Energy Policy Outlook—113th Congress

Senator J. Bennett Johnston* N. Hunter Johnston

Overview President Barack Obama’s reelection has profound implications for the nation’s energy agenda over the next four years. Although many energy interests opposed President Obama’s reelection, during the President’s new term there may be increased opportunity both for his administration and Congress to fashion compromise and build consensus on important energy issues. At the outset of the upcoming congressional session, budget and fiscal issues are almost certain to be the predominant focus. Yet, because many energy issues are inseparably intertwined with tax policy and certain energy policies raise revenue for the federal government, energy issues should play a key role in ongoing negotiations to reduce the budget deficit and reform the tax code. Of course, renewed prospects of major energy legislation will have to be measured against the fact that any such legislation must have bipartisan support in order to pass both chambers of Congress and be signed into law by the President. Moreover, irrespective of congressional action, the Administration is poised to take regulatory steps that will have important consequences for energy stakeholders. Nonetheless, with new members and leaders of key congressional committees having already expressed interest in dispensing with partisan politics in favor of a pragmatic and results-oriented approach to legislating, there may be real promise.

Key Drivers of Energy Policy Energy policy has traditionally been dominated by regional interests as opposed to partisan politics. Since the second Bush Administration, however, and continuing through the Obama Administration, partisanship has played an increasing role. Notwithstanding this fact, perhaps the most significant energy issue confronting the 113th Congress—revenue sharing—is still divided along regional and not partisan lines. Past disagreement on this issue, with former Chairman Bingaman on one side and Ranking Member Murkowski and Sen. Landrieu on the other, has precluded the Senate ENR Committee from considering other important energy issues. Because energy policy is expected to be largely driven from the less partisan Senate rather than the House, the extent to which incoming Chairman Ron Wyden (D-OR) can bridge this gap over the next two years will largely determine how big a footprint the 113th Congress will leave in the energy world. The Administration’s implementation of certain regulatory initiatives held over until after the election could impact how Congress engages in energy policymaking. The actions of the Environmental Protection Agency (“EPA”), the Department of State, the Department of Energy (“DOE”) and the Federal Energy Regulatory Commission (“FERC”), in conjunction with the recent decreases in natural gas prices, will have a huge effect on the future of domestic energy production and policy.

Energy Policy Outlook—113th Congress

EPA Even with Lisa Jackson’s recent announcement that she is stepping down as the head of the EPA, the agency will continue to have a significant impact on energy policy. In particular, a number of regulatory actions which were deferred until after the election will now be pushed forward in the coming months. The most notable of these include: • Finalizing regulations limiting greenhouse gas emissions from power plants which are primarily directed towards eliminating new coal-fired power plants; • Revisiting the ozone pollution limit standards that forced EPA to withdraw proposed regulations in September 2011; • Implementing the recently-finalized fine particulate matter (i.e., “soot”) standards and stronger emissions controls for industrial boilers; • Continuing oversight enforcement of new post-Macondo spill safety rules; and • Considering new federal controls on produced water, fugitive methane and other discharges from hydraulic fracturing. Department of State The Department of State is in the process of reviewing the proposed Keystone XL Pipeline and has said it will make a recommendation to President Obama regarding the presidential permit needed for the pipeline’s construction by the end of March. However, it is doubtful that this deadline will be met, particularly as the Department transitions over the next several months from Secretary of State Hillary Clinton to her successor, likely Senator John Kerry (D-MA). If the pipeline is approved it could facilitate a more favorable, cooperative climate between the Administration and Congress on energy legislation. DOE & FERC DOE has become a more influential driver of energy policy in the wake of the proliferation of hydraulic fracturing as a means of accessing significant and highly profitable domestic shale gas reserves. However, developers of liquefied natural gas (“LNG”) import/export facilities must obtain authorization both from DOE to export and from FERC to construct and operate such facilities. Presently, there are over twenty license applications pending at DOE for authorization of exports to non-free trade agreement (“FTA”) countries.1 Collectively, these applications represent potential exports of up to approximately 24 billion cubic feet per day of natural gas or nearly one-third of current domestic natural gas production. To date, through its subsidiary Sabine Pass Liquefaction LLC, only Cheniere Energy Inc. has received both the DOE and FERC approvals needed to export to non-FTA countries, which are mostly in Asia and are the biggest purchasers of LNG.2 In early-December, DOE finalized a long-awaited study on the probable impact of gas exports on the

