The 2014 Midterm Election Results: Implications for Energy and Environment Policies

The 2014 midterm elections will have implications on a variety of issues across the country and throughout all levels of government. Many people will be analyzing the events and decisions that occurred during the campaign season. But looking forward, numerous energy and environmental issues will be decided during the next two years by the newly elected and re-elected politicians. Here is a brief outlook of possible energy and environment issues to be debated in Congress, state capitols, and public utility commissions.

Republicans will continue their control over the House of Representatives and also become the majority party in the Senate, as a result of gaining at least seven seats. Federal lawmakers will debate at least three energy issues as a result of this change in power.

First, there are now 61 senators in favor of the Keystone XL pipeline. Approving the pipeline is likely one of the GOP’s first agenda items when the new Congress begins its session.

Second, climate change deniers will control key Senate committees allowing deniers to be in positions that effect agencies and budgets. Lee Fang at Republic Report broke down how the Senate committees would likely change:

• Sen. Jim Inhofe (R-OK) controlling the Environment and Public Works Committee, which oversees the Environmental Protection Agency.
• Sen. Ted Cruz (R-TX) chairing the Subcommittee on Science and Space, which oversees the National Science Foundation and the White House office of Science and Technology Policy.
• Sen. Ron Johnson (R-WI) controlling Homeland Security and Governmental Reform Committee where he would “likely use his perch to harass scientists.”
• Sen. Mike Enzi (R-WY) chairing the Budget Committee and could reduce funding for agencies “attempting to regulate carbon pollution.”

Third, two vital clean-energy policies are potentially in jeopardy: the Production Tax Credit (PTC) and the Investment Tax Credit (ITC).

The PTC is used to incentivize the development of wind energy, but Congress failed to extend the PTC at the end of 2013. In 2014, a PTC extension could be approved as part of a broad tax extenders package during the lame-duck session.  The Senate Finance Committee has already passed a bill that extends the PTC for projects that start construction prior to the end of 2015. However, because Republicans know they control both chambers of Congress starting January 3, 2015, the GOP will likely delay any extenders package thereby creating uncertainty for the PTC. In fact, Rep. Boehner and Sen. McConnell write in The Wall Street Journal that the tax code will be one of their priorities next year.

The ITC provides a 30% tax credit for the cost of solar systems and has helped to drive growth in the solar energy industry. While it does not expire until the end of 2016 (when it would be reduced from 30% to 10%), Republicans will still control Congress and thus, determine if it gets extended.

Deutsche Bank recently released a report concluding that solar will reach grid parity (meaning it will be more cost effective than traditional electricity sources) in 47 states by 2016. But if the ITC were to drop to 10%, solar would only have grid parity in 36 states. This is why energy interests aligned with the Koch Brothers want to squash pro-solar policies like the ITC.

Solar Energy Industries Association (SEIA) President Rhone Resch announced a national campaign to extend the ITC beginning when the new Congress is sworn in on January 3, 2015. Resch said it will be an uphill battle fight but “as sure as World War I started in 1914, if the Koch Brothers and their allies come after solar, 2014 will be the beginning of World War III.”

More than two-thirds of the states held gubernatorial elections in 2014, which made the midterms important for state-level politics, specifically energy and environment policies. This is because the gridlock in Washington D.C. has made state capitols the place to enact, weaken, or even repeal energy and environment laws.

Furthermore, President Obama’s Clean Power Plan, which is to reduce carbon dioxide emissions by 30 percent by 2030, gives states flexibility in creating plans to reach their individual state targets. This will turn state legislatures into battlegrounds over the next two years. But, this is not the only topic that will be debated in state capitols across the country. There are other renewable energy policies and environmental laws that will be under attack from traditional energy interests at the state level during the next two years.

Renewable Energy Standards

Kansas’ Republican Governor Sam Brownback defeated Democratic challenger Paul Davis. While this specific gubernatorial election can be characterized as a referendum on Brownback’s aggressive tax cutting, the state’s renewable energy standard is also at stake over the next few years. Ari Phillips at ClimateProgress wrote, “the Koch brothers have devoted a significant amount of time and money into repealing the standard and as of late, Brownback has wavered in his support.” Brownback was once in favor of the state’s renewable energy standard but has now singled that he would like to “phase out” the law. Davis said he would veto any bill that repeals the standard. The introduction of a bill designed to repeal the standard seems inevitable in 2015.

