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Transcript: "E2 Live Post-Election Panel: What Next for Energy and Environmental Policy? TeleSalon"

Tuesday, November 13, 2012 (12:30 PM - 1:30 PM Eastern)
As part of the E2 Washington Forum on November 13, we are hosting a live webinar discussion with three leading analysts of American politics to examine what the election outcomes mean for energy and environmental policy. Did the voters provide a signal on energy and climate? How will energy issues play into the deficit debate?

Panelists include:
William Galston
senior fellow at Brookings Institution and former policy advisor to President Clinton
Chris Frates,
correspondent for National Journal, covering the intersection between money, politics and policy
Steven Mufson
, reporter for the Washington Post, covering energy and other financial news

JUDITH ALBERT: Hi, I'd like to welcome you to today's E2 TeleSalon, which is a post-election panel on what next for energy and environmental policy. This is a special event for us, because we are holding this part of our E2 Washington forum, so we have a number of E2 members here in the room, together with our guest panelists, and we also have a number of E2 members on the phone. So we welcome you all. For those of you who are on the phone who have questions, we'd ask you to submit them by email to my colleague Ying at yli@nrdc.org, and we will try to incorporate your questions in with the questions from the floor.

As I said, this -- we're very pleased to be hosting a live panel discussion today with three leading Washington political analysts to better understand what the election results mean for energy and environmental policy. The E2 members who are in the room with us at the forum will be meeting tomorrow with lawmakers on Capitol Hill to discuss some of these issues as the lame duck session of Congress gets under way, but our objective here is also to take a somewhat longer view as the implications are going to be lasting for the next several years.

Let me introduce our speakers. Bill Galston is a senior fellow at Brooking Institution; he holds the Ezra Zilkha chair and runs the governance studies program at Brookings. He was a policy advisor to President Clinton and is an expert on domestic policy, political campaigns and elections. Chris Frates is a correspondent for National Journal covering the intersection of money, politics and policy. In short, he covers Congress and lobbyists. He was previously with Politico, and before that, the Denver Post. Steve Mufson covers energy and other financial news for the Washington Post. He has a long journalism career, starting with the Wall Street Journal in the 1980s, and has been at the Post since 1989, where he has served as chief economic policy writer, Beijing correspondent and diplomatic correspondent.

Our moderator for this panel is Bob Deans, NRDC's associate director of communications in Washington, D.C. Bob spent nearly 30 years as a newspaper (reporter ?), including eight years covering the White House, and is former president of the White House Correspondents' Association. Again, let me remind those of you on the phone that you can submit questions to yli@nrdc.org.

And now, let me turn the mic over to Bob.

BOB DEANS: Thanks, Judy, and I think what we're going to do is just -- I think all of y'all had some sort of general thoughts. We're really trying to mine down on two kind of themes here today. One is, what did the voters tell us about where they might like to see changes in our energy and environmental policy, and two would be, what did this election leave us with in terms of the ability of the two parties to work together in some new ways, maybe finding common ground in some areas we haven't had before. And I think just as a -- as a prelude to that, we would want to note the following, that while there was a lot said about the fact that climate and energy weren't center stage in any of the debates or the campaigning, what was said did show us two starkly different candidates in a way that I don't think we've seen around energy and climate ever.

We had one candidate who said climate change is a joke, we had another who said it was a threat. We had one whose energy policy was fundamentally "drill, baby, drill," and another who said we've got to invest in domestic sources but also renewables and efficiency, and we need to do it in a way that protects our future. So we had two starkly different visions of our climate and energy future, and overwhelmingly, the voters said, we're with the guy who sees climate as a threat, who wants to do something about it. That's what they said in Virginia, that's what they said in Florida, in Ohio, in Colorado, in Wisconsin, in every single battleground state around the country.

So we start with a question of, if this isn't a mandate, is it at least a historic opportunity for change? And against that context, we'd be grateful to hear your thoughts, and let's start with you, Dr. Galston.

WILLIAM GALSTON: Well, intriguing questions, all. And let me apologize in advance both face-to-face and virtually -- because of an engagement in Philadelphia later this afternoon, I'm going to have to bug out of the conversation at about 1:10. So let me -- let me keep -- let me keep my remarks brief. I just want to make five points very quickly. First of all, "overwhelmingly" is not the adverb I would choose to describe the results of this election. It was a very close election, and it has been a very, very long time since an incumbent was re-elected with a margin smaller than his initial election victory.

The second -- the -- going along with that, this election, unlike elections that have confirmed mandates in the past, has left us with divided government, right? If you look at big, mandate-confirming elections like Reagan in '84, Roosevelt in '36, McKinley in -- McKinley in 1900, they have all -- they have all focused not -- they've all featured not only very large and expanded margins for the incumbent, but also unified government with which the incumbent could work. That is not the case in this election; we have divided government, and the president claims his majority, but you might call this election James Madison's revenge. The John Boehner claims his majority with equal conviction, and so these two different American majorities are now going to have to negotiate, and the president cannot simply run roughshod over the House of Representatives or vice versa.

Obviously, the president has some executive authority, and he's already demonstrated that he's prepared to use it in in this area, but there are limits to executive authority. And so to the extent that we're talking about legislation, we're also talking about negotiation across a gap of starkly different visions in the area of energy and environment, as you pointed out, as well as a lot -- as well as a lot of other things.

The second point I want to make is that there is a threshold issue now confronting the president, the Congress and the country, which will have to be addressed if not fully resolved before anything else can happen. And I'm referring, of course, to this complex of fiscal issues. That is job one. It's not job one necessarily because either party would choose to make it job one; it's job one because the -- you know, because the calendar of expiring legislation known collectively as the fiscal cliff forces action of some sort or, in the case of inaction, will force actual changes in the legislative status quo. That's just -- that's just a fact.

