Author Archives Laura Arnold

So far, sources close to the talks said, the two sides are holding firm in their demands. The power companies want relief from the air pollution rules as a price of entry into negotiations if they are going to accept a mandatory carbon limit that won’t apply to other industries. The environmentalists are saying no.

While Senate staff are not in the room, a failure to reach agreement among this critical subset of interests may drive Reid to drop greenhouse gas caps altogether from the bill headed to the floor in less than two weeks.

Several key figures met Monday night at The Caucus Room restaurant to hash out a range of issues, from the distribution of valuable emissions allocations in a utility-only climate bill to the potential retirement of aging coal-fired power plants. But the talks ran aground over the air pollution rules.

At the table for industry: Duke Energy President and CEO Jim Rogers, Exelon Chairman and CEO John Rowe, Dominion Resources President and CEO Thomas Farrell, PNM Resources Chairman and CEO Jeff Sterba and Melissa Lavinson, senior director of federal affairs for San Francisco-based PG&E Corp. Environmental Defense Fund President Fred Krupp, Pew Center on Global Climate Change President Eileen Claussen, Dan Lashof, director of the Natural Resources Defense Council’s climate center, and Jason Grumet, president of the Bipartisan Policy Center, represented the environmental and non-governmental groups.

Sources familiar with the dinner said Rogers led the call for regulatory relief on a number of existing Clean Air Act programs dealing with sulfur dioxide, nitrogen oxide and mercury, including a new EPA rule proposed last week that deals with interstate pollution.

Duke and EDF hosted another round of talks on the climate and air pollution issues for several hours on Wednesday at the power company’s Washington offices, alongside officials from the Pew Center on Global Climate Change. Sources following the meeting were unsure if any agreements were reached.

Debate over the nexus between climate and air pollution dates back a decade, when Miller worked as a senior staffer for Reid and then-Sen. Jim Jeffords (I-Vt.) on the Environment and Public Works Committee. Key Senate Democrats and Republicans had been on the verge of agreement in early 2001 over legislation capping carbon dioxide and traditional air pollution emissions from power plants in exchange for breaks on a Clean Air Act provision that the Clinton administration had used in litigation against several companies (for allegedly prolonging the life of their aging plants without installing modern emission controls). But power companies walked after President George W. Bush reversed his campaign pledge to regulate carbon dioxide emissions.

A few years later, Bush’s Clear Skies initiative died in EPW after Republicans couldn’t persuade a simple majority to pass the bill that capped only traditional air pollutants. Critics, including then-Sen. Lincoln Chafee (R-R.I.), wanted the GOP-authored legislation to include carbon dioxide controls and also leave untouched several of the same existing Clean Air Act provisions.

Fast-forward to 2010, and industry officials insist that the power companies deserve a break, given the number of air regulations now on the books or soon to come. The Edison Electric Institute, the leading trade group for investor-owned utilities, and some of its member companies, including Duke and FPL Group, endorsed a climate bill released in May by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) that covered other industrial sectors, too, including major manufacturers and transportation. But EEI and the companies want a break if President Barack Obama and Reid follow through with their plans to focus just on power plants because they don’t have the votes for the broader bill.

“It’s like a baby trying to run before it can walk — you’ve got to be able to take the first step,” said Brian Wolff, senior vice president for communications at EEI. “This is about consumers who have to, at the end of the day, pay for this. The buck stops where? The consumers. The people who have to pay for this.”

EDF and NRDC officials declined comment on their closed-door talks with industry officials. But other environmentalists insist they don’t like the idea of any special relief for power companies.

“I’m sure people throw everything on the table,” said League of Conservation Voters President Gene Karpinski. “But we’ve made it damn clear ... that there are no trade-offs of any regulation of any [conventional] pollutants.”

EDF’s presence in the room has made some environmental groups uneasy, given the group’s reputation for cutting some unpopular deals on behalf of the environmental community during the debate surrounding the 1990 Clean Air Act.

“Kerry’s already said he’s already compromised a lot and is willing to compromise a lot more, which has some environmental groups worried,” said Tyson Slocum, an energy analyst with advocacy group Public Citizen.

“In the past, EDF has signaled its willingness to compromise on a large array of key issues in exchange for a larger goal — in this case, of a cap on carbon,” Slocum added. “There’s definitely debate within the environmental community about the degree to which other environmental groups are willing to compromise on other elements.”

The talks between the industry and environmental groups are expected to produce recommendations that Reid can fold into the bill headed to the floor. Other options already on the table include a controversial provision from Sen. Dick Lugar (R-Ind.) that would grant power plants exemptions from a range of existing environmental laws if utilities entered into a voluntary agreement to retire them by January 2018. Kerry and Lieberman punted on the issue by calling for a study on the air pollution rules.

And Sen. Tom Carper (D-Del.), along with six Republicans, is pushing legislation that would curtail the traditional air pollutants nitrogen oxide, sulfur dioxide and mercury without making any changes to other pieces of the Clean Air Act.

A Senate Democratic aide involved in the climate negotiations warned that the Clean Air Act requests from industry may be too much — and have little political payoff, anyway. EEI endorsed the Lieberman-Kerry bill but didn’t bring along any new Republican votes in the process.

“I’m a little worried we’re giving away the farm,” the staffer said, noting that should the bill not pass in 2010, the deal could come back to haunt Congress if it includes Clean Air Act carve-outs. “This is the marker for next year.”

Sen. Ben Cardin (D-Md.) told POLITICO on Wednesday that he’d oppose an industry-led effort to strip the EPA of its ability to deal with traditional air pollution.

“I’d not want to see any weakening of the authority they have today,” Cardin said. “It’s been a major tool for cleaning up our air.”

Meanwhile, each side in the private talks is prepared to accuse the other of bringing down the whole bill.

The environmental groups “are the key to any deal, not the utilities,” said Wolff, a former top aide to House Speaker Nancy Pelosi. “They hold all the cards.”

But an environmentalist tracking the process warned that the utility industry demands don’t bode well for the final vote, meaning the whole bill could unravel if the issue isn’t resolved in a clean way.

“The utility deal will only work if EEI strips EPA of their powers to [conduct] the fierce regulation they are doing in several sectors,” the source said. “This will put the votes of the liberal Democrats against the moderate Republicans. This is untenable.”

CORRECTION: An earlier version of this story incorrectly identified some of the participants at a meeting at The Caucus Room. The NRDC’s Frances Beinecke and David Hawkins were invited but did not attend. The following people did attend on behalf of environmental groups and NGOs: NRDC’s Dan Lashof, the Bipartisan Policy Center’s Jason Grumet and the Pew Center on Global Climate Change’s Eileen Claussen. PG&E’s Melissa Lavinson also attended.