This week, the President released his 2016 budget, which is his proposal to Congress for taxes and spending. It will set the tone for the next two years and potentially put Republicans on the defensive as protectors of the wealthy. The President’s budget, which totals $3.99 trillion, will also focus on the administration’s lowest deficits since the onset of the Obama presidency. Notably, it was released with an American economy that is at its strongest since the onset of his tenure. This combination of arguments will serve as the basis for the President’s plan that increases government spending, maintains entitlement programs and raises taxes. While it is likely that Congress will discard and redirect many funding items through the appropriations process, the 2016 Budget does foreshadow agency priorities. It is important to note that the FY2016 budget provides for relief from sequestration. Notably, from an energy/environmental focus, there are a number of priorities worth noting including:
- An increase of $500 million for the Environmental Protection Agency (EPA), which results in a total allocation of $8.6 billion, and which includes $239 million directed toward EPA efforts to decrease carbon pollution and a $4 billion incentive for those states that choose to invest in a range of activities that go beyond the Clean Power Plan;
- A more than 42 percent increase ($2.72 billion) for the Department of Energy Office of Energy Efficiency and Renewable Energy in order to continue to reduce the nation’s dependence on fossil fuels, promote energy efficiency and double U.S. renewable electricity generation to name a number of priorities;
- A permanent and refundable tax credit for renewable electricity production; and
- Incentivizing the commercial deployment of Carbon Capture, Utilization and Storage.
Keystone XL Bill Passes Senate; Quick Conference Expected
After continued consideration during the month of January, the Senate passed S.1, The Keystone XL Pipeline Approval Act, which would approve the Keystone pipeline. The bill was approved 62-46. Senate Majority Leader McConnell (R-KY) kept his commitment to operate the Senate with an open amendment process. This objective ultimately resulted in the filing of more than 240 amendments and almost endless negotiations, but also 42 roll call votes, which was three times the number of roll call votes in all of 2014. Six of the amendments passed. Insiders anticipate that a quick conference among House and Senate conferees is likely for various reasons including putting pressure on the administration to make a decision regarding the pipeline permit. The White House, which has vowed to veto S.1, has announced no time frame for making a decision on the permit.
Among the many failed amendments that were offered was a nonbinding sense of the Senate resolution that expressed support for a five year extension of the production tax credit (PTC). The PTC sense of the Senate resolution failed on a simple majority vote, 47-51. The vote demonstrates the lack of appetite for the continuation of government supported renewable energy incentives as currently crafted. The tax credit, which in the last few years has only been extended for one or two years at a time, expired at the end of 2013. In December, Congress extended it retroactively through the end of 2014 but did not renew it for the current year.
In an unrelated, but recently reported on topic, Senate Energy and Natural Chairwoman’s Murkowski’s (R-AK) effort to stymie the President’s Artic National Wildlife Refuge (ANWR) plans failed 50-48. As previously reported, the Obama administration announced on Sunday, January 25, 2014, its recommendation that additional ANWR areas be designated as wilderness. Currently, about 7 million acres of ANWR are managed as wilderness. The announcement came amid a Department of Interior recommendation that close to 12.3 million acres should receive the wilderness designation. If approved, the new Comprehensive Conservation Plan that Fish and Wildlife has been working on for years would manage 98 percent of ANWR as wilderness, banning oil and gas development, new road construction and other activities. The amendment, as crafted, would have eliminated such wilderness protections after one year.
With Keystone Done, Congressional Agenda Will Pivot Toward Various Priorities
With the Senate finishing its consideration of Keystone, insiders anticipate fewer floor debates on energy/environment related issues in the coming months. This does not indicate a lack of congressional activity, however, as authorizers and appropriators will begin to focus on various Agency budgets. House and Senate staff continue in their work to develop and potentially release a targeted energy infrastructure bill that is likely to see relevant House and Senate committee consideration much later in the Spring. Committees with jurisdiction over energy issues are contemplating legislation focused on energy infrastructure, electricity grid reliability, energy efficiency reforms, and other issues that can garner bipartisan support. At this juncture, it is anticipated that the bill will include four titles with a focus on including modernizing infrastructure; grid reliability/security; workforce development and energy diplomacy. Given the bipartisan focus of these efforts, anti-EPA legislation is unlikely to be included in the legislative proposals.
Congress Scrutinizes Administration Waters of the US Proposal
In an agenda item that is likely to be the center of congressional attention from relevant authorizers and appropriators, the U.S. Senate Committee on Environment and Public Works and the U.S. House Committee on Transportation and Infrastructure will convene a joint hearing later today to “examine the impacts on state and local governments of a proposed rule to expand federal regulation of waters under the Clean Water Act.” The administration issued a proposed Waters of the U.S. rule last April, and a final rule is anticipated during the Spring of this year. The proposal, which has been viewed as controversial, has been the subject of significant bipartisan congressional focus. Scrutiny regarding the proposal will likely remain a congressional priority.