Now, my final three points address energy more specifically. Point number one of these three: The development of the technology of fracking is a real game changer. You know, it is enormously significant.

I'm sure you all read the reports this morning or yesterday about this new international -- you know, international study, you know, suggesting an enormous gain in fossil fuel productive capacity as the result -- as the result of fracking. An estimate -- an estimate of increased production, jobs, economic growth, you know, ability to export, et cetera, et cetera. This new technological fact with economic consequences is going to exert, in my judgment, a profound gravitational force on the conversation in the Congress of the United States. I think there's no way -- there's no way around that, especially in a period where the question on the table is, where is the next area of growth in the American economy going to be? From the standpoint of many legislators, providentially, an answer has appeared almost out of the blue. It will not be easy for the Congress of the United States to turn its back on this opportunity. I think that's simply a fact.

Second of three points under this energy-specific heading: Energy, as I'm -- and the environment, as I'm sure you know, are issues that tend to divide not along starkly partisan or ideological lines, but along regional and sectoral lines, and it is very instructive to look at the list of senators up for re-election in 2014, and you'll notice that many of them come from, you know, energy sector states. They will be responsive to those concerns. Not exclusively, but they will be responsive to those concerns, and that's something to bear in mind. And finally -- and I don't say this with any pleasure, but I think it's a fact -- events in the past four years -- both, you know -- you know, of legislation, of implementation and also of, you know, economic events -- have raised some new questions about strategies of subsidy for clean energy. That's another fact. And that strategy is now more on the defensive than it was when Barack Obama took office, in my judgment, not only for fiscal reasons but because some of the assumptions on which past systems of support and subsidy have been based haven't panned out very well. I just read a report yesterday on global overcapacity in the solar panel industry, which is phenomenally large.

So those are the initial points that I wanted to put on the table for the consideration of this group.

MR. DEANS: Excellent.


STEVE MUFSON: Well, thanks, Bob. Just to start with your first question, which is what does the election tell us, and what are the voters trying to say? And I think that voters are really mostly thinking about other things. If you look at the results in Ohio, very clearly the auto bailout was the key issue. Sixty percent of the people said that was a good idea; they voted 3-to-1 for Obama. Twenty-two percent of voters said they came from union households; they went 3-to-2 for Obama, while the rest of the electorate split almost evenly. So certainly if you're looking at Ohio, which was part of the big fight about coal and whether or not the administration was trying to kill coal, I'm not sure that the election actually tells you that much.

I interviewed people afterwards. Of course the American Petroleum Institute says the election was a victory because Obama's talking about all-of-the-above and talks about oil and gas first. And you talk to the American Wind Energy Association -- they said it was a great victory for them. (Laughter.) So it's a little -- a little hard to say.

But I do think that the -- that the way that people talked about the climate issue changed during the campaign. And the impression that it was not being talked about at all, I think, was really true until the Republican convention. I think that the president was happy to let this issue slide into the background a little bit and saw a threat being from people who were going to suggest that he was anti- job creation. But then I think Romney, by mocking the issue of climate change during the convention with his line that the -- that the president's busy worrying about the level of the oceans while I'm worried about your job, I think really forced the issue. And the president responded by reiterating his positions on climate change.

And I think that the conversation about it really changed after that, and there was a clear difference. And I think that it probably made -- it might have made some change, especially with the Hurricane Sandy that came along at the end and Bloomberg's endorsement. So it's possible that the president may have picked up a little -- a little ground there at the end.

In terms of where we go from here and what possibilities there might be for common ground, of course the divided Congress limits the scope of action. So I think that what my colleague Julia Eilperin and I can discern from reporting we did -- that what we expect will be some combination of efforts to use the executive power and regulatory power the administration has and possibly some opportunistic things on the tax side might come up, even though I think the administration's not really talking about those sorts of things right now.

Just to start with the regulatory issues, EPA obviously needs to make more decisions that will affect the fate of coal plants. Some of these have been slow in coming but might still be on the way. They're planning to finish a study by the end of next year -- also something that they don't seem to have rushed into too much -- on fracking guidelines. I think that's something they could do. I think there are guidelines that could be issued that wouldn't stop fracking but might conceivably make it a little tidier -- (scattered laughter) -- and maybe a bit more consistent. I think New York state -- if I were -- well, I should say if -- the one possibility, it seems to me, is that the governor might try to at least protect the New York City watershed, even if he allows fracking to go ahead in other parts of the state.

I think the administration's going to make a push on the issue of energy efficiency. That's a little tricky, because building regulations are mostly state and local prerogatives, and therefore it seems as though -- that the administration's thinking about ways it could use the Clean Air Act to set some sort of baseline federal standards in the building efficiency area. And I think that'll be interesting to look at.

In terms of opportunistic things that might come up, to me I think the carbon tax would seem like the kind of thing that might come up. I don't think it's going to come up at the beginning of these -- of these talks about the fiscal cliff because it has a lot of political obstacles. But I can't help thinking that if they get to a figure that's half a trillion dollars short of what they want to get to, and they're not sure what to do, it seems to me it's the kind of thing that could come up on the table.

Obviously it has a lot of Republican support, although most Republican support -- supporters tend to say that the money should be -- have in the past said the money should be given back to taxpayers, either through lower Social Security taxes, which would offset the regressivity of the tax, or by lowering corporate income taxes. But perhaps, you know, if it's part of a package, and that package includes some elements that might be more progressive, then -- or if it's a choice between raising corporate income taxes or having them higher -- personal income taxes higher than they would be otherwise, a carbon tax might become more attractive, I think, at the late stages. But we'll have to see.

