2015 and Beyond: Legislative Outlook
Regardless of which party controls the Senate after November, we can expect the next two years to be marked with much activity, though it is unlikely to result in significant legislation that the President signs.
The short-term focus from the President’s perspective, similar to other lame-duck Presidents, will be to cement his Presidential legacy and define it as “successful.” In Congress, regardless of whether the Senate is controlled by Democrats or Republicans, party leaders will remain laser-focused on setting the stage for the 2016 election. In addition to the Presidential race (which is likely to involve several sitting Senators), Republicans in 2016 will have to defend close to a quarter of the Senate (24 seats), while Democrats will only have 10 seats to defend. To succeed in 2016, Republicans will need to walk a fine line in the next two years that highlights the negative impacts of the Democratic agenda, which helps define the GOP Presidential/Senate platform, but also demonstrates that they stand for something other than the creation of road blocks, as voters are tired of obstruction tactics, and nothing getting done.
At this juncture, it is generally thought that the Republicans could gain a few seats in the House. Several of the Senate races remain very close, so it is unclear at this point whether the Republicans will gain control. Thus it is possible, with the number of close races and possible runoffs, that control of the Senate will not be resolved until January 2015.
Against this backdrop, if Democrats retain Senate control, we can expect the White House and Senate to be more focused on populist themes such as immigration reform, an increase to the minimum wage and potentially, efforts to raise discretionary spending above the current sequester level. We can also anticipate that any House-passed energy legislation will continue to languish in the Senate.
Should the GOP take control of the Senate and, as expected, retain control of the House, leaders will have to balance engaging in aggressive oversight of the Administration’s policies and stymieing Obama nominees, with trying to advance legislation that will require Democratic cooperation and demonstrate the GOP’s ability to lead. We can anticipate potential use of the budget reconciliation process in the Senate, which requires only a simple majority (instead of a 60-vote threshold) as a means to force the President to either negotiate or to veto a high profile measure, further frustrating a public weary of governmental inaction. In the past, the budget reconciliation process has been successfully used to advance the Patient Protection and Affordable Care Act, the Bush tax cuts and 1996 welfare reform provisions. Also, the appropriations bills and other must-pass pieces of legislation could be used by a GOP Congress to drive policy changes.
Of major note will be the onset of a serious focus on comprehensive tax reform. It should be noted that despite the low probability that legislation will be passed in the next Congress, we should anticipate activity on this front in both Congressional houses and the need for proactive engagement.
Generally, regardless of who controls the Senate after November 2014, we believe that we will see a significant amount of activity in the energy/environmental arena that will require diligent and proactive monitoring and outreach, although we anticipate limited, if any, legislation being signed into law.
Status Quo: Democrat Controlled Senate/Republican Controlled House
As a general matter, if Democrats retain control of the Senate, we can anticipate a somewhat similar approach in the 114th Congress, as in the 113th. On the House side, Democrats will continue to oppose pro-energy legislation and anti-Environmental Protection Agency (EPA) legislation that GOP House leaders are likely to advance. Activity on the Senate side, however, will largely depend on the re-election outcome of the current Chair of the Energy and Natural Resources (ENR) Committee, Sen. Mary Landrieu (D-LA).
Landrieu, a stalwart in terms of her support for the energy industry, would likely drive an ENR agenda that would advance fossil fuel production initiatives, including legislation to advance approval of the Keystone XL pipeline. Conversely, should Landrieu lose her race, Sen. Maria Cantwell (D-WA) would likely become Chair of the ENR Committee. A Western member with a much more progressive bent, Cantwell would likely drive an agenda that promotes renewable energy. Cantwell would, therefore, be more likely to focus on the development of renewable sources of energy and potentially “leveling” what she views to be an uneven playing field between the renewable energy and oil and gas sectors. Cantwell also takes a fairly aggressive stance against what she sees as energy market manipulation, and is likely to place a heightened focus on Federal Energy Regulatory Commission (FERC) enforcement activities. Importantly, if Democrats retain the Senate, Sen. Lisa Murkowski (R-AK), the current Ranking Senator on the ENR Committee, would be term limited and Sen. John Barrasso (R-WY) would likely assume that position. A conservative, Barrasso is viewed as far more partisan in his leanings than Murkowski. Barrasso’s ascendancy could make it more difficult to advance bi-partisan legislation for Senate consideration, although oil and gas production-related issues might be ones where he and Landrieu could try to work together. Conversely, a Cantwell/Barrasso ENR leadership combination is one that is less likely to yield in bi-partisan legislation.
