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Policy News Update

February 19, 2009

In this issue: [Contract All : Expand All]

STIMULUS: NOW LAW, STIMULUS PACKAGE IS WINDFALL FOR GREEN ENERGY, SCIENCE

On February 17, President Obama signed into law the $787 billion American Recovery and Reinvestment Act of 2009, following swift conference negotiations between the House and Senate. Although the negotiations resulted in some minor reductions, the final bill represents a major expansion of federal funding for green energy and energy efficiency programs ($43 billion in direct funding plus $20 billion in tax provisions, which effectively triples existing levels of clean energy spending) and includes a great deal of funding for scientific research.

Science funding highlights include:

Meanwhile, energy funding will go towards projects ranging from carbon sequestration research to credits for homeowners who invest in energy-efficient appliances. The bill also revamps the incentive strategy for renewable energy projects. Addressing concerns raised by the industry—specifically that the tax credits previously designed to encourage investments were rendered unhelpful by the recession—the bill includes grants for renewable project developers to use in lieu of credits. This grant provision comes as good news for the wind industry, which will also receive a three-year extension (through 2012) on the production tax credit previously set to expire at year’s end.  Other renewables, including geothermal, biomass, and hydropower, will see similar extensions through 2013, bringing the cost of production tax credits to $13 billion over a decade—the largest tax provision in the stimulus. Several billion dollars in manufacturing incentives are also included in the bill as part of an effort to fulfill Democrats’ pledge to create “green” jobs while addressing energy and climate goals.

One of the more controversial energy measures—an additional $50 billion to the loan guarantee authority—was stripped from the bill completely during conference negotiations. Many environmental groups had worried that the funds, which would have been available to all energy technologies reducing greenhouse gas emissions, would go towards nuclear projects.

SCIENCE FUNDING: WHAT DOES THE STIMULUS PACKAGE REALLY MEAN FOR SCIENCE AND THE ENVIRONMENT?

The place of science in the stimulus bill was often questioned as Congress debated—many argued that investments in research would not stimulate the economy and would thus be more appropriately taken up during the appropriations process. Proponents of the funding countered that such investments would represent a blend of stimulus and transformation, sentiments echoed by the Obama Administration and Speaker Pelosi, both of whom repeatedly emphasized the importance of science to the country’s competitiveness. In the end, science fared quite well. Most notably, the National Science Foundation (NSF) received $3 billion in funding, $2 billion of which will go to basic research.

While the funding will be a major boost for science, it also raises expectations while reducing the amount of time agencies have to make important investment decisions (NSF will have 60 days to produce a spending plan, and will have until September 30, 2010 to make all grants). According to Nature columnist David Goldston, the stimulus and its numerous transparency measures will place science under additional scrutiny—legislators will expect more immediate results, and any mistakes made in the rush to allocate funds will cause “disproportionate damage to agencies’ reputations.”

But perhaps most concerning is the possibility of a “boom-and-bust” cycle, wherein an influx of funding will leave researchers in limbo when it dries up a few years later. Many scientists have expressed concerns over whether the community is prepared to overcome these challenges.

Congressional staffers familiar with these issues point laid out numerous ways of ensuring that the stimulus package translates into long-term sustainable growth in the sciences. Among the most significant:

Other agencies and departments are facing similar challenges related to allocating funds in so short a span of time. The Interior Department, for example, is faced with determining which of its many backlogged projects are ready to go—and can be completed within the next 18 months—and, of those, which should receive a portion of the department’s nearly $3 billion in stimulus funding. The process of prioritizing projects will involve input at all levels, ranging from local officials to the White House.

Meanwhile, the time crunch has raised questions about ensuring adequate environmental analysis for each project approved. During stimulus debates, Congress rejected a GOP attempt to accelerate or waive National Environmental Policy Act (NEPA) reviews for stimulus projects, electing instead to include a competing proposal from Senate Environment and Public Works Chairman Barbara Boxer (D-CA), which guaranteed stimulus funds for ensuring that NEPA reviews “are completed on an expeditious basis."

The large number of backlogged projects ensures that many will already have reviews done. The National Park Service, for example, has a backlog of $9 billion, and received about $750 million in the stimulus. Officials acknowledged that this is the largest program the agency has ever had to finish within 18 months, but expressed confidence in the outcome, stating that they were prioritizing projects with environmental evaluations on file.

