K Street in Brief

EXECS TOUCH DOWN

The CEOs for Delta and Northwest arrived in Washington two days ahead of scheduled appearances before congressional panels in hopes of smoothing the path for their proposed $17.7 billion merger.

Richard Anderson, Delta CEO, said rising fuel prices and growing international competition necessitated the airlines’ joining forces.

{mosads}Doug Steenland, Northwest CEO, said the executives planned to meet with members of the oversight committees and lawmakers from areas where either airline now operates.

Both Anderson and Steenland stressed the new challenges the industry faces as fuel costs rise. That could create the need for some consolidation, Steenland said. But the merger would not dramatically affect service in areas where the two airlines now operate, because there is little overlap between the two fleets, he said.

The Justice Department will investigate whether the merger would violate antitrust laws. The CEOs said the merger should be approved without any conditions.

“There are just not any competition issues,” Anderson told reporters during a breakfast meeting Tuesday.

But members of Congress have already raised concerns about the link. Congress doesn’t have to approve the deal but could make things more difficult.  

Rep. Jim Oberstar (D-Minn.), the chairman of the Transportation and Infrastructure Committee, said he opposes the deal. Northwest is based in Minneapolis.

Critics say the merger will reduce service and raise ticket prices for flyers.

Anderson and Steenland are scheduled to testify before the Senate and House Judiciary committees on Thursday.

Northwest and Delta have spent a combined $3 million on lobbying during the first three months of the year, according to public records. Delta, for example, recently hired the Breaux Lott Leadership Group , a firm founded by former Sens. John Breaux (D-La.) and Trent Lott (R-Miss.).

Northwest’s team includes Elmendorf Strategies and lobbyist Richard Cogorno, former floor director for House Majority Leader Steny Hoyer (D-Md.).

Jim Snyder

LAWMAKERS TELL PAULSON: DON'T GAMBLE

House Financial Services Committee Chairman Barney Frank (D-Mass.) took another strike at legislation passed into law in 2006 to crack down on Internet gambling.

Along with Reps. Luis Gutierrez (D-Ill.), Ron Paul (R-Texas) and Pete King (R-N.Y.), Frank on Monday sent letters to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson advising them against devoting any more resources to issuing regulations to carry out the law.

The lawmakers warned the endeavor amounted to a “Sisyphean task,” a reference to the mythical king condemned to rolling a rock up a hill for all eternity, since they intend to “vigorously pursue” legislation to bar the promulgation of the regulations.

Frank and the libertarian-minded Paul introduced such a bill this month, shortly after a hearing in which officials from Treasury and the Fed testified that their agencies were struggling to craft rules to implement the law.

Frank, who is philosophically opposed to federal prohibitions against online gambling, introduced a bill to legalize and regulate the activity last year. Now he is attacking the law as impractical, arguing that federal rules would be unworkable because Congress failed to define what constitutes illegal online gambling in the 2006 legislation.

Jessica Holzer

REALTORS BACK RATERS

Four trade groups representing segments of the real estate market on Tuesday weighed in strongly against a proposed change to the credit rating process that would affect mortgage-backed securities.

The Real Estate Roundtable , the Mortgage Bankers Association , the Commercial Mortgage Securities Association and the National Association of Realtors called the proposal “counter-productive” and warned that it could undermine liquidity in the credit markets in a letter to the Senate Banking Committee’s chairman and ranking member, Sens. Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.).

The credit rating agencies, which include Standard & Poor ’s and Moody’s , have come under fire for giving high ratings to securities backed by risky mortgages that have since become worthless.

Members of the Senate Banking panel on Tuesday grilled company representatives over their firms’ role in the current financial market turmoil.

Citing flaws in the rating firms’ assessments of asset-backed securities, the President’s Working Group on Financial Markets last month proposed tougher disclosure and due-diligence standards for credit agency reviews of such transactions. It also advocated differentiating the ratings for asset-backed securities from ratings for corporate and municipal bonds.

The real estate groups argued that treating asset-backed securities differently from other debt would “erode investor confidence and further weaken our economy’s stability.”

 J.H.

STAY COOL (AND SAVE THE PLANET)

Many companies fear mandated cuts in greenhouse gas emissions will cost them billions of dollars. John Conover sees a business opportunity.

Conover is president of Trane in the Americas, the air conditioning and heating unit manufacturer. Though much of the focus on global warming is on coal-fired power plants and emissions from cars and trucks, buildings account for 38 percent of the energy consumed worldwide, he said.

Making them more efficient could go a long way in cutting energy demand, and therefore emissions.

One big piece of improving efficiency is upgrading A/C and heating systems, which is where the opportunity for a company like Trane lies. Some new air conditioning units are as much as 40 percent more efficient than older units still in use, Conover said. Over the long term, that means big savings on fuel bills.

Building owners are still reluctant to upgrade because an air conditioning unit can cost thousands of dollars. An owner of a residential or office building has little incentive to pay the expense. Renters pick up the tab.

“We need to find ways to make it attractive for building owners to upgrade their systems,” Conover said.

One way is to give building owners a tax break to recoup their costs by speeding up the time a business can depreciate the expense.

There will be 15 million new buildings between now and 2015, Conover said, but that will still be only about 90 percent of the total number.

In the existing building “is where the real opportunity lies,” Conover said.

Conover explained some of this last week as part of the Great Energy Efficiency Day sponsored by the Energy Efficiency Alliance.

“We used to be just these … people stuck in the boiler room. Now people are interested,” he said.

 J.S.