1 Under the Natural Gas Act, applications to DOE to authorize the import/export of natural gas, including LNG, from/to FTA countries are to be deemed consistent with the public interest and granted without modification or delay. In contrast, authorizations sought for export/import to non-FTA countries are subject to a more time- consuming regulatory process involving public comments, protests, and motions to intervene prior to a public interest finding. 2 The approved terminal, located in Louisiana, has a projected capacity of 2.2 billion cubic feet per day.

2

Energy Policy Outlook—113th Congress domestic gas market and found that exports would generally benefit the U.S. economy and lead to net economic gains likely to outweigh the cost of any resulting increase in domestic natural gas prices. While release of this study clears the way for DOE to consider approving the numerous LNG export proposals, much debate over the actual long-term cost-benefit calculus of such export will continue to take place. Indeed, Sen. Wyden has criticized the DOE study and in a recent letter questioned the methodology and assumptions contained therein. To the extent that natural gas producers and would-be exporters have been lobbying for the opportunity to ship more gas overseas, where prices can be five times as high as those in the U.S., the conclusions reached in this most recent DOE study, while contentious, are likely to have a broad impact on domestic project investment decisions and could be leveraged to facilitate bipartisan consensus in Congress in favor of at least limited additional export. Low Natural Gas Prices Domestically The last major energy bill enacted, the Energy Independence and Security Act of 2007 (“EISA”), was signed into law before the widespread implementation of hydraulic fracturing technology which has transformed the landscape of America’s domestic energy production capabilities. In 2007, domestic prices for natural gas averaged between $6.50 and $7.50 per MMBTU while today’s prices are approximately $3.50 per MMBTU. This decrease in domestic prices coupled with the opportunity to penetrate more profitable markets abroad may provide an opportunity for Congress to pass new energy legislation reflecting these changes.

Opportunities for Congressional Action If Congress reaches a consensus on revenue-sharing for offshore energy production, it could generate momentum and pave the way for consideration of more controversial and divisive issues such as DOE’s loan guarantee program, the Renewable Fuel Standard (“RFS”), and energy efficiency. While the House and Senate have been at odds over the past two years, bills arising in the Senate could have a realistic chance of passage since it is a more consensus-driven body. The Senate The Senate ENR Committee now has a new chairman, Sen. Ron Wyden (D-OR). Sen. Wyden has already established a good working relationship with Ranking Member Sen. Lisa Murkowski (R-AK), most recently illustrated by the trips they took together to Alaska and Oregon to better understand both states’ energy and natural resource agendas. Clearly, Sens. Wyden and Murkowski are going to great lengths to establish a cooperative working relationship. Sen. Wyden has also reached out to moderate Democrats on the committee, traveling to Louisiana with Sen. Mary Landrieu and to West Virginia with Sen. Joe Manchin. Another new dynamic regarding energy policy relates to the new personalities that will be involved in shaping it. The election of two moderate Democrats to the Senate may have far-reaching consequences. Heidi Heitkamp (D-ND) is an expert in energy policy, while Joe Donnelly (D-IN) is a well-known, thoughtful moderate who may also support certain energy policy initiatives. Along with moderates including Mary Landrieu (LA), Mark Pryor (AR), Joe Manchin (WV), and Mark Begich (AK), these senators make up a core group that provides Democrats a majority in the Senate. In a way, they should be considered the “swing votes” in the Senate, as they could provide Republicans a majority on certain issues if they all cross the aisle. Their views will be taken seriously. Liberal freshmen Sens. Martin Heinrich (D-NM) and Brian Schatz (D-HI) will fill vacancies left by retiring