SENATE: MAJOR LEADERSHIP CHANGES IN ENERGY AND NATURAL RESOURCES SUBCOMMITTEES

The Senate Energy and Natural Resources Committee welcomes a number of new members this year, as well as new chairmen for three of its four subcommittees:

In addition, the committee will see two new ranking members: Senator Sam Brownback (R-KS) for Water and Power, and freshman Senator James Risch (R-ID) for Energy.

Joining the full committee will be Democrats Evan Bayh (IN) and Jeanne Shaheen (NH), and Republicans John McCain (AZ) and Bob Bennett (UT).

Subcommittee priorities:

Energy Subcommittee

The Energy Subcommittee has jurisdiction over fossil fuels, most aspects of the nuclear cycle, utilities, renewable energy, the Energy Information Administration, the strategic petroleum reserve, many of the programs in the $24 billion Energy Department (excluding the weapons program), and other energy-related infrastructure.

Cantwell replaces Senator Byron Dorgan (D-ND), who is chairman of the Energy and Water Development Appropriations Subcommittee and the Indian Affairs Committee. The two will likely still collaborate a great deal because of their subcommittees’ roles: the Energy Subcommittee authorizes energy policy, while the Energy and Water Appropriations Subcommittee provides the money to fund the policies.

Cantwell’s top priorities include renewable energy, smart grid technologies, national lab research, energy market regulation, and nuclear waste cleanup. She expects that her subcommittee will participate in the crafting of climate change legislation, and recently said that she plans to “focus on innovative ways to make climate policy simpler, more equitable, and more transparent.”

Risch, who replaces Senator Larry Craig (R-ID) as the subcommittee’s new ranking member, has expressed many of the same interests as Cantwell. Both Idaho and Washington—the two leaders’ states—have significant amounts of renewable energy resources as well as nuclear waste left over from the Cold War and defense activities. The two may not agree on how to advance their shared interests, however. Risch strongly supports nuclear energy, as Idaho stands to gain from housing nuclear power development projects.

National Parks Subcommittee

Mark Udall succeeds Senator Daniel Akaka (D-HI). Previously a member of the House of Representatives, he has expressed support for cap-and-trade legislation, fought oil shale development, and been an outspoken advocate of wind, solar and geothermal power. Last year, Udall agreed to some offshore drilling as part of the "Gang of 10" energy proposal.

Senator Richard Burr (R-NC) will remain the subcommittee’s ranking member.

Water and Power Subcommittee

The successor of Senator Tim Johnson (D-SD), Debbie Stabenow, brings a wealth of knowledge on water issues, having worked extensively on Great Lakes issues throughout her career. She authored the first federal ban on oil and gas drilling in the lakes, which became law in 2001, has lobbied for the funding of climate change monitoring programs, and has pushed to protect the lakes against drilling, invasive species, and water diversions.

The subcommittee, which is responsible for overseeing power marketing administrations, hydroelectric power initiatives, and energy development’s effects on water resources, will prioritize water infrastructure and flood control projects this year.

Public Lands and Forests Subcommittee

Senators Ron Wyden (D-OR) and John Barrasso (R-WY) will remain at the top of the Public Lands and Forests Subcommittee.

Wyden is a longtime supporter of forest conservation, and has been a prominent voice in the debate over old-growth logging, wildfire prevention and thinning efforts. He has also been among the most outspoken critics of Interior Department ethics, including political intervention in endangered species decisions and the recent scandal at the Minerals Management Service.

Barrasso has been active on mining and climate change legislation—both major issues for the Wyoming coal industry. Although he supported curtailing National Environmental Policy Act reviews for economic stimulus projects, he has pushed legislation to ban oil and gas development in parts of the Wyoming Range.

CLIMATE AND SECURITY: CLIMATE, ENERGY TO GAIN PROMINENCE THROUGH NATIONAL SECURITY COUNCIL OVERHAUL

A forthcoming overhaul of the National Security Council will extend the body’s scope beyond foreign policy matters and bring additional agencies to the table. Sources close to the White House have suggested that the administration plans to elevate the status of climate and energy issues, and may add the Energy Department to the Council.

Addressing climate in terms of national security will allow for the input of additional perspectives in climate change planning—military officials, for example, will play an important role in determining how climate change will drive international conflict.

This change could also increase the influence that the national security adviser has over climate and energy policy. Obama’s adviser, James Jones, has stirred up some concern among environmentalists, who have pointed to Jones’ mixed environmental track record as head of the U.S. Chamber of Commerce’s Institute for 21st Century Energy. A strong advocate of linking energy and national security issues, Jones supported increased investment and incentives for renewable energy and efficiency, but also called for the production of domestic oil shale and the permanent removal of limits on offshore drilling.