And then on the wind tax credit, we just had 28 governors -- bipartisan group endorse renewing the wind tax credit. We obviously have a lot of people lobbying against it, including Exelon. And I think it's possible that it could get extended but with a phaseout period. There's a lot of talk about that, and so we'll have to see where that goes. But there are, I think, even some people in the oil industry who aren't necessarily opposed to renewing it but might try and negotiate some sort of phaseout.

So that's kind of what we're expecting on the -- on the energy and environment front going forward.

MR. DEANS: Great. Thanks, Steve.


CHRIS FRATES: Well, thank you all for having me. I appreciate your time. I will try to keep this short so we can get to some questions. I agree almost with everything our panelists have said so far. I don't think that this election told us a lot about energy other than that we still remain divided as a country.

And I was going to focus my remarks on the fiscal cliff because I think you have to look at what Congress is consumed with and how energy could play a role in that. And I would have said that, you know, it wasn't going to have a very big role up until this morning.

I just came from the Chamber of Commerce, where Tom Donohue, the president, and Bruce Josten, the chief lobbyist there, sat down with a few reporters and said that they are pushing a third bucket in the fiscal cliff; that there is of course taxes, there's entitlements, and now they feel like energy development should be that third -- that third bucket. I was a little bit late here because I was filing a piece about that.

And I think that's very interesting because as you guys know, the chamber has big resources. They are clearly pushing for more energy development, more drilling, more opening of public lands, the kinds of things that make environmentalists nervous -- is the kind of thing, I think, that the chamber is going to push it. And they're pushing it in terms of the best way to create jobs, the best way to create more revenues through taxes, through royalties, and that if you open up more energy development in the United States, then you ease the burden on having to cut taxes or having to cut entitlements. You give politicians more choice, and that I believe that they are taking this very seriously and will push very hard to insert energy into that fiscal cliff debate. So that is something that, you know, happened just a few hours ago -- (laughter) -- that I thought was, you know, pretty noteworthy.

When you look at the fiscal cliff, you know, some folks have talked about, you know, the carbon tax. I certainly think that could be something that comes up again, if only to get batted around. I'm not sure the political class is quite there yet. But to talk about it and to have Grover Norquist say that if you were to, you know, replace a corporate income tax with a -- and offset that with a carbon tax, it wouldn't violate his pledge -- (laughter) -- so he's given -- he's given Republicans a little bit of leeway there.

MR. MUFSON: It'd be one hell of a carbon tax.

MR. FRATES (?): It would be. (Laughs.) So I think that's interesting because it does signal to Republicans that you can at least have this conversation without getting, you know, slammed by the Wednesday club.

I think corporate tax reform is going to be something to watch as well. That whole debate will include, you know, the biggest -- some of the biggest companies in the country, of course, are energy companies, oil and gas, coal. How are those subsidies dealt with? How are their tax rates dealt with? How are their capital investments dealt with? Those are all things that will keep that sector very well occupied. When you -- and when you talk about corporate tax reform, of course you talk about oil subsides. I think API's going to have its hands full fighting back against Obama's push to repeal some of the oil and gas subsidies. I think it's going to -- I think it's going to happen. I think API's ready for it to happen. And they're looking for offsets somewhere else in corporate tax reform so that they don't end up net losers. Where else can they play where they could offset some of those subsides with better tax treatment, whether it's for offshore profits, if they can repatriate, or other ways to kind of make sure that their balance evens out? I think they'll be very occupied with that.

Renewable energy subsidies, I think, suffer the same fate as oil subsides. I don't think they're very -- in a time where revenue is tight, you're going to see a lot of renewable energy. Despite the president's commitment to it, I think it's difficult to continue to push those subsides, to make them permanent. You know, each year we have a fight over extending them. I think it will be tough to make them permanent, in this environment in particular. So, you know, those are some of the -- those are some of the kind of thoughts that I have just generally, and I'll stop now to open it up to questions.

MR. DEANS: Yeah, before we go around the table, I'll just exercise the moderator's prerogative and ask one that -- I try to tie together some themes I've been hearing from you all. And of course, Bill, you've been -- you sat at the White House after midterm elections when there's a lot of finger pointing going around and reassessment, soul searching, if you will, within a party. I'm wondering if you all are seeing any indication within the Republican Party that people may say, you know, the right took us too far down the direction of the climate deniers, voting against safeguards that the public supports, that the right took us too far in that direction, and to be successful going forward, we're going to need to reassess, move back a little bit more toward the center.

And if you see any indication of that, could you -- could you give us one area where you think there might be some potential where the Republicans would say, for example, fracking's a game changer? Might the Republicans say, OK, let's put some national safeguards in place to make it more reliable, more tidy, more consistent? Might we see some agreement on a carbon tax or some give there that would be cast as fiscal success, or might we see something on -- something else on climate like going along with carbon rules for existing power plants, something like that -- just real quickly?

MR. GALSTON: Well, all those things are possibilities, and I think thoughtful Republicans are surely thinking some of those thoughts. However, I think it's important not to underestimate the extent to which the Republican House majority, which lost very few seats, believes that it represents not THE American majority, but AN American majority, and I don't think it's in a deeply self-reflective or repentant mood. The part of the party that is -- the part of the party that is responsible for the national message, for the development a more viable slate of candidates for 2016, et cetera, that's where the rethinking is going to occur. But the Republican Party, after the 2010 census and during redistricting, adopted what I think is a very smart strategy. They decided not to try to overreach and maximize the number of seats, but rather to safeguard the seats that currently constitute their majority. They did that, and you see one of the fine fruits of that in the results of this election -- a reasonably strong Democratic tide, which the House Republican majority resisted almost entirely. So they have built themselves a bastion, and I think that they will use that bastion to represent their coalition.

