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Energy and Environmental Policies Under the Administration of
Pres. Donald TrumpHon. Earl Pomeroy
Senior Counsel
Alston & Bird
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Official Washington Takes Notice
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Sharply Contrasts on Energy Regulations
President Obama
Energy development viewed in context of environmental protection and climate change.
Environmental groups highly influential
“Protecting the one planet we’ve got is what we have to do for the next generation.”- President Obama, Apr. 22, 2015, NBC News, Halimach Abdullah
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Candidate Trump
Energy production viewed in context of job creation, economic growth, and energy self-sufficiency.
Strong support from oil and gas industry.
“American energy dominance will be declared a strategic economic and foreign policy goal of the United States. It’s about time.”- Candidate Trump - E&E Daily, May 27, 2016
Sharply Contrasts on Energy Regulations
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The Obama Years: Accelerating Domestic Regulation And New International Commitments Through Paris Climate Agreement.
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The Obama Years: Unprecedented Regulatory Activity BLM Waste Prevention, Production Subject to Royalties, and Resource Conservation Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sector BOEM Air Quality Control, Reporting and Compliance Rule EPA and OSHA Modernization of the Accidental Release Prevention (RMP0) Regulations Under Clean Air ActCorporate Finance: 1504 RuleHealth and Environment Committee/Cross Cutting Issues Ozone NAAQS (2015): Realign implementation to 2025, increase review period to 10 years Final guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of
Climate Change in National Environmental Policy Act Review, White House, Council on Environmental Quality, signed August 1, 2016.
OMB Social Costs of Carbon and Methane Oil and Gas Control Techniques Guidelines OMB guidance on Regulatory Impact Analyses Ozone Exceptional Events Rule (2016) All related NAAQS implementation rule Regional Consistency Tribal Lands Federal Implementation Plan Short-term NO2 and SO2 primary NAAQS (2016) PM Annual NAAQS (2013) Refinery Sector Rule (maybe adding a monitoring off-ramp and perhaps other provisions on flaring, etc.) – defend work
practice standards Greenhouse Gas Emissions Reporting Program (GHGRP) Startup, Shutdown and Malfunction (SSM) SIP Call CERCLA 108(b) Financial Responsibility Rulemaking for Petroleum and Chemical Industries White House memorandum re incorporating Ecosystem Services into Federal Decision Making (10/7/15)Downstream: EPA should directly address potential impacts of the E10 blendwall by lowering the statutory amounts of corn ethanol to
9.7% or less; calls for changing the RFS point of obligation should be ignored, as this suggested change would not address the fundamental flaws of the RFS, especially the E10 blendwall
Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium and Heavy-Duty engines and vehicles Finding that Greenhouse Gas Emissions from Aircraft Cause of Contribute to Air Pollution that May Reasonably Be
Anticipated to Endanger Public Health and Welfare RFS 2017 Implementing Standards and RFS 2018 Biomass-based Diesel Standard: Proposed rule released in May, 2016;
Final Rule released November 23, 2016 Walking and Working Surfaces; Personal Protective Equipment (Fall Protection Systems) Clarification of Employers’ Ongoing Obligation to Maintain Accurate Recordkeeping Records Proposed Rule Upstream: ONRR Amendments to Civil Penalty Regulations (81 Fed. Reg. 50306, August 1, 2016) ONRR Consolidated Federal Oil and Gas and Federal and Indian Coal Valuation Reform (81 Fed. Reg. 43338, July 1,
2016) BOEM/BSEE Oil and Gas and Sulfur Operations on the Outer Continental Shelf-Requirements for Exploratory Drilling on
the Arctic Outer Continental Shelf (July 15, 2016) 81 Fed. Reg. 46477 Efffluent Limitations Guidelines and Standards for the Oil and Gas Extraction Point Source Category, 81 Fed. Reg. 124,
41845 (June 28, 2016) BLM Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases: Measurement of Gas (80 Fed. Reg.
