McDonald Hopkins Government Strategies Advisory: This Week in Washington -- May 8, 2015

Obama’s EPA rules under attack

A centerpiece of the new GOP majorities in Congress has been the effort to roll back many of the Obama administration’s EPA regulations. Next week, Sen. Shelley Moore Capito (R-WV) will introduce a bill challenging the EPA rules limiting greenhouse gas emissions from existing power plants. Speaking after a Tuesday hearing on the EPA rules, Capito said her bill is still being worked out, but would touch on the timeline of implementation and the ability of states to opt out of EPA regulations. Her bill will target both the rules on existing power plants and a finalized rule on new power plants.

Inevitable lawsuits against the rule are likely to be appealed up the judicial ladder and could stretch on for years, something opponents are banking on because it would likely put compliance on hold as well. Senate Majority Leader Mitch McConnell has urged states not to comply with the rule, citing the uncertainty of legal challenges. He even cautioned other countries that America's climate work was at risk because of legal challenges.

Capito's bill will look similar to, but have a wider scope than, a House bill that would give states the ability to opt of the rule and put a hold on federal enforcement until judicial challenges are finished. The House bill passed the Energy and Commerce Committee last week and is expected on the floor sometime after Memorial Day.

Republicans have warned that the EPA rule, which is set to be finalized this summer, would be costly for fossil-fuel states, while casting doubt on the climate benefits of the rule. They have also been poring through the Clean Air Act to raise questions about the legality of the power plant rules, especially as states and utilities prepare lawsuits against the rule.

States, even those that oppose the rule, have already begun working toward crafting implementation plans for the rule ahead of its finalization. (States will get a year from finalization to submit their plans.) The administration would like to see it implemented on schedule and without delay, not only to get the health benefits, but as part of its pledge to the United Nations to cut the country's 2005 greenhouse gas emission levels by 28 percent by 2025.

EPA Administrator Gina McCarthy has repeatedly said the agency is on firm legal ground with the rule.

Obama's trade deal could get even more divisive

The effort to give President Obama "fast-track authority" to negotiate a new Asian trade deal has already been divisive on the Hill, and it appears to be getting even more divisive.

Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-AK) will introduce legislation to end the oil export ban next week, and suggested it could move as an amendment to the upcoming trade bill.

Murkowski has long been a vocal advocate of lifting the ban. But the standalone bill will mark the start of an intensified push by the chairman to fundamentally alter the decades-old policy barring the sale of most U.S. oil abroad.

Laying out her thinking during a meeting with reporters, Murkowski said she believes the export bill could advance three different ways: on its own, as an amendment to another piece of legislation such as the so-called "fast-track" deal that would grant Congress an up-or-down vote on international trade agreements negotiated by the White House, or as part of a broader energy package that the Senate panel is currently working to formulate.

If Murkowski ties ending the export ban to the "fast-track" bill, which faces intense opposition from many Democrats, it could make the push to pass trade promotion authority even more contentious.

Democrats, labor, and environmental groups strongly oppose the trade legislation, saying it would pave the way for Obama to finalize a trade deal that will hurt American workers and the environment.

The politics of lifting the export ban are also tricky. The issue has divided Republicans in the past, and many senators are wary of lifting the ban for fear that it could cause gasoline prices to spike. A spate of recently released studies, including research from the nonpartisan advocacy group Resources for the Future, suggest that lifting the ban would actually cause gas prices to go down.

Supporters of exports also make the case that lifting the ban would bolster national security.

During Senate debate over Iran sanctions last month, Murkowski introduced an amendment to lift the ban; however, the amendment did not come to a vote.

It is unclear how many Democrats would sign on to the push to lift the ban. A number of high-profile Democrats, most prominently Sens. Ed Markey of Massachusetts and Bob Menendez of New Jersey, strongly oppose lifting the ban.

An attempt by Republican senator and 2016 presidential contender Ted Cruz to pass an amendment lifting the ban during debate over the Keystone XL pipeline in January ruffled feathers among export advocates who believed the issue was not yet ripe and feared that bringing any amendment to a vote would result in failure.