And compromise will be hard-won in the House of Representatives, because I don't -- you know, I don't think that most of the people there think of themselves as moderates. Most of them don't think of themselves as coming from swing districts. Almost all of them think that the dangers are on the right rather than the center of the left in the form of primary challenges. So I would expect some tonal and verbal adjustments. But whether that's going to spill over into policy is anybody's guess.

I personally favor a carbon tax. I'm encouraged by the amount of discussion of the carbon tax that's going -- that's going on across party lines. But I -- you know, I agree with Chris's judgment, that I don't think the political climate has yet ripened to the point where that can easily make its way onto the front burner with the policy agenda.

MR. MUFSON: Yeah, just to clarify, on the carbon tax, I'm not putting any bets on it, but I do think that it's -- you know, you could imagine a late situation where they might just reach for something --

MR. GALSTON: Yes, you can.

MR. MUFSON: -- that they wouldn't ordinarily reach for --

MR. GALSTON: You can, indeed.

MR. MUFSON: -- and they wouldn't ordinarily reach for. (Laughter.)

MR. GALSTON: And I -- you know, I am not sitting here saying it's impossible. I'm saying it's an uphill climb.

MR. MUFSON: Yeah. Yeah. I'll agree with that.

MR. GALSTON: All right.

MR. MUFSON: But -- and then on as far as the Republican Party, I agree with Bill about the -- about the mood in the House. I think that's problematic for the next Republican presidential candidate because one of the things we found in our poll -- in the poll we took over the summer is that 60 percent or so, I think it was, of Republicans believe climate change is a problem and that, you know, mankind has something to do with it and we should do something about it. So it's a real problem, I think, for -- at the presidential level.

MR. GALSTON: I agree with you.

MR. MUFSON: And then you also asked about -- oh, there was one other thing I wanted to mention which I had forgotten before -- and again, this is in the executive authority category -- is the Keystone pipeline decision's coming, and I think there is -- a lot of people assumed that that would be approved because of the way that Obama postponed it last year, which he -- you know, during which he left the door wide open to reconsidering it and approving it and -- but now that the election's happened it seems like a lot of environmental groups are gearing up and trying to block that. And I think there are a lot of people within his environmental circle who are also opposed to it, so it'll be very interesting to see how he deals with that decision. That will be something fairly early that will set some sort of tone, and of course, will, you know, drive people in Congress crazy one way or the other -- (inaudible).

MR. DEANS: Chris, the National Journal today, Coral Davenport, had an excellent piece about that. Could you talk a little bit about the pressures that the president's under on Keystone?

MR. FRATES: Certainly. I think -- I think he's under pressure from both ways. And I agree with Steve that in terms of a -- the conventional wisdom seemed to be that he would sign that after the election, but if you remember back the conventional wisdom in 2011 was that he would sign it at the end of 2011, which he did not. And I wouldn't be surprised if we see the president use Keystone as a bargaining chip, perhaps maybe in the fiscal cliff. I mean, it's something that he knows, you know, could create jobs, be -- could become a win-win. He knows Republicans want it very badly. What could he get from Republicans in terms of maybe cutting less entitlement, what kinds of offsets, what do you get? So I think there's certainly a chance there that we have not seen the end of the Keystone pipeline in a very politicized and important debate.

The -- and I agree with Bill in terms of the House. I certainly think it is a Republican bastion. It's where the center of the ideas are going to come from in a national debate, and I don't see that they're rethinking their climate policy. But I think the other thing to watch is the Senate. And the Democrats in the Senate who are conservative Democrats who are up for re-election in 2014 are also going to have a real hard time voting for anything climate wise that seems too far out of step of the conservatives. And you know, Mitch McConnell knows this, and I wouldn't doubt if you start to see some -- you know, if you see climate votes in the fiscal cliff or down the road here after we get past the cliff that conservative Democrats won't be able to take and you won't be able to get 60 on. So I think that's another place where not just is there -- there are no rethinking, I think, among house Republicans about, you know, the dangers of climate change -- certainly they're still focused on the economic impact of some of those policies and will continue, I think, to have the upper hand.

MR. DEANS: That's great.

Did you want to make -- (inaudible)?

MR. MUFSON: But I wanted to make one other point about what you were saying earlier about the Chamber of Commerce proposing that. In the context of fiscal negot (ph) talks, I think you meant that some sort of more liberal attitude toward drilling would provide benefits. And although they may provide some economic benefits, you can't score those for, you know -- so for in terms of the fiscal debate, I don't really think that's going to have much of an impact.

MR. FRATES: Well, to your point, Donahue (sp) made that point. You can't score through CBO or through JEC. However, you know, he then rattled off, you know, a number of studies that would show, you know, that the chamber's done, that outside groups have done, that would show the economic benefit of that. And I think that, while certainly, it makes it tougher in that debate, because you're not getting the referee to come down on your side --

MR. MUFSON: Studies all paid for by the Chamber of Commerce.

MR. FRATES: -- right, sure, by and large -- but I think -- I think it's a mistake to believe that by the chamber putting it on the table, despite it being tough, you know, they have a lot of clout, particularly in the House. And they have a very big megaphone there with some of the key leaders. So I wouldn't doubt if you start to hear some of those arguments, now that the chamber has put it out, from some of the Republican leaders in Congress.

