The midterm elections are now behind us (minus the yet-to-be-decided Senate races in Louisiana, as well as, several House races in Arizona, Louisiana, California and New York) and it is clear that Republicans won big victories in what many are viewing as a “wave election.”
In the Senate, Republicans took the majority, picking up 7 seats that were previously held by Democrats, giving the GOP 52 Senate seats in the 114th Congress. Republicans won in Alaska., Montana, South Dakota, West Virginia, Iowa, North Carolina, Arkansas and Colorado. Democrats were able to hold off strong challenges in Virginia, where it took 3 days to finalized the 16,000-vote victory by incumbent Mark Warner who was almost surprised by former White House/RNC official Ed Gillespie and in New Hampshire, where former Senator Scott Brown challenged incumbent Senator Jeanne Shaheen. Only a run off in Louisiana remains for December 6th between incumbent Mary Landrieu and challenger Bill Cassidy.
In the House of Representatives, Republicans added at least ten seats to their existing majority, moving it to nearly 243 seats depending on the undecided races. One key note: former GM lobbyist Debbie Dingell won the seat of husband John Dingell, keeping the Dingell name in that seat for every Congress since 1933…that’s the 72nd Congress or 81 years.
There were big wins in State Capitals for many Republicans closely–fought incumbent wins in Florida, Michigan, Maine and Wisconsin. They also won big surprising victories in blue states of Illinois, Massachusetts and Maryland. The only big pick up for Democrats was in Pennsylvania, where Tom Wolf swamped incumbent Tom Corbett despite the State Legislature going overwhelmingly Republican.
So what does the change mean for Congress? With both chambers in Republican control, expect far more oversight of key Administration initiatives than we have seen in the past. Most notably, we expect much of that oversight to occur in the energy, the environment and immigration policy arenas. In addition, with Mitch McConnell now leading the Senate instead of Harry Reid, many experts see a return to a more traditional appropriations process, regular order on nominations and the prospects for real negotiations between the White House and Congress on key policy initiatives. In that vein, it is likely the President will be using his veto pen much more in the last two years of his Presidency.
As far as specific issues in Congress, in the new session in 2015, we expect the first order of business will be a bill to finalize the approval of the Keystone XL pipeline. In fact, the House and Senate have already started that ball this week with votes in the House and Senate. Whether it is separate legislative item or an attachment to must-pass legislation, the issues enjoys wide bipartisan majority in support and its passage is virtual certainty. Less certain is whether the President, buoyed by aggressive environmental activists will sign it or veto.
It remains to be seen what legislative amendments and/or riders will be advanced to curtail the scope and speed of the Clean Power Plan, but it is likely one or more of these provisions will reach the floor of both chambers. Points of focus for States and Republican legislators include: the interim targets for emissions reductions states must meet by 2020, the impact the Clean Power Plan is likely to have on electrical reliability and its enforceability in light of widespread opposition from numerous governors. The outcomes in a number of gubernatorial races will also be felt in the coming years because the success or failure of the Clean Power Plan is highly dependent on the States. The net effect probably amplifies the chorus of opposition to implementation of the plan and other EPA rules.
It is likely that the volume obligations and the credits program under the Federal Renewable Fuel Standard, the ethanol mandate, will be subject to greater scrutiny and perhaps legislative reform in the new Congress. Further oversight is likely on ozone, regional haze, coal ash, and the waters of the United States as well.
The U.S. offshore energy industry is grappling with a sharp cyclical downturn due to falling global oil prices and a surge of output from new domestic sources. Concerns over the depth of the President’s commitment to an “all of the above” energy policy have today taken a backseat to more pragmatic questions involving the scope of offshore tracts coming online for development and the evolving extent of the Interior Department’s regulatory reach. Here look for push back on the administration’s recent enthusiasm for designating new national monuments, as well as for lawmakers to make a legislative push into opening up more offshore areas for energy development – areas traditionally governed by the Interior’s five-year Outer Continental Shelf (OCS) leasing plans.
Policies favoring renewable energy will likely face headwinds in the next Congressional session. Republicans in Congress have often taken the position that the federal government shouldn’t “pick winners and losers” in the energy markets or gamble taxpayer dollars on renewable-energy loans to companies with programs like federal loan guarantees, and several have proposed slashing funding for renewable energy programs. Just a day after the election, a collection of conservative and anti-wind groups sent a letter urging Speaker Boehner and Senate Minority Leader McConnell to reject any attempt to revive the wind Production Tax Credit, specifically in any tax extenders package in the lame-duck Congressional session.
Finally, US law and regulations relating to crude oil exports date back to the 1970s, but in this new domestic shale-fueled boom, policymakers and industry stakeholders are taking a closer look at the possibilities to export energy resources. The new Congress will need to consider the many facets of this issue, including its effect on refiners, domestic gasoline prices, and shipping.
The election changes in Washington will have a dramatic impact on politics and policy over the next two years. Buckle Up!
Frank Maisano is a senior principal in government relations and strategic communications at Bracewell and Giulliani.