61,646) (November 17, 2016) BLM Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases: Site Security, (80 Fed. Reg. 40,768) (July
13, 2015)
BLM Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases: Measurement of Oil (80 Fed. Reg. 58,952) (November 17, 2016)
EPA ICR No. 2548.01: Information Collection Effort for Oil and Gas Facilities (Existing Sources) BLM Resource Management Planning (February 25, 2016 Fed. Reg. 9674) BSEE, Final Well Control Rule, April 29, 2016, 81 Federal Register 25888 (April 29, 2016) BOEM Financial Assurance NTL No. 2016-NO1, 81 Fed Reg. 46599 (July 18, 2016) API comments filed on ANPR on
November 17, 2014, and Draft Guidance on November 23, 2015 (objective is to suspend implementation in order to establish a reasonable timeline and implementation)
November 3, 2015 (80 DE 68743), Presidential Memorandum “Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment”, the Presidential proclamation that set “no net loss” as a shorthand objective, and states that environmental goals (not simply positive environment effects) are to be a criterion of future economic and national security actions.
FWS-HQ-ES-2015-0126, FWS Revisions to the U.S Fish and Wildlife Service Mitigation Policy, originally published 81 Fed. Reg. 12,380 (March 8, 2016). Final policy published November 21, 2016 at 81 Fed. Reg. 83440. Joint API-IPAA comments submitted May 9, 2015
FWS-HQ-ES-2015-0165, FWS Draft Endangered Species Act Compensatory Mitigation Policy, originally published at 81 Fed. Reg. 61.032 (September 2, 2016). Joint API-IPAA-AXPC-IAGC-Western Energy Alliance comments submitted October 17, 2016
NOAA/NMFS Acoustic Criteria Technical Guidance, 81 Fed. Reg. 51694 (August 4, 2016). Joint API-IAGC-NOIA-AOGA comments filed on March 3, 2014, September 14, 2015, and March 30, 2016.
EPA Report, Assessment of Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources. EPA’s Clean Water Rule: Definition of “water of the United States,” 80 Fed. Reg. 37,054, (June 29, 2015) DOI/BOEM 2017-203 Proposed Final 50-Year OCS Leasing Program, 81 Fed. Reg. 84612 (November 23, 2016). Joint
industry trade comments submitted on August 23, 2014 (RFI), March 20, 2015, (DPP), June 15, 2016 (Proposed Program) RIN 1004-E26, BLM Hydraulic Fracturing on Federal and Indian Lands, 78 ed. Reg. 31,635 (May 24, 2013) Final Rule
published 43 CFR Part 3160, 80 Fed. Reg. R 16127 (March 26, 2015). API comments submitted August 23, 2013. NMFS, Proposed Incidental Harassment Authorization (IHA) Regulations for GOM Geological and Geophysical Activities –
litigation settlement agreement allowing ongoing G&G activities in GOM expires on September 30, 2017. Regulations must be finalized by this date, and industry fully supports finalization of a reasonable final rule.
Midstream Proposal to Reissue and Modify Nationwide Permits Pipeline Safety: Safety of Gas Transmission and Gathering Pipelines Pipeline Safety: Safety of Hazardous Liquids Pipelines Pipeline Safety: Operator Qualification, Cost Recovery, Accident and Incident Notification and other Pipeline Safety
Proposed Changes. Hazardous Materials: Sampling and Testing Requirements for Unrefined Petroleum Products Hazardous Materials: Volatility of Unrefined Petroleum Products and Class 3 Materials Pipeline Safety: Gaseous Carbon Dioxide Pipelines Pipeline Safety: Amendments to Part 192 and 195 to Require Valve Installation and Minimum Rupture Detections
Standards Pipeline Safety: Enhanced Emergency Order Procedures Pipeline Safety: Safe Operations of Underground Storage Facilities for Natural Gas IFR to codify the requirements of API
RPs 1170 and 1171 Hazardous Materials: Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable Trains - *ONLY
THE ECP BRAKING PORTION OF THE ENHANCED BRAKING REQUIREMENTMarket Development EPA Clean Power Plan Implementation (Federal Implementation Plan, model training rules) Internal Revenue Service Notice 2016-31, May 5, 2016. Beginning of Construction for Sections 45 and 48. EO Planning for Federal Sustainability in the Next Decade on March 19, 2015 (supersedes Executive Order 13514 –
Focused on Federal Leadership in Environmental, Energy and Economic Performance, October 5, 2009Taxation: Section 385 Rules Administrative Position on Industry Tax Provisions: Should request the targeted elimination of industry-used tax provisions
are not included in future administration budgets.
