Should Republicans reach a majority in the U.S. Congress in the November midterm elections, the party could put Democrats' energy and climate policies under intense scrutiny — even as obstacles remain to advancing major GOP goals in that space.
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Although Democratic President Joe Biden could veto Republican bills that may threaten his agenda, tough oversight from a Republican majority could target implementation of the Inflation Reduction Act, with its billions in energy and climate spending. A GOP-led House or Senate could also intensify scrutiny of federal agencies such as the U.S. Environmental Protection Agency at a time when the Biden administration is seeking to complete a suite of regulations to fulfill its greenhouse gas reduction goals.
"From a practical standpoint, [aggressive congressional oversight] in the past has had the result of slowing the agency work down," said Christopher Guith, senior vice president for policy at the U.S. Chamber of Commerce's Global Energy Institute. "It also from a political standpoint starts to frame certain issues for the 2024 general [presidential election]."
Agency oversight
In recent months, many in the Republican party have said that Democratic policies are driving up inflation and discouraging fossil fuel production needed at a perilous energy security moment.
The pace of natural gas infrastructure approvals by the Federal Energy Regulatory Commission already come has under fire from Republican lawmakers and Sen. Joe Manchin, D-W.Va., chair of the Senate and Energy Natural Resources Committee. That pressure could intensify if U.S. Rep. Cathy McMorris Rodgers, R-Wash., takes the helm at the House Energy and Commerce Committee, a panel with a long history of hounding the opposing administration.
Rodgers and U.S. Sen. John Barrasso, R-Wyo., ranking member of the Senate energy panel, have already pressed the energy regulator with detailed inquiries on gas and electric policies they contend could put energy security and reliability at risk.
Jack Heretik, a spokesman for Republicans on the House Energy and Commerce Committee, confirmed in an email that the panel's Republican members would conduct "rigorous oversight of FERC" should the party take the House.
More broadly, infrastructure permitting and Biden's turnback of the Trump administration's National Environmental Policy Act reforms are also expected to be a major focus of oversight attention, should the House flip to Republican control. The party may also push its own legislation that would accelerate the permitting process.
Other targets could include the U.S. Interior Department's five-year oil and gas leasing plan and the Securities and Exchange Commission's climate disclosure rules for public companies. At the same time, the Commodity Futures Trading Commission — an independent agency — has been investigating how climate risk should affect its role overseeing derivatives markets, as the Biden administration has pursued a whole-of-government approach to addressing climate.
Republicans are also expected to seize on a recent U.S. Supreme Court ruling in West Virginia v. EPA to bolster their case that agencies lack an express mandate from Congress to pursue their climate policy goals.
Scrutinizing IRA spending
If Republicans take back control of Congress, they also vow to scrutinize a wide sweep of Democrats' climate and energy policies in the past two years. A particular focus is expected on the Inflation Reduction Act, or IRA, and the bipartisan infrastructure law of 2021, two pieces of legislation that made huge federal investments in clean energy.
"Oversight of the billions of dollars in federal funds for energy and environmental provisions that have been doled out over the last two years should be a critical component of Congressional energy oversight in the 118th Congress," U.S. Rep. Morgan Griffith, R-Va., ranking member of the House energy committee's Subcommittee on Oversight and Investigations, said in an email to S&P Global Commodity Insights.
Some of that funding is contingent on recipients meeting certain labor, wage and domestic content standards that could be tough to satisfy. If those hurdles prove too high to clear, GOP lawmakers may try to claw back unused money from the legislation.
"I suspect that we're going to find in the coming months that there are tens of billions of dollars that are available out there that nobody's ever going to really touch because the price of admission is just too high," said Jim Barnette, a partner at Steptoe & Johnson LLP who previously served as general counsel for the House energy committee. "So something has to give — either that money should just be rescinded, or you've got to loosen up the requirements in order to get that money out the door."
Clean energy project developers and manufacturers must also meet certain labor and domestic content requirements to claim bonus tax credits contained in the Inflation Reduction Act, presenting similar potential challenges for that new law. The IRA included about $369 billion in clean energy tax credits and other climate and energy spending.
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"The spending over the last couple years ... has been pretty loose, so Republicans are going to be looking for pay-fors for everything that they want to do," Barnette said, adding that unused funds from the infrastructure law "would be real prime territory for offsets."
Still, Democratic control of the White House for at least the next two years would likely stymie any Republican attempts to rescind congressionally approved climate and energy spending.
Reliability concerns
In addition to probing the recently passed laws, Republicans may take a close look at domestic energy resources, grid and pipeline security; the future of the Strategic Petroleum Reserve; and regulatory actions by the EPA. Oversight of these industry elements "will be necessary," Griffith said.
Grid reliability could get particular attention as states such as California have struggled recently to meet demand amid soaring temperatures and a shift toward more intermittent renewable resources. Those challenges could prompt scrutiny of the clean energy transition broadly and the efficacy of wholesale power markets regulated by FERC, former Republican Commissioner Bernard McNamee said in an interview.
"Because of the changing resource mix, we're seeing that the [regional grid operators] may not be providing reliability or the economic value that was promised to customers, particularly as you have a growing number of subsidized resources like wind and solar that also don't have fuel costs and yet power prices are generally set at a clearing price set by natural gas and all resources are then paid at price," McNamee said. "As we get more subsidized resources, the question is going to become, when are those economic benefits going to pass to customers?"
While stepped-up attention from Congress could put agencies on the defensive, it is not guaranteed to slow or derail new regulation, according to Matthew Davis, senior director of government affairs for the League of Conservation Voters. Davis reflected on prior Republican efforts to hobble Obama administration actions.
"Did it burn some resources from some agencies? Yeah, probably," Davis said. "But, overall, did it knock the Obama administration off its game? I didn't necessarily think it made a major change in terms of the way the administration moved forward."
Commodity Insights reporter Maya Weber writes for S&P Platts Dimensions Pro. S&P Global Commodity Insights is owned by S&P Global Inc.
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