MR. DEANS: And just for those of us outside the beltway, scoring is how we put a number -- (laughter) -- we put a number on a policy proposal for the purpose of reaching some particular fiscal goal, like, for example, a balanced budget. So if you can't put a number on it, it doesn't have a whole lot of credibility when push comes to shove.

I want to introduce my colleague, director of Federal Communications, Ed Chen -- longtime correspondent, well-known here in Washington, former president of White House Correspondent Association -- got a question there.

Q: Yes, quick one for, Bill: You touched on it a little bit earlier, and I ask you because I know you have lots of former Clinton White House colleagues that are still in the White House. What are you feeling or sensing about where the president is, looking at his legacy in terms of our issues, and given that there may be a lot of the things we've talked about that are probably unlikely to go through Congress that the president can do and might want to do?

MR. DEANS: Just for the callers, repeating the question is, what might we say about the president viewing his legacy, and where might energy and environmental issues fit into that, and how might he exercise executive authority to do what he might not be able to get -- (inaudible) -- Congress go along with?

MR. GALSTON: Well, it's clear that generically, this ensemble of issues that you're gathered to discuss is near and dear to the president's heart. That became very apparent in his first presidential election, and I cannot imagine that he's changed his mind. He made some very hardheaded decisions after the failure of the grand bargain talks and after the debt ceiling fiasco, that he was going to spend the next 15 months talking only about those issues that would contribute to his re-election. And he and his team showed a great deal of message and substantive discipline during those 15 months. It was one of the most, you know, disciplined attempts I know of, based on my reading of American history, to use the White House, you know, as the fulcrum and the leader, for a successful re-election campaign.

And the president also knows that unless he gets his arms around this fiscal challenge, that every -- you know, every other piece of his agenda is going to be backed up and frozen. And I don't think he's going to do anything on energy and environment that would -- that would weaken his chances of getting an acceptable agreement, both in the short term and in the longer term, on the fiscal issues that really have threatened to stall everything else, and have stalled everything else for a year and a half now.

MR. MUFSON: So the Keystone study's going to take a long time. (Laughter.)

MR. GALSTON: Well -- (inaudible) -- I actually, you know, I actually think -- I mean, the president himself said in the -- in the immediate wake of the election that growth in jobs is really at the center of his concerns. It must be. It's at the center of public concerns. If you ask the American people, they care a lot more about growth in jobs than they do about deficit reduction, and it's only the way the legislative calendar is structured that's forcing this early consideration of the fiscal cliff and the fiscal challenge. And that being the case -- and this is not a prediction -- I think he's going to have a hard time early in his second term turning down something that both the opposition party and the American people believe would be a source of jobs and economic opportunity. I think he will think twice before turning down Keystone. Can't prove that, but that's my hunch.

Q: What could he get in return if you were advising?

MR. GALSTON: I'm not sure. I'm not -- well, look, I mean, this generic idea of using it as a bargaining chip sounds attractive, but you know, if I were an opposition spinner, you know, I would just ask some very pointed questions. You know, why is the president using jobs as a bargaining chip to get, you know, so that he could raise your taxes, OK? I mean, that's a -- (scattered laughter) -- you know, I'm sorry.

That's the way the game is played around here. So I -- you know -- they may try to use it, as you suggest. I don't think that's going to be a successful tactic.

MR. DEANS: Who has a question around the table? Yes, sir.

Q: Following on, you know, the administration, we've heard, you know, there's changes in -- somebody in State, et cetera, that aren't going to be as directly involved in these, in energy and environment. But how about Interior, Energy, the EPA, do you expect any changes in the, you know, leadership of those agencies? And what does that mean to us?

MR. FRATES: I don't -- Interior, in particular, I don't -- as an old Denver Post guy, I don't get the sense that Ken Salazar is going to go anywhere. I mean, he likes that position a lot. I wouldn't be surprised if the president asked him to stay. He dealt with BP very effectively. And we've already seen some moves from Interior. I mean, just on Friday after the election, you know, they limited oil shale on Western public lands. So you're already kind of seeing, you know, some of those regulations that were bottled up. You know, NJ had a good story a couple of weeks about the number of regulations that had been bottled up, both in EPA and Interior, and then across some health care and some of these other areas as well. And I think you'll start to see those kind of unwind, and I would imagine -- at least in Interior, I expect that, you know, should the president ask Secretary Salazar to stay, he would. He would, in fact, stay.

MR. MUFSON: Yeah, I'm not -- I'm not sure. I mean, I think we'll see a change at DOE, and I think we might see a change at EPA. I'm not -- but it doesn't have to be immediate. I don't think that it's conceived as a problem necessarily. But it may just be that Lisa Jackson wants to do something else. I don't see this as a reflection on the administration's relationship with her necessarily. But I agree with Ken -- I could imagine Salazar staying at Interior.

But -- and I -- I think though, in some ways, it won't make that much difference, because I think the president is actually very, in his own way, involved in this issue, and I think a lot of people thought that Chu was going to end up leaving earlier. And I never really felt that way myself, because I felt that he reflected a lot of what the president actually believes in, and that -- and that they would not rush to replace him.

MR. GALSTON: Yeah, I agree with -- I agree with all of that. Let me add just one thought.

When -- you know, when the president, back in the fall of 2011, and the White House sort of announced this, we-can't-wait agenda, that was designed to use executive authority to accomplish the things that the legislative process clearly would not, there were a lot of skeptics, and I was one of them. But by aggressively using his executive administrative regulatory authority, and in effect daring anyone to get in his way, and nobody really did, he moved a lot of issues, including some issues in your area. And I think that episode left a good taste in the White House's mouth. And I would not be surprised to see a renewed push to accomplish, through the administrative executive regulatory mechanisms, things that seem remote hopes as legislative items. And --

MR. MUFSON: Which two or three items do you think would be at the top of that list of the regulatory (measures ?)?

