Washington Energy Update

Energy and Environmental Update

Congress returned last week with budget-related issues at the forefront of the agenda. Similar budget issues will continue to dominate the discussions in the early days of this week, specifically related to funding for the Department of Homeland Security (DHS), which was the only department for which FY2015 funding had not been appropriated. Republicans had delayed passing the funding for the measure because of a desire to use the DHS appropriations bill as a vehicle to overturn the president’s executive action on immigration. After a political stand off, the House passed by a vote of 257-167, a measure funding DHS previously cleared by the Senate. The bill was stripped of the Republican immigration riders. With the bill headed for the president's signature, shutdown of the Homeland Security Department was averted. House conservatives are displeased with the outcome which augurs for potential complications for Republican leaders within the Republican caucuses on both sides of the Capitol.

On a similar track, Congress has begun its budget hearings for the Fiscal Year 2016 Budget. Energy Secretary Moniz testified before the House Committee on Science, Space and Technology, where he emphasized the many areas of research and development where the administration proposes funding for FY2016. Science Committee Members remained focused on the Department’s prioritization of renewable energy at the expense of conventional energy. Secretary Moniz repeatedly emphasized that renewable prices are extremely competitive with traditional energy prices. As part of his testimony, he also highlighted that the President's budget is more robust for research and development programs focused on carbon capture and storage (CCS) and nuclear, as opposed to renewables.

Elsewhere in the Capitol, Environmental Protection Agency Administrator Gina McCarthy testified before the House Energy and Power Subcommittee and the Environment and Economy Subcommittee of the House Energy and Commerce Committee. Opening statements from Members on both sides were predictable with Republicans expressing concern regarding the Administration’s climate change agenda and the impacts on the economy, and Democrats praising the Administration for their efforts to address the issue. McCarthy focused her testimony on the Agency’s five performance goals, which include addressing climate change and improving air quality. The President's Clean Power Plan dominated the agenda, although numerous questions regarding carbon capture and sequestration, nuclear related topics and the perennially controversial Renewable Fuel Standard also arose. McCarthy will appear before the Senate Environment and Public Works Committee later this week to defend the Agency’s budget.

This week the Senate will likely vote to try to override the President’s veto of the Keystone XL Pipeline Approval Act. Insiders anticipate the vote will be short of the 67-vote margin required for passage.

Other Items of Interest:

TSCA Reform Legislation Being Drafted. Building upon bipartisan legislative efforts from last Congress, Senate majority Environment and Public Works Committee staff is working with interested stakeholders on reform legislation for the Toxic Substances Control Act (TSCA). Stakeholders who are participating in the discussions indicate that a bill could be released later this month. Chief among the priorities for any TSCA reform legislation is a well crafted state pre-emption provision. House Energy and Commerce staff is said to be working on similar legislation as well, although release of their bill will occur after release of the Senate bill.

House and Senate Committee Leaders Continue in Efforts to Develop Targeted Energy Legislation. Insiders anticipate that House Energy and Commerce leadership could release legislation as early as mid-March, as a follow up to the release of an framework addressing various energy issues issued in February. It is still widely anticipated that efforts will focus on energy infrastructure, workforce issues and energy efficiency. Given criticism House Republicans received for not including Democrats in their framework development process, their Senate counterparts on the Energy and Natural Resources Committee have taken a different tack, with Republican and Democratic staff members initiating listening sessions with trade associations, environmental groups, impacted companies and other stakeholders.

Tax Reform Efforts Initiated. As a starting point for the consideration of comprehensive tax reform, the Senate Finance Committee has formed bipartisan working groups to address five key policy areas. Energy will be considered as part of the infrastructure and community development working group, which is chaired by Sens. Heller (R-NV) and Bennet (D-CO). Each of the working groups is conducting outreach in the coming weeks, leading up to a series of public roundtables in April. Based on the outcomes of these meetings and roundtables, each working group will be tasked with producing a report with options and potential legislative solutions by the end of May.

If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work, or

Rick BoucherPartner+1.202.736.8290rboucher@sidley.comCatherine KarenCounsel+1.202.736.8368ckaren@sidley.comThe Energy Practice of Sidley Austin LLP

The Government Strategies Practice of Sidley Austin LLP

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