3

Energy Policy Outlook—113th Congress

Chairman Bingaman and Sen. Jeanne Shaheen (D-NH), who are no longer on the committee. Having received substantial campaign support from “green” advocacy groups, Sen. Heinrich has already indicated that he shares Sen. Wyden’s position on the importance of innovation and has suggested that his three biggest priorities—research funding, improving education and developing infrastructure—should be agreed upon by both sides of the aisle in the context of energy policy. Notably, Sen. Heinrich comes from a state with two federal research laboratories critical to providing jobs and economic opportunity. For his part, Sen. Schatz supported expanding renewable energy production and preserving natural resources while he served as Hawaii’s Lt. Gov. and has indicated that, in addition to those issues, global climate change will be another of his top priorities in Congress. One key to Sen. Wyden’s success will be his ability to manage a bipartisan coalition of senators on a committee whose membership will clearly span the ideological spectrum. For example, moderate Sens. Landrieu, Murkowski, and Manchin have very different views on energy issues compared to Sens. Franken and Sanders. Another important factor will be whether the ENR Committee can reach an early agreement on revenue sharing. The lack of such an agreement has been the primary impediment to committee business recently, and removing that obstacle by reaching an early deal could bode well for future committee productivity. Chairman Wyden is a strong promoter of renewable energy but has been pragmatic and open-minded in his support of natural gas as a bridge fuel to a better environment. Sen. Murkowski is in the process of developing her own comprehensive energy plan as well. Set to be released sometime in January, the plan is rumored to be in excess of a hundred pages and will outline oil and gas, nuclear, renewable energy, cybersecurity, and other policies. She will rely on the plan as a foundational reference point and, in addition to providing significant insight into the likelihood that she will sponsor, support, or oppose certain legislation, it will also set the tone for areas of cooperation between Sen. Wyden and herself. Sen. Wyden may agree with many ideas in Sen. Murkowski’s plan, but he will go further than she will in promoting renewable energy, especially in those areas that he thinks are underserved, such as renewable fuels, biomass and hydropower. In the past, Sen. Wyden has supported a renewable portfolio standard (“RPS”) and is thought to favor exploring whether a clean energy standard might be written in a manner which encourages both natural gas and nuclear power as a means of bridging the divide on an RPS. With Sen. Wyden also retaining his seat on the Senate Finance Committee, he is poised to stand at the center of any debate over repealing or rewriting energy tax incentives or the potential imposition of a carbon tax on polluting activities and industries. Opening the Arctic National Wildlife Refuge to drilling has long been a top goal of Republicans and Sen. Murkowski will almost certainly include the refuge in her plans, perhaps seeking to garner support from Democrats by tying some of the federal revenue from drilling to a willingness to support renewable energy. Facing criticism that it has been too tough on oil and gas producers, the Obama Administration has recently been reaching out more to industry and touting its oil and gas credentials. Sen. Murkowski will try to find common ground with Sen. Wyden on revenue sharing on public lands, perhaps by directing more federal revenue from oil and gas production to renewable energy. Whether the ENR Committee can get an early start to consideration of legislation may be a good indicator of whether legislation can pass in the new Congress. In general, Sen. Wyden may recognize that passage of energy legislation is a painstaking process that succeeds when bipartisan compromise is achieved and legislation is considered early in the legislative calendar. This could lead to hearings early this year that could pave the way for markup of energy legislation in the spring. On a somewhat related note, the GOP leadership on the Environment and Public Works (“EPW”)

