Congressional Update: Lame Duck Session
On Friday, Arizona U.S. Senator Kyrsten Sinema says she is switching her party affiliation from Democratic to Independent.
Sen. Sinema says she will not caucus with Republicans but believes the broken partisan system in Washington does not serve Arizonans well.
Senator Sinema’s decision allows Democrats to maintain a 50-seat majority but creates additional challenges for Senate Majority Leader Schumer. The power of Senators Manchin and Sinema, or “Manchinema”, may be stronger than ever.
Federal Spending Bills
Congress returned for its lame duck session prior to the start of the new Congress on January 3, 2023.
Outstanding items which may be addressed before the end of the year include Fiscal Year (FY) 2023 appropriations legislation, the FY 2023 National Defense Authorization Act (NDAA), and year-end tax legislation.
Congressional leaders have reached agreement on total defense spending but remain in negotiations on topline non-defense spending in advance of the December 16 government funding deadline.
A short-term continuing resolution (CR) is now being contemplated to push the government funding deadline to December 23, and a year-long CR, maintaining funding levels from the prior fiscal year, remains a possibility absent an agreement before the end of the year.
Importantly, the fate of government funding – and a year-end omnibus package – will determine whether additional legislation, such as the Credit Card Competition Act, can advance this year.
On Tuesday, the Defense Funding Bill was filed in the House, following significant disagreements over additional provisions to be included in the bill, including federal permitting reform legislation advocated by Sen. Joe Manchin (D-WV).
Permitting reform was not included in the final version of the NDAA, following bipartisan concerns over the provisions. The House passed the NDAA Thursday under suspension, and final Senate consideration is expected next week.
House and Senate committee leaders are continuing to discuss a potential tax extenders package, which may include partisan priorities such as an extension of the expanded Child Tax Credit and extensions of expiring tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA).
The Biden Administration is continuing to implement tax provisions enacted in the Inflation Reduction Act (IRA), including several new or expanded federal subsidies for clean energy and climate projects.
Recently, congressional Democrats rejected calls to revisit the IRA’s tax provisions, amid criticism from Republicans and European policymakers.
Congress has also begun to determine party leaders and committee assignments for the 118th Congress.
House Minority Leader Kevin McCarthy (R-CA) has secured the nomination of House Republicans to serve as the next Speaker of the House, however, McCarthy still requires the support of a majority of the House on January 3 to be elected as Speaker.
In addition, House Minority Whip Steve Scalise (R-LA) will be the next House Majority Leader, and Reps. Hakeem Jeffries (D-NY) and Katherine Clark (D-MA) have been elected as the next House Minority Leader and House Minority Whip, respectively.
This month, Democrats and Republicans will also meet to determine committee leadership in the upcoming Congress.
While several committee elections are uncontested, including major energy and environment committees, contested elections include the incoming Chair of the House Ways and Means and Budget Committees, as well as the ranking Democrat on the House Oversight Committee.
Meanwhile, Senators John Barrasso (R-WY) continues to push for legislation to be attached to an end of the year spending deal that would allow renewable diesel (RD) fuel production facilities to qualify for certain Department of Energy loans.
The “Renewable Diesel and Sustainable Aviation Fuel Parity Act of 2022” aims to increase RD use by exempting RD that meets the same ASTM specifications as diesel fuel from federal labeling requirements.
Several associations oppose the bill including NATSO, SIGMA and the American Trucking Associations (ATA) arguing that eliminating the label at the pump would lead to a situation “where retailers and consumers are not fully aware whether they are purchasing renewable diesel or petroleum-based diesel — the price of the two would be the same, rather than renewable diesel having a cost advantage.”
Biomass-based diesel fuels include biodiesel and renewable diesel, both of which are refined from the same types of fat, oil, and grease feedstocks.
Renewable diesel is chemically indistinguishable from petroleum diesel (known as a drop-in diesel fuel), meaning that it meets specifications for use in existing infrastructure and diesel engines and is not subject to any blending limitations.
Biodiesel is a mixture of chemical compounds known as alkyl esters and is often combined with petroleum diesel in blends of 5 percent to 20 percent, known as B5 to B20, respectively.
EIA projects that production of renewable diesel supply will grow because of its compatibility with existing distribution infrastructure and engines, higher state and federal targets for renewable fuel production, incentives from tax credits, and the conversion of existing petroleum refineries into renewable diesel refineries.