MR. GALSTON: Oh, I think there's -- you know, I don't know for sure, but I've got to believe that there's going to be a lot of action around fracking, around coal, things of that sort, that the aspects -- the aspects of the -- of the energy agenda that the environmental community regards as the dirtiest. I think those are the major targets of opportunity. That's -- but this is not my area. That's just a top-down guess.

And -- now just one more -- one more thought and then I have to run out the door, unfortunately because I'm enjoying this more than I'm about to enjoy my train ride. (Laughter.) The -- you know, and that is that if we can see this emerging opportunity, then so can all the political actors in town. And there are devices that the Congress can use to slow the regulatory process, or even try to stop it in its tracks. And the more the White House pushes on that, the more pushback they're going to get from their adversaries in Congress. So it's not going to be an easy ride just because it's not legislative.

MR. DEANS: And it comes at a price.

MR. GALSTON: It comes at a price. And the price will not diminish with time.

MR. DEANS: Yes, please. Thanks so much, Bill, for coming here. Safe travels.

MR. GALSTON: Thank you.

Q: Along that price thought, as long as you've got the crystal balls out, you talked about the inability due to conservative Democrats being up in 2014 of getting to 60. What are the chances of some kind of filibuster reform and would that change the equation? Might we end up with things going to conference and, you know, move towards solutions that incorporate some energy and environment?

MR. FRATES: I think -- that's a great question. And I think -- you know, we saw Harry Reid come out already and talk about filibuster reform. You know, Senator Udall's been banging at that drum for some time now. I think that the majority party is always happy to talk about filibuster reform -- (laughter) -- because it would make things, you know, much easier for them. And I still think it's going to be very difficult.

To change the rules you need more than 60. You need -- I can't remember, it's like a supermajority to change the Senate rules. And I think that's going to be very, very tough, particularly when you're looking at Mitch McConnell, you know, understanding that that's one of his only stopgaps, is to filibuster. And you know, added to that, the idea that even Democrats are conservative about changing too much and creating a House in the Senate, because one day they know they will also be back in the minority. And so you got to be careful kind of what you undo when you're in power.

MR. MUFSON: I -- that's exactly what I would say.

MS. ALBERT: One of the areas where there's been a lot of support for clean energy -- albeit not big dollars but certain a real, leading effort -- has come out of the Department of Defense. Clearly, the Defense budget has been a campaign issue. It is going to be key to the whole sequestration issue. Do you see the Department of Defense continuing to be sort of a leading light in this area and support, because there has been criticism from Congress about some of those initiatives, even from people who are quite conservative?

MR. MUFSON: Well, I think that you probably won't see big appropriations coming in this area, even in Defense which is probably the last place that you would see them. But I think that there are already projects in progress that will still keep going throughout the second term. I mean, you know, the stimulus bill was just an astonishing amount of money for this whole area.

And the grants and loans programs were probably two or three times the size of DOE's annual budget, all appropriated in one fell swoop. It's just not -- you know, we'll never see anything close to that again. So in the military, I think it might go on a little bit longer because they might be able to make some national security arguments, but I still think the big money is -- the big authorizations are behind us. Some of the spending might still be dribbling out.

MR. FRATES: And just to add to that, I agree with what Steve said. And even with the cuts to defense, they're still going to have one of the biggest budgets around. And so I think there would still be a spot there for some of the renewables because you can make a national security argument about it. You know, many military guys have made, you know, national security arguments about renewable energy. So I think while it will be a smaller scale, it still is a place with a lot of money. It's -- even a small amount to renewables is going to be more than you're going to get out of, you know, like a DOE, for instance.

MR. MUFSON: Aren't they committed to this rooftop -- the military housing? I think they've already committed to that.

MS. ALBERT: Yeah, it's signed up. Yes.

MR. MUFSON: So that's going to take time to actually carry out.

Q: But that's privatized. SolarCity -- there was no appropriation for that. That is solely on the private side of the equation.

Q: It's also contractual arrangements.

MR. DEANS: What about biofuels?

MR. FRATES: I mean, I think they fall into the same -- kind of the same rubric as solar and wind. I just don't think there's going to be as many subsidies for them anymore. And I think all of those areas are looking at cuts and smaller, you know, subsidies and R&D grants than they had been before. And I think biofuels falls into that.

You know, Republicans like to joke that, you know, it -- it's kind of a -- you know, they'll privately tell you, you know, they don't believe you can -- you can fuel the economy on crap. You know, and like they're feeding it to us with this biofuels piece. And I think the House Republicans continue to kind of feel that way about it.

MR. MUFSON: Well, I think the big issue is, you know, we have these mandates still for cellulosic ethanol that obviously aren't going to hit it, so that's going to be one issue, how to deal with that. And then because -- you know, if the gasoline motor fuel consumption market has peaked and may even go down a little bit, then you've got the whole issue about the -- how you mix the ethanol in to get up to the right percentages and the blend wall and all that sort of thing. So these issues -- some of these issues are still hanging around; will have to be resolved at some point.

MR. DEANS: In the Defense Department's biofuels program, is there an argument to be made in terms of jobs or is that in the category of -- where the authorizations are already there an that's locked in? Or is it vulnerable in sequestration?

MR. MUFSON: I'm not sure, to tell you the truth. I wouldn't -- I wouldn't think you're going to see new appropriations in that area.