4

Energy Policy Outlook—113th Congress

Committee is different, as Ranking Member James Inhofe (R-OK) was term-limited and is now the top Republican on the Senate Armed Services Committee. Sen. David Vitter has replaced him as Ranking Member, and has replaced nearly all of Sen. Inhofe’s EPW staff. Sen. Barbara Boxer will remain the EPW Committee’s Chair. It is doubtful that Sens. Boxer and Vitter will be able to agree upon much with respect to energy policy. Instead, this Committee is likely to focus on areas in which they can agree, such as transportation funding and a Water Resources Bill authorizing projects under the Army Corps of Engineers’ jurisdiction. The House of Representatives During the course of the last Congress, most of the energy bills passed by the Energy and Commerce Committee were devoted to repealing EPA regulations. Since none of these bills ever stood a chance of passage in a Democratically-controlled Senate, these bills might best be considered “messaging bills” that were aimed at politics rather than national policy. Assuming Sen. John Kerry (D-MA) succeeds Hillary Clinton as the new Secretary of State, it is possible that Congressman Ed Markey (D-MA), one of the House Democrats’ most knowledgeable members on energy issues, will succeed him in the Senate. Consequently, the House Energy and Commerce and Natural Resources Committees could lose one of their strongest advocates of tighter environmental regulation and renewable energy production. Notably, House Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) has reached out to Sens. Wyden and Murkowski to express interest in better understanding the possible areas of compromise between the House and the Senate. Given these developments, it remains to be seen whether prospects for bipartisan energy legislation are any brighter in the House in this Congress.

Key Issues Below is a brief overview of some key issues likely to dominate Congress’s energy agenda: Natural Gas Exports While DOE had placed a hold on reviewing export license applications until two studies on LNG exports were finalized, the Energy Information Administration (“EIA”) released the first study in January 2012 and DOE recently released the second study on December 5, 2012. Speculation swirled throughout 2012 over whether DOE would approve the multitude of pending non-FTA applications following completion of the studies and whether, in doing so, it would impose restrictions on such exports, as has been urged by a bipartisan chorus of lawmakers. These lawmakers sometimes cite a domestic “manufacturing renaissance” that draws on cheap fuel and a surge in activity among chemical companies eager to use cheap feedstocks stemming from natural gas production. It will be interesting to see if there can be some compromise on imposing standards in the Natural Gas Act beyond the current loose and unpredictable public interest standard. In particular, natural gas exports will be a fascinating issue for Sen. Wyden to negotiate. There are two pending natural gas export facilities in his home state of Oregon. Environmentalists and other activists have opposed these facilities, so it will be interesting to see how he reconciles his position in favor of clean energy with the specter of new natural gas exports that could benefit his home state’s economy. National Standards for Hydraulic Fracturing Republicans have recently increased political pressure on the White House to back off regulations that will impose new controls on the controversial oil-and-gas extraction method known as hydraulic fracturing or “hydrofracking.” In May, the Dept. of Interior floated draft rules that would, among other requirements, force drillers operating on federal and Indian lands to disclose chemicals used when conducting hydrofracking. The Republican Governors Association and the Republican Attorneys General Association, in a recent letter to President Obama, alleged that the

