With help from Elana Schor and Darius Dixon

LET PEACE FILL THE SOUTHEAST AS THE WATERS FILL THE SEA: The governors of Alabama and Georgia have returned to the negotiating table and are working out the rough outlines of an agreement that could end 30 years of legislative and legal wrangling over water rights between the two states. As Pro's Annie Snider reports, The longstanding battle has threatened a number of legislative priorities, including last year's omnibus spending deal, as lawmakers from both states have sought to add legislative provisions advancing their interests. Now, the Water Resources Development Act Sens. Jim Inhofe and Barbara Boxer are hoping to move on the floor this September could become a major battleground for the warring states if a deal doesn't shape up soon.

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Water is for fightin' over: Alabama, Georgia, and Florida have been bickering over a pair of river systems for decades, as the rapid growth of the Atlanta metro region put pressure on water supplies, raising the hackles of managers of Alabama hydropower and Florida fishermen. Governors have come close to striking deals in the past, but the efforts keep falling apart. Alabama Gov. Robert Bentley and Georgia Gov. Nathan Deal were driven to the negotiating table on Tuesday in part by fatigue over the endless dispute, but also by the questions surrounding of an expected regulation from the Army Corps of Engineers whose implications are unclear to everyone. “Neither side knows who has the upper hand, that's why they're coming to the table,” said a source close to the negotiations. “Both sides could get screwed.”

WRDA's prospects: Boxer and Inhofe praised the governors for agreeing to meet in a letter sent last month. They need peace to break out in order to ensure the smooth passage of WRDA. Without it, they could face a bitter fight over the bill, with Sen. Richard Shelby moving to insert pro-Alabama language in the Senate version to counteract the pro-Georgia provision in the House version. And with a Senate calendar already jam packed — Congress still needs to fund the government, among other legislative goals — leadership is likely less willing to spend a lot of floor time on a fight over a local issue.

The art of a deal: The two Republicans emerged from their meeting with the framework of an agreement, and they've now assigned staff to work out the details, sources close to the negotiations say, with plans to schedule a second meeting this fall. “We had a good meeting with Governor Deal about water issues, and we look forward to further good-faith discussions on these issues in the future,” said Yasamie August, a spokeswoman for Bentley.

WELCOME TO FRIDAY! I'm your host Eric Wolff, and now, thanks to the folks at ClimateNexus, I have to watch Olympic Trampolining next week, because I had no idea that existed, and it is oddly mesmerizing. Send your tips, quips, and comments to ewolff@politico.com, or follow us on Twitter @ericwolff, @Morning_Energy, and @POLITICOPro.

TRANSPO PASSES POWER FOR GHG EMISSIONS: The transportation sector produced more carbon emissions than the power sector for the first time in 40 years, the nonprofit U.S. PIRG says in a report. The green group looked at a rolling 12-month average of emissions using the latest Energy Information Administration data and found that electric power had fewer emission than any other sector (commercial, residential, industrial, transportation). ME took a look at the data, and indeed, transportation has produced more tons of CO2 than electric generation six of the last eight months reported by the agency.

A SUSTAINABLE TORCH: The Olympic torch that will be lit tonight in Brazil will be smaller than it has been at other recent games, a testament to the opening ceremony's theme of sustainability, Reuters reports. The exact details of the ceremonies are kept under wraps, but they will cost about half of the 2012 ceremony in London. The torch itself will stand in contrast to the bonfires of other recent games. "It will be a low-emission cauldron as it would be an oxymoron to talk about sustainability and then burn massive amounts of gas," executive producer Marco Balich said.

Sustainable at both ends: By tradition, the torch is lit in Greece by using parabolic mirrors to concentrate the sun's rays to spark the flame. As a Sunshot Initiative spokeswoman pointed out, this is the same technology used in concentrated solar arrays, like California's 377 MW Ivanpah Solar Power Facility.

TONY CLARK READY TO DISCHARGE: FERC Commissioner Tony Clark will make the agency’s September meeting his last. As Pro's Darius Dixon reports, while the commissioner's term ended on June 30, he could have hung around until December if he had wanted. By sticking around as long as he did, Clark was able to be the crucial third vote on several fines approved by the agency that otherwise would’ve stalled because FERC Chairman Norman Bay has had to recuse himself from so many decisions. In a tweet announcing his departure Thursday, Clark said, "Public service has been an honor, but these aren't meant to be forever jobs.” Without Clark, the ostensibly five-member commission will be down to three, all Democrats, the minimum for a quorum. No one has been nominated to take either of the Republican seats.

Clark tells ME he “will depart shortly after” the September meeting but hasn’t set a firm exit date. That gives him a couple weeks to clean out his desk and throw a proper shindig.

W. ADVISER: CLIMATE CHANGE THREATENS NATIONAL SECURITY: Stephen Hadley, first a deputy and later top adviser in George W. Bush's administration from 2001 to 2009, said refugees fleeing the effects of climate change have wreaked political havoc in Europe. "I have not been particularly sensitive to the climate change issue," he said at a POLITICO Playbook event in Washington. "Climate change and a lot of other economic dislocations have put a lot of people out of work, they are on the move and they have no place to go and it means they are recruiting grounds for terrorists and extremists and potential refugee flows that will tax Europe even more." Hadley is swimming upstream against Republican orthodoxy. During the GOP presidential primary, candidates, including eventual nominee Donald Trump, mocked Obama and Democrats for rating climate change a top national security threat.

JUDGE REJECTS SOLARCITY'S NEVADA BALLOT INITIATIVE: SolarCity is running out of options in Nevada now that a state judge rejected a company-sponsored ballot initiative that would have restored net metering to the state's solar customers. As Pro's Esther Whieldon reports, regulators drastically cut the amount solar customers get paid for supplying excess power to the grid, causing several large solar customers to leave the state. The judge said the initiative failed to explain to voters that it would have removed the commission's "power to set specific net metering rates altogether." SolarCity must now apply to the legislature to overturn the rules.

‘DIVERGENT’, ‘MAD MAX’ STARS TAKE ON PIPELINE: A group of young Native American activists recently staged a run from their reservation to D.C. to protest the Dakota Access Pipeline, a $3.7 billion pipeline almost as long as Keystone XL that would ship light oil from North Dakota’s Bakken shale region to Illinois. And they’re getting some Hollywood backup on Saturday. “Divergent” actress Shailene Woodley and Riley Keough of “Mad Max: Fury Road” (also known as Elvis Presley’s granddaughter) are set to appear with the activists at a rally to deliver 140,000 signatures on a petition asking the Army Corps of Engineers to stop the pipeline.

What’s happening on the ground: The activists represent the Standing Rock Sioux tribe, which has challenged the Army Corps’ approval of final permits for Dakota Access in court. The pipeline is otherwise on track, however, and got some new operators this week when Canadian oil sands transporter Enbridge and Marathon signed a $2 billion deal to acquire a stake in the project.

CONSOL, EPA AGREE TO DEAL: CONSOL Energy will pay $3 million and stop discharging contaminated waste water into the Ohio river under and agreement struck with the EPA and announced Thursday. As Pro's Alex Guillén reports, the money will be split between the state and federal governments. "Mining operations that discharge to our rivers, lakes and streams have an obligation to comply with our nation's laws that protect those water bodies, as well as public health," EPA regional administrator Shawn Garvin said in a statement.

HAMM CREDITS CHEAP GAS FOR SAVING THE ECONOMY: Continental Resources CEO and Trump energy adviser Harold Hamm said cheap U.S. gas, fed by the fracking revolution, rescued the economy from its doldrums, according to a Q&A published by Bloomberg BusinessWeek Thursday. "You know, the last eight years were pretty miserable, but they would have been real bad without what we’ve done — without this energy renaissance. It’s been tremendous," he said. He also said he hopes the next president will "change the rhetoric on the fossil fuel industry and not have a target on everybody’s back in this industry and trying to put us out of business."

Eni chief zings North American oil: Claudio Descalzi, CEO of Italian oil major Eni, knocked North American non-traditional oil extraction in comments he made in a BusinessWeek Q&A of his own. Descalzi explained how Eni is surviving low oil prices, saying, "Fortunately we had a strategy to own conventional assets, which means a very low cost and very low break-even price. If we’d made different choices — complicated projects or tar sands or Arctic projects — life would be quite difficult." The CEO also backed the Paris climate accord and suggested the world needs to burn less fossil fuels. "I believe in the need to face climate change, reduce fossil fuel — and I put coal and oil and gas all together. We need to find the right balance."

MOVER, SHAKER: George Hawkins, general manager of the D.C. Water and Sewer Authority, has been named to the National Infrastructure Advisory Council by President Barack Obama. Hawkins is a former EPA staffer and board member of the North American Electric Reliability Corp. who was hired by D.C. when the city needed to fix its own, pre-Flint, lead-in-the-water problem.

QUICK HITS

— BP working to halt excessive waste flow into Lake Michigan from refinery, Fuel Fix

— Greenspan says oil price probably has hit bottom, Fuel Fix

— The Next Shale Boom Will Be Built on Sand, Bloomberg

— California voters could decide future of climate change program, Reuters

— Everyone Despises SolarCity Deal, Except Tesla Shareholders, NYT

THAT'S ALL FOR ME!