MR. MUFSON: There was the -- I mean, they were doing it on -- doing something on jet fuel I think. That was probably the -- but I don't see a lot of happening on that.

MR. DEANS: Let me -- let me shift gears real quick. Are there questions around here? If you have one just give me the high sign. But I wanted to go -- Steve did a big take out of fracking, it was a great piece actually, in the summer. And we talked about the report that came out yesterday that talked about the United States becoming the next Saudi Arabia, from shale oil deposits, over the next 15 years.

What do you think realistically Congress could do to protect communities, farms, ranchers, the environment from the dangers of fracking? And is there an argument to be made that the -- by going along with that, the industry gets out ahead of the opposition that it's seen in some three dozen states around the country to this, based on fear and the possibility of a kind of a -- of a -- of a Macondo well-style disaster in the fracking fields that could set the industry back for years.

MR. MUFSON: Right. Well, I guess I don't see -- a Macondo-sized accident, I think, would be hard, because the whole nature of fracking is that you're drilling thousands and thousands of these new wells -- thousands of these wells with relatively small production rates. So an aquifer -- there's just not an aquifer -- I mean, aside from the Ogallala -- that's anywhere near the size of the Gulf of Mexico. So it's -- the risk is in a different category.

And I think that to do something that -- in the regulatory side, has to be really focused on a couple of things. One is water. And there are three water issues. One is whether or not you're contaminating it from below, which seems least likely. One is whether you're contaminating aquifers as you drill through it, which seems like something that would happen pretty -- at least often enough to make it a political issue. And the third being how you dispose of the water once it's back on top, which to me seems like the biggest issue.

It's the problem with whether or not you have enough disposal wells, whether or not people are just dumping them in the river on the side, very hard to regulate. And I think there is a lot of desire to regulate it though. I think it would be a popular thing to do. And one of the interesting thing about Ohio and the politics of Ohio is that, although people are in favor of fracking, they're also in favor of environmental regulations about it. So the governor there has been somewhat circumspect in his criticism of regulating fracking because it's as -- it's as popular as the idea of fracking itself. So I do think we'll see regulations focusing on that.

And then there's just the whole issue of the physical nature of this development. You know, you need so many truckloads of water to do the frack job. There are a lot of people who feel their land's been violated. Saw a lot of that in the summer in this trip I took through the Great Plains -- people very unhappy about eminent domain and their -- and their land being claimed for the pipeline. So you see that a little bit less on the fracking side because people don't have to sign away their mineral rights, but some people don't even realize their mineral rights have been signed away before.

So I think something about the pace of development might be -- and how you go about that development -- might be something we see. I mean, certainly if you go up to North Dakota, it's pretty chaotic up there. And there's been a lot of gas flaring because they're drilling -- doing shale oil up there. So that seems a bit out of control too. So that's something that seems like -- could be regulated as well. In North Dakota, as most of you might know, if it were an independent country, it would be the fifth-largest gas-flaring nation in the world, right after Russia, Iraq, Nigeria and -- I can't remember the fourth; maybe Saudi Arabia?

MR. DEANS: Chris.

Q: What does that mean, gas flaring? Fires -- (inaudible)?

MR. MUFSON: It means they're -- that when they're -- when they're -- when they're drilling for oil shale, they find associated gas. Since the price of gas is so cheap and they don't have the pipeline infrastructure to capture it, they just burn it off.

Q: Burn it.

MR. MUFSON: And you want to burn it off rather than just let it release because methane's a, what, 11 times or so worse greenhouse gas than carbon dioxide. So you just burn it.

MR. FRATES: And Bob, one of the things that I thought was so interesting about the fracking debate is how involved Halliburton has been in that debate and how closely they have lined with the -- Obama and the State Department in terms of exporting this technology. And that's just a very, like, kind of mind-blowing development, as far as I can tell, with Halliburton working so closely with a Democratic administration to put forward and to spread technologies that many critics would say aren't kind of fully tested yet across the globe because the State Department feels like this is a, you know, "raise all boats" kind of technology; you know, that if countries can find their own energy, then they're going to be more stable, and there'll be less strife across the world.

But you know, to Steve's point that this is a technology that isn't -- you know, isn't fully tested, and the technology is so far ahead of where members are and what their understanding of the technology is -- that I think it's certainly a situation where we don't see serious efforts to regulate for several more years, because the knowledge of kind of how it works among the political class is so new and hasn't been explained. And there's a lot of, you know, kind of surface understanding but not a lot about kind of what do the tests show, what do the studies show, because we're still a little bit out, you know, in the field with some of those tests and scientific study.

MR. MUFSON: But I'm just saying -- (coughs) -- excuse me -- as a political issue, this isn't going away because even if you assume an extremely low problem rate on the -- on the number of wells that are drilled -- let's say � of 1 percent of wells are either not drilled properly or the water's not disposed of properly because of some rogue individual or contractor -- but � of 1 percent would still be a lot of -- a lot of incidents. So I think as a strictly -- and whether or not you think that's environmentally important, it's certainly going to be politically important. So I think the administration really has to, in some ways, do something to show that it cares about the standards in this area.

MR. DEANS: (Inaudible) -- yes, sir.

Q: We've talked about a few things. But are there other sort of low-hanging fruit for dealing with climate change that either could happen, you know, at the administration level or, you know, with the current makeup of Congress, in addition to the things we've talked about?

MR. : Go ahead.

MR. : OK.

MR. MUFSON: Sorry, just repeating one more time?

Q: Sure. Are there low-hanging fruit in the area of climate change, opportunities for action given the current political environment?