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Newton’s Third Law: For every action, there is an equal and opposite reaction.
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The Political Backlash: Too many regulations are stifling economic growth
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Candidate Trump
“I will eliminate all needless and job-killing regulations now on the books.”- CNN Money, Peter Gillespie, Sept. 23, 2016
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2016 Presidential Election Results by State
THE WALL STREET JOURNAL/NY Times
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2016 Presidential Election Results by County
http://www.nytimes.com/elections/results/presidentNew York Times
Clinton carried 88 of the country’s most populous
counties.*
Trump carried about 2,600 of the remaining 3,000
counties.*
*National Journal, February 2, 2017.
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12http://www.nytimes.com/elections/results/househttp://www.nytimes.com/elections/results/senate
Senate seats defended in 2016:Republican – 24Democratic – 10
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Down-ballot voting trends significantly strengthen Republican dominance in state legislatures and governorships
https://www.washingtonpost.com/news/the-fix/wp/2016/11/10/the-decimation-of-the-democratic-party-visualized/?tid=a_inl
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Consequence of 2016 Elections: Era of deregulation has begun.
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Deregulation Agenda Will Advance In All Three Branches of
Government
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January 2017: Executive and Legislative Branches Off to a Fast Start
Presidential Actions:
Cabinet Nominations
Executive Orders
Supreme Court Nomination
Congressional Actions:
Congressional Review Act
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Executive Actions
Cabinet Nominations
Secretary of Energy Rick Perry
Secretary of InteriorRyan Zinke
EPA AdministratorScott Pruitt
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Secretary of Energy – Rick Perry
“I am committed to modernizing our nuclear stockpile, promoting and developing American energy in all forms, advancing the departments critical science and technology mission, and carefully disposing of nuclear waste.”
“…after being briefed on so many of the vital functions of the department of energy, I regret recommending its elimination.”Comments in confirmation hearing, The Hill, January 19, 2017
Background:
Governor of Texas (2000-2015)
Presidential Candidate
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Secretary of Interior – Ray Zinke
“The President-Elect has said we want to be energy independent. It is better to produce domestically under reasonable regulation than watch it be produced overseas with no regulation.”Comments from confirmation hearing, The Washington Post, January 17, 2017.
Background:
Navy Seal (1986-2008)
Montana State Senator (2009-2011)
1 Term U.S. Congress
Bachelor Degree in Geology; MBA
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EPA Administrator – Scott Pruitt
“We can simultaneously pursue the mutual goals of environmental protection and economic growth. But that can only happen if EPA listens to the views of all interested stakeholders, including the states, so that it can determine how to realize its mission while considering the pragmatic impact of its decisions on jobs, communities, and most importantly, families.”Comments in confirmation hearing, Oil & Gas Journal, January 18, 2017.
Background:
Oklahoma Attorney General (2010-2017)
Initiated or participated in 14 law suits aimed at blocking EPA regulations
State Senate (1998-2006)
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Executive Orders
In January, President Trump signed 7 executive orders and 11 presidential memoranda.
Executive Order: Legally binding document, authorized by Constitutional powers and statutes, which declares government policy and directs action by government agencies and departments.
Presidential Memorandum: Document establishing Administration Priority.
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Executive Orders Signed by President Trump
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Presidential Memoranda
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“Section 2….it is the policy of the executive branch to streamline and expedite, in a manner consistent with law, environmental reviews and approvals for all infrastructure projects, especially projects that are a high priority for the Nation, such as improving the U.S. electric grid and telecommunications systems and repairing and upgrading critical port facilities, airports, pipelines, bridges, and highways.”
(Emphasis Added)
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“Section 1…for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”
Section 2. (b)…For fiscal year 2017, which is in progress, the heads of all agencies are directed that the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero”
Section 2. (d)…The Director [of OMB] shall provide the heads of agencies with guidance on the implementation of this section. Such guidance shall address, among other things, processes for standardizing the measurement and estimation of regulatory costs.”
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Executive Order 13771 – “One-In, Two-Out”
Adopts “Pay Go” (Pay As You Go) budget principle as a means to limit additional regulations;
Similar initiatives already in place in Canada, United Kingdom and Australia;
Significantly increases power of OMB director over Agency heads. OMB Director establishes measuring metrics and oversees agency compliance as new regulatory initiatives are proposed.
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OMB Director Nominee – Mick Mulvaney
Background:
Member of Congress from South Carolina (2011-2017)
Co-Founder of Freedom Caucus, Consisting of most conservative Republican House Members
Voted against raising debt ceiling
Spoke in favor of entitlement cuts at confirmation hearing
Source: U.S. Budget Week, January 27, 2017.
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“Too broad a scope could overwhelm the two-for-one system, but too narrow a scope may result in too little a reduction in regulatory burden.”
Implementing Issues: What Qualifies for
Regulations to be Eliminated?
Source: Peacock, Marcus (December 7, 2016) Implementing a Two-for-One Regulatory Requirement in the U.S., The George Washington University Regulatory Studies Center.
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Pipelines: American Made
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“Section 1….I believe that construction and operation of lawfully permitted pipeline infrastructure serve the national interest.”;
“…(i) review and approve in an expedited manner, to the extent permitted by law”;
“…(ii) consider, to the extent permitted by law and as warranted, whether to rescind or modify the memorandum by the Assistant Secretary of the Army for Civil Works dated December 4, 2016 and whether to withdraw the Notice of Intent to Prepare an Environmental Impact Statement.”
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Dakota Access Pipeline
Crosses Missouri River within .5 miles of Standing Rock Indian Reservation.
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Timeline of Critical EventsJuly 25, 2016: US Corps of Engineers grants Dakota Access Pipeline, a Section 408 permit, for crossing of Missouri River. Accompanying Environmental Assessment by the Corps concludes the crossing “would not produce significant environmental impact.”
Not Included: A right-of-way easement under Mineral Leasing Act.
July 27, 2016: Standing Rock Sioux Tribe sues Corps of Engineers in U.S. District Court for District of Columbia
September 9, 2016: U.S. District Judge James Boasberg denies motion for preliminary injunction.
September 9, 2016: The U.S. Department of Justice, Army, and Interior temporarily halt project on Federal Land after request for “voluntary pause” rejected by Energy Transfer Partners, project owner.
October 9, 2016: On appeal, denial of injunction is affirmed.
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Timeline Continued…December 4, 2016: Assistant Secretary of Army for Civil Works announced remaining easement would not be granted without the analysis and public input of an Environmental Impact Statement under the National Environmental Protection Act (NEPA).
February 3, 2017: Corps of Engineers orders protest camp to be cleared.
February 8, 2017: Army Corps of Engineers, having concluded a NEPA EIS was not required, issues the remaining easement allowing pipeline construction under the Missouri River at Lake Oahe.
February 13, 2017: Federal District Judge James Boasberg rejected a TRO motion finding the petitioners had not demonstrated irreparable harm to tribal members’ religious practices. The judge committed to a hearing “before oil flows through the pipeline.” More motions are anticipated.
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“Section 2…. I hereby invite TransCanada Keystone Pipeline, L.P. (TransCanada), to promptly re-submit its application to the Department of State for a Presidential permit for the construction and operation of the Keystone XL Pipeline, a major pipeline for the importation of petroleum from Canada to the United States.”
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Canadians Still Eager to Charge Forward on Keystone
“We are currently preparing the application…”Statement from TransCanada, pipeline owner
American reversal on Keystone will lead “to a deepening of the relationship across the border.”Jim Carr – Natural Resources Minister
Source: N.Y. Times, January 24, 2017, Trump Revives Keystone Pipeline Rejected by Obama.
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Revisiting International Commitments
Will President Trump remove the United States from the Paris Climate Agreement?
“We are going to cancel the Paris Climate Agreement.”Candidate Trump - Reuters, May 27, 2016.
“I’m looking at it very closely, I have an open mind to it.”President Elect Trump – Reuters, November 23, 2016
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Future of the Paris Agreement?
“It’s important that the U.S. maintains its seat at the table about how to address the threat of climate change. No one country is going to solve it on it’s own.”
Rex Tillerson, Exxon CEO and Secretary of State designate at confirmation hearing. Washington Post, January 11, 2017.
“Trump has made it clear he will withdraw from the Paris Agreement.”
Myron Ebell, former head of Trump EPA Transition Team.Reuters, January 30, 2017.
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BLM Hydraulic Fracturing Rule
Trump Administration will decide next step in appeal of Federal Court ruling invalidating Department of Interior fracking rule.
March, 2015- Department of Interior finalizes rule regulating fracking on public and Native American Lands.
June 22, 2016- Federal District Judge in Wyoming rules against Department of Interior, finding the agency does not have authority to issue rule.
January 5, 2017- 10th Circuit Court delays oral arguments until March instead of original date of January 17, 2017.
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Options for Trump Administration
Defend the rule;
Drop appeal of District Court ruling;
Request voluntary remand to reconsider or rework the rule.
No indication of the Administration’s plan at this point.
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Revisiting Promulgated Rules
Clean Power Plan
Published October 23, 2015, requires states to submit plans to achieve State specific CO2 goals reflecting emission levels for coal and gas fired power plants. Rule requires 32% cut in carbon by 2030.
Litigation by state and companies challenging rule consolidated into West Virginia v. EPA.
Supreme Court enters rare Stay of Rule in a 5-4 ruling issued four days before the death of Justice Scalia.
Oral arguments to the full D.C. Circuit Court of Appeals held on September 27, 2016.
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States Participating in Clean Power Plan
Litigation
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Demise of Clean Power Plan
Foreseeable in 1 of 2 ways:
9 member Supreme Court strikes down the rule.
Rule is reworked in rule making under APA and litigated.
Ken Silverstein, Forbes, November 10, 2016.
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On December 7, 2009, EPA entered Endangerment Finding that 6 key greenhouse gases, including carbon dioxide (CO2) and methane (CO4) threaten public health and welfare of current and future generations as provided under Clean Air Act Section 202 (a).
The Endangerment Finding included a record with 380,000 comments in two public hearings.
Revisiting Promulgated Rules
Endangerment Finding: A Bridge Too Far?
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Endangerment Finding
Options to reverse Endangerment Finding:
1. Repeal Clean Air Act Legislative and political non-starter.
2. Reverse Endangerment Finding by promulgating rule concluding carbon dioxide, methane, and other green house gases do not endanger public health and welfare. Politically unpopular.
Would require building factual record that would counter significant body of scientific research.
Vulnerable to court challenge.
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Congressional Action on Deregulation
In divided government, Congress tends to distrust the regulatory authority of the Executive Branch.
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Congressional Review Act
The Congressional Review Act (CRA) creates means of Congress to disapprove recently promulgated rules.
Key Components: Congress can revoke rule by majority vote, subject to Presidential veto,
within 60 legislative days of its submission to Congress.
Not subject to filibuster.
If rule is submitted less than 60 days before the end of the legislative session, the CRA window resets at the beginning of the next session.
Rules adopted after June 13, 2016 will be eligible for CRA disapproval resolutions.
Source: Congressional Research Service.
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CRA Action Against Stream Protection Rule
Department of Interior Rule effective December 20, 2017. Congressional Resolution of Disapproval, House vote: 228-194; Senate
vote: 54-45. It is expected to be signed by President Trump.
Reason for Rule: Clarifies 1977 Surface Mining Control and Reclamation Act, updates “Stream Buffer Rule” of 1983.
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Reason for Rejection by Congress
Added regulatory requirements to coal industry. $52m annual compliance cost, half to fall on hard pressed mining operations in Appalachia.
Rule, which had been under development for years, finalized in December, within reach of CRA.
Easy deliverable for coal country.
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CRA Action against SEC Extraction Payment Disclosure Rule
Adopted by SEC on June 27, 2016. Resolution disapproval, House vote:235-187; Senate vote: 52-47. It is
expected to be signed by President Trump.
Reason for the Rule: Dodd Frank Act requires SEC to adopt a rule on payment disclosure to foreign governments by U.S. resource extractive industries.
Reasons Against the Rule: Compliance costs,
Competitive disadvantage for U.S. companies,
Few quantifiable benefits.
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CRA Action Against Department of Interior Venting and Flaring Rule
Adopted by Interior Department on November 15, 2016.
Resolution of disapproval passed House 221-191 on January 27, 2017. Awaiting Senate Action.
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Reasons for the Rule
Reduce by 50% flaring on federal and tribal lands, along with requirements to reduce leaks and venting of methane gas.
Capture royalty payments on gas which would have been flared;
Update federal requirements consistent with available technology;
Reduce release of methane.
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Reasons Against the Rule
Duplicative regulation: EPA is the federal agency with regulatory jurisdiction of the Clean Air Act.
EPA has the expertise and experience for CAA enforcement. The prospect of uncoordinated enforcement by two separate agencies would create conflicting requirements and compliance difficulties.
The rule is not consistent with state regulations already in place.
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Controversy about the Rule
Public is opposed to flaring;
Some royalty owners believe their payments are being short changed due to amount of flared gas;
Use of CRA to eliminate Venting and Flaring Rule raises questions about Department of Interior’s ability to address the issue in future.
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Congress Considers Structural Reforms on Executive Branch Authority
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REINS Act (Regulations from the Executive in Need of Scrutiny Act)
Regulations with economic cost in excess of $100 million must be approved in vote of Congress within 70 session days.
Passed House on January 5, 2017 by vote of 237-187.
Strong support from Koch brothers and growing list of trade associations, including API.
Prognosis: Will face filibuster in Senate. President Trump has indicated support, but the executive authority of his administration would be significantly curtailed.
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Regulatory Accountability Act of 2017
Repeal Chevron Doctrine regarding difference to Executive Branch agencies. Chevron Doctrine: If there is ambiguity in statute, courts must accept an
agency’s interpretation unless it is arbitrary or manifestly contrary to the statute.
Title II of Regulatory Accountability Act Any court reviewing an administrative action shall “decide de novo all
relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.” (Emphasis added)
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REINS ActLegislative
Executive
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Regulatory Accountability Act
Judicial
ExecutiveLegislative
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Judiciary Action
Nomination of Neil Gorsuch will restore, upon confirmation, a conservative 5-4 majority to the Supreme Court.
“Gorsuch, a judge on the 10th Circuit Court of Appeals, is a conservative justice straight from central casting – young, with impeccable credentials and a track record well within the mainstream of the Republican Party.”Sam Baker, National Journal, January 31, 2017
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Judge Gorsuch has been thinking about Chevron…
“In the Administrative Procedure Act (APA), Congress vested the courts with the power to “interpret…statutory provisions” and overturn agency action inconsistent with those interpretations…
Chevron seems no less than a judge-made doctrine for the abdication of the judicial duty…”
Gutierrez-Brizuela v. Lynch No.14-9585 (10 Cir. 2016)
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Create Sustainable regulatory structure representing reasonable response to public protection issue which will endure through inevitable political change.
The Goal of Regulatory Reform:
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End Regulatory Twists and Turns…
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With Clear, Consistent, Responsive Rules.
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Parting Thought
“It would be nice if Trump and his critics could find some common ground:
Democrats admitting that regulations have been carelessly overused,
Republicans conceding that the regulatory state isn’t going away. It needs to be governed better, neither abused nor abolished.”
Robert J. Samuelson, The Washington Post, February 5, 2017.
