Repairing a Frayed Connection

Posted September 18, 2014 at 11:44am

Federal energy regulators trying to implement the Obama administration’s ambitious energy and climate agenda have found plenty of hostility in Washington during the past few years.

Budget pressures, a never-ending stream of criticism from some business interests and a rocky relationship with congressional Republicans forced rulemakers into a permanent defensive crouch after President Barack Obama took office in 2009. GOP electoral gains have only exacerbated their problems.

The political atmosphere, though, may be changing for the Energy Department as Secretary Ernest J. Moniz enters his second year in office. The former MIT physicist with the floppy gray hair has juggled seemingly incongruous roles as chief spokesman for the administration’s climate strategy as well as a defender of the very fossil fuels that are warming the atmosphere. His political savvy and candor have gained him respect among even some Republicans, though critics still scoff at the administration’s professed support for coal, crude and natural gas.

Moniz inherited a department with self-inflicted troubles. DOE’s budget got a two-year, $35 billion boost from the 2009 economic stimulus law, but Republican opponents had a field day when California solar panel maker Solyndra filed for bankruptcy after receiving a half-billion-dollar DOE loan guarantee under the law. The affair became a persistent headache for an administration anxious to prove that the stimulus was working, and it soured relations between Congress and Energy Secretary Steven Chu, who stepped down last year.

Moniz has worked overtime to repair ties with Capitol Hill since breezing through his Senate confirmation in May 2013. Solyndra may be old news at this point, but Moniz’s warmer relationship with lawmakers is still no small feat. DOE remains in the middle of a host of tough policy issues including climate change, natural gas exports and nuclear waste disposal. All affect regions differently and therefore have multiple constituencies on Capitol Hill.

Straddling the Issues

To the chagrin of environmentalists, the administration’s approach to energy includes fealty to fossil fuels, pleasing industry and oil-state politicians. GOP critics, meanwhile, argue that Obama’s landmark Climate Action Plan will have a devastating economic impact — with few environmental gains.

Moniz, who as secretary has been an unapologetic advocate for the department’s climate work from day one, insists lawmakers are getting the message on climate.

“I believe that almost uniformly in Congress there is a recognition that we do need to do something on climate change,” he said in an interview in his office last month. “There are clearly significantly different views in terms of what we do and when we do it, and how we do it in terms of what is the linkage to international progress, etc. But I think with very few exceptions, we’re past the argument over whether we need to do something.”

But Obama’s climate agenda crashed headfirst into the annual appropriations process in June, when Senate Democrats had to scrap a markup of the Energy Department’s fiscal 2015 spending bill to avoid tough votes on Republican amendments targeting EPA’s carbon regulations.

The standstill threatens to undermine Moniz’s careful efforts to work with House and Senate appropriators on spending, which yielded a $1 billion increase for DOE’s energy programs in fiscal 2014 over the previous year. The boost illustrates continuing congressional support for the department’s missions, even in the small-government, deficit-driven mindset that dominates Capitol Hill these days.

Moniz says his outreach to Congress, which took him to a half-dozen states in August alone, helped balance administration priorities with lawmakers’ prerogatives when “normal order broke out” in the appropriations process earlier this year.

“I think it’s so critical to doing the job,” he says of building relationships with Congress. “It was important that I had spent time over the fall with both the chairs and ranking members of both appropriations committees, so when this came about, it was not suddenly coming out of the blue, you know — ‘Oh, I want a favor, I really think this is important, etc.’

“Obviously nobody gets everything they want, but I had the opportunity with all four to say what I thought were priorities under their constraints,” he says. “They listened, they also said what was important to them and I think it really helped make a pretty good appropriations bill come out on all sides.”

Personal Touches

Alaska’s Lisa Murkowski, a frequent administration critic who’s also the top Republican on the Senate Energy and Natural Resources Committee and a senior appropriator, says Moniz’s personal touch goes a long way in working through policy decisions with which she doesn’t agree.

“He has been very good in his reach-out to me on issues, and as things come up that he knows that I’m involved with, he’ll pick up the phone and he’ll call me,” says Murkowski, who hosted Moniz in Alaska in August. “That’s a good relationship to have with a secretary and I really appreciate it.”

It also reflects political insight that was lacking in Moniz’s predecessor. Chu, a Nobel-Prize-winning physicist who served as director of DOE’s Lawrence Berkeley National Lab, was well regarded for his intellect. But he was seen as unprepared for the political and management challenges associated with running a department of nearly 14,000 employees and tens of thousands of contractors. Compounding the task for Chu was the unprecedented infusion of stimulus funds, which included speedy spending deadlines.

Moniz, by contrast, has a lengthy Washington résumé, having spent four years as DOE undersecretary in the Clinton administration, as well as a stint in the White House as a top science adviser.