Separately, the Environment and Public Works (EPW) Committee, which has key jurisdiction over the country’s environmental statutes, has distinguished itself as one of the more partisan Committees in the Senate. The Committee, which Sen. Barbara Boxer (D-CA) currently presides over, with Sen. David Vitter (R-LA) as Ranking Senator, has not moved much in the way of legislation during the 113th Congress. We can anticipate a similar scenario in the next Congress, even with a change in Republican leadership to Sen. Roger Wicker (R-MS).
Republican Control: Republican Controlled Senate/Republican Controlled House
On the House side, which is likely to remain in GOP control, we can anticipate heightened activity that builds upon work done in the 113th Congress with passage of pro-energy legislation and measures designed to thwart Administration policies viewed as anti-energy or anti-market. The House is likely to continue in its oversight efforts of the current Administration as well.
A Republican controlled Senate will result in a significant amount of activity in the energy/environmental space with a focus on: 1) increased scrutiny on energy production issues; 2) extensive oversight, especially as it relates to many of the Administration’s rulemakings; 3) some efforts related to the Congressional Review Act; and 4) possibly, directed spending initiatives aimed at limiting or rolling back a host of Administration rulemakings.
More specifically, under the leadership of Murkowski, we are likely to see an ENR Committee agenda and a series of bills in keeping with her Energy 20/20: A Vision for America’s Energy Future (Blueprint). This 2013 discussion Blueprint addressed various categories, but focused on “our national interest to make energy abundant, affordable, clean, diverse and secure” and “to align federal policy with that consensus.” In keeping with this Blueprint, we should anticipate an agenda generally focused on promoting increased domestic energy production (including both fossil fuels and renewables), potential action on energy exports (facilitating natural gas exports/removing barriers to oil exports), renewed oversight scrutiny and potential legislation aimed at mitigating perceived regulatory overreach and permitting impediments for energy infrastructure projects, among others.
Murkowski has also long been concerned about the reliability of the electricity grid, particularly as a result of the expected retirement of existing coal generation. She is likely to move legislation to address the FERC/EPA jurisdictional conflict, somewhat similar to the bill sponsored by Rep. Olson (R-22-TX) in the House, though more comprehensive. As an adjunct to this, she is likely to have oversight hearings on the operation of capacity markets across the US and the effects on reliability. Should there be operational problems in the grid, perhaps due to another cold winter, the Republicans will likely move quickly to highlight them and suggest that coal plant retirements are an underlying cause. A Murkowski/Landrieu union makes this agenda even more possible. Further, while Sen. Cantwell has a more pro-renewable energy bent than Sen. Landrieu, Sens. Murkowski and Cantwell have worked together in the past on issues of interest to their Pacific Northwest constituencies. This might foreshadow a stronger working relationship than a Cantwell/Barrasso ENR leadership combination under Democratic control.
On the oversight front, we anticipate scrutiny of Administration policies both at the Senate ENR Committee, which has jurisdiction over the Department of Energy and the Department of Interior, and the EPW Committee, which has authorizing authority over the EPA. Sen. Jim Inhofe (R-OK), a stalwart opponent to the Administration’s environmental agenda and strongly pro-energy, would chair the EPW Committee.1 As EPW Chair, he would certainly advance an agenda very much focused on scrutinizing the Administration’s environmental policies and the basis for their rulemakings.
