Capitol Hill Briefing: Romney and Obama Campaigns, Defense Production Act, 2012 Farm Bill and the RFS

June 7, 2012

 

Laurie Purpuro (K&L Gates, Government Affairs Advisor)
A Brief Overview of the Romney campaign. 

There is no public Romney campaign position specific to biofuels.  The campaign does have an energy policy favoring oil, coal, natural gas.  Romney does not appear to think the Obama Administration’s focus on Green Jobs is effective.  In a Romney Administration,  we will most likely see support for streamlining of regulations and permit processes to ease the development of domestic oil and natural gas resources.  Romney appears to support investment in nuclear energy.

Romney would like to inventory our carbon-based energy resources and then allow drilling where that would be safely done.

The campaign does support R&D for energy, but doesn’t mention biofuels specifically.  There is indication he does not support more funding for commercialization  as was illustrated when he visited the Solyndra plant and he commented that large sums of money going to one specific company within an industry does not help grow that industry, but actually stunts the competition and industry growth.  This would illustrate his perspective on the Loan Guarantee Program and the grants that go beyond R&D and initial demonstration stages.

In a Romney presidency, we see clean energy spending re-directed toward R&D and initial demonstration to  — as the campaign says — promote innovation without distorting the market.   Candidate Romney does like the DARPA model, which at the Department of Energy is ARPA-E. This is good news.

Romney is on record as being supportive of ethanol, cellulosic ethanol and on a YouTube video shot in Iowa in 2007, he talks about algae in a positive way indicating that he would support federal funding for algae research and development for fuel and carbon capture.  The YouTube video has been sent by ABO to  the Romney campaign staff to make sure that they know that he is on record as having supported algae.

Amy Carnevale (K&L Gates, Government Affairs Advisor) 
Romney policy and campaign credentials and insights.

Amy has been elected to the Republican State Committee in Massachusetts and been asked by the Romney campaign to oversee the efforts to choose and select a portion of the delegates who will be elected at the State meeting.  She is also running to be a delegate so she has been working closely with the Romney campaign.

The Romney policy staff has been bare-bones until the last few weeks by design as their focus was on fundraising and grassroots outreach in order to win the primaries and nomination.  They were not interested in fully developing a lot of policy or position papers.  This is beginning to gear up.  They now have an active effort to start hiring policy staff to get more informed and develop the positions.

The YouTube video can be very helpful to our efforts.  The Policy Staff often does not have frequent access to the candidate so they will rely on past statements Romney has made.  In particular with Romney, there is a lot of sensitivity to changing positions and being malleable.  The video can be used in future outreach to tell the staff that this is something he already has expressed support for and it can be used to guide the development of position papers by the staff.

Tim Peckinpaugh (K&L Gates, Partner) 
Political Environment as it relates to biofuels.

The change we are seeing away from support of Green Technology is not unexpected as we moved away from stimulus and the new focus is on conventional energy.  However, it has happened much more quickly than expected.

This is in part due to Solyndra.  However, we are not solar, we are biofuels which gives us the opportunity to shape the debate in our favor.  The fact that Romney is a blank slate on biofuels policy is very good for us.  The video on algae is very good for us.  We can seize the opportunity right now to change the Romney thinking on these issues.

Materials were prepared earlier to make the point that “Algae is the Republican biofuel”.    Points that should resonate with Republicans include:  algae fuel is a drop in  –  adaptable to the existing  gas and oil infrastructure, we can scale it, it is a high energy content fuel which the military likes, private sector investment is already involved, and we have support from big companies like Boeing, Honeywell, and some of the major oil companies.  So we have some good conservative points to make to point out that we can fit the Republican agenda on biofuels.  The objective would minimally be that we could get them to be neutral on  our issues.

Mike Evans (K&L Gates, Partner) 
Broader discussion about House,  Senate and the White House based on what happens in the election.

The goal of this call is to exam the 2012 campaigns, so ABO can be prepared for all potential outcomes.  Expectation is that it will be a very close election and could go either way.

What will the situation be like from the perspective of biofuels policy, if the Republicans win the House, Senate and President?  What are their policies and what are our relationships with them?

At this time the Democratic administration and House have been a check on Senate Republicans who have wanted to be more aggressive in opposing biofuels policy.  If Republicans gain control of the House, Senate and Presidency, we could potentially see a much more aggressive Congress in opposition to RFS, appropriations that are relevant to biofuels,  as well as defense and tax incentives for biofuels.

It is very important to consider our relationships with potential champions and defenders and work to strengthen and develop those relationships.  Key committees to focus on having these relationships with are:  Armed Services, Appropriations, Energy, Environment & Public Works and Finance.  If we look at those Republican members, we need to identify those we have relationship with, have constituent interest in algae or who are likely to be most critical and causative on the issues.

Q&A

Mary Rosenthal
Can you expand on the statement “Algae is the Republican biofuel”?

A strong case can be made for this.  That doesn’t mean that it will be accepted as such.
·         It is the source of today’s oil as it is making algae the perfect biofuel for hydro-carbon support.
·         It is a drop-in fuel.
·         It can be scaled.
·         It does not compete with desirable agricultural land or viable water supply.
·         The military likes algae because it is a high BTU content, high density fuel.  It is ideal for aviation fuel.
·         Algae has already made the transition to commercial.
·         The marketplace is focused.
·         We have major corporate players supporting algae.  Boeing, FedEx, Honeywell, the major airlines.  Oil companies are investing in and supporting algae.
·         It can be a great marriage with other high carbon fuels like coal.

