Daily on Energy: Trump deregulations in Democratic crosshairs for cancellation

  • Jan 13, 2021
  • Washington Examiner

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ALL ABOUT THE CRA: Democrats’ wins in the Georgia Senate races gave President-elect Joe Biden a tool to use in peeling back Trump deregulations: the Congressional Review Act.

The CRA allows Congress, with a simple majority vote and in an expedited process, to cancel regulations, passing a resolution of disapproval that the president then signs. That would spare Biden the lengthy, uncertain rulemaking process he’d otherwise have to slog through.

Using the CRA, though, isn’t without its hurdles. For one, the Senate is a 50-50 split, so Democrats would have to have every member of their party on board, including energy state moderates like West Virginia’s Joe Manchin, or pick off some Republicans for a CRA resolution to succeed.

And what’s more, a Democratic-led Congress has never actually used the CRA to eliminate a regulation. Only Republican lawmakers have.

Abby talked with some regulatory policy experts to gauge their expectations about how the CRA could be used this Congress and answers all your burning questions below.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

YOUR QUESTIONS ANSWERED: How common is it for Congress to cancel regulations with the CRA? It was pretty rare before the Trump administration. Prior to 2017, Congress had only ever used the CRA against one regulation — a Clinton-era ergonomics standard in 2001. (Fun fact: The Senate was also split 50-50 then. Six Democrats joined all 50 Republicans to reject that regulation).

When President Trump took office, however, the Republican-controlled Congress brought 16 CRA resolutions to the floor. Just one of those resolutions — attempting to cancel Obama-era controls on methane from oil and gas operations on public lands — failed, after the late Sen. John McCain in a surprise move gave it a thumbs down.

So what rules are eligible for a CRA resolution? Any rules finalized within the last 60 working days of the last Congress. 2020 was a weird year for a lot of reasons, including the congressional calendar, so the cut-off date is later than usual. Regulatory experts put the cut-off date at Aug. 21, so any Trump administration rule finalized after that date could theoretically be at risk.

Why wouldn’t Democrats want to try to cancel as many Trump rules as they can? One of the main reasons is a provision within the law itself that prohibits federal agencies from issuing any regulation “substantially similar” to one rejected by the CRA. It’s why people often describe the CRA as a “blunt tool.”

“That is what constrained the incoming Obama administration, even though they had a Democratic majority,” said Susan Dudley, director of the George Washington University Regulatory Studies Center and a former Bush administration regulatory chief. “It was really that they would have liked to make them different, but not be prevented from doing anything.”

Other regulatory policy experts, however, say concerns about the “substantially similar” provision are overblown. In fact, the Trump administration has tested this provision, too, issuing regulations related to Obama-era rules Congress repealed using the CRA, a source involved in CRA discussions told Abby.

And because the Trump rules were deregulatory in nature, any rules the Biden team issues would already be substantially different, that source argued.

Timing is another reason why Democrats might be hesitant to use the CRA as much. Congress has just 60 days to consider CRA resolutions, and during that time, the Senate will also be working quickly to confirm Biden’s nominees and give him a working Cabinet. Not to mention, Congress could be working on another coronavirus relief package, which Democrats and Biden have both said is a priority.

So what are the top targets in the energy and environment space? There are a couple rules potentially on the chopping block. Top targets, regulatory policy experts told Abby, could be Department of Labor rules restricting sustainable investing that drew a lot of backlash from the clean energy sector. Also eligible are Interior Department changes that would not make companies legally liable for the unintentional killing of birds.

Probably the most controversial rules under consideration for the CRA are at the EPA, which has been rushing to finish its deregulatory agenda before Biden takes office. Rules under consideration there include changes relaxing air pollution permitting, elimination of direct federal regulation of methane from oil and gas, and rules that restrict the type of science the EPA can use in policymaking and alter how the EPA calculates the costs and benefits of rules.

Wait…I thought Administrator Andrew Wheeler said the science transparency and cost-benefit rules aren’t eligible for the CRA. What gives? It’s not exactly clear whether his argument would hold water — or whether Democrats would even be bound to it. Wheeler has argued those rules aren’t eligible for the CRA because they are procedural (dealing with internal EPA matters) and not counted as major rules.

The Congressional Research Service debunks one of those arguments outright, noting that all final rules are subject to the CRA. Regulatory policy experts also say there’s a case to be made that neither rule is merely procedural, because it introduces substantive changes to how the EPA sets pollution standards.

