus on the manner in which the Chairman managed the agency’s review of the DOE license application and includes general allegations about the Chairman withholding approval of foreign travel for his colleagues until they agreed with him on unspecified issues. Other allegations include his threatening to contact unspecified Administration officials if his proposals weren’t approved. The likely follow-up by Congressional investigators on these items could well create additional political problems for the Chairman.
AEP garnered headlines this week when it announced a tentative “compliance plan” that would result in the closure of several coal facilities and the conversion of several units to natural gas at other facilities if the full slate of proposed EPA regulations proceed on schedule. The AEP press release highlighted the resulting job losses in Kentucky, West Virginia and Ohio and the impact of the facility closures on the local tax base. The AEP release are possible topics next Wednesday, when EPA Administrator Jackson makes an appearance before the Senate EPW Committee to discuss the role of the Clean Air Act in protecting public health.
Jackson is also likely to be pressed on an extension of the comment period for the Utility MACT rule; last week 27 Democratic House members, including Energy and Commerce Chairman Emeritus John Dingell, joined others in making that request.
Three short takes: