Republican Congress To Set Sights on Energy, Environment

When Congress reconvenes next week, the Republicans will have control of the Senate for the first time in nearly a decade, giving the GOP the opportunity to advance part of its wish list on energy production and exports. But a Republican Senate is unlikely to lead to a wholesale repudiation of the Obama administration’s energy and environmental policies, especially landmark clean-air rules meant to clean up greenhouse gas emissions in the power sector.

Republican goals broadly fall into three categories: Increasing energy exports, boosting domestic energy production, and rolling back what they see as onerous environmental rules, especially those that target the U.S. coal industry.

At the very top of the list is the fate of the long-delayed Keystone XL pipeline. Sen. Mitch McConnell (R.-Ky.), the new Senate majority leader, has said that he would make approval of the pipeline the first priority for the 114th Congress. While a Senate effort to force approval of the pipe–which the Obama administration has slow-footed for six years–fell just short in November, the new GOP majority can now marshal enough votes.

The problem would be to overcome a possible White House veto. President Barack Obama, in his year-end press conference, took a dismissive view of the pipeline’s supposed benefits, saying that it would largely serve to help Canadian oil producers get their products to market, rather than helping Americans by lowering energy prices. “It’s not even going to be a nominal benefit to U.S. consumers,” Obama said.

What’s more, the pipeline’s route is still in legal limbo: A Nebraska court has yet to rule on whether the state properly authorized one segment of Keystone. On Friday, Jan. 2, the Nebraska court delayed any ruling yet again. That gives the Obama administration a ready-made legal excuse to block congressional maneuvers.

Top GOP lawmakers in both houses have also said they hope to boost U.S. energy exports, especially of crude oil, which have been banned since the mid-1970s. Surging U.S. oil production in recent years threatens to create a glut of light, sweet crude oil inside the United States. Rep. Joe Barton (R.-Tex.) and Sen. Lisa Murkowski (R.-Alaska) both have bills designed to remove decades-old restrictions on crude exports.

But two things have changed since lawmakers first started seriously talking up the prospect of crude exports. Oil prices have cratered, falling close to 50 percent from their summertime highs, which means there’s less need to pour extra oil into the global market. At the same time, the Obama administration has already quietly cracked open the door to greater oil exports: In late December, the Commerce Department said that one kind of ultralight oil that U.S. producers churn out–known as condensate–can be legally exported. Analysts said that bureaucratic move could pave the way for as much as one million barrels of oil exports this year.

Another energy-export issue is natural gas. Slowly but surely, the United States has opened the door to exports of liquefied natural gas (LNG) from terminals on the coast. Exporting gas to the handful of countries with which the U.S. has a free- trade agreement is already allowed. But for exports to the rest of the world, the procedure is slow and cumbersome: Of the nearly forty projects that have sought administration approval, only nine have so far gotten a green light.

Several lawmakers see gas exports as a way for the United States to turn its energy bounty in geopolitical leverage. And Sen. Murkowski has signalled that she might try to expedite LNG export approvals now that she is in charge of the Senate energy committee. But, like the oil market, the global gas market has changed dramatically since exports popped onto the radar. Questions about future demand for natural gas, especially in Asia, combined with a flurry of gas-export projects from Canada to Australia have created the risk of a natural-gas glut. That makes additional U.S. gas exports less necessary.

After Keystone, congressional Republicans have Obama administration environmental regulations in the crosshairs. The GOP has complained for years that Obama’s Environmental Protection Agency has over-reached with tough new rules meant to limit air pollution and greenhouse gas emissions; states like Kentucky that rely heavily on coal feel especially threatened. McConnell took aim at the coal rules in an interview with AP last month: “I couldn’t be angrier about it and whatever we can think of to try to stop it we’re going to do,” he said.

For Republicans, the good news is that key committees are in friendly hands. Sen. James Inhofe (R.-Okla.) now heads the Senate environment panel; Rep. Fred Upton (R-Mich.) still heads the House energy committee. Both are sharp-tongued critics of what they see as self-destructive energy and environmental policies in Washington; Inhofe in particular, who sees climate change as a “hoax,” will likely use his gavel to discredit the administration’s climate policies.

The trick will be to turn that opposition into legislation, and that means overcoming Senate rules concerning filibusters. Most big bills require 60 votes; while the GOP leadership can count on attracting some Democrats to cross the aisle for certain issues, rolling back Obama’s signature environmental legacy is probably not one of them.

There is one way around the threat of filibuster: so-called “reconciliation.” It’s an obscure legislative maneuver that allows bills to pass with a simple, 51-vote majority, and is the same method Democrats used to pass the Affordable Care Act in 2010. McConnell has said he would seek to use reconciliation to drive as much as he can of the GOP agenda next year.

But, as with Keystone, there’s one big problem for Republicans. Obama still wields veto power — and signalled the day after the elections that he has finally found his pen.

“Congress will pass some bills that I cannot sign,” Obama said.

Finally, the Republican-led congress will get a chance to resuscitate bills promoting greater domestic energy exploration that easily passed the House in recent years but which died in the Senate. Murkowski, in particular, has an energy blueprint that calls for greater U.S. production of oil and gas.

The obstacles there are less political than economic. The collapse of global oil prices in recent months threatens to kneecap some U.S. oil production. While production costs vary widely for U.S. shale producers, the sector generally needs oil prices north of $60 a barrel for the economics to work. But the world is still awash in oil: the United States, Russia, and Iraq are pumping more than they have for years even though global demand for oil is weak. That means that crude prices keep falling. Crude in London traded around $56 a barrel on Friday, while crude in New York slipped to about $53 a barrel.

ALEX WONG/Getty Images