HOUSE AVOIDS FIGHT WITH PRESIDENT.  In an effort to avoid a budget stand-off with the Administration, the Democrats have decided to remove any language that would limit the opening of the outer continental shelf (OCS) to drilling from the continuing resolution (CR) they expect to pass this week.  House Appropriations Chairman David Obey (Wisconsin) announced late in the day on September 24 that an agreement had been reached with the Administration to let the drilling bans expire on September 30 with the end of the current federal fiscal year.  The Congressional moratoria on offshore drilling has been routinely renewed through the Interior Department appropriations bill every year since 1982.  Despite recent action by the House to pass legislation (H.R. 6899) with an alternative proposal for opening the OCS to new drilling in a more limited fashion, the issue remained in play pending Senate action.  According to Chairman Obey, the White House made it clear that any drilling restrictions would be a nonstarter for the CR, which is needed to keep the government operating past the October 1 start of the new fiscal year.  Despite the agreement to allow the moratoria to expire, allowing for new drilling in federal waters beginning in most states three miles off the coastline, Democrats are expecting to return to the issue next year.  In addition, it will be several months or more before any action could be taken, as existing regulations and timetables governing the Interior Department activities limit its ability to conduct new lease sales along the Atlantic or Pacific coast lines.  Subsequently, Ranking Member of the House Committee on Energy and Commerce Joe Barton (Texas) introduced H.R. 7032 on September 24 to accelerate the timeline for such permitting on public lands. 

On a related note, the CR will not include language extending the ban on future oil shale leasing of federal lands in Wyoming, Colorado, and Utah.  The ban was included on fiscal year 2008 spending legislation by legislators concerned with the environmental effect of oil shale production.  As with offshore drilling, the House had passed an alternative proposal allowing for states to opt-in to oil shale leasing as part of energy legislation (H.R. 6899) passed on September 16.

HOUSE PASSES CR, FUNDING BILL MOVES TO SENATE.  Following a fairly short debate, the House passed the continuing resolution (CR), H.R. 2638, by a vote of 370-58.  The CR will keep the federal government funded through March 6, 2009.  While the remainder of the government will be funded at FY 2008 levels, the CR does include the FY 2009 appropriations bills for Defense, Military Construction-Veterans Affairs, and Homeland Security.  In addition, the CR included $5.1 billion in  funding for the Low Income Home Energy Assistance Program (LIHEAP), an additional $250 million in funding for the Weatherization program, $22.9 in disaster relief funding, and $7.5 billion to launch a $25 billion program of loans to help automakers and their suppliers manufacture advanced technology vehicles. The $7.5 billion is meant to cover default risks for the loan program, which was authorized but not funded by the Energy Independence and Security Act of 2007 (PL 110-140). 

HOUSE AGRICULTURE COMMITTEE PASSES BILL TO SUSPEND FARM BILL PROVISION.  On September 24, the House of Representatives gave bipartisan support to legislation to suspend a Farm Bill provision requiring producers to have a minimum of 10 base acres to receive farm program benefits.  The bill, approved by the House Committee on Agriculture on September 18, stems from the U.S. Department of Agriculture's publication of a notice stating USDA's intention not to approve requests for farm combination reconstitutions of farms having 10 base acres or less; thus, farmers would not have been allowed to aggregate base acres from multiple working farms.   However, Farm Bill (P.L. 110-134) report language states that base acreages could be aggregated to allow for farm program eligibility. 

The bill as introduced amended the commodity provisions of the Food, Conservation, and Energy Act of 2008 to permit producers to aggregate base acres and reconstitute farms to avoid the prohibition on receiving direct payments, counter-cyclical payments, or average crop revenue election payments when the sum of the base acres of a farm is 10 acres or less.  In Committee action, Chairman Peterson introduced a substitute amendment that suspended the entire 10 acre provision for two years. That amendment, which was adopted by the Committee,  provides a temporary, less expensive solution to the situation and is fully offset in order to meet federal budget pay-as-you-go (PAYGO) requirements.

