Subcommittee Takes Aim at Emissions in Developing Countries

The U.S. House Energy and Air Quality Subcommittee on Wednesday examined ideas for addressing climate change in the United States while also pushing for greater action in China, India, and other developing countries.

U.S. House Energy and Commerce Committee Chair John Dingell (D-Mich.) outlined several principles for how Congress should engage the developing world while at the same time establishing a mandatory cap-and-trade program that seeks to limit U.S. emissions to between 60 and 80 percent by mid-century.

The chairman said U.S. climate law should include a provision that presses developing countries into limiting their own emission growth "on a timetable that meets both environmental and trade competitiveness concerns." The law must be crafted with the understanding that other countries will challenge it before the World Trade Organization (WTO) court in Geneva. Although Congress will try to pass a law that survives a WTO challenge, it also must try to find an "acceptable" economic risk if it does get overturned, he said.

Representatives from environmental groups proposed ideas on how to accomplish the chairman's stated goals in upcoming climate change legislation. David Doniger, Director of the Natural Resources Defense Council's  (NRDC’s) Climate Center gave lawmakers another idea for offsetting damages to U.S. industries, including the iron and steel, cement, glass, pulp and paper, and chemicals industries.   These businesses face competitive disadvantages from companies located in countries without strict climate regulations.

Congress could give away about 10 percent of the allowances for free, providing the company maintains employment in the United States. The free credits also would phase out by the time the trade threats come into play in 2020. "NRDC does not suggest the use of free allowances or auction revenues lightly," Doniger said.

Contact David Hubbard.

Subcommittee Holds Hearing on Investment in the Railroads

The U.S. House Transportation and Infrastructure Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing on “Investment in the Rail Industry."

The hearing examined recent interest in the railroads by Wall Street investors as well as a London-based hedge fund, Children’s Investment Fund. 

Subcommittee Chair Corrine Brown (D-Fla.) and many panel members noted investment in the railroads is encouraging, but expressed strong concerns about a proposed takeover of CSX Corporation (or any other Class I railroad) by hedge fund investors.  Committee members expressed their view that the rail industry needs long-term investors, not need short-term capital from speculators. 

Surface Transportation Board Chairman Chip Nottingham generally supported all types of investment in the rail industry, but acknowledged longer term investment is more desirable.  He said that the Board has no authority over a hedge fund purchasing a railroad.

Snehal Amin, (founding) Partner of the The Children’s Investment Fund, explained that while CSX is valuable today, there are significant inefficiencies in the railroad, which he said is not well managed.  Michael Ward, Chief Executive of CSX, argued that indeed the railroad is well managed and receives a much greater-than-average rate of return for its investors.

Contact David Hubbard.

Financial Services Chair to Unveil Fix for Failing Mortgages

U.S. House Committee on Financial Services Chairman Barney Frank (D-Mass.) has indicated he will introduce legislation as early as next week that will call on the federal government to buy out distressed mortgages.

Chairman Frank’s proposed legislation is in response to the large number of failing home loans across the nation. The bill would allow the federal government to purchase troubled mortgages at a hefty discounted rate from lenders.  In turn, the government would refinance the loans through the Federal Housing Administration at a cost of $12 billion.

The proposal would help 2.8 million homeowners at risk of foreclosure, while also creating the basis for a broader U.S. House of Representatives’ economic stimulus package.

Contact Robert Sullivan.

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