Republican leadership is also likely to consider the use of the Congressional Review Act (CRA) disapproval resolution process. In this scenario, Congress may use its general powers to overturn final agency rules. Passage of a joint resolution of disapproval only requires a majority vote in both chambers, but is unlikely to yield the two-thirds vote ratio necessary in both congressional houses to override a certain Presidential veto. Notably, since its inception, the CRA process has only been used once successfully. Given the likelihood of Presidential veto, GOP leadership will likely engage in internal robust discussions regarding the potential overuse of the CRA disapproval resolution process and the value it will truly bring to candidates in 2016. It is a tenuous balance as they weigh the benefits of politicizing issues (and putting the President in the position of having to potentially veto legislation) versus being perceived as lacking a proactive agenda. However, it is also a scenario that, if used strategically, can provide a win to both the President, who can appear stalwart in his efforts to prevent rollbacks, and to Republicans, who can show to their constituencies their efforts to push back on Obama Administration initiatives. Given the balance that needs to be potentially struck, stakeholders need to be mindful and proactive to ensure that they are strategically engaged in potential CRA-related discussions.
Finally, Republican leaders will likely consider potential use of the appropriations process as a means to defund Administration initiatives or limit the Administration’s reach as it relates to its energy/environmental policies. Even if they control the Senate, the GOP will lack the 60 votes necessary to adopt legislative riders to appropriations bills. Leadership, however, might advance for debate riders that provide for more time for rule implementation or in some instances (i.e., National Ambient Air Quality Standards requirements) require that the Agency consider costs in its rulemakings. Further, even though they will be short of the 60-vote threshold, Republicans will have increased leverage and spending oversight that could help achieve some of their goals. Regardless of the ultimate approaches Republicans adopt, a high level of Senate activity can be expected and proactive stakeholder engagement is a necessity.
Specific Issues to Watch For
We can anticipate activity on bills to approve the Keystone XL pipeline and other House-passed measures designed to address the Administration’s energy/environmental agenda. More generally, and based on our current discussions, it is possible that we will see activity on the following:
Action on Energy Exports: During the recent term, we have witnessed a significant push for increased energy exports, especially as it relates to liquefied natural gas. Exports of oil are largely prohibited under current law. Murkowski and other Members, however, have publicly expressed a strong and renewed interest in making changes to the law and eliminating the decades old oil export ban. Some insiders speculate that a debate on repealing the oil export ban will likely be delayed for another two years.
Potential Energy Legislation: Rep. Upton (R-6-MI), who will be in the final two years of his tenure as Energy and Commerce Committee Chair, is rumored to be developing energy legislation that is focused on energy infrastructure. Staff is said to be in discussions with their counterparts on the Senate side as well. Insiders believe that passage of energy legislation will require a delicate balance even in a GOP-controlled Congress given various regional issues that split the Conference and that some may attempt to tack onto this legislation. Murkowski is also concerned about the lack of development of energy infrastructure, including pipelines and transmission lines, and may also develop a more comprehensive legislative package to address her concerns.
Potential Changes to the Renewable Fuel Standard (RFS): More regional in nature, and always controversial, this is a perennial issue that will require extensive monitoring and engagement, but is ultimately unlikely to make it to the President’s desk for his signature. Sen. Murkowski cited to reforms to the RFS as a point for consideration in her 20/20 Blueprint.
Potential Revisions to Key Environmental Laws: While unlikely to yield in bills that are enacted, a Republican controlled Congress will likely make efforts to address the Administration’s regulatory overreach through amendments to current statutes.
Action on Energy Efficiency Legislation (Shaheen-Portman): Work on bi-partisan and widely supported energy efficiency legislation has been ongoing during the 113th Congress. The prospect, however, of unrelated amendments being considered and vulnerable Members having to take tough votes, ultimately derailed the bill from receiving Senate Floor time. Some would argue that if in a Sen. Reid (D-NV) controlled Senate the legislation was not considered, its prospects for consideration and passage are even less likely in a GOP controlled Senate. However, we can anticipate that Senator Rob Portman (R-OH), who will be in-cycle in 2016, will push to advance legislation that Democrats should generally support. In short , there is a potential for movement on this type of legislation. Given the broad and bi-partisan support for the bill, it is an item to potentially monitor, especially if it is one of the few energy-related measures that ultimately moves, and which could have other measures tacked onto it.
Waters of the US: The Administration’s proposal to expand the reach of what is subject to Clean Water Act jurisdiction, has been met with very strong opposition. We can anticipate that this reaction will only augment in a Republican controlled Congress.