5

Energy Policy Outlook—113th Congress planned Dept. of Interior rules will stifle oil and gas production on federal and Indian lands and that states, rather than the federal government, are best positioned to appropriately regulate such operations. Energy Efficiency Sweeping energy efficiency legislation based upon a bill co-authored by Sens. Jeanne Shaheen (D-NH) and Rob Portman (R-OH) is considered one of the most promising areas of potential bipartisan compromise. While Sen. Shaheen’s departure to the Senate Appropriations Committee represents the loss of one of biggest advocates of energy efficiency on the ENR Committee, Sens. Wyden and Murkowski appear poised to take up the effort and, to the extent spending arguments prove surmountable, could build on a recently enacted law involving appliance efficiency upgrades and efficiency audits for federal agencies. In the House, Reps. Cory Gardner (R-CO) and Peter Welch (D-VT), who recently rejoined the House E&C Committee, are also pushing to make efficiency an area of compromise and recently announced the creation of a bipartisan Energy Savings Performance Caucus. Overall, by targeting an issue that is low- hanging fruit, success in this regard could yield a model for bigger initiatives to come. Revenue Sharing Relative to his predecessor, Sen. Wyden is more open to Sen. Landrieu’s revenue- sharing proposal. Without a change, the 37.5% share of royalty payments from offshore drilling would not take effect until 2017. Sen. Landrieu is optimistic that a compromise on this issue will unclog Energy Committee business—much of which was stalled when now-retired Chairman Bingaman opposed Sen. Landrieu’s legislation arguing revenues should go directly to the federal government—and potentially trigger passage of a major energy bill facilitating robust domestic oil and gas production and development of alternative energy sources. Sen. Landrieu’s legislation would have lifted a $500 million cap on offshore drilling royalties given to Alabama, Louisiana, Mississippi, and Texas, and would have permitted the states to begin collecting those payments in 2015 rather than 2017. The bill also established a revenue- sharing mechanism for federal offshore wind projects, with an eye toward winning support from Pacific Northwest committee members like Sens. Wyden and Maria Cantwell (D-WA). In the 113th Congress, revenue sharing on offshore and gas development is likely to be expanded to include renewable energy production under legislation being crafted by Sen. Murkowski. The legislation, which most likely would be cosponsored by Sen. Landrieu, would increase the number of coastal states eligible to share in federal revenues from offshore energy production, and broaden the types of energy eligible to include tidal, wind, hydro, and other renewable sources. Under the bill, states would receive 27.5% of revenues from both conventional and renewable offshore energy production, and would be eligible to receive an additional ten percent if they institute a state-run program for renewable energy production, land conservation, or coastal restoration. Finally, the legislation would expand revenue sharing from energy production on federal lands within a state’s boundaries to include renewable and alternative energy production. (Currently, renewable energy production on federal lands is not eligible for revenue sharing.) While Sen. Wyden has historically expressed a preference for revenue sharing among all states, recently he has aligned more closely with Sen. Murkowski by acknowledging the particular needs of “resource- dependent” communities and potentially indicating a willingness to agree to revenue sharing among all coastal states. Oil & Gas Tax Benefits Whether as part of any potential budget or debt limit compromise or as part of a broader tax reform effort, House Democrats have continued to push hard to eliminate certain tax benefits afforded to various industry sectors but which amount to tens of billions of dollars in particular to the oil and gas industry. In addition to the roughly $4 billion in tax benefits realized by the oil industry each year, oil and gas companies also benefit from roughly $1 billion per year in royalty-free drilling on public lands.

6

Energy Policy Outlook—113th Congress

Sen. Murkowski has shown surprising willingness to scale back and reshape these same tax breaks and subsidies for the oil and gas industry as a means of negotiating for the ratcheting down of similarly favorable tax treatment for certain if not all types of renewable energy generation. Alternative Energy Tax Credits Although Republican leaders in Congress maintain that tax revenue is now “off the table” for future budget negotiations, expect continued legislative efforts to acquire additional revenue, and tax provisions beneficial to the energy industry will be attractive. In addition, the production tax credit (“PTC”), which Sen. Wyden supports, was only extended through 2013 in the New Year’s Day deal averting the fiscal cliff (though under the terms of its extension, companies are eligible to take advantage of it as long as project construction has commenced prior to the close of 2013). A recently proposed six-year phase out of the PTC for wind could be a model for future compromise on tax benefits for various forms of energy production by maintaining parity between benefits afforded to alternative energy producers and oil and gas producers. Indeed, the decision to extend the PTC for only a single year suggests that the status quo must necessarily shift—perhaps toward true resource neutrality. A related priority of Sen. Wyden's is energy storage. Along with Sen. Susan Collins (R-ME) and recently- retired Sen. Bingaman, he co-sponsored legislation in the 112th Congress (S. 1845) to create a storage investment tax credit to be used for storage technologies that can be employed to better integrate intermittent renewable generation resources (i.e., those that generate power only when the sun shines or wind blows) into the power supply. Carbon Capture and Sequestration Carbon Capture and Sequestration (“CCS”) projects to promote enhanced oil recovery (“EOR”) could be an area of compromise for various subsidies of clean energy, as EOR revenue is an attractive funding source. Sens. Enzi (R-WY) and Conrad (D-ND) have introduced legislation making important modifications to the existing Section 45Q Tax Credit for CO2 sequestration and is a key step toward expanding CO2-EOR in the United States. Sen. Wyden’s support for this measure would be immensely helpful to CCS-EOR advocates. In addition, because CCS’s continued success is important for the coal industry, Sen. Manchin will continue to be an ally on the committee. Loan Guarantee Program Sens. Wyden and Murkowski see a need to reform the Loan Guarantee Program, though they both recognize value in it. Sen. Wyden has complained the program treats all applicants the same, regardless of whether an applicant is a manufacturing company of a new technology (i.e., Solyndra) or a power project with a long-term off-take agreement (i.e., Shepards Flat Wind Farm in Oregon). He thinks there may be some room for improvement in this regard, such that government support would (a) go to companies that will be able to succeed in the market and (b) be structured to provide long-term certainty for companies. Any effort to reform the program will have to be reconciled with a House Republican conference that is more inclined to see its disappearance rather than mere modification. Along these lines, the No More Solyndra bill that passed the House in mid-2012 would make it difficult for the loan guarantee program to operate successfully. Clean Energy / Carbon Tax Congress is unlikely to take up climate change early in the President’s new term because it is too controversial to be considered on a parallel track with deficit reduction talks. The failure of cap-and-trade early in the President’s first term exemplifies a lack of consensus on major, broad-based legislation addressing climate change. There will, however, be a focus on the Clean Air Act’s suitability to regulate greenhouse gas emissions as well as renewed discussion of imposing a carbon tax. Although such policy proposals become more viable in the context of the budget shortfalls facing the U.S. government, Congress is more likely to consider smaller, targeted, and less aggressive means of implementing clean energy policy. However, there is talk of imposing a carbon tax in order to generate much-needed revenue.