Nevertheless, many environmental groups are optimistic. The change would greatly improve the stature of climate and energy issues, and it is very possible that Jones’ input will center largely on more traditional foreign policy matters, rather than the country’s approach to international climate negotiations.

RENEWABLE ENERGY: UDALL, BINGAMAN COMMITTED TO MOVING RENEWABLE STANDARD FORWARD

On February 12, freshman Senator Tom Udall (D-NM) introduced legislation to enact a renewable electricity standard that would require utilities to obtain 6 percent of their electricity from renewable sources by 2012 and 25 percent by 2025.

The standard, commonly referred to as a renewable portfolio standard (RPS) , applies only to privately owned power plants, and would allow utilities to meet requirements by purchasing renewable energy credits. Banking and borrowing credits would also be allowed.

The week prior, both the House and the Senate reviewed other pieces of RPS legislation. In the House, Representative Ed Markey (D-MA) introduced a measure similar to Udall’s, setting a target of 17.5 percent in 2020 and 25 percent from 2025 to 2039. Meanwhile, Senate Energy and Natural Resources chairman Jeff Bingaman (D-NM) circulated draft legislation setting slightly lower requirements: 16 percent by 2019 and 20 percent from 2021 to 2039. Even these more modest targets were met with some opposition, however, as southeastern lawmakers from both parties argued that they lack the resources to meet the requirements. Local power plants would be forced to buy credits, they said, sending necessary wealth out of their states.

Opponents are also concerned about whether an RPS would be at odds with attempts to reduce greenhouse gas emissions. Lester Lave, a professor of economics, engineering and public policy at Carnegie Mellon University, cautioned Bingaman’s committee that a national standard would single out renewables, forgoing the potential benefits of letting all technologies fully compete in emissions reduction efforts. Increasing the use of renewable energy and reducing the emission of greenhouse gasses have frequently been treated as parallel objectives, but this is not always the case.  Energy independence is high on lawmakers’ list of priorities as well, but as the committee’s ranking member, Senator Lisa Murkowski (R-AK) pointed out, it is important to consider whether an RPS is “the right policy at this time or whether it has been overtaken by the need to address climate change standards."

The House is also addressing this issue as it determines whether or not to include renewables in a broader climate change bill. Bingaman’s goal has been to move an RPS separately and thus more quickly, perhaps as a part of an energy bill he plans to introduce in early spring. Both Bingaman and Udall have emphasized their commitment to moving an RPS forward through cooperation.

TRANSITION UPDATE: OBAMA ADMINISTRATION BEGINS TO ADDRESS MERCURY RULE, CALIFORNIA WAIVER, EPA ENDANGERMENT FINDING

In its first few weeks, the Obama administration has reviewed a number of controversial air policies from the Bush administration. Among the highest profile have been the previous administration’s move to revise the regulation of mercury emissions from power plants; its rejection of a California waiver request, which would allow the state to regulate greenhouse gas emissions from automobiles; and a much-debated “endangerment finding” memo from former Environmental Protection Agency (EPA) Administrator Stephen Johnson, which stated that the federal government should not use the Clear Air Act to address carbon dioxide emissions.

(For additional background, please refer to the February 5 Policy News Update: http://www.esa.org/pao/policyNews/pn2009/02052009.php)

Mercury rule: On February 6, the Obama administration asked the Supreme Court to drop former President George W. Bush's request for review of a mercury rule that had been struck down a year prior in federal appeals court. The rule would have called for a cap-and-trade approach to regulating power plant emissions; EPA plans instead to develop standards for electric utilities that force individual plants to curb their emissions.

California waiver: Also on February 6, following a January executive order from President Obama, EPA initiated the process towards reevaluating and possibly reversing the Bush administration's denial of California's waiver request. Moving forward, the agency said that it will accept public comment on possible changes, and will hold a public hearing in March.

Endangerment finding: On February 17, the Environmental Protection Agency said it would reconsider Johnson’s memo, which is currently the subject of a lawsuit initiated by several prominent environmental groups. These groups argue that Johnson’s decision unlawfully reinterprets the Clean Air Act, specifically its requirement—based on a decision by EPA’s Environmental Appeals Board—that the agency consider global warming emissions when issuing permits for new coal-fired power plants. The groups had until the 17th to file a motion to stay (that is, to place on hold) the memo. Had they gone through with this, EPA would have had to either defend or stay the memo. Staying the memo in its present state could have triggered broad-ranging regulations targeting even small sources of carbon emissions. As an alternative, EPA’s current administrator, Lisa Jackson, contacted the groups with a plan for moving forward: rather than holding the memo, the agency will open it for public comment. Pleased with this response, the groups stressed the importance of having a new proposal in place before removing the Johnson memo and said that they expected such a proposal—one that would require best available control technology for all new, large-scale greenhouse gas sources—to be released in the next six months.

