Energy And Environment Update - December 2 2012

Author:Mr David Leiter and Sarah Litke
Profession:Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Energy and Climate Debate

With the lame duck session in full swing, fiscal cliff negotiations are ongoing, but slow moving, and energy issues are stuck in the middle of the fight.

Though many are hopeful that the expiring wind production tax credit will be extended, Senator Chuck Grassley (R-IA) said November 28 that the fight now has more to do with saving the credit than with which version of the extension should prevail. Multiple versions of an extension are pending in Congress. Senator Grassley has proposed a stand-alone measure, the American Energy and Job Promotion Act (S. 2201), to extend the program for two years, while the Senate Finance Committee approved in August a tax extension measure, the Family and Business Tax Cut Certainty Act (S. 3521) to extend and expand the program. Legislation extending the credit has also been introduced in the House, but has not advanced.

The North American Association of Insulation Manufacturers sent letters to House and Senate leadership November 29 urging them to extend the 25C home retrofit credit and the 45L energy efficient new home credit as part of the tax extenders negotiation. Both credits expired at the end of 2011, but were included in the Finance Committee's August package.

Smart Growth America asked Congress November 19 to pass a tax incentive, Section 198, by the end of the year to encourage brownfields development. Extending the incentive through fiscal year 2013 would allow for greater expenditure in brownfields development and maintain existing momentum; the brownfields tax incentive was created as part of the Taxpayer Relief Act of 1997.

After receiving significant attention in the media a couple of weeks ago, policymakers continue to voice their opinion over whether a carbon tax has a place in the fiscal cliff negotiations. Senator Lisa Murkowski (R-AK) said November 28 that a carbon tax has little political momentum as this moment, while a group of more than 100 companies, including Shell and BP, signed the Carbon Price Communique November 20 encouraging Congress and the Administration to put a clear price on carbon emissions.

Senator David Vitter (R-LA) and Representative Mike Pompeo (R-KS) said November 29 that they plan to introduce a concurrent resolution this week stating that a carbon tax is not in the economic interest of the United States. Senate Majority Leader Harry Reid's (D-NV) office said that the resolution will not get a vote in the Senate.

As part of the Defense authorization negotiations, the Senate approved, 62-37, an amendment from Senator Mark Udall (D-CO) November 28 to the National Defense Authorization Act for Fiscal Year 2013 (S. 3254) that removed a provision that would have prohibited the Defense Department from producing or procuring biofuels if the cost exceeds the price of traditional fossil fuel. One of the Pentagon's energy goals includes having the Navy derive 50 percent of its total energy from alternative sources by 2020 and having the Air Force obtain half of the fuel it uses for domestic flights from alternative sources by 2016. The Senate also approved an amendment from Senator Kay Hagan (D-NC) to strike a provision hat would prohibit the Pentagon from entering into a contract to plan, design, or construct a biofuel refinery unless specifically authorized by law. It is unclear when the bill will come to a vote on final passage.

House and Senate farm bill leaders joined Agriculture Secretary Tom Vilsack last week in a last ditch effort to put in place a new five-year plan before the end of this Congress, though it is quite likely that an agreement is not worked out until next year. The Farm Bill includes an energy title.


Tier 3 Standards Sought

Senator Kirsten Gillibrand was joined by 11 of her colleagues November 29 in sending a letter to President Obama calling on the Environmental Protection Agency to move forward with Tier 3 regulations to limit sulfur in gasoline.

Revenue Sharing Legislation Forthcoming

Senators Lisa Murkowski (R-AK) and Mary Landrieu (D-LA) signaled their support November 28 for using a portion of offshore drilling royalties for energy research as part of a broader revenue sharing proposal. Both senators hope to pursue revenue sharing legislation next year that funnels royalties to coastal states.

Murkowski Energy Plan

Senator Lisa Murkowski (R-AK) said November 28 that she plans to release her energy blueprint for the next Congress in January, after she has an opportunity to consult with new members of the Senate Energy and Natural Resources Committee. The plan will focus on making energy "abundant, affordable, clean, diverse, and secure."

Renewed Commitment to EE Legislation

Senators Rob Portman (R-OH) and Jeanne Shaheen (D-NH) said November 27 that they are preparing an aggressive push for their energy efficiency legislation in the next Congress. The two are meeting to map out a path forward for the measure, which includes increasing efficiency standards for buildings and appliances and a revolving loan fund to help improve manufacturing efficiency. They are also preparing to discuss the bill with some of their colleagues soon.

Particulate Rule Estimates Requested

Representatives Fred Upton (R-MI), Ed Whitfield (R-KY), and Joe Barton (R-TX) sent a letter November 16 to Environmental Protection Agency Administrator Lisa Jackson asking her to provide by November 29 an updated cost estimate for the particulates rule that does not include cross-state reductions. The agency is preparing a regulatory impact analysis for the final particulate matter rule that will be publicly available after December 14.

GRID Act Passage Urged

Representative Ed Markey sent a letter November 20 to House energy and Commerce Chairman Fred Upton (R-MI) urging him to take immediate action to pass the GRID Act, legislation they co-sponsored last Congress that aims to boost the domestic electric grid against cyber attacks and physical vulnerabilities or threats.

Opposition to EPA Demand Response Revisions

Senators Frank Lautenberg (D-NJ), Joe Lieberman (I-CT), Sheldon Whitehouse (D-RI), Kirsten Gillibrand (D-NY), Ben Cardin (D-MD), and Bob Menendez (D-NJ) encouraged the Environmental Protection Agency in a November 27 letter to revise a proposed rule that would allow stationary engines that generate electricity to run without emissions controls for 100 hours per year. The group charged that the engines, operating under demand-response circumstances, would undermine a program that is intended to encourage energy efficiency and smart grid management. They did not specify what an appropriate number of hours would be. The agency published a proposed rule June 7 to allow backup, reciprocating internal combustion engines to operate for up to 100 hours during emergency and electricity peak-use periods without being subject to emissions limits.

Corker to Leave ENR

Senator Bob Corker (R-TN) will leave his spot on the Energy and Natural Resources Committee. With the departure of Senate Foreign Relations Committee Ranking Member Dick Lugar (R-IN), Senator Corker becomes the top Republican on the Committee, though there are rumors going around that Senator Marco Rubio (R-FL) may try to bypass him for the position.

Carbon Tax Emails Sought

Senator David Vitter (R-LA) sent a letter November 20 to Treasury Secretary Timothy Geithner accusing the agency of withholding thousands of pages of emails that could be related to the department's involvement with carbon tax issues. The Competitive Enterprise Institute is seeking the emails under the Freedom of Information Act.

Legislation Introduced

House Science Committee Chairman Ralph Hall (R-TX) introduced the Tapping America's Energy Potential through Research and Development Act (H.R. 6603) November 27 to authorize $111 million for the Department of Energy to conduct research and development on unconventional oil and natural gas resources and to find ways...

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