Michigan’s Republican incumbent governor, Rick Snyder, defeated Democratic challenger Mark Schauer. Michigan utilities are on track to meet the 10% renewable energy standard by 2015, and Snyder has set a broad energy vision and is looking to have specific legislation in place in 2015. Snyder is looking to have legislation include renewable energy goals to be achieved by 2025. Snyder has also said he wants to reduce the state’s reliance on coal while boosting energy efficiency.

New Mexico’s Republican incumbent governor, Susana Martinez, won a second term and defeated Democratic challenger Gary King. Oil, gas, and other energy-related industries were Martinez’s largest financial backers according to The Santa Fe New Mexican. Martinez is also one of the governors who signed a letter sent to President Obama in September saying the EPA has overstepped its authority with the Clean Power Plan. King was in favor of the Clean Power Plan in addition to enhancing the 20% renewable energy standard to encourage the development of more renewable energy. Martinez will likely ignore any pathways to expand clean energy in the state.

Ohio’s Republican incumbent governor, John Kasich, defeated Democrat Edward FitzGerald. Kasich signed ALEC-influenced Senate Bill 310 in June making Ohio the first state in the country to freeze its renewable energy and energy-efficiency standards. A legislative committee has been established to review the standards and make recommendations. Only three members of this committee voted against SB 310. The remaining nine members voted in favor of the freeze, including ALEC members Sen. Balderson, Faber, and Seitz. The defeat of FitzGerald makes it now more of an uphill battle to reinstate the renewable energy and energy efficiency laws.

Solar Energy

Republican Governor Rick Scott held off a strong challenge from former governor Charlie Crist. Republicans also won super-majority control of the Florida House of Representatives and kept control of the Senate. Because Scott has a strong financial backing from the state’s utility companies (Florida Power & Light, Duke Energy and Tampa Electric), he will continue preventing solar energy from developing in the state since it threatens these companies’ bottom-line. Crist had released a plan that promised to develop a “thriving solar industry” in the state.

Scott also recently selected a close ally and former state Representative Jimmy Patronis and re-appointed Commissioner Julie Brown to serve on the Public Service Commission, which regulates public utilities in the state.

Nuclear Energy

Illinois Democrat Governor Pat Quinn lost his re-election bid to Republican challenger Bruce Rauner. But during their campaigning, Exelon, the country’s largest nuclear energy generator, made headlines by seeking $580 million from the state to keep its nuclear plants operating. The corporation is unable to compete against cheap renewable energy and natural gas in the wholesale electricity market, and is losing money.

Exelon argues it can help Illinois cut its carbon dioxide emissions to meet targets set by the EPA Clean Power Plan. Rauner and the state legislature will face an important decision on how to move forward with Exelon. Will Rauner seek to modify the state’s renewable energy standard to include nuclear, look to create or join a carbon trading system, or not act and let one of Illinois’ largest employers begin to shutdown expensive, uncompetitive nuclear plants?

Carbon Trading

Democrat challenger Tom Wolf defeated Pennsylvania Republican incumbent Governor Tom Corbett. Wolf will look to raise taxes on the natural gas industry in order to generate more state revenue, and he also has said to consider moving Pennsylvania into the Northeast’s carbon trading system, known as RGGI. Currently, only Texas and California release more carbon dioxide emissions. If Wolf succeeds in getting Pennsylvania into RGGI, it would allow the revenue generated from the sale of carbon permits to be invested in deploying more renewable energy in the state.

Fracking Regulations

Democrat incumbent governor John Hickenlooper narrowly defeated Republican Bob Beauprez. Hickenlooper irritated members of his party by not taking a tougher stance on fracking. He instead compromised with the state’s two largest operators, Anadarko Petroleum and Noble Energy, to avoid ballot initiatives extending the minimum setback for drilling rigs. It was reported the compromise occurred to avoid a “spending spree” by the oil and gas industry to increase Republican turnout and unseat Hickenlooper and Sen. Mark Udall.

As a result of the compromise, Hickenlooper created a task force that will make recommendations to the legislature next year regarding setbacks, and he had the Colorado Oil and Gas Conservation Commission drop its lawsuit against the city of Longmont over its 2012 ban on drilling. Beauprez is critical of the task force saying it is a solution “in search of a problem,” and regulation must stay as the state level. With Hickenlooper able to secure re-election it’s clear that his political calculations worked (despite Sen. Udall loosing his re-election bid), and hopefully strong safeguards will be established to protect communities from the negative impacts of fracking.

