Mining states celebrate HJR 38, Keystone XL back on track, CPP still an unknown

Several stalled or presumed dead energy projects are back in the driver’s seat in 2017, and the new team running things in Washington, both at the White House and in Congress, has moved rapidly in the past month to begin to rollback some of the growth-stifling regulations that came into being during the previous eight years.

Energy projects: HJR 38 overturns Stream Protection Rule

Wyoming Governor Matt Mead applauded President Trump’s decision to sign House Joint Resolution 38, overturning the Office of Surface Mining, Reclamation and Enforcement’s (OSMRE) stream protection rule. The rule conflicted with the Surface Mining Coal Reclamation Act, which gives States the power to be the primary regulators of coal mining.

“Wyoming has the experience, the expertise and the programs required to ensure the protection of our natural resources,” said Governor Mead. “The national rule did not recognize the primacy of states and it did not account for the significant differences between coal operations in the mountains of Appalachia and the plains of Wyoming. This rule was ill conceived and unworkable. I applaud Congress and President Trump for taking swift action.”

Wyoming was part of a coalition of states challenging the rule in court. The states argued OSMRE ignored Congress in developing this rule and that the rule would impose heavy burdens on the states and the coal industry. It would significantly impair the development of coal resources. Attorney General Peter Michael had joined other Attorneys General in asking Congress to consider using the Congressional Review Act to overturn the rule.

Keystone XL pipeline back in play: TransCanada applies for new approval of Keystone XL route in Nebraska

After the Obama State Department killed the final approval for TransCanada’s Keystone XL pipeline project that would take Canada’s crude oil south to U.S. refineries, TransCanada Corporation (ticker: TRP) filed an application with the Nebraska Public Service Commission (PSC) seeking approval for the Keystone XL pipeline route through the state.

Shrinking Red Tape Moves Energy Projects Forward

Keystone XL pipeline route denoted by dashed blue line. The existing Keystone pipeline system is denoted with a brown line. Source: TransCanada

“This application has been shaped by direct, on-the-ground input from Nebraskans,” said Russ Girling, TransCanada’s president and chief executive officer. “The thousands of Nebraskans we have met over the last eight years understand the value of this project and what it means to the state. As we have said consistently, safety and a respect for the environment remain our key priorities. We are listening and acting on what we have learned.”

The United States House of Representatives Energy & Commerce Committee’s Keystone XL timeline is reproduced here, as presented by former committee Chairman Fred Upton:

  • September 19, 2008 – TransCanada submits an application to the U.S. Department of State to construct the Keystone XL pipeline, an extension of the existing Keystone pipeline.
  • 2009 – Department of State conducts 20 scoping meetings in communities along the pipeline route and consults with federal and state agencies and Indian tribes.
  • April 16, 2010 – Department of State issues its Draft Environmental Impact Statement. It opens a 45-day comment period, which it extends for additional days.
  • Summer 2010 – Department of State hosts 21 public comment meetings in communities along the pipeline route. When the public comment period is extended, additional meetings are held. Nearly 1,800 verbal and written comments are received.
  • October 15, 2010 – Speaking to the Commonwealth Club of San Francisco, Secretary of State Hillary Clinton is asked about approval of the Keystone XL pipeline and she says, “we are inclined to do so.”
  • October 25, 2010 – The General Presidents of four international unions representing a total of 2.6 million workers send a letter to Secretary of State Hillary Clinton urging the Department of State to approve the Keystone XL pipeline project.
  • December 7, 2010 – Department of State hosts a government-to-government meeting for Indian tribes and other consulting parties.
  • January 2011 – TransCanada agrees to adopt 57 project-specific special conditions for design, construction, and operations of the Keystone XL pipeline. The conditions are developed by the Department of State and the Pipeline and Hazardous Materials Safety Administration; according to the Supplemental Environmental Impact Statement, these conditions would give the Keystone XL pipeline “a degree of safety over any other typically constructed domestic oil pipeline,” making it a truly state-of-the-art pipeline.
  • April 15, 2011 – Department of State issues a Supplemental Draft Environmental Impact Statement and opens another 45-day comment period. More than 280,000 comments are received.
  • July 25, 2011 – The Obama administration issues a Statement of Administration Policy calling legislation related to the Keystone XL pipeline unnecessary, declaring, “the Department of State has been working diligently to complete the permit decision process for the Keystone XL pipeline and has publicly committed to reaching a decision before December 31, 2011.”
  • July 26, 2011 – U.S. House of Representatives approves H.R. 1938, the North American-Made Energy Security Act. The bill, authored by Rep. Lee Terry (R-NE), requires a decision on the Keystone XL pipeline by November 1, 2011. The bill is approved with a strong bipartisan vote of 279-147.
  • August 26, 2011 – Department of State issues its Final Environmental Impact Statement and opens up a 90-day review period. The agency continues accepting public comments.
  • Fall 2011 – Department of State hosts public meetings in states along the pipeline route.
  • November 10, 2011 – President Obama announces that no decision on the Keystone XL pipeline will be made until after the 2012 election. A decision is expected in early 2013, after the administration identifies a new route for the pipeline.
  • November 10, 2011 – The president’s decision is widely attributed to political pressure exerted by environmentalist groups opposed to the pipeline. A statement from Terry O’Sullivan, General President of the Laborers’ International Union of North America, sums up the response: “Environmentalists formed a circle around the White House and within days the Obama administration chose to inflict a potentially fatal delay to a project that is not just a pipeline, but is a lifeline for thousands of desperate working men and women. The administration chose to support environmentalists over jobs – job-killers win, American workers lose.”
  • December 23, 2011 – Both the House and Senate unanimously approve – and President Obama signs into law – a bill requiring approval of the Keystone XL pipeline within 60 days unless the president determines the project does not serve the national interest.
  • January 18, 2012 – After over three years of review, President Obama formally rejects the pipeline’s Presidential Permit and asks TransCanada to reapply.
  • February 7, 2012 – The Energy and Commerce Committee approves H.R. 3548, the North American Energy Access Act. The bill, authored by Rep. Lee Terry (R-NE), removes the president’s authority over the pipeline’s permit and transfers it to the Federal Energy Regulatory Commission.
  • February 16, 2012 – U.S. House of Representatives approves the PIONEERS Act with language from Rep. Terry’s bill requiring swift approval of the pipeline.
  • March 8, 2012 – President Obama personally lobbies the Senate to kill an amendment calling for congressional approval of the Keystone XL pipeline. In spite of the president’s efforts, 11 Senate Democrats joined all voting Republicans in favor of the project.
  • March 22, 2012 – On a visit to Cushing, Oklahoma, President Obama takes undue credit for the southern leg of the pipeline from Cushing to the Gulf Coast, ignoring the fact that he rejected the only Keystone permit that requires his approval because it crosses our national boundary with Canada.
  • April 18, 2012 – House approves H.R. 4348, the Surface Transportation Extension Act of 2012, including language authored by Rep. Lee Terry (R-NE) taking the pipeline out of the president’s hands and requiring the Federal Energy Regulatory Commission to approve the permit within 30 days. The bill passed with veto-proof support by a vote of 293-127.
  • April 18, 2012 – TransCanada submits a reroute of the Keystone XL plan to the state of Nebraska for review.
  • May 4, 2012 – TransCanada reapplies to U.S. State Department for a Presidential Permit.
  • May 18, 2012 – House passes a Motion to Instruct Conferees on H.R. 4348 to insist on Title II of the House bill regarding approval of the Keystone XL Pipeline. The motion passed with a bipartisan vote of 261-152.
  • June 15, 2012 – State Department publishes Notice of Intent (NOI) to prepare a Supplemental EIS (SEIS) for the second Keystone XL Presidential Permit application.
  • January 22, 2013 – Nebraska Governor Dave Heineman gives approval of the proposed reroute of the pipeline through the Cornhusker State.
  • March 1, 2013 – The U.S. State Department issued its Supplemental Environmental Impact Statement for the Keystone XL Presidential Permit application, which includes the proposed new route through Nebraska. The SEIS findings are similar to the Department’s FEIS issued last August, which found the pipeline will have limited adverse environmental impacts.
  • March 15, 2013 – H.R. 3, the Northern Route Approval Act, is introduced in the House by Rep. Lee Terry (R-NE). The bill addresses all the permits necessary beyond just presidential approval and would limit litigation that could doom the project.
  • March 22, 2013 – U.S. Senate agrees to Sen. John Hoeven’s (R-ND) budget amendment urging approval of the Keystone XL pipeline by a vote of 62-37. 17 Democrats joined every Senate Republican voting in favor of the amendment, signaling future filibuster-proof support for legislation to build the pipeline using congressional authority.
  • April 17, 2013 – The Energy and Commerce Committee approves H.R. 3, the Northern Route Approval Act, by a vote of 30 to 18.
  • May 22, 2013 – House approves H.R. 3, the Northern Route Approval Act, with bipartisan support by a vote of 241 to 175.
  • January 31, 2014 – The U.S. State Department issued its Final Supplemental Environmental Impact Statement for the permit application, confirming the project is safe and will have limited environmental impacts. The report reflects that TransCanada has agreed to incorporate 59 special safety conditions recommended by PHMSA.
  • April 18, 2014 – The U.S. State Department announced it will delay the national interest determination period indefinitely, citing a need to wait until the Nebraska Supreme Court can rule over the route.
  • September 18, 2014 – House approves H.R. 2, the American Energy Solutions for Lower Costs and More American Jobs Act, a broad energy package that includes the language of H.R. 3.
  • November 14, 2014 – House approves H.R. 5682, a bill authored by Rep. Bill Cassidy (R-LA), which would approve the application for the Keystone XL pipeline.
  • January 9, 2015 – House approves H.R. 3, the Keystone XL Pipeline Act, authored by Rep. Kevin Cramer (R-ND), which would authorize construction of the project.
  • January 29, 2015 – Senate approves S.1, the Keystone XL Pipeline Approval Act.
  • February 11, 2015 – House approves S.1, the Keystone XL Pipeline Approval Act, sending the bill approving the pipeline to the president’s desk.
  • February 24, 2015 – President Obama vetoes S.1, the Keystone XL Pipeline Approval Act
  • November 6, 2015 – Obama administration / U.S. State Department reject TransCanada’s application to build the Keystone XL pipeline.

The proposed route was evaluated by the Nebraska Department of Environmental Quality and approved by the Governor of Nebraska in 2013. The preferred route avoids the area that is defined as the Nebraska Sandhills and is expected to have minimal environmental impacts in Nebraska. The review also included active consultation with landowners along the pipeline corridor where over 90 percent have signed voluntary easements to construct Keystone XL, TransCanada said in a statement.

The PSC process is the clearest path to achieving route certainty for the project in Nebraska and is expected to conclude in 2017, TransCanada said.

Washington update 

In a note last week, Akin Gump delivered an update on Washington activity. Energy applications follow:

  1. Infrastructure Development. Just four days into his term, on January 24, President Trump sent a clear signal that infrastructure development would be a top priority for his administration. Two Presidential Memoranda were issued to advance the Keystone XL and Dakota Access Pipeline projects, and to promote the use of materials produced in the United States in the construction, retrofitting, repair and expansion of pipelines inside the country. The President also issued an EO to expedite environmental reviews for projects that the Chairman of the Council on Environmental Quality designates as “high priority.” While the EO does not eliminate or otherwise limit environmental review and permitting requirements, it seeks to expedite infrastructure development by directing agency heads to prioritize reviews and approvals and meet established deadlines “using all necessary and appropriate means.” Examples of high-priority projects cited in the EO are improving, repairing or upgrading the electric grid, telecommunications systems, port facilities, airports, pipelines, bridges and highways. It remains to be seen whether projects designated as “high priority” advance quicker through project development. The potential for Congress to amend the National Environmental Policy Act and other environmental laws likely will have the greatest impact on President Trump’s objective to spur more infrastructure investment.
  2. Regulatory Reform. The January 24 Presidential Memorandum calls for “Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing” and instructs the Secretary of Commerce to coordinate with the other agency heads to develop a streamlining action plan for federal permitting and reducing regulatory burdens affecting domestic manufacturers. Once the action plan is complete, the Secretary of Commerce will solicit comments from the public for a 60-day period. The public comment period for stakeholders provides domestic manufacturers with an opportunity to identify permitting and regulatory burdens for consideration in the streamlining process.
    On February 2, the Office of Management and Budget provided interim guidance on the January 30 Executive Order (“Reducing Regulation and Controlling Regulatory Costs”), which calls for agencies to eliminate two existing regulations for each new one that is issued—and to ensure that any incremental costs for new regulations be offset by the elimination of existing costs associated with a minimum of two prior regulations. The interim guidance provides detailed information about the coverage of the EO and explains that, for the remainder of fiscal year 2017, it applies to “significant regulatory actions,” as that term is defined in a prior 1993 Executive Order. Generally, a “significant regulatory action” is a broad term that includes rulemakings that have an annual effect on the economy of $100 million or more, adversely affect a sector of the economy (e.g., jobs), create inconsistencies with actions planned by another agency, or raise novel legal or policy issues.
  3. Congressional Review Act (CRA) as a Tool to Overturn Oil, Gas and Mining Rules. President Trump signed his first CRA resolution, J. Res. 41, rendering without effect the SEC rule requiring the “disclosure of payments by resource extraction issuers” (only the second regulation ever “overruled” in such fashion). Click here to read more on the Senate resolution, and the CRA, generally. Next up, potentially, is H.J. Res. 71, to eliminate the Interior Department’s Office of Natural Resources Revenue’s ‘‘Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform” rule, which revised the mechanism by which the value of oil, gas and coal on public lands is established. These decisions will benefit the oil and gas sector both directly, in altering the fees paid, and indirectly, in the reporting obligations associated with the operations.

22 Western Governors to Congress: we are concerned about BLM Planning 2.0 Rule

Twenty-two Western Governors, representing 19 Western states, Guam, American Samoa and the Northern Mariana Islands as part of the Western Governors Association, have reiterated their concerns to Congressional leadership concerning the Bureau of Land Management’s (BLM) final rule, Resource Management Planning (Planning 2.0).

In a statement, the Western Governors expressed their disappointment by BLM’s failure to adequately involve western states in the Rule’s development, and they oppose several provisions of the final rule issued on Dec. 12, 2016. The Governors, in outreach sent on Feb. 10, 2017, are concerned by BLM’s changes to provisions regarding Governors’ consistency reviews for new and revised resource management plans, and an emphasis on landscape-scale planning that could lead to an emphasis on national objectives over state and local objective.

Estimated cost of federal government regulation imposed between 2009-2015

Last May the Heritage Foundation calculated that the Obama administration’s increases in regulations had elevated the cost burden on the U.S. economy by $100 billion. The organization’s overall tally included the Clean Power Plan, FDA, FCC, DOE and Dodd-Frank, among others.

“The number and cost of federal regulations increased substantially in 2015, as regulators continued to tighten restrictions on American businesses and individuals. The addition of 43 new major rules last year increased annual regulatory costs by more than $22 billion, bringing the total annual costs of Obama Administration rules to an astonishing $100 billon-plus in just seven years,” the foundation said.

The foundation said the EPA dominated rulemaking in 2015, accounting for nine of the 43 new major rules, and increasing annual regulatory costs by $11.1 billion.

“The U.S. Energy Information Administration projects that the Clean Power Plan will more than double the number of coal-fired power-plant closures than would otherwise occur absent the regulation.

“Not only will electricity rates increase, but so will the prices of virtually all U.S. products, because energy is a primary component of all manufacturing. … Higher prices also dampen consumer demand, which imperils jobs. More than 150 stakeholders, including 27 states, have filed suit challenging the Clean Power Plan as a violation of the EPA’s regulatory authority. On February 22, 2016, the Supreme Court issued a stay to halt implementation of the regulation until the lower court determines its validity,” the foundation said.

Shrinking Red Tape Moves Energy Projects Forward

EPA headquarters building

The Clean Power Plan

On August 3, 2015, President Obama and EPA announced the Clean Power Plan, described by the EPA as: “a historic and important step in reducing carbon pollution from power plants that takes real action on climate change. … With strong but achievable standards for power plants, and customized goals for states to cut the carbon pollution that is driving climate change, the Clean Power Plan provides national consistency, accountability and a level playing field while reflecting each state’s energy mix. It also shows the world that the United States is committed to leading global efforts to address climate change.”

On February 9, 2016, the Supreme Court stayed implementation of the Clean Power Plan pending judicial review. The Court’s decision was not on the merits of the rule, according to the EPA. The Final Rule for the Clean Power Plan is posted on the EPA website. The Clean Power Plan is under attack by several energy states.

Oil & Gas 360® spoke to FBR & Company Senior Analyst Lucas Pipes  about the status of the coal industry under the new administration and discussed the effects of the Clean Power Plan on the U.S coal industry—and the consequences of not reversing it.

“I don’t want to sound like I’m exaggerating, and I’m paraphrasing some of the comments I’ve heard from [coal industry] executives:  the Clean Power Plan [represents] ‘life or death’ for coal. I think that’s how it is often viewed, and I think the expectation in the industry is that the Trump administration will take this rule very seriously and do what it can to reverse it,” Pipes said.

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