Daily on Energy: Industry's long wait for EPA air pollution permitting changes

Industry has for years sought changes to the EPA’s New Source Review program, claiming the permitting requirements make it economically impossible for facilities to pursue efficiency improvements. They argue that also keeps them from reducing emissions and installing technology like carbon capture and storage.

Under the New Source Review program, power plants and other industrial facilities making an upgrade or modification must install pollution controls if those changes increase emissions of air pollutants.

The Bush EPA tried — and failed — to make changes to the permitting program. Former Bush EPA official Bill Wehrum, who served as the Trump EPA’s air chief until June of this year, picked up that mantle again, proposing changes that would ease the requirements for power plants making energy efficiency upgrades. But those changes appear to have stalled at the agency.

Now Republicans in Congress are trying to help out.

Wyoming Republican John Barrasso, who chairs the Senate Environment and Public Works Committee, introduced legislation last month that would codify some of the changes the EPA is seeking. Virginia Republican Congressman Morgan Griffith had previously introduced a similar bill.

All of those attempts might be in vain: Democrats staunchly opposed the Barrasso bill in a Wednesday hearing in the Senate environment committee.

The House version of the legislation does have some support from Democrats — but it’s unlikely to win enough support across the aisle to push it over the finish line.

And state attorneys general and environmental groups are already raising legal questions about the EPA’s changes to the New Source Review program, which it initially proposed as part of its replacement to the Obama-era Clean Power Plan.

Where are the EPA reforms? EPA officials haven’t said much publicly about their plans after pulling the New Source Review changes last-minute from its power plant rule.

Those changes could even push into next year, to the dismay of industry groups. The only clue the EPA has offered on timing was in a legal filing in the lawsuit challenging its power plant rule.

“[T]he content of the intended final action has not yet been determined and interagency review has not begun,” the agency said in a legal filing last month. “Thus final action on the NSR proposal is a month away at a minimum.”

The agency’s opponents say the delay is because the EPA is running into legal issues as it tries to thread the needle on the permitting program.

“If the EPA thought this was compliant with the law, wouldn’t they have included this in their most recent revisions to the Obama power plant law?” Maryland Democrat Chris Van Hollen said during the Wednesday Senate hearing.

Natural Resources Defense Council attorney John Walke said in response the EPA’s changes are “severely problematic.”

Old battles die hard: But he added the Senate bill would be even worse, allowing “unlimited increases” in pollution in the name of electric reliