Republicans to Fight Clean Power Program With ‘Byrd’ Budget Rule

(Bloomberg) -- Republicans intend to challenge a key climate-change program in the Democrats’ $3.5 trillion tax-and-spending package with the same maneuver that helped knock out immigration reform. 

They plan to seek a ruling from the Senate parliamentarian that the Clean Electricity Performance Program violates the so-called Byrd Rule prohibition on using budget reconciliation measures to advance policy changes with “merely incidental” budgetary impacts.

If successful, the gambit would thwart a major climate initiative seen as key to meeting President Joe Biden’s goal of de-carbonizing the nation’s electric grid by 2035. The program would compel utilities to switch to clean energy by hitting them with penalties if they don’t comply.

“We will pitch the parliamentarian very, very strongly to eliminate some of these things,” Senator John Cornyn, a Texas Republican, said in an interview. “Trust me there will be a very rigorous scrubbing -- or as we like to call it around here, a ‘Byrd Bath.’”

Cornyn said the clean electricity program was one of the measures they would challenge under the Byrd rule.

In her ruling Sunday, the parliamentarian found that a plan to provide legal status to as many as 8 million undocumented immigrants didn’t qualify for inclusion in the reconciliation bill. Parliamentarian Elizabeth MacDonough said the proposal was a policy change that “substantially outweighs” its budgetary impacts. 

The power plant initiative was meant to be a reconciliation-friendly replacement for a more straightforward clean electricity standard.

Under the new plan, as unveiled earlier this month by House Democrats, electricity suppliers would be rewarded with federal grants if they increase the amount of nearly carbon-free electricity they supply by 4% on a year-by-year basis. Utilities that fall short of those targets would be forced to pay a fine to the Energy Department. 

The system of grants and penalties is key to including the initiative in the reconciliation measure Democrats are using to advance climate policy, health care changes and other Biden priorities on a simple majority vote. To fit within the constraints of the Byrd Rule, the clean electricity program “has to have some bells and whistles that have budgetary consequences,” and here, that’s the grants, said Bill Hoagland, a former Republican budget director in the Senate now with the Bipartisan Policy Center. 

But that might not be enough. 

Simply redesigning the clean electricity standard as a payment program doesn’t change supporters’ intent to create new federal climate policy, said Frank Macchiarola, an American Petroleum Institute senior vice president. It’s still an environmental policy program wrapped in budgetary clothing, Macchiarola said. 

“These are provisions that are not designed for their budgetary impact; they are designed for their policy change,” he said. 

Advocates for power utilities and natural gas producers have already provided Republicans with ammunition for a parliamentary challenge. In an analysis of the plan Tuesday, the right-leaning American Action Forum asserts that the Clean Electricity Payment Program “is a veiled attempt to regulate the supply of electricity.”

The program’s opponents have a good case, said Marc Goldwein, a senior vice president of the Committee for a Responsible Federal Budget, a non-partisan think tank.

“If the parliamentarian looks at this and says this is basically a regulation it won’t be Byrd Rule-compliant,” Goldwein said. “The argument is going to be that it’s really just a regulation and the fact that there is a penalty isn’t a revenue raiser in itself.”

Even if the penalties and grants in the proposal survive a Byrd Rule challenge, Republicans could mount the same parliamentary attack on other provisions necessary to administer the program. Many of the CEPP’s administrative details would be put in the hands of the Energy Department, and critics have already singled those out for review.

Supporters have been on guard for the attack from the start and even designed the initiative to try to avoid procedural pitfalls under the Byrd Rule, which governs the budget reconciliation process and is named for former West Virginia Senator Robert C. Byrd. 

Months before House Democrats unveiled their measure, progressives canvassed experts for the best ways to advance a clean electricity standard through reconciliation. In February, progressive environmental groups Evergreen Action and Data for Progress outlined several paths -- including the CEPP model ultimately adopted by House and Senate Democrats.

Architects of the approaches were unabashed in explaining their goal was to enact meaningful legislation to clean up the grid -- but make it “fit with the Byrd Rule.” “Congress can pass a 100% Clean Electricity Standard targeting 2035 -- including through budget reconciliation,” Leah Stokes, a University of California, Santa Barbara professor, said on Twitter at the time. 

However, even if the program survives a Byrd Rule challenge, it still faces an uncertain path in the Senate, where it may not be able to muster the necessary 50 votes to ensure passage. 

So far, congressional debate has focused more on the proposal’s consequences for the environment and consumers -- not its impact on the budget. When the measure was considered by the House Energy and Commerce Committee earlier this month, Democrats focused almost entirely on how it would spur a clean energy transition. 

Chairman Frank Pallone, a New Jersey Democrat, stressed the $150 billion program would help the nation meet its clean energy goals. Republicans, meanwhile, attacked it as an unrealistic mandate that would destabilize the nation’s energy grid and raise costs for utilities and consumers.  

More stories like this are available on bloomberg.com

©2021 Bloomberg L.P.