Market News

 November 06, 2014
Republican wave unlikely to wash away Obama's major rules

 Despite their impressive gains last night, Republicans do not appear to have flipped enough seats to undo most of President Obama's environment and climate change agenda.

The united GOP Congress should be able to send him legislation that would approve the Keystone XL pipeline and to achieve narrower limits on the most controversial impending rules.

Republicans picked up at least seven seats in yesterday's elections, with additional gains possible in Alaska and next month's runoff in Louisiana as well as a possible recount in the unexpectedly close Virginia race.

Outgoing Majority Leader Harry Reid's tight control over the chamber prevented nearly all controversial votes over the last two years, with the exception of the all-night "vote-a-rama" in early 2013 when senators voted on nearly four dozen nonbinding amendments to the budget resolution.

That series of votes saw members weigh in on a carbon tax, EPA air toxics rules, requiring more cost-benefit analysis of regulations and approval of Keystone XL. Senators also weighed in on a controversial water regulation during consideration of an infrastructure bill later in the year.

The most significant gains on energy and environmental issues came in Iowa and Colorado, where retiring Sen. Tom Harkin (D-Iowa) voted with the majority of Democrats on all seven relevant amendments and defeated Sen. Mark Udall (D-Colo.) voted with his party on six of the seven measures. Arkansas Sen. Mark Pryor (D) voted with Republicans whenever energy or environmental issues came up, and Sen. Mary Landrieu (D-La.) was with Republicans in all but one amendment analyzed by Greenwire.

All of the energy-related budget amendments fell short of the 60 votes needed to overcome a filibuster, with the exception of one aimed at approving KXL. Republicans and industry supporters are confident a bill approving the pipeline will quickly reach the president's desk next year.

Using those tallies as a base line, Republicans don't appear to have flipped enough seats to end a filibuster -- even if they eventually win Alaska and Louisiana and if a recount reverses Sen. Mark Warner's victory in Virginia.

In the new Senate, Republicans likely have between 55 and 59 votes to block action on climate change based on seats that flipped this year.

Sen. James Inhofe (R-Okla.), who is expected to lead the Environment and Public Works Committee, secured 47 votes for an amendment to bar greenhouse gas regulations. At least six Democrats who voted against the measure were unseated by Republicans who likely would support it, and that figure could grow to eight depending on Begich's and Warner's fates. But that would still leave Inhofe with 55 supporters. A separate budget amendment from Sen. Roy Blunt (R-Mo.) to block a carbon tax, which the administration has not proposed, won 53 supportive votes and could gain as many as six more based on the outcome of the election, but that would still leave it one short of a filibuster-proof margin.

Industry supporters acknowledge they are going to be unlikely to completely sweep away EPA's climate rules, but that doesn't mean Republicans won't be more aggressive.

Scott Segal, a lobbyist with Bracewell & Giuliani who represents utilities and coal companies among other clients, said Republicans would "certainly" try to undo the entire rule with either a Congressional Review Act resolution, which requires only 51 votes to pass, or via an appropriations rider, but either of those efforts could be blocked by the president.

"I'm not sure that we have the votes to actually advance those across the finish line, particularly if they are vetoed," he said on a conference call today, suggesting narrower tweaks may still be possible.

Other priorities considered during the budget debate were amendments to end EPA's mercury and air toxics rule for power plants, which failed 46-53 and would pick up at most nine additional supporters.

Water rule, ozone standard

Another regulation expected to be a top Republican target is EPA's rule delineating what qualifies as a "water of the United States" subject to federal regulation.

Environmentalists say the rule is needed for upstream tributaries and wetlands that would otherwise lack federal protection, but conservatives have attacked it as a costly expansion of government power.

Sen. John Barrasso (R-Wyo.) offered an amendment to block it on last year's water infrastructure bill but came up eight votes short of overcoming a filibuster. Five Democrats who opposed the amendments lost their seats or retired and are being replaced by Republicans; a Warner loss would flip another vote. And Sen. Lisa Murkowski (R-Alaska) was not present for the vote, adding another likely supporter. But that would still leave the effort stuck at 59 votes in favor.

One top GOP target that has not previously been subject to a Senate vote is EPA's forthcoming rule expected to tighten the National Ambient Air Quality Standard for ozone, which has been in the works for years.

Most Republicans signed a letter to then-EPA Administrator Lisa Jackson in 2011 expressing concerns with the rule. Landrieu, who faces a runoff next month, and Sen. Joe Manchin (D-W.Va.) also signed the letter.

Jeff Holmstead of Bracewell & Giuliani, a former EPA air chief, noted Congress may be able to block or delay the ozone rule because it is not a "legacy issue for the White House," unlike the climate change rules. Indeed, Obama reportedly blocked EPA from tightening the standard in September 2011, suggesting he may be willing to work with Congress, where Democrats from states with heavy manufacturing or oil and gas extraction could be willing partners.

"Given the fact this issue is not a presidential priority I think it's possible we could see some legislative action, perhaps a rider," he said. "That is not going to fundamentally change the Clean Air Act, but there are ways this standard could be delayed or softened."