That experience, coupled with a reputation as “a straight shooter,” lends Moniz credibility, including with business interests often critical of the administration’s energy policies, says Bud Albright, a former Republican staff director for the House Energy and Commerce Committee who also served as Energy undersecretary during the George W. Bush presidency.

“He’s really a very engaging person and his motivation is to do what he perceives to be right, and that comes across,” says Albright, now a lobbyist with Ogilvy Government Relations. “There’s no ill motive to what he tries to do. You may agree or disagree with him, but his cards are on the table. That has a lot of sway with people.”

‘All of the Above’ Plan

Navigating the toxic congressional environment requires Moniz to use all of the negotiating skills he can muster. In addition to the controversy over the climate agenda, DOE plays a major supporting role in implementing the administration’s broader “all of the above” energy policy, which also supports nuclear power, renewables and the continued use of fossil fuels.

Moniz rejects the notion that cutting emissions and expanding fossil fuels are contradictory, as well as the frequent GOP contention that the administration is working to hamper production of coal, natural gas and oil. As proof, he points to the department’s multibillion-dollar loan programs for advanced fossil fuel and nuclear projects, as well as its ongoing research efforts into energy technologies.

“What does ‘all of the above’ mean?” Moniz says. “It starts with, we are reducing CO2 emissions. That’s not debatable, that it’s our responsibility to advance the science and the technologies that will lower emissions at lower costs. But once we get that on the table, then we are supporting fuels and technologies across the board.”

Two factors help him make his case to Congress. The first is the department’s broad portfolio, which includes nuclear weapons and nonproliferation programs overseen by its National Nuclear Security Administration, as well its costly cleanup of Cold War nuclear production sites. Both missions, which enjoy broad support across both parties, consume slightly more than half of DOE’s overall budget.

The second is the shift in domestic energy dynamics, driven largely by the boom in U.S. crude oil and natural gas production to levels thought impossible just a few years ago.

Louisiana Democrat Mary L. Landrieu, who chairs the Senate Energy and Natural Resources Committee, describes Moniz as far more “comfortable” with the needs of fossil-fuel-producing states like her own than was Chu, seen by many lawmakers as singularly focused on clean energy sources.

“He’s been more open to exports of natural gas and he understands the oil and gas revolution that is occurring,” says Landrieu, who took Moniz on a helicopter tour of energy production facilities in Louisiana in May.

Nonetheless, DOE’s efforts on the fossil fuel front remain a piñata for critics. Illustrating the point is broad bipartisan support for exporting natural gas supplies to overseas markets, for which the department acts as gatekeeper under federal law.

Export supporters, which include many lawmakers from both parties as well as domestic oil and gas producers, have long complained that DOE’s process for considering export applications to nontrade partners takes too long (exports to trade partners are automatically approved). Supporters want to see more exports to nonpartner nations such as Ukraine and Japan, for example.

On the opposite side are companies that are heavy users of natural gas, both as a power source and feedstock, who benefit from the relatively cheap domestic price of gas. Export opponents fear allowing too much natural gas to flow abroad will push up domestic costs, negating the economic benefits of the U.S. fracking boom.

After months of consideration, DOE in August finalized an overhaul of the application process that was intended to give priority to export projects that were seen as more economically viable. The shift failed to stem complaints from industry critics, who said the department should have adopted more sweeping reforms.

In the interview, a frustrated Moniz dismissed industry criticism that DOE was dragging its feet on export applications. He noted that the department can’t take final action until a separate Federal Energy Regulatory Commission review is completed. That occurred in late July, when FERC — a separate agency that Moniz does not control — rejected environmentalists’ request to reconsider its approval of Louisiana’s $10 billion Cameron liquefied natural gas project.

“This is all B.S.,” Moniz said. “We had nothing to act on until now.”

In an interview before DOE announced its overhaul of the natural gas approval process, Senate Energy Committee member John Hoeven, a North Dakota Republican, said he thinks Moniz is constrained on exports and other issues by the White House.

“Unfortunately, I think this administration’s policies hold him up on some things that he knows we need to do,” says Hoeven, an export supporter who also hosted Moniz during a visit to his oil-rich state over the August recess.

While Moniz enjoys good relations with members on both sides of the aisle, it only goes so far in a gridlocked Congress. For instance, he says the snail’s pace at which nominees are confirmed by the Senate is “hurting us badly,” with seven key positions in his department remaining unfilled.

Additionally, Moniz’s behind-the-scenes work with a bipartisan group of senators on a legislative overhaul of federal nuclear waste policy has been unable to gain traction in the House. Nonetheless, he points to the efforts on nuclear waste as a model for how government should work.

“You had both parties and the administration and Congress getting together to craft something that made sense. And it still makes sense,” he said. “To me, it’s good government.”