Energy Blog

Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth A natural gas rig in Wyoming.Source: Devon Energy via Bloomberg.

Congress is rolling back some of the regulatory red tape created by the Obama administration.

Using the Congressional Review Act (CRA), Congress can disapprove of regulations that have been finalized in the last 60 days Congress has been in session. When the resolutions of disapproval are signed by the president, they’re taken off the books.

Early in this session Congress has jumped right in working to relieve some regulatory burdens on businesses.

Stream Rule

The first regulation on its way for repeal is the Interior Department’s stream protection rule. This duplicative regulation harmful to coal mining was finalized six weeks after Election Day. In a key vote letter to House members, the U.S. Chamber explained the rule:

exceeds the Department’s authority, will cause significant economic harm and job losses, and interferes with longstanding and successful state efforts to protect water quality.

In putting together the regulation, the Department acknowledged the rule would have adverse economic impacts as a result of reduced coal production. Yet, the agency may be underestimating the economic impact because it ignored permitting delays and litigation costs. These adverse impacts would increase production costs of U.S. coal relative to foreign competitors and likely reduce U.S. exports.

The U.S. Chamber also signed onto a letter with 30 state and local chambers of commerce asking Congress to repeal the stream protection rule:

It is a one-size-fits-all federal mandate that interferes with the longstanding federal-state balance in overseeing mining operations. It will place massive amounts of coal reserves—and the affordable energy they provide—off limits. The National Mining Association estimates that the SPR would eliminate up to 270,000 jobs, including 80,000 mining jobs.

The negative impacts of the regulation will be felt far beyond the coalfields, extending to railroads, utilities, and the companies that service and support mining communities, from restaurants to hotels to equipment suppliers. The rule will drive up energy costs for families and businesses, and it will reduce state and local tax revenues in areas of the country that have already been devastated in recent years. This means negative impacts to schools, roads, first responders and nearly all state and local government services in affected areas.

After the Senate voted to repeal the regulation, Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy said:

Today’s vote to block the Obama Administration’s unnecessary and costly stream rule is a victory for common sense and American energy production. This rule interfered with state authorities and would have placed massive amounts of coal resources off limits for production, costing us jobs and higher energy prices.

Resource Extraction

The second regulation sent to President Trump also involves energy.  Last summer, the Securities and Exchange Commission (SEC) finalized a regulation that requires American energy companies to release sensitive and detailed commercial information about foreign energy projects.

In a key vote letter to House members, the U.S. Chamber explained, “Similar rules from SEC have been killed by the courts because SEC violated the free speech protections of the First Amendment.”

The Chamber added, “In its own description of the rule, SEC recognized that the rule would result in a loss of competitive advantage by U.S. companies relative to some foreign firms.”

Methane Emissions

Ten days after Election Day, the Bureau of Land Management finalized a “venting and flaring” regulation to reduce methane emissions from wells on federal and tribal land.

The U.S. Chamber along with state and local chambers support nixing the rule:

Venting and flaring gasses from oil and natural gas wells is vital to manage pressure and maintain safety. While energy companies have every fiscal incentive to minimize venting and flaring, they sometimes must do so due to a lack of sufficient infrastructure to transport natural gas to market. This is especially true for wells in newly productive areas on federal lands. Nonetheless, through technological innovation, industry has successfully and voluntarily reduced methane emissions, even as natural gas production has grown significantly.

Unfortunately, under the guise of reducing methane emissions and increasing government royalties, BLM’s 11th hour regulatory action imposes costly and prescriptive requirements on oil and natural gas production that will make energy development uneconomical in many areas.

On February 3, 2017, the House voted to repeal the rule, and it awaits action in the Senate.

Blacklist for Federal Contractors

Last year, the FAR Council finalized regulations enacting President Obama’s Fair Pay and Safe Workplaces Executive Order. The rules require that “federal contractors must disclose mere allegations of federal labor violations, potentially locking them out of federal contracts without giving them a chance to challenge the charges,” writes Marc Freedman, U.S. Chamber executive director of labor law policy, thereby earning the E.O. and regulations the nickname of "blacklisting." What’s more, it would give unions leverage in labor negotiations with companies who have federal contracts by threatening to file federal labor violation allegations.

As Jack Howard, senior vice president of Congressional and Public Affairs states in the Chamber’s letter:

The Executive Order and the FAR Council’s rule, are seriously problematic, burdensome and unwarranted:

 Because of any contractor’s desire to remain eligible, enforcement agencies will have extraordinary leverage to extract agency-favorable “labor compliance agreements” from contractors to resolve violations, even before the contractors will have had a chance to present their defense. They contradict the Federal Arbitration Act that permits employers to use pre-dispute arbitration clauses in employment contracts to resolve employee complaints without the expense and burden of going to court. Arbitration is a simpler, fairer and faster way for all parties to resolve disputes that arise between them. Such use of these clauses have been upheld by the courts numerous times. The addition of contracting penalties and new levels of severity for violations usurps Congress’s exclusive authority to write labor and employment laws. They exceed the authority provided under the Procurement Act, which allows the president to change federal procurement only to increase “economy and efficiency.” The reporting requirements will likely spur massive delays for procurement, particularly for key Department of Defense items.

The U.S. Chamber joined a chorus of associations representing companies doing business with the federal government in opposing the Blacklisting rule. The House voted to repeal the rule February 2, prompting Randy Johnson, U.S. Chamber Senior Vice President for Labor, Immigration, and Employee Benefits to applaud:

If implemented this Executive Order would have resulted in contractors sacrificing their due process rights, massive reporting requirements that would have generated delays in critical procurement actions, and given enforcement agencies enormous leverage to settle violations on very agency favorable terms.

With a president willing to sign them, look for Congress to make repealing harmful regulations a regular part of its work this year.

Sean Hackbarth President Donald Trump signed executive orders to advance construction of the Keystone XL and Dakota Access pipelines.President Donald Trump took steps to advance construction of the Keystone XL and Dakota Access pipelines.Photo credit: Shawn Thew/Pool via Bloomberg.

When it comes to pipelines, Inauguration Day brought quite a change at the White House:

President Donald Trump took steps to advance construction of the Keystone XL and Dakota Access pipelines, marking the start of an era with fewer constraints on the oil industry to the chagrin of environmentalists who have bitterly fought the projects.

The moves, among Trump’s first actions since taking office, are a major departure from the Obama administration, which rejected TransCanada Corp.’s Keystone proposal in 2015 and has kept Dakota Access blocked since September.

Contrast this to the Obama administration appeasing extreme, “keep it in the ground” groups.

It’s great seeing a president who treats North American energy abundance as a benefit to producing jobs and growth.

“For too long, private infrastructure investment has been held hostage by government interference driven by fringe interests,” said Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy. “Today’s Executive Orders on the Dakota Access pipeline and Keystone XL pipeline demonstrate that we finally have an administration that is serious about putting American energy to work for the entire economy.”

Speaker of the House Paul Ryan (R-Wis.) agreed.

It's about time. https://t.co/rHPbOwhjio

— Paul Ryan (@PRyan) January 24, 2017

Both pipeline projects have been unfairly held up. On multiple occasions, the Obama administration used federal agencies to put up barriers blocking the Dakota Access Pipeline’s completion. All that’s needed is for the Army Corps of Engineers to issue an easement to allow construction under the Missouri River.

And with the Keystone XL pipeline, even with seven years of reviews finding it was safe, President Obama flat-out rejected it in 2015.

Both projects would create jobs and boost economic growth.

For instance, the Dakota Access Pipeline, which would transport oil from North Dakota to refineries in Illinois, has already created 12,000 jobs and will “inject $156 million in sales and income taxes to local economies,” according to Energy Transfer Partners, the company building the pipeline.

As for the Keystone XL pipeline, it would transport 800,000 barrels a day of Canadian and North Dakota oil to Gulf Coast refineries produce big economic benefits:

According to the FSEIS [the State Department’s environmental analysis], 42,100 Americans will be employed in direct, indirect, and induced jobs during construction of Keystone XL, generating $2.02 billion in earnings for workers.  In addition, the $3.3 billion project will generate $66 million in sales tax for goods and services during construction that will infuse economic vitality into local communities.  The FSEIS also states that $3.1 billion will be spent on construction contracts, materials, and other support for Keystone XL – much-needed revenue for companies still struggling to recover from a hard recession.  It will also provide $55.6 million in new property tax revenue in 17 counties with Keystone facilities…. Overall, the project will contribute $3.4 billion during construction to the U.S. Gross Domestic Product (GDP).

With the strokes of President Trump’s pen, the attack on modernizing American energy infrastructure is over. Now, we can get on with using American energy to create more good-paying jobs and boost economic growth.

Sean Hackbarth Construction of the Dakota Access Pipeline near in New Salem, North Dakota.Construction of the Dakota Access Pipeline near in New Salem, North Dakota.Photo credit: Tony Webster. Licensed under a Creative Commons Attribution-ShareAlike 2.0 Generic license.

The Obama era is drawing to a close, but the saga of the Dakota Access Pipeline continues.

As President Barack Obama and his administration packs up and leaves office, they threw a wrench in the works of finishing the beneficial energy infrastructure project:

The Army published a notice Wednesday of its intent to prepare an environmental impact statement on the Lake Oahe crossing. Texas-based developer Energy Transfer Partners won't be able to lay pipe under the reservoir while the study is ongoing — it is currently blocked from doing so anyway. A study could take up to two years, according to the Energy Department.

ETP asked U.S. District Judge James Boasberg on Tuesday to block the study; he scheduled a hearing for Wednesday afternoon in Washington, D.C.

Judge Boasberg allowed the Corps to proceed:

A federal judge said Wednesday he won't keep the U.S. Army Corps of Engineers from launching a full environmental study of the $3.8 billion Dakota Access pipeline's disputed crossing under a Missouri River reservoir in North Dakota.

U.S. District Judge James Boasberg denied Texas-based Energy Transfer Partners' request to stop the Corps from proceeding until he rules on whether the company already has the necessary permission to lay pipe under Lake Oahe, the water source for the Standing Rock Sioux tribe.

The Associated Press reports, “The study notice can be withdrawn if Boasberg were to eventually rule that ETP has permission for the crossing.”

Rob Port at SayAnythingBlog.com correctly explains the president’s strategy:

At this point, which just days left in his last term in office, President Obama knows he cannot unilaterally stop the pipeline. So what this is about is setting the stage for more legal warfare against the project under Donald Trump. By initiating this process now, environmental extremist groups can argue in court that it would somehow be illegal for Trump to allow the project to be completed until it plays out.

Potentially, an environmental review could mean years of delay when all that’s left to finish the pipeline is drilling underneath Lake Oahe. The Associated Press reports, Energy Transfer Partners (ETP) “has said in court documents there is already oil in a portion of the pipeline leading up to the lake in anticipation of finishing the project.”

Gumming up the works for the next administration does not make for a “smooth and effective” transition.

So much has already been invested in a project that has already been approved by the Corps. In June 2016, the Corps signed off on an easement, allowing pipeline construction under the Missouri River. However, it didn't finalize it. 

Now, President Obama’s political appointees have complicated things even more and put the agency in a bind, say pipeline supporters.

“It’s unfortunate that the outgoing administration would try to hamstring the professionals at the Army Corps of Engineers who worked diligently for years to ensure the Dakota Access Pipeline was sited and constructed in the environmentally and culturally sensitive manner,” said Craig Stevens, Midwest Alliance for Infrastructure Now (MAIN) Coalition spokesman.

A frustrating aspect to the Obama administration’s action is it runs counter to what the Corps did recently when it reissued its nationwide permit procedures. Matt Koch at the Institute for 21st Century Energy explains [emphasis mine]:

The Corps Nationwide Permit (NWP) procedures create a streamlined authorization process ("general permit") for construction projects deemed to have minimal environmental impacts to waterways, with the goal of protecting the environment while reducing administrative burdens and delays.  

Highlighted by the Dakota Access pipeline protest, pipeline protestors and the anti-fossil energy "keep it in the ground" movement called on the Army Corps to abandon the long established NWP program and expand the Army Corps role in regulating oil and gas pipelines in their effort to slow and stop pipeline and other energy infrastructure projects.

Instead, the Army Corps is sticking with its process to review utility line and oil and gas pipeline construction projects “limited to regulating discharges of dredged or fill material into waters of the U.S. and structures or work in navigable waters of the U.S.” The Army Corps stated, “We do not have the authority to regulate the operation of oil and gas pipelines.”

But for this politically-charged project, Obama political appointees want the Corps to regulate an oil pipeline.

Apparently coherence gets tossed aside when you’re helping extreme, "keep it in the ground," anti-energy groups.

Hopefully under the new Trump administration, the Corps will issue all outstanding permits to allow this complicated legal struggle to come to a conclusion. And hopefully this beneficial, job-creating energy project will be allowed to be completed.