Mary Rosenthal
How do we keep our message out there and clear with all the other groups getting engaged in the biofuels messaging?

Our small coalition has been the A4B, AFBA, BIO, Farm Bureau and ABO.

We don’t want the same message for every office.  Each will respond to different talking points.  The more groups out there talking about biofuels in a positive way, the better.  We just need to make sure to target them to the audience who will respond

John Williams
If the Republican Congress is anti-biofuels in general, what is the likelihood of any Republicans swimming upstream and favoring any type of biofuel over another?  Or does everything get thrown out with the bath water?

It is concerning that part of the temptation right now is for the Republicans to go after Democrats on a broader Clean Energy mission and make the broad statement that all biofuels are bad and we shouldn’t have any federal government involvement.  With the Romney campaign, we have a chance to make our case to the policy staff so that he will at least think twice before he embraces Senator McCain’s & Senator  Inhofe’s views.

The Romney Energy Policy on the website leaves the door open for him to accept some level of support for biofuels.  If you look at the language he has in his policy statement, he makes the point right up front that energy is a national security issue.  He also talks about job generation and he wants production domestically of alternative sources of fuel.  He goes after wind and solar, but does not go after biofuels specifically.  There is a small door that is open to get him involved in this.

More specifically, Republicans don’t think DOD should be funding biofuels.  Not against biofuels, but don’t want DOD to be bearing the majority of the cost to get this rolling.

John Williams
To what extent can we build success from the bottom up?  We’ve had two strong algae legislation victories and one neutral, if not trending positive, algae legislation victory in states right now that have  heavily credentialed Republican governors (Ohio & Arizona & Florida).  To what extent can we create a wedge by having victories and support of algae in states with Republican governors  give it a Republican seal of approval because of job creation and tax base expansion?  Is that another strategy that we can use?  We have a lot more control at the state level as 500 jobs means a lot in a state like Arizona, but doesn’t mean anything at the federal level.  

States can help drive this process.  These states are all politically relevant for the Romney campaign.  Ohio and Florida are probably the two biggest swing states right now.  New Mexico will also be a swing state and we have the opportunity to use our support in the states among Republicans and stress to the Romney people that this is a good issue politically for them and resist the temptation to bash everything Obama and Green Technology; and in the case of this particular biofuel this would be a mistake.  To be able to say so in the context of job creation and economic development in key swing states can be very meaningful, because when the day is done there is going to be just a handful of votes that will decide this election.

If we could get Romney to do a site visit to an algae facility in one of these swing states, it would be a real coup and do-able because he needs to be very visible in these swing states.

Mark Allen
Is there a case to be made on the Republican side, that whatever the Administration wants, they all want.  If Romney becomes president, would all of the contention against biofuels go away because it is reasonable for the Republicans to switch and champion biofuels?  Is there an outcome where it slips dramatically in our favor?

Key thing for us it to make sure they don’t say anything during the campaign. We are lucky that the focus has been thus far on solar, not on biofuels.  We need to keep him from adding biofuels into the negative Solyndra mantra.  We need to keep the campaign for the next few months from saying anything very decisive and hurtful to us that would limit what he can do during the first year or so of his administration.

FARM BILL UPDATE

The bill will be on the Senate floor this week.  It includes an Energy Title which the ABO has supported.  During the committee mark up, they included $800 million dollars in mandatory funding in the Senate bill for the Energy Title.  We got exactly what we wanted on the Senate side.  We haven’t seen the list of amendments that will be offered on the Senate floor yet.  The expectation is that someone will attempt to strip the mandatory funding from the bill.  Also, we must assume that we need 60 votes to pass it and they won’t be able to get it.  Debate will probably go on through the next weeks.

The House bill hasn’t been marked up in full committee yet, although we can assume that will happen soon.  We can anticipate it will not include mandatory funding.  There are a lot of members who don’t think there should be an Energy Title at all.

If there are two bills passed with different provisions in them, there will be a conference committee appointed which has members from both House and Senate to work the bill out so that ultimately you have the same language that the President could then sign.  It is a long process and we are in the middle of that process now.  The good news is that the Senate bill contains all of the language that we have supported.

This bill will be one that will get through the Senate and House.  Conference will be hard.  It’s a large bill.  If it gets to conference, we are going to be one of the hundreds of issues at the conference, so we will have to work the conference.

DPAA

It will likely make it onto the Senate floor in July.  There will be both a Senate and House version.  The conference will probably not happen for awhile.  In the Senate version, there is no funding for biorefineries or procurement of fuels.  This is the Republican attempt to derail the funding completely.  This is very dependent on the DOD funding.  Without DOD funding, it will be very difficult to keep the program alive.   Mark-up is scheduled for the 3rd week of June.

RFS

Not likely to be serious legislation with regard to the RFS with this Congress.  Dialogue has begun, but it is not a very active dialogue.

In conclusion, K&L Gates will be following up and working with Mary and the EPC to develop an Action Plan to implement with the ABO membership.

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