Watch this week's Washington Business Brief video, LaTourette Talks GOP Presidential Primary

GOP mulls how to best use reconciliation

Now that both chambers have passed a final budget, we know that Republicans plan on using reconciliation instructions in that budget to take on the President’s Affordable Care Act. What remains unknown, however, is exactly what that will look like. It may depend greatly on what the Supreme Court does in the ACA case before the court now.

If the Court rules as Republicans hope in King v. Burwell, financial assistance will be invalidated in more than 30 states that have federal exchanges. And although several Republican proposals have already been put forth to deal with the chaos that would ensue following an immediate subsidy removal, the party is split over whether or not it should use budget reconciliation to ensure one of them ends up on the president's desk.

The reconciliation process requires only 51 senators to put a bill before the president, as opposed to the normal 60. But, prior to the post-King proposals, many Republicans called for it to be used for a full Affordable Care Act repeal, and the Republican budget agreement uses language ambiguous enough to leave reconciliation's specific use up in the air.

Some, like Senator John Barrasso (R-WY), would like to see the reconciliation language used to pass something that President Obama might actually sign. Barrasso is a sponsor of a post-King proposal that would give financial assistance to those impacted for a transitional period and allow states to create their own competitive health-insurance markets.

But it is unlikely Obama would sign a bill put on his desk through reconciliation and without Democratic support, even if it repairs the damage caused by a King win at the Supreme Court.

Others, particularly conservatives, are likely to push for a full repeal of the ACA through reconciliation, even if President Obama will never sign such a bill.

Medicare reform: Not happening

Major Medicare reform was once gospel for Republicans, and indeed, moving Medicare to a more privatized model has been a staple of Republican budgets since they took the House in 2010. This year, however, it is clear that major reform of the entitlement program isn’t on the GOP agenda.

Some on the right aren't happy about that, but boosters on Capitol Hill insist that the policy, known as premium support, isn't dead. It's just lying dormant until 2017, presuming a Republican wins the White House.

The proposal, which allows Medicare enrollees to receive a voucher and purchase private health coverage, has become close to party doctrine since Ryan started putting it in his annual budgets in 2011. Mitt Romney endorsed his running mate's Medicare agenda during the 2012 presidential campaign, and took heat from the Obama campaign for it.

House Budget Chairman Tom Price, who succeeded Ryan this year after the latter assumed the Ways and Means post, reintroduced the premium-support plan in this year's House budget. But the newly Republican-controlled Senate did not; it called for unspecified $430 billion in cuts over 10 years. The conference agreement that the two chambers reached last week "proposes the same amount of Medicare savings reflected in the Senate-passed fiscal year 2016 budget," and the relevant committees in each chamber are tasked with coming up with specific proposals.

Why the retreat on Medicare? Like so many other issues, it’s all about politics. Senate Republicans are concerned about their newly minted majority. Vulnerable GOP senators up in 2016 aren’t thrilled about diving into a Medicare fight.

Furthermore, the proposal would be dead on arrival even if it reached President Obama's desk. The Republican congress clearly is prioritizing instead, using the budget to either repeal the Affordable Care Act or pass a so-called "fix" if the Supreme Court rules as the GOP hopes it does and invalidates the health care law's subsidies in more than 30 states this summer.

Right and left come together in opposition to Patriot Act

Usually, when we see bipartisanship in Congress it’s between centrist GOPers and centrists Democrats. However, every once and a while, we see an issue that brings together hardcore conservatives and hardcore progressives, and we are seeing that today in the coalition of groups and members coming out against the Patriot Act.

Conservative organizations like FreedomWorks and Gun Owners of America joined liberal groups like the American Civil Liberties Union and the NAACP this week in opposing Majority Leader Mitch McConnell’s plan for a “clean” reauthorization of the law.

Leader McConnell hopes to extend three provisions of the Patriot Act set to expire at the end of the month, including the section that the National Security Agency has relied on to collect millions of Americans’ phone records. This provision has come under fire from privacy advocates who say the law goes too far, while defenders of the program insist it is necessary to protect American interests.

The issue will be front and center in the House next week, when the lower chamber is scheduled to vote on the USA Freedom Act, which would effectively end the NSA’s bulk phone records collection program, among other changes to current law.

There is a companion bill in the Senate, backed by a strange bedfellow of senators including Ted Crus (R-TX) and Al Franken (D-MN). Even if the House passes their version, it is unclear whether the companion bill in the Senate will get a vote. McConnell continues to insist on a clean reauthorization, which might force lawmakers to pass a short-term extension of the law before it expires.

What the Alberta election means for the U.S.

If you think that an upset election victory by a center-left party in Alberta would have no impact on the U.S., you would be wrong. Rachel Notley, the New Democratic Party leader, and likely the new Premier of Alberta —the heart of Canada's oil country—has eliminated one of the most public faces in the lobbying effort promoting the Keystone XL pipeline.

Former Alberta premiers Alison Redford and Jim Prentice were frequent visitors to Washington to promote the pipeline, and touted it as a necessary project for promoting Canada's oil-sands development. Notley, however, isn't going to be lobbying lawmakers in D.C.

Notley has said the project has been too caught up in American domestic politics and that she doesn't plan on promoting it. In an April interview with the Calgary Herald, Notley said there was "no realistic objective" to visiting Washington to discuss the pipeline, and that she'd instead focus on shipping refined crude rather than the bitumen that would be shipped on the pipeline.

There are still plenty of Canadian politicians who could offer domestic support for the pipeline—Prime Minister Stephen Harper has made it a topic of discussion with President Obama and others in visits, and Gary Doer, Canada's ambassador to the U.S., appeared with Senate sponsors of a Keystone approval bill this year and has pushed for Congress to keep promoting the pipeline despite Obama's veto of that bill.

But the loss of such an ardent booster of Keystone XL in the heart of Canada's oil patch could mark another blow to the industry coalition backing the project. The country's energy sector has already expressed some reticence about NDP's ascension, and investors showed uncertainty on the markets Wednesday, with oil-sands companies taking an early hit.

The NDP has taken a more critical stance on the oil industry, which has strong ties to the conservatives. On the trail, Notley had suggested that she would review royalty rates paid by oil and gas companies once the drop in oil prices had settled. The party's platform says it will work to reduce the climate impact of oil development, looking at both the greenhouse gas emissions from extraction and the impact of drilling waste.

Notley has also said she would not promote the proposed Northern Gateway pipeline to a planned Pacific export terminal in British Columbia, but that she did support other export lines like the Trans Mountain and Energy East projects.

The State Department is currently reviewing the Keystone XL permit, but Obama has said he won't approve the project if it is shown to have a negative effect on climate change. Opponents have said that the pipeline will exacerbate development of the dirty tar sands. It's become an environmental and political flash point in the U.S., where congressional supporters have pushed legislation forcing approval of the pipeline, a bill Obama vetoed.

Transportation in Focus

Time running out for highway fix

Somehow, Congress has found itself staring at yet another highway funding deadline without a long-term deal in place. They have until just the end of this month to act, before the Highway Trust Fund runs out of money. But despite the deadline, lawmakers in both chambers and in both parties remain deeply divided on what to do. The lack of a long-term deal means that a short-term extension of the current program is more and more likely every day.

However, even on the question of a short-term extension there is division. Some members would like to see an extension just to the end of July, others are pushing an extension to the end of the fiscal year, and finally some say an extension through the end of the year is the best approach.

Whatever Congress ends up doing, whether it’s short-term or long-term, there is little time left to debate. They have until May 31 to act and, with the Memorial Day recess, they really only have two weeks of actual time left.

The Chamber of Commerce, a big supporter of a long-term transportation fix, believes that if a long-term deal cannot be reached then Congress should only pass a very short-term extension. The Chamber and some others believe that a short-term extension helps to keep Congress’s “feet to the fire” on the issue. Others, however, like Senator Orrin Hatch (R-UT), Chairman of the Senate Finance Committee, believe that Congress needs more time to find long-term solutions.

  

 Steven C. LaTourette, President | 202.559.2600

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