It’s also not clear who would enforce Wheeler’s argument. “If Congress chooses to disapprove those rules, who has standing to stop them?” Dudley said.

OIL AND GAS INDUSTRY PREPARES FOR BIDEN: The American Petroleum Institute is promising to fight Biden’s proposed ban on new oil and gas drilling on public lands and waters, but the fossil fuel industry also sees opportunities to work with the new administration on combating climate change.

“If he is interested in finding commonsense solutions, President Biden has a willing and able partner in the oil and gas industry,” Mike Sommers, the CEO of API, the largest U.S. oil and gas lobby group, told Josh in an exclusive interview ahead of its State of American Energy event today, in which the industry previews priorities for the new year.

Sommers said Biden cannot reach his goal of achieving net-zero emissions across the economy “without us,” citing the importance of investing significantly in carbon capture technologies for fossil fuel projects, which is still not commercially widespread.

Coming to the table on methane: API is ready to support federal regulation of methane, Sommers said, a shift after the group backed the Trump administration’s elimination rollback of methane rules.

But Sommers suggested that position is untenable now, as Biden has promised stricter actions and Europe moves in the same direction, putting the U.S. at a competitive disadvantage

“If they did it right and do it in a way that is consistent with our principles, there is going to be common ground with methane regulations,” Sommers said. “If I am a new administration, I would want the people actually in the business at the table as I am writing a regulation.”

It’s worth noting API opposed the Obama administration’s methane regulations (spearheaded by Biden’s new domestic climate czar Gina McCarthy, who was EPA chief at the time) that required oil and gas companies check for leaks twice a year, and Biden would likely move in a more aggressive direction, so it’s unclear what kind of rules the group would support.

RELATED...US OIL PRODUCTION MIGHT HAVE PEAKED: U.S. oil production likely won’t ever again reach its pre-pandemic peak, the Energy Information Administration suggested yesterday.

Looking all the way out to 2022, presumably a long ways away from the pandemic (we hope), EIA projects oil production to average 11.5 million barrels per day, compared to a record of around 13 million b/pd at the start of 2020. Production will average 11.1 million b/pd this year, EIA said in its Short-Term Energy Outlook.

The worst polluting fossil fuel, coal, could see a bit of a bump because of a rise in natural gas prices. Coal production is set to increase by 12% this year, after falling 24% in 2020, while coal’s share of the electricity mix will increase from 20% last year to 24% in 2022.

Renewables will continue their rapid growth, particularly solar, but as the economy comes back to life, EIA projects carbon emissions to rise 4.7% this year and by 3.2% in 2022 after the record double-digit fall in 2020.

BUT DEMAND GETS A BUMP: U.S. oil demand rose to 19.61 million barrels per day last week from 17.05 million b/pd the previous week, the Energy Information Administration reported today.

Jet fuel consumption, which has been holding back demand recovery as people avoid flying, got a big boost, increasing to 1.47 million b/pd from 917,000 b/pd.

Crude oil inventories decreased by 3.2 million barrels, easing the glut in the market.

CLIMATE RISK DISCLOSURE JUST GOT MORE REAL FOR COMPANIES: Environmental groups are happy with Biden’s reported selection of Gary Gensler as chairman of the Securities and Exchange Commission, a choice that signals the SEC is primed to take the lead role in fulfilling the president-elect’s promise to mandate public companies disclose their risks to climate change.

Gensler is a progressive former head of the Commodity Futures Trading Commission in the Obama administration and Goldman Sachs alum who led Biden’s financial policy transition team.

“Selecting Gary Gensler to chair the SEC shows that Biden takes the climate financial risk seriously,” said Jamal Raad, campaign director of Evergreen Action, a group of former staffers on Washington Gov. Jay Inslee’s presidential campaign. Raad added Gensler has proved to be a “strong voice for Wall Street accountability.”

THAT NAME SOUNDS FAMILIAR: After reportedly being a finalist for Energy secretary, Biden today named Elizabeth Sherwood-Randall as his homeland security advisor and deputy national security advisor.

Sherwood-Randall was deputy secretary of Energy in the Obama administration, where she mostly focused on the nuclear weapons portfolio of DOE. But liberal groups campaigned against her because of her connection to Ernest Moniz, the moderate former Obama Energy secretary. Sherwood-Randall is an advisory board member on Moniz’ Energy Futures Initiative.