7

Energy Policy Outlook—113th Congress

In addition, President Obama has said he will support a “clean energy standard” (“CES”) similar to that previously proposed by former Sen. Bingaman, which would have required utilities to get 80 percent of their power from low-carbon or zero-carbon sources by 2035. Sen. Murkowski has expressed interest in a CES as well, particularly if the standard allows for nuclear power and carbon capture from coal plants. Nonetheless, the odds of such legislation passing through the Republican-controlled House are small. At a hearing on the CES bill floated by Sen. Bingaman, Sen. Wyden indicated support for the "basic proposition" of the bill but added that he was concerned about energy prices and regional differences in the energy sector, and suggested the possibility of a “state waiver” process under the CES. Master Limited Partnerships for Renewable Energy and CCS Senate Democrats will begin to look at Master Limited Partnerships (“MLPs”) as a means of facilitating continued investments in renewable energy as well as mitigating the adverse impact of the PTC expiring. Sens. Chris Coons (D-DE) and Michael Bennett (D-CO) introduced legislation that would change the tax code to allow renewable power companies to be structured as MLPs. There has been talk recently of expanding the bill to include CCS projects, which would provide a new source of funding for these endeavors. The MLP model, which is viewed positively by policy experts and has been utilized by energy companies for more than two decades, allows companies to divide up their income, taxes, and tax credits among their investors, saving them from paying a tax bill at the corporate level. Transmission / Electric Power Issues Policy seems to be shifting away from a model based on long distance transmission of renewable energy from remote locations to local centers in the Midwest to one more focused on benefit-sharing on a more direct basis. The Electric Transmission Customer Protection Act, co-sponsored by Sens. Wyden, Murkowski, Corker, Graham and Burr, could be the basis for consideration of electric transmission policy. This legislation was proposed in response to FERC Order No. 1000, which dramatically changes the planning and valuation process for transmission lines by more broadly spreading the allocation of costs for new transmission projects. Whereas the planning process used to only have to consider reliability and efficiency, it now also must consider various public policy objectives, which include state and federal laws that contain Renewable Portfolio Standards mandating a certain percentage of electricity come from renewable energy sources. Order No. 1000 gives FERC broad authority to spread the associated costs to customers outside the area immediately serviced by news transmission lines. The Electric Transmission Customer Protection Act would require FERC to use a “measureable reliability or economic benefit” standard when distributing transmission costs across state lines. Renewable Fuel Standard Reform More and more, interest groups ranging from oil refiners and gasoline marketers to chain restaurants and poultry groups are urging Congress to reform the Renewable Fuel Standard (“RFS”). The American Petroleum Institute has called on Congress to repeal the RFS entirely, calling it a “priority issue” in 2013, while other groups advocate reforms to facilitate the introduction of higher ethanol blends into gasoline. EPA recently rejected a request from several states to waive RFS volume obligations this year on account of a drought that struck much of the country in 2012. If such conditions persist throughout this year and lead to further waiver requests, this will add to the growing momentum favoring reform or repeal of the RFS. In the last Congress, Sen. Wyden floated legislation to replace EPA's RFS with a Low-Carbon Fuel Standard (“LCFS”) that would incentivize fuels with low greenhouse gas emissions. Although the RFS continues to receive criticism as a partial cause for boosting food prices and perpetuating a heavy reliance on corn-derived ethanol, an LCFS bill—which would also be subject to the Senate Environment and Public Works Committee's jurisdiction—could remain an uphill battle, as biofuels groups have vowed