"The Department's notice is a substantial change from what was in place prior to the most recent Farm Bill and runs contrary to what Congress intended when it wrote this provision and passed the bill," said Chairman Collin C. Peterson (Minnesota) about the Committee's action.  "This will protect the farm safety net for producers while giving us time to decide how to correct the problem for later years."

"The intent of this provision in the farm bill was always to allow for aggregation.  USDA decided to interpret that provision differently, which forced us to pass further legislation to make sure this intent cannot be misconstrued," said Ranking Member Bob Goodlatte (Virginia).

HOUSE CONTINUES TO WORK ON TAX EXTENDERS PACKAGE.  House Democrats are planning to vote on the Senate-passed tax extenders bill, H.R. 6049, before the end of the week; however, they will be offering an amendment to the bill that would replace the section that deals with the tax extenders that are partially paid for with a plan that follows the pay-as-you-go, or PAYGO, rules and fully offsets the tax credits.  Additionally, Chairman of the Ways and Means Committee Charlie Rangel (New York) plans to extend those tax credits for two years, instead of the one-year fix offered in the Senate bill. 

The Senate passed H.R. 6049 on September 23 by a vote of 93-2.  Once arriving in the House, Democratic leadership decided to split the bill into two, leaving the energy and tax extenders package in H.R. 6049 and creating a new bill for  the Alternative Minimum Tax (AMT) patch, H.R. 7005, which passed the House of Representatives on September 24 by a vote of 393-30.  In both the House and Senate bills, the tax credit extensions for renewable energy are fully offset, while the AMT patch is not.  The matter up for debate currently is the non-energy related tax credit extensions that are only partially offset in the Senate bill. 

Members of both sides of the aisle in the Senate are urging the House to pass their version of the bill as soon as possible.

CAIR CASE MOVES FORWARD, EPA REQUESTS NEW HEARING.  On September 24, the U.S. Department of Justice and U.S. Environmental Protection Agency (EPA) filed a request for an new hearing before the full federal appeals court to reconsider the July 11 decision by a three-judge panel to vacate the EPA Clean Air Interstate Rule (CAIR).  EPA has requested that the court reconsider its finding that the agency lacked authority under the Clean Air Act to establish an emissions trading program to help eastern states achieve air quality standards.  EPA contends that the court decision conflicts with prior case law concerning regional emissions trading programs under the Clean Air Act.  The agency cites Michigan v EPA (D.C. Cir., 213 F. 3d 663, 2000)  where the court found that in the NOX SIP Call reducing emissions from all states collectively would satisfy each state's requirement to eliminate its significant contribution to nonattainment in other states.  In addition, the agency asserts that no party in the CAIR lawsuit challenged EPA's authority to establish the emissions trading program.  It is unknown whether the U.S. Court of Appeals for the District of Columbia Circuit will grant the agency's request or if a rehearing would alter the outcome of the case.  Congress is not expected to move legislation in response to the court's action this session but will likely take up the issue of a CAIR-fix early in the 111^th Congress next year.

CONGRESS PASSES GREAT LAKES COMPACT.  Congressional approval of the inter-state compact designed to conserve and protect water resources in the Great Lakes-St. Lawrence River Basin moved one step closer to completion on September 23.  The House passed S.J. Res. 45, consenting to the ratification of the agreement, by a vote of 390-25.  The Senate had previously passed the resolution on August 1 by unanimous consent.  The White House has confirmed that the President intends to sign the resolution.  The compact was negotiated in 2005 among the Governors of the eight Great Lake states (Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania and Wisconsin) and the premiers of Ontario and Quebec.  In addition, legislation has been passed to ratify the agreement in all eight states.  The Congressional approval of the compact is necessary for it to go into affect.   Though not bound by U.S. law, Canada's Great Lakes provinces have agreed to abide by the deal.