GREENS WANT TRUMP IMPEACHED: A coalition of 11 environmental groups are calling on Congress to vote to impeach Trump for “inciting last week’s white supremacist violent insurrection at the United States Capitol.”

The groups, led by the League of Conservation Voters, said in a letter yesterday that lawmakers must hold Trump accountable for undermining democracy and the faith in free and fair elections.

FORMER MICHIGAN GOV. RICK SNYDER TO FACE CHARGES OVER FLINT: Former Michigan Gov. Rick Snyder and other top officials in his administration have been informed they are being charged following an investigation into the Flint water crisis, according to press reports yesterday.

It’s not clear the nature of the charges, but the Michigan attorney general’s office informed Snyder, his former top health official Nick Lyon, and others in his administration to expect to appear in court soon, the Associated Press reported.

Snyder, a Republican, was serving as governor when state water managers in 2014 switched the water supply for Flint without properly treating it. The city’s residents, the majority of whom are black, were then exposed to high levels of lead contamination in their drinking water.

CLEAN ENERGY JOBS AREN’T REBOUNDING THAT QUICKLY: Just 16,900 clean energy jobs were added back in December, a growth of 0.6% as the sector continues to recover slowly from deep job losses over the spring due to the pandemic.

In fact, 2020 marked the first year in which the clean energy sector ended the year with fewer jobs than it had when the year began, according to the latest data from BW Research, Environmental Entrepreneurs, E4TheFuture, and the American Council on Renewable Energy. Nearly 430,000 clean energy workers remain out of a job, the data said.

None of the clean energy sectors experienced more than 1% in job growth in December. At the end of the year, job losses affected 13% of the energy efficiency workforce and 12% of the renewable energy workforce. Clean fuels, transmission, and clean vehicles employment also saw significant declines.

The clean energy groups are looking to Biden for help: Provisions in the year-end spending bill, which included an extension of wind and solar tax credits, can help, but aren’t enough, said Gregory Wetstone, ACORE’s president and CEO.

The renewable energy industry is “looking forward to working with the incoming Biden administration and the new Congress to move past the endless cycle of temporary stopgap measures” and finally advance “comprehensive, long-term, scientifically-driven climate policy” that can grow clean energy jobs, he added.

INDUSTRY CALLS FOR POLICIES FOR 100% ELECTRIC CARS: In a policy platform released this morning, the Zero Emissions Transportation Association — a new coalition of electric car companies, utilities, and minerals producers — said Congress should dramatically expand the incentives offered to consumers to purchase an electric car.

To boost electric vehicle charging infrastructure, the group recommends Congress spend $30 billion over 10 years.

The group also encourages the incoming Biden administration to ratchet up fuel economy and tailpipe greenhouse gas standards to accelerate transportation electrification. The roadmap calls on Biden to sign an executive order establishing a “transportation electrification coordinator” in the White House and set a requirement that electric cars make up 50% of the government’s vehicle procurement by 2025.

HEADWINDS FOR WIND POWER DESPITE 2020 RECORD: The wind energy sector broke installation records in 2020, despite the pandemic, but its recent boom is concealing a stall in progress on the horizon, Bloomberg NEF said in analysis yesterday.

Onshore wind installations could break records again in 2021. After that, though, growth looks likely to slow, especially in countries other than China where BNEF expects wind capacity additions to fall from just under 50 gigawatts in 2021 to roughly 30 GW in 2025.

Wind power’s growth is still tied too closely to politics in countries like the U.S. and those in Europe. For example, expiring subsidies for wind power in the U.S. in 2026 will lead to shrinking installations, unless the tax credits are extended, BNEF said. More broadly, onshore wind turbines are also competing with low solar prices and grappling with more public opposition than offshore wind, the analysis noted.

“Finding routes to market without subsidies and freeing themselves from the whims of politicians could help deliver more consistent growth,” BNEF wrote.

New York Times A late burst of climate denial extends the era of Trump disinformation

Washington Post EPA to unveil Scott Pruitt’s portrait Friday

Bloomberg Occidental to strip carbon from the air and use it to pump crude

Washington Post United Airlines aims to suck carbon dioxide from the friendly skies

Bloomberg The UAE warns US shale companies against pumping more oil

The House is voting on impeachment of President Trump. The Senate is out.