8

Energy Policy Outlook—113th Congress to more strongly defend rather than work on measures to amend the RFS. Nuclear Waste Storage In a stance markedly different from that taken by his predecessor, Sen. Wyden has recently indicated that he would be open to moving nuclear waste from high-risk reactors to interim storage sites. If they came to fruition, such discussions could help revive efforts to address the nation’s nuclear waste management, in particular, by appeasing Sens. Murkowski, Lamar Alexander (R-TN) and Dianne Feinstein (D-CA), who had previously worked with Sen. Bingaman on a bill to implement recommendations from the Blue Ribbon Commission that was formed in 2009 to evaluate the nation’s handling of nuclear waste. While Sen. Bingaman had continuously sought to prohibit storing spent nuclear fuel at temporary storage sites until steps were taken to establish a permanent, long-term repository, a softening of that stance would free up the process that had become deadlocked and periodically inflamed by the long controversy over Yucca Mountain repository. Sen. Wyden also indicated a desire to explore various policy options based upon a separation of military- and civilian-spent fuel. Finally, the Obama Administration recently called for the creation of a permanent geologic repository by 2048 to store increasing amounts of nuclear waste. The Administration’s strategy calls for the creation of a pilot interim storage facility by 2021, a larger interim facility by 2025, and a final repository more than two decades later.

Conclusion Energy could finally emerge in the 113th Congress after being stymied over the last several years. Much of the early national dialogue will be focused on budget and tax issues, gun reform and potentially comprehensive immigration legislation. However, there is a potential for energy issues to play a major role in the 113th Congress, both in the context of the larger fiscal debate, and as stand-alone measures. The key issues to watch over the next several months will be whether and how Congress resolves the debt limit and budget debate, and progress on revenue-sharing legislation in the Senate ENR Committee. If those issues are dispensed with in a manner that does not create bad blood between the parties, the pieces could fall into place for energy legislation to be enacted in the 113th Congress. # # #

About the Authors

Senator J. Bennett Johnston* Through a strategic alliance between his firm, Johnston & Associates, and Steptoe, Senator Johnston provides key legislative and public policy advice to Steptoe clients. Senator Johnston served four terms in the US Senate representing the State of Louisiana and held numerous leadership positions during his tenure. He served as a member of the Senate Committee on Energy and Natural Resources from its creation and as its Chairman and Ranking Member for much of that time. He can be reached at [email protected].

N. Hunter Johnston A partner in the Washington office of Steptoe, Mr. Johnston is a member of the Government Affairs & Public Policy practice group and has represented clients in governmental affairs and legislative matters in Washington, DC for more than 25 years. He has extensive experience working with the US House of Representatives and the US Senate. He also retains substantive experience working in his native State of Louisiana, and he has a broad knowledge of Louisiana business and politics. Mr. Johnston can be reached at [email protected].

9