Summary
President Obama and the Democratic majority that accompanied him to Washington devoted a substantial portion of the administration's first year in office, the first session of the 111th Congress, to passing a comprehensive climate change bill that would cap domestic greenhouse gas emissions and encourage investment in energy efficiency projects and clean energy technologies. On June 26th, 2009, the Obama Administration and congressional Democrats looked well on their way to accomplishing this goal when the House of Representatives passed H.R. 2454, the American Clean Energy and Security Act, by a seven vote margin. However, once the bill reached the Senate, a number of moderate Democrats balked at supporting a bill that they believed would hurt an economy that was already shedding thousands of jobs each month in the wake of the financial crisis of 2008. Ultimately, any chance of a climate bill landing on the president's desk in 2009 died when Republicans boycotted the Senate Environment and Public Works Committee's markup of the legislation. The reluctance of moderate Democrats to support comprehensive cap-and-trade legislation, combined with the staunch oppositions of Republicans, left Senate leadership without enough votes to bring a bill based on the House approved legislation to the Senate floor.
Despite the inability of Senate Majority Leader Harry Reid (D-NV) to gather enough votes for a climate change package; the Obama Administration has remained committed to pursing legislation capping greenhouse gas emissions. In December 2009 the Environmental Protection Agency released an endangerment finding which concluded that unabated greenhouse gas emissions pose a danger to public health. This determination allows the EPA to regulate greenhouse gas emissions under the authority given to the agency in the Clean Air Act. Regulation of greenhouse gas emissions under the Clean Air Act would impose a heavy burden of a number of inconsequential emitters, and for this reason President Obama has often said he would prefer to limit emissions legislatively. Thus, many in Washington have interpreted the release of the endangerment finding as a tool to compel congressional action on climate change.
Outlook
It appears as if the Obama Administration's prodding had the desired effect. Since late 2009, a bipartisan group of three Senators-Lindsay Graham (R-NC), Joseph Lieberman (I-CT), and John Kerry (D-MA)-have been soliciting the advice and support of their colleagues while attempting to draft a bill that reduces greenhouse gas emissions and could garner 60 votes in the Senate. While Senator Graham told reporters on March 1st that he does not expect to publicly release any of the groups actual legislative language for a few more weeks, the general outline of the group's proposal is known. According to early reports, the Kerry-Graham-Lieberman plan aims to reduce domestic greenhouse gas emissions to 17 percent below 2005 levels by 2020.
The senate trio's proposal would meet this goal by initially only imposing an emissions cap-and-trade system on utilities and eventually incorporating manufacturers into the system. The cap-and-trade system created by H.R. 2454 would have covered every sector of the economy from its enactment. The Kerry-Lieberman-Graham plan would reduce emissions from the transportation sector by imposing a tax on fuels, based on each fuels' carbon content. The three Senators' proposal is likely to include provisions encouraging domestic oil production and the construction of new nuclear power plants.
Last year while Democrats searched for additional votes for the climate change bills, a number of fence-sitting Democrats from states with heavily industrialized economies suggested the addition of border-adjustment provisions to the legislation could persuaded them to vote in its favor. These border-adjustment provisions would impose a tariff on goods imported from countries that did not cap greenhouse gas emissions. While there has been no indication that similar provisions will be included in the Kerry-Graham-Lieberman proposal, the Senators could consider adding this type of language if they believe it will win the support of some of their hesitant colleagues.
As congressional action on climate change legislation resumes, the Obama Administration has slowed its attempts to regulate emissions via the Clean Air Act. In late February, EPA Administrator Lisa Jackson announced that the agency would not release its greenhouse gas emissions rule until 2011; and that the agency will tailor the rule so that it only applies to large emitters.
Despite this announcement, a bipartisan effort to strip the EPA of its authority to regulate greenhouse emissions remains active on Capitol Hill. Senator Lisa Murkowski (R-AK) introduced a disapproval resolution (S.J.RES.26), cosponsored by three Democrats, that would bar the EPA from regulating greenhouse gas emissions under the Clean Air Act. Senator Graham cosponsored the disapproval resolution as well. In the House, two different groups have introduce legislation with the same aim. Democrats Ike Skelton (D-MO) and Collin Peterson (D-MN), along with Republican Jo Ann Emerson (R-MO), have introduced H.J.RES.76 which would block EPA from regulation greenhouse gas emissions.
Blank Rome LLP and Blank Rome Government Relations LLC will continue to monitor efforts to pass climate change legislation during this session of Congress. As is apparent, a significant compromise of the respective parties' positions will be needed if legislation is to pass.
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