INSIGHT: US mid-terms pose big changes for industry, energy

28 October 2010 16:43  [Source: ICIS news]

By Joe Kamalick

WASHINGTON (ICIS)--US mid-term elections next week could well bring a sea-change in the political landscape of Congress and mark a dramatic shift on a wide range of legislative, regulatory and policy issues facing chemical makers and industry in general.

On Tuesday next week, 2 November, all 435 members of the House of Representatives, 37 Senators and 37 state governors face voters in a mid-term election that many pollsters and commentators predict will be one of the most significant in decades.

Republicans are forecast to win back majority control of the House by picking up as many as 50 seats now held by Democrats, many of whom were swept into Congress on the coat tails of President Barack Obama in the 2008 national election.

Republicans need to gain 39 seats to get the House majority, and they appear poised to win that many and more.

The respected Cook Political Report this week revised its polling and outlook to predict a gain of as many as 60 House seats for the Republicans.

Conservative analyst John Gizzi predicts that Republicans will gain as many as 64 House seats.

And independent pollster Stuart Rothberg of the Rothberg Political Report said this week that “House Democrats face the potential of a political bloodbath the size of which we haven’t seen since the presidency of Franklin Delano Roosevelt”.

In the mid-term election of 1938 during Roosevelt’s second term as president, Democrats lost 71 seats in the House.

In the Senate, Republicans also are expected to make significant gains, although it appears very unlikely that they can seize 10 of the 11 Democrat seats that are up for re-election in order to gain a slim 51-vote majority in the 100-seat Senate.

Even without winning majority control of the Senate, the wave of anticipated Republican victories in Congress would bring fundamental changes in the House, where key committees would shift from Democrat control and agendas to markedly different Republican priorities.

Such a turnover in the House would not only kill off much Democrat-sponsored pending legislation but also challenge major policy initiatives undertaken by the Obama White House on the administrative level.

The chairmanship of the House Committee on Energy and Commerce would shift from its current leader, Congressman Henry Waxman of California, and most likely go to Congressman Fred Upton, Republican of Michigan.

Waxman was one of two principal authors (along with Massachusetts Democrat Edward Markey) of the massive, 1,400-page climate change bill that was only narrowly passed by the House last year on a strictly party-line vote. That bill failed to get traction in the Senate and was fiercely opposed by most chemical producers, other manufacturers, agricultural interests and business in general.

Upton and other Republican members of the energy panel opposed the Waxman-Markey climate change legislation and its cap-and-trade restrictions on US power generation and industrial energy use. Almost certainly they would quash any effort to move energy legislation that would include an arbitrary cap on carbon.

Under Upton’s leadership, the House Energy Committee would likely press for loan guarantees or other incentives to boost US use of nuclear power and allow greatly expanded production of domestic oil and natural gas reserves.

The Energy and Commerce Committee also is a venue for Democrat-sponsored legislation that would replace and significantly expand the Toxic Substances Control Act (TSCA), the principal federal statute governing control of chemicals in commerce.

That bill, HR-5820, The Toxic Chemicals Safety Act, is still pending before the Subcommittee on Commerce, Trade and Consumer Protection, where chemicals industry leaders testified in opposition to it in July this year.

While trade groups such as the American Chemistry Council (ACC) agree that the 34-year-old TSCA needs to be updated, they oppose what many in the industry regard as a Democrat effort to create a US version of the EU’s programme for the registration, evaluation and authorisation of chemicals (Reach).

With Republican control of the House, work on updating TSCA would continue next year, but a final bill is likely to sustain TSCA's longstanding risk-based approach to chemicals controls, rather than convert the US system to the precautionary principle underlying Reach.

In the House Committee on Natural Resources, ranking Republican Representative Doc Hastings of Washington State would become the new chairman, replacing current panel chief Nick Rahall, Democrat of West Virginia.

Hastings also opposed the Waxman-Markey climate change mandate, and he is one of many House Republicans (and some Democrats) who want to strip the Environmental Protection Agency (EPA) of its plan to impose its own sharp and costly limits on carbon emissions by US utilities and manufacturers.

Like many of his House and Senate Republican colleagues, Hastings advocates an “all of the above” energy policy, including renewables such as wind and solar farms, biofuels and geothermal - but also greatly expanded oil and gas drilling, clean coal technologies and nuclear power.

For the crucial and powerful House Appropriations Committee, there are three possible Republican candidates for the chairmanship. Regardless of which Republican takes the committee gavel, the panel under Republican command would be in position to have broad effect on policies that the White House and Democrats have been advancing for two years.

For example, under their “Pledge to America” policy agenda issued on 22 September, House and Senate Republicans promised that, if returned to majority control, they would “rein in the red tape factory in Washington, DC and require Congress to approve any new administration regulation that would harm job creation or the economy”.

In particular, the pledge document specifies that “we will require congressional approval of any new federal regulation that has an annual cost to our economy of $100m [€73m] or more”.

A few weeks after congressional Republicans issued their policy statement pledge, Congressman Joe Barton of Texas, now the ranking Republican on the Energy and Commerce Committee, sent a letter to EPA administrator Lisa Jackson asking her to identify costs for some 69 recent or proposed agency regulations under the Clean Air Act (CAA), each of which was or appeared to be well above the $100m threshold. 

In addition to plans by Hastings and others to strip EPA of its authority to regulate carbon dioxide and other greenhouse gases, the Appropriations Committee - which dictates how federal funds are spent - could simply vote to deny money to the agency to carry out its carbon emissions restrictions plans.

A Republican House majority also is expected to simply disband the Select Committee on Global Warming, which was chaired by climate bill co-author Markey and played a central role in advancing Democrat bills and policies on environmental and energy issues.

However, the likely Republican chairman of that committee, Jim Sensenbrenner of Wisconsin, has indicated that he might keep the panel in business but turn its focus to a broad investigation of what many Republicans regard as bogus climate science - and what Sensenbrenner himself termed science fascism.

At the House Committee on Homeland Security, current Chairman Bennie Thompson, Democrat of Mississippi, would be replaced by ranking Republican Peter King of New York. It was this committee that produced a new and much tougher bill to regulate antiterrorism security measures at US chemical plants, refineries and other chemical-related facilities deemed to be at high risk for attack by terrorists seeking to cause major off-site casualties.

That measure, The Chemical Facility Anti-Terrorism Act of 2009, was approved by the full House late last year but failed to advance in the Senate.

Broadly opposed by petrochemical, refining and other process industries, that bill would have expanded the existing four-year-old federal Chemical Facility Anti-Terrorism Standards (CFATS) with more stringent requirements, particularly giving federal regulators authority to order changes in chemical plant feedstocks, processes or even end products, to make facilities less attractive as targets.

House and Senate Republicans have generally favoured making the existing CFATS permanent with some additional provisions for security training, a position also supported by industry.

Overall, major gains by Republicans in both the House and Senate likely will lead to stalemate on a wide range of issues and make final action by Congress over the next two years on any major legislation extremely difficult.

Even if, as expected, Republicans fall short of gaining the Senate majority, they are likely to gain enough seats to make the party split in that chamber at or very close to 50-50.

Under Senate rules, it typically requires the votes of 60 senators to pass major or controversial legislation, which means that any bill with unanimous backing of Democrats would have to win support from at least ten Republicans, and vice versa.

With a Republican majority in the House and a gridlock party split in the Senate, chances are high that little substantive legislation will emerge from the 112th Congress that convenes in January.

For many in industry, that's not a bad thing.

($1 = €0.73)

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By: Joe Kamalick
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