Methane Rule Repeal Hits Snag in Senate Over Ethanol

by Jennifer A Dlouhy and Ari Natter (Bloomberg Markets) Midwest Republicans didn’t get policy change in omnibus; Lawmakers now withholding support for methane rule repeal -- A top oil industry priority on Capitol Hill may fall victim to an unrelated dispute over ethanol.

At stake is an Interior Department rule forcing energy companies to curb emissions of methane escaping from wells and pipelines on public land. Senate Republican leaders say they are close to getting the 51 votes they need to overturn that Obama-era regulation using expedited repeal procedures under the Congressional Review Act.

But now, with a deadline about a week away, that campaign is on the verge of capsizing.

Four Midwest Republicans, including Senators Chuck Grassley of Iowa and John Thune of South Dakota, told Senate leaders the price for their votes for the methane measure is a change in ethanol policy, according to people familiar with the talks who spoke anonymously about the negotiations. The lawmakers demanded the measure -- which would free up use of higher blends of ethanol -- be included in the $1.1 trillion omnibus spending bill set to advance this week. Spokesmen for Grassley and Thune did not return emailed requests for comment.

Still, the regulatory repeal may not be dead yet: Ethanol supporters are now asking Republican leaders for a commitment to put the ethanol provision on a must-pass bill later, according to one person familiar with the discussions. It’s not clear Republican leaders would accept this offer. Some oil companies oppose the change because it could translate to greater demand for ethanol, a competitor.

Colorado Senator Cory Gardner told Bloomberg BNA that his vote remains in play as he hears from environmental supporters of the methane limits and industry supporters of rolling them back. He is reluctant to do anything that might jeopardize Colorado’s own methane limits, he said.

The Interior Department methane rule, which applies only on public land, aims to discourage the practice of venting and flaring natural gas at oil wells. READ MORE and MORE (Politico's Morning Energy 1) and MORE (Politico's Morning Energy 2) and MORE (Politico's Morning Energy 3)

Excerpt from Politico's Morning Energy 1: Fighting for the waiver are Grassley, Thune, and Sens. Deb Fischer and Joni Ernst, according to lobbyists tracking the fight. Fischer declined to say whether she was involved in the behind-the-scenes deal-making when ME caught her in the Capitol last night. "I would just say I've got a great bill on the [waiver] and it's important and it should be addressed," she said. Sen. John Barrasso , the EPW chairman who has been leading the charge on the methane CRA, pointedly declined to comment multiple times on whether he'd been involved in the waiver discussions. But other Republicans didn't see why the issue should bog down one of the last opportunities they have to nullify Obama-era rules: "It's something we should straighten out, but I don't know why that should be a problem as far as the vote we're going to have on the CRA," Sen. John Hoeven told reporters. READ MORE

Excerpt from Politico's Morning Energy 2: EPA Administrator Scott Pruitt may have opened a path for Senate Republicans to appease a small bloc of their caucus seeking a year-round waiver to sell 15 percent ethanol fuel and thereby boost the chamber's odds of repealing of an Obama-era methane regulation, Pro's Eric Wolff reports . "I very much hope we can get there, but it's a matter of whether the statute permits it or not," Pruitt told the National Association of Farm Broadcasting. There has been dispute within the agency and even among biofuels advocates over whether the law allows EPA to grant such a waiver, or if Congress must alter the Clean Air Act. But the promise of doing so might get the bloc of corn-state Republicans, led by Chuck Grassley , on board with using a Congressional Review Act resolution to nullify a BLM rule targeting methane emissions from oil and gas drilling on public lands. It's worth noting that another group of four undecided senators - Rob Portman, Cory Gardner, Heidi Heitkamp and Dean Heller - would likely not be won over on that alone.

Cornyn projects CRA confidence: But Senate Majority Whip John Cornyn voiced optimism the chamber would vote on the measure next week and said he'd locked down adequate support to ensure its passage. "I know there are some people who wanted this ethanol vapor thing in the omnibus and that wasn't included, but I'm optimistic we'll get the vote" on methane, the Texas Republican told ME. John Thune, one of the CRA holdouts pushing the ethanol waiver, said the issue remained active: "We don't have any resolution on it yet." READ MORE

Excerpt from Politico's Morning Energy 3: Time's running out for the Senate to nullify an Obama-era methane regulation but lawmakers left town for the week no closer to a deal on an ethanol waiver that's needed to secure the support of a small bloc of corn-state Republicans. Sens. Chuck Grassley and John Thune said they'd been unable to date to reach an agreement with colleagues for a year-round waiver to sell 15 percent ethanol fuel. Options being mulled include including the waiver in future must-pass legislation or having EPA attempt grant it administratively, but Grassley in particular seemed decidedly cool to the idea of relying on EPA, despite Administrator Scott Pruitt floated that as a possibility Wednesday. "If he wants to affect this thing, he should start that process yesterday," Grassley told reporters. "We're not buying a pig in a poke."

Backers of the Congressional Review Act challenge to BLM's rule targeting methane emissions from oil and gas operations on public lands continue to say they hope to vote next week, but Senate Majority John Cornyn sounded less confident Thursday than he had previously. "I want to pass it, but we're still working on the votes," Cornyn told reporters. "There are some collateral issues that have come up.... We're not there yet." And resolving the ethanol waiver issue still doesn't resolve the matter of at least four other senators - Rob Portman (R-Ohio), Cory Gardner (R-Colo.), Dean Heller (R-Nev.) and Heidi Heitkamp (D-N.D.) - publicly undecided on the challenge. (Vice President Mike Pence might be needed to break a tie). Meanwhile, the Western Values Project urged senators to "stand up for folks on the ground out West and across America, not corporate interests and backroom Koch lobbyists" by rejecting the CRA. READ MORE