MR. MUFSON: I think the -- I mean, this is -- this isn't even something they really necessarily need to take much action on. But obviously the biggest thing happening is on the closure of coal plants. And I mean, I suppose someday we'll have an election where people will say -- charge -- when president -- (inaudible) -- trying to kill coal, and he'll say, yes, actually that's what I'm trying to do -- because in a way, that is the -- that is the larger plan, it seems to me, for the administration or for people who care about greenhouse gases. And that's where the biggest impact and headway could be made.

But most of that's being made by cheap natural gas, and which is one reason I think they might hesitate to issue any kind of regulations that would significantly impede the development of shale gas. I think the administration definitely wants to have the shale gas developed for environmental reasons, for economic reasons. But -- so that's why I do think we'll see some kind of guidelines, but not -- nothing that will be -- will stop this, because the closure of coal plants is the biggest savings on the greenhouse gas front going on now, I think. And especially, you know, we're not going to expand any nuclear power plants anytime soon, so --

MR. DEANS: OK, I get to ask the last question, which is this. We've kind of been warned today of three big things, I think. One is that there's a risk of overplaying our hand because of a absence of a clear mandate out of this election. There are fiscal realities that are going to constrain what we're able to do as a nation toward some of these energy and environmental goals we've been discussing. And finally, we are looking at a large amount of oil and gas that's going to be coming from shale one way or another. And the question really is how we do it.

But I want to try and end on a hopeful note, if I can. And I'm going to start with you, Chris, because you had a recent piece where some folks were telling you this could be, 2013, more bipartisan cooperation than we've seen in 15 years because of some of these election realities. And you've reported on the speaker of the House perhaps backing away from the attempt to kill "Obamacare," for example.

I just want to ask this, what can Americans who do care about the environmental agenda, who do care about having a clean energy future, who do care about doing something about climate change -- what can Americans around the country be doing in the next six months or the next three months to try and help advance this agenda?

MR. FRATES: Well, I think it's what Americans can always do, which is get in touch with their representatives. And you know, certainly you can -- you can email, you can call. But you know, when you talk to members, you know, there's nothing more powerful than when you show up at their town halls or when you meet them at the fair and you -- and you kind of continue to talk to them about this issue and try to keep it on the front burner.

I think there is some hopefulness that there would be some bipartisanship. I take the election results that are kind of a status quo, and look at them as hopeful because everybody's in the same seat and there's not a lot of jockeying and not a lot of power or boundary testing. We've been down this road before. People understand the different power dynamics between the Senate, the House and the White House. And they know that there's some serious work to get done.

And I would say the biggest challenge for the environmental community and people who care about climate change is reasserting yourselves and putting it on the agenda. And the way to do that right now is through jobs and to talk about renewable energy jobs, to talk about green jobs. That's going to be the best way in, I think, when you're trying to get attention from lawmakers.

And I don't see that diminishing, at least in 2013, because even when we pass this fiscal cliff, you know, we're going to continue to talk about tax reform, entitlement reforms and creating jobs. And I think if you can't put yourself into one of those buckets, it's going to be very hard to get heard.

MR. DEANS: Steve.

MR. MUFSON: I think that the whole prominence of the Keystone debate shows that there are a lot that people can do to make something an issue that you wouldn't have thought could ever become such a big issue. So that would be kind of the -- on the optimistic end of things, if you're thinking about activism. But I think that -- this isn't so much a question of advice -- but just, you know, when -- I think when we think about where we are on the energy issue today it's very different from where we were four years ago.

That the -- or four years ago I think we were all thinking about energy in terms of scarcity. Now we're thinking about it in terms, maybe not of abundance -- and I think some people are carried away with what we've -- you know, the amount of oil and gas that's been found -- but it's certainly not the level of scarcity we were talking about four years ago. And where prices will be, I think, also is something that's very unpredictable. We're at very low natural gas prices. That seems certain to be around for quite some time.

And the price of oil is something that I think is very hard to predict out four years from now. So I think that when thinking about the issues, it's probably important to think about just how much has changed in the last four years and, looking ahead, was -- you know, not taking for granted that where we are now is going to continue on a straight line but could still change, perhaps on the oil front, in some -- in some really significant ways, and to test whatever it is your strategy is against where we might be and how things might look four years from now or even a couple years from now.

And I think the consequence of those low natural gas prices is very powerful in terms of the economy. There are a lot of high-energy intensive industries that are coming back to the United States from abroad, more so than you ever would have guessed possible. And that's going to create a certain constituency that needs to be taken into account somehow.

MR. FRATES: And just quickly, to piggyback on your point, Steve, of how things could shift, the debate over natural gas exporting will also have an effect on price, depending on kind of where Congress and regulators come down on that, which could change again very quickly. So I agree with your point that, you know, we could be looking at a very different game should a couple pieces move. Yeah.

MR. DEANS: Thanks, guys. I'm going to turn it to Judy for the last word.

MS. ALBERT: Well, I really want to thank all of you. This has been a fascinating session. We have promised to close it at 1:30, but we could go on for a good while longer. I think it's tremendous background for the delegates who are going to be going out tomorrow. I think it's -- you've introduce a note of realism, but there is also the note that there still are things we can do.

We actually have -- we're having a transcript made of the recordings, which we will be posting. And Bob will be seeing that it also gets -- we get some media coverage on it, because we think these are important conversations to be having. So that for member who were not able to hear every word on the recording today, or that we had a number of members who dialed in, you will be able to read about it.

And thank you, again, very, very much.

MR. FRATES: Thank you.

MR. MUFSON: Thanks. (Applause.)

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