EPA said it plans to publish a notice of the proposed rulemaking soon in the Federal Register.

FISHERIES UPDATE: LUBCHENCO SAYS OFFSHORE FISH FARMS ARE STILL AN OPTION

During her confirmation hearing, Jane Lubchenco, President Obama's pick to head the National Oceanic and Atmospheric Administration (NOAA), told the Senate Commerce Committee that the federal government should consider offshore aquaculture, but only if there is "scientifically grounded" information to ensure its sustainability.

Lubchenco’s comments follow recent efforts to open the Gulf of Mexico to offshore fish farms (for additional information, please see the February 5 Policy News Update: http://www.esa.org/pao/policyNews/pn2009/02052009.php) and indicate that the marine biologist could work to advance a federal permitting system for the operations. She went on to say that aquaculture is a “key element” of the food production system, and that as head of NOAA she would make it a priority to identify “the right conditions under which aquaculture is sustainable.” In emphasizing the importance of scientific indicators of sustainability, however, she drew an important distinction between her philosophy and that of the gulf proposal and the Bush administration, whose attempts at an offshore permitting system met bipartisan criticism for their lack of environmental safeguards.

The issue surfaced again last month when a federal fisheries council in the Gulf of Mexico voted to open its waters to offshore fish farms—a proposal that must go through NOAA for final approval.

House Natural Resources Chairman Nick Rahall (D-WV) has asked the Commerce Department to reject the Gulf Council's plan on the grounds that it violates Congress' intent in fisheries law and neither anticipates conflicts between competing uses of marine waters nor guards against environmental damages. Rahall indicated, however, that he would work to advance a permitting plan allowing for offshore fish farms in federal waters nationwide.

APPROPRIATIONS: INOUYE TO MOVE “CLEAN” OMNIBUS THIS MONTH

Senate Appropriations Chairman Daniel Inouye (D-HI) is preparing to move an omnibus appropriations bill to fund the federal government for the rest of fiscal year 2009. Although appropriators in both chambers have been kept busy with the economic stimulus bill as of late, Inouye said that staff are already working on the omnibus, and that the committee will likely take it up after the Presidents Day recess.

To ensure swift passage, Inouye wants to keep the bill “clean”—in other words, free of policy riders like an offshore drilling moratorium or calls to reverse Bush administration rules. The bill will likely see many of the amendments originally intended for the stimulus, however, particularly ones that the conservatives had characterized as non-stimulative and thus better suited for appropriations bills.

Many of these funding requests may also appear in discussions regarding the 2010 appropriations bills, which lawmakers will have to take up in the near future. Appropriations panels typically start spending bill hearings in February, but this year’s administration change has delayed the process.

Indeed, Congress will need to move swiftly—the continuing resolution, which currently funds federal agencies at 2008 levels, is set to expire on March 6. With both the House and the Senate addressing the omnibus after the break, another extension may be necessary.

CLIMATE CHANGE LAWSUIT: FEDERAL JUDGE RULES IN FAVOR OF USING NEPA TO ADDRESS CLIMATE CHANGE DAMAGES

On February 6, the federal government settled a lawsuit holding two US agencies, the Export-Import Bank of the United States and the Overseas Private Investment Corp, accountable for the climate change impacts of projects the agencies financed overseas.

This settlement represents the conclusion of a lawsuit initiated in 2002 by Friends of the Earth, Greenpeace, and four cities, who said they would suffer economic and environmental damage from the emissions created by the projects. According to the plaintiffs, the National Environmental Policy Act (NEPA) holds the agencies liable for failing to assess the possible environmental impacts of these projects, projects whose carbon dioxide emissions from 1990-2003 added up to almost eight percent of what the world emits each year.

Accepting this argument, a federal judge ruled that US cities negatively impacted by climate change were eligible to file lawsuits under NEPA, and ordered the parties to negotiate an agreement. The result: the two agencies agreed to spend $250 million each on renewable energy projects and to take climate into consideration for future investments. In addition, the Overseas Private Investment Corp. set a goal of reducing the greenhouse gas emissions of its projects by 20 percent over the next decade.


Sources: Environment and Energy Daily, Greenwire, Politico, CNN, The Associated Press, The American Institute of Physics, The American Chemical Society, The American Institute of Biological Sciences, The Coalition for National Science Funding

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