Republican control of the U.S. House of Representatives in the incoming 112th Congress means the Obama administration likely will be unsuccessful in attempting again to prop up the budget with new taxes on the oil and gas industry.
Also, expect to see a whole slew of oversight committee hearings that likely will call on the Interior Department to explain the slow pace of well permitting in the Gulf of Mexico (GOM), and on the Environmental Protection Agency (EPA) to account for some of its recent actions greenhouse gas actions affecting energy.
Beyond that it was not clear how a Republican House and a Democratic Senate and administration would produce any legislation of note, given the overwhelming hostility between the parties and in the electorate in recent years that has ruled out compromise. An election count on Wednesday showed the Republicans with 240 House seats to 184 for Democrats with 11 undecided. Democrats were guaranteed to hold onto control and at least 50 of the 100 Senate seats with a handful of close races still outstanding.
The Republican-led House will be looking for ways to take its projected 60-seat gain in Tuesday's election out for a spin. It can be expected to "aggressively initiate oversight hearings on the EPA, particularly centering on its greenhouse gas regulatory structure," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA).
He pointed out that both the House Energy and Commerce Committee and the Transportation and Infrastructure Committee have jurisdiction over the EPA activities. Also, the House Oversight and Government Reform Committee can hold hearings on any subject, and very well could jump into the EPA fray.
The House Committee on Natural Resources could be inquiring into the slow pace of the resumption of drilling activities in the GOM more than six months after the massive oil spill that caused the administration to shut down deepwater drilling.
The oversight investigations of EPA will garner support generally from business and power generation interests, not to mention coal producers. The agency has threatened to go forward with its own rulemakings on greenhouse gas emissions if Congress failed to pass serious emissions restrictions such as proposed cap-and-trade legislation.
Since that legislation faltered in the current Congress even with Democratic majorities in both houses, it has been effectively been pronounced dead in the divided 112th Congress. "I would anticipate that a broad array of greenhouse gas issues would be among the areas they [the oversight committees] would pursue," Fuller said. That could include the 'tailoring' rule or a rule regulating emissions from stationary sources, or the greenhouse gas inventory.
As to what actions the committees could take, that is more problematic, given the Republican-Democrat split in the Congress and the administration. "They can shine the light" on questionable items or question whether the EPA is following the law. "They can try to restructure EPA authority or restrict funding. Other avenues are possible," Fuller said, "but they all require both houses to act and the president to sign legislation."
Questions about the EPA's ongoing study of hydraulic fracturing also could come up. There could be some oversight aimed at "assuring that study is being done fairly and scientifically," Fuller said. He pointed out that the study's mandate is to determine if hydraulic fracturing is being effectively regulated. "If the study is done well, I believe it will show that fracturing is being effectively regulated in its current form. The states have been regulating it for over 50 years." The EPA does not now have the authority to regulate drilling, but an adverse report could impact state activities and spark litigation.
Fuller said the 112th Congress is even less likely than its predecessor to embrace the administration's proposals for increased taxes on the oil and gas industry. Even with Democratic majorities in both houses, that administration proposal failed to become reality.
As to the leadership of the key House Energy and Commerce Committee, Fuller said it's too soon to predict who the new Republican chairman will be. Joe Barton, R-TX, currently the ranking Republican, has used up his allotted three terms as chairman and ranking member. He has indicated, however, he might seek a waiver that would allow him to serve. Also campaigning for chairman is Fred Upton, R-MI, and Cliff Stearns, R-FL, also has been mentioned.
It will be up to the party caucus to determine the leadership question as part of its allocations of members to various committees. Since there will be a lame duck session, the Republicans may start work on committee assignments, but it could slide over into next year and the start of the next Congress, Fuller said.
On the Senate side, Sen. Lisa Murkowski, R-AK, has held her own as an independent write-in candidate against the Tea Party's Republican Joe Miller, but the final results possibly won't be known for weeks. Write-in votes represented 41% of the vote with 99% of precincts reporting. Miller had 34% and Democrat Scott McAdams had 24%. Not all the write-ins will be for Murkowski, however, since there were 160 write-in candidates. Those votes must be separated and absentee ballots counted before there is a winner. If Murkowski is successful, she would be the first U.S. Senate candidate to win as a write-in since Strom Thurmond did it in 1954.
If she does win, Murkowski has said she will caucus with the Republican Party, but it is not clear whether she will be able to retain her ranking member status on the Senate Energy Committee. She has been a leader in the Senate on oil and gas issues.
Meanwhile, the election of Republican Tom Corbett as governor of Pennsylvania may or may not mean there will be a severance tax in the state on natural gas. Corbett's "no new taxes" pledge may not be proof against the pressure of a huge and growing budget deficit. And every Pennsylvania governor in the last 40 years has raised taxes in some form. It simply is to be determined what taxes are going to help fund the deficit.
Regardless of how the tax issue goes, with both houses of the state legislature emerging from the election under Republican control, the natural gas industry may get some of the concessions it had unsuccessfully looked for in the last split legislature. Also, the state Department of Environmental Protection is likely to get a new Corbett-appointed director.
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