The trio of senators working to develop compromise climate change legislation released the first details of their proposal in meetings with business and environmental groups on March 17 and 19.  Sen. Joseph Lieberman (I-CT) who – along with Republican Lindsey Graham of South Carolina and Democrat John Kerry of Massachusetts – has been working to develop a bill that can garner enough votes to get through the Senate, had promised to show a bill to his colleagues in March. Although it was not clear at presstime if they would present a full bill prior to the Easter recess, the three promised to present an eight-page summary to colleagues in that timeframe.

According to participants in the briefings, the plan would bring electric utilities under a cap and trade plan in 2012. Other manufacturing plants would have until 2016 to comply with the limits set in the bill. The plan calls for half of the money from federal emissions credits to be returned to consumers to cover increased energy costs.

To appease businesses, the plan mandates that the Environmental Protection Agency and individual states would be prohibited from regulating greenhouse gas emissions, the caps would apply only to sources that emit at least 25,000 tons of greenhouse gases, and there would be a price ceiling on the emissions allowances that sources would need for emitting greenhouse gases. The ceiling would be indexed to inflation.

Midwestern Democrats – led by Sherrod Brown of Ohio – have been fighting to make sure manufacturers have enough lead time before being covered under a carbon cap. For example, Carl Levin (D-MI) has been asking for at least a decade.

Details of the plan first began leaking out following a March 2 briefing for Democratic senators. The plan would also cover the transportation sector which would be covered by a carbon tax with taxes being used to fund alternative energy technology research. The fee – which would apply to automobiles and aircraft –would be collected at the refinery level. In comments to reporters, Lieberman acknowledge that the plan would result in increased costs at the gas pump. It is not clear if such a tax would be politically palatable in an election year. Congress typically has shied away from gasoline tax increases – particularly in election years. 

The Kerry-Graham-Lieberman compromise would also include incentives for increased oil and gas drilling and nuclear power, as well as carbon capture and storage provisions similar to those proposed in S. 1733 – the bill approved last year by the Senate Environment & Public Works Committee. It would most likely be combined with S. 1492, the bill approved last June by the Senate Energy Committee.

President Obama continued to push completion of energy legislation March 9 when he hosted a bipartisan group of senators along with several Cabinet officials to discuss Senate efforts to craft a compromise bill. Those attending included not only Sens. Lieberman, Graham and Kerry, but also a dozen others, including prominent Republicans such as Richard Lugar of Indiana, the senior Republican on the Foreign Relations Committee and Lisa Murkowski of Alaska, the senior Republican on the Energy Committee.

Meanwhile, Sen. Murkowski continued to refine her effort to block the Environmental Protection Agency from regulating greenhouse gases under the Clean Air Act. She has been pushing a plan (S.J. Res. 26) that would use the 1996 Congressional Review Act to stop the EPA. The Act allows opponents to vote down a regulation with a simple majority of 51 votes instead of the 60 usually needed to overcome a filibuster threat. Although she has gotten the support of several key Democrats, Sen. Murkowski appears unable to get the 51 votes needed to prevail on the floor. In addition, her resolution has no chance of making it through the House or being signed by the President. Under the Act, she has only until mid-April or May to bring her resolution to a vote.

—Brent S. Franzel, principal, Cardinal Point Partners, LLC

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