While the nation’s capital faced an earthquake and a hurricane last week and Congress remained in recess, several pieces of the energy debate faced heightened intensity.

As the State Department is preparing to release an environmental assessment of the Keystone XL oil sands pipeline project that declares “limited adverse environmental impacts,” environmentalists and the White House are finding themselves at odds. The Obama Administration will still need to conclude that the pipeline is in the national interest before granting it a permit, but the environmental assessment will significantly move the project closer to approval. Protesting in front of the White House last week, environmentalists threatened to stay away from the 2012 election if the Administration moves forward with the project.

Contributing to an even tenser situation, Administration attorneys urged a federal appeals court August 25 to reject several green groups’ request that judges order the Environmental Protection Agency to finalize its delayed ozone standard, saying the court system lacks the authority to force the EPA to take action. Meanwhile, congressional Republicans are already looking to the Congressional Review Act as a method to overturn the smog rule once it is finalized. Also last week, the EPA told a federal court that it was justified in delaying the controversial air toxics rules for boilers and incinerators; environmental groups have asked the court to reject the agency’s delay.

In other news, Friends of the Earth, Public Citizen, the Heartland Institute, and Taxpayers for Common Sense released a report August 24 that recommends cutting $380 billion in “environmentally harmful” federal subsidies. The Green Scissors 2011 report suggest the elimination of more than 100 subsidies, including those received by the fossil fuel, nuclear power, and alternative energy industries, as well as subsidies related to agriculture, land, transportation, and water projects. The Green Scissors Campaign, which has identified environment-related subsidies for elimination since 1994, directed this year’s report to the Joint Special Committee on Deficit Reduction as it prepares to identify as much as $1.5 trillion in deficit reduction.

Upon its return, Congress will be faced with the immediate task of passing fiscal year 2012 budgets to keep the federal government running. Leadership from both parties are hoping the same bipartisan blocs that approved the debt-ceiling deal will consolidate all outstanding appropriations bills into a single continuing resolution, buying time for a larger FY2012 budget deal closer to year’s end. This deal would provide some guidance to the Joint Special Committee on Deficit Reduction by offering a glimpse of prioritized spending, but the passage of the continuing resolution is far from certain and can expect opposition from the same groups that opposed the debt deal. House and Senate Republicans are also gearing up for a regulatory reform debate when they return from the August recess, and, as outlined below, the administration released reports last week identifying priority areas for reform. At the same time, Congressional Democrats, led by Senate Majority Leader Harry Reid (D-NV), are preparing a major jobs bill, and President Obama plans to make a speech soon after Labor Day about the need to create more domestic jobs.