Offshore Drilling

The Obama Administration took a step closer in allowing oil and gas drilling to occur off the Mid-Atlantic and South Atlantic coasts by approving seismic testing in July. Additionally, the Interior Department’s Bureau of Ocean Energy Management (BOEM) is in the planning stages of preparing the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program. Comments have already come from Virginia, North Carolina, South Carolina, and Georgia in support of offshore drilling.

With the re-election of Republican Nathan Deal in Georgia and Republican Nikki Haley in South Carolina, it is now more likely the governors in this region will work together with BOEM in moving forward with a 2017-2022 leasing program in the Mid-Atlantic and South Atlantic coast. In fact, officials from these states are privately meeting with the oil and gas industry and the Koch-funded front groups to discuss offshore drilling with BOEM.

Attempting to Sell Public Lands

Democrat A.J. Balukoff was unsuccessful in his bid to defeat Idaho Republican incumbent Governor Butch Otter. On his campaign website Balukoff stated, “The last thing I want to see happen is our public lands get sold off to private interests that cut off public access to those lands that we all enjoy. The people who advocate taking over federal lands want to be able to extract natural resources, like timber.”

Idaho’s gubernatorial race in 2006 saw then-U.S. Rep. Otter withdraw support of federal legislation that proposed to sell off millions of acres of federal land in the West to help raise money to offset costs of Hurricane Katrina. However, Idaho continues to hold a series of hearings around the state on the topic of transferring public lands to the state as a result of 2013 legislation. The last meeting occurred on October 10, 2014.

The push to transfer public lands away from the federal government is unconstitutional and wastes taxpayer dollars on legal fees. In fact, The Spokesman-Review reports that outside legal fees for the Idaho committee holding the meetings and reviewing the issue has reached $61,375.

Solar Energy

According to unofficial election results from the Louisiana Secretary of State’s office, Forest Bradley-Wright has received 38.4% of the votes while Eric Skrmetta has received 36.9% in the Public Service Commission (PSC) election. Skrmetta and Bradley-Wright will now face each other in a run-off election, and if Bradley-Wright is declared the winner, the regulated utility companies in Louisiana lose.

Brian Holton Henderson, a renewable energy blogger, called this election, “The Most Important Race You’ve Never Heard of.” Why? Solar energy could dramatically increase in the state or continue to be restricted by utility companies depending on the outcome. Louisiana’s PSC has already been reviewing net metering. The PSC selected Louisiana State University economist David Dismukes of Acadian Consulting, who works for clients in the oil and gas industry, to study the issue.

Bradley-Wright told Henderson that the issue of solar energy represents, “a fundamentally American interest; it represents technological innovation, it represents opening new markets that improve peoples’ lives.”

In Arizona, Republicans Tom Forese and Doug Little defeated the Democrat challengers to fill two seats on the Arizona Corporation Commission. But this race was decided when Forese and Little defeated the team of Vernon Parker and Lucy Mason in the Republican primary. While Forese and Little support the state’s existing 15% by 2025 renewable energy standard, the two benefited from advertising purchased from the major utilities in the state (Arizona Public Service Co. and Tucson Electric Power Co.). Forese and Little, along with three other Republican commissioners, will now be regulating these companies and making decisions on any electricity rate hikes. Forese and Little also never criticized the effort by utilities to add fees for solar energy users during the campaign.

Fracking Restrictions

Denton became the first city in Texas to ban hydraulic fracturing, or fracking. Denton Mayor Chris Watts in a statement said, “The City Council is committed to defending the ordinance and will exercise the legal remedies that are available to us should the ordinance be challenged.” Texas Railroad Commissioner David Porter said he is confident that the ban will be overturned. Mike Lee of E&E Publishing as reported that the Texas Oil and Gas Association has already filed suit. Additionally, legislation can expected at the state level that would prohibit cities from enacting future bans.

In California, San Benito Country voters approved a ballot measure that outlaws fracking. Early election returns showed voters in Mendocino County also approved a fracking ban, but a similar measure in Santa Barbara County was defeated.  Oil and gas companies spent more than $7.6 million to help defeat the measure in Santa Barbara.

Citizens in Athens, Ohio also voted to establish a citizens’ bill of rights to restrict fracking in the city limits.  But voters in Gate Mills, Kent, and Youngstown rejected the citizens’ bill of rights.

Conservation Funding

In North Dakota, a ballot measure was defeated that would have dedicated several billions of dollars in oil and gas revenue for conservation projects over the next 25 years. The conservation projects included flood control infrastructure, and restoration of fish and wildlife habitats. If it had been approved, five percent of the state’s oil extraction tax revenue would have been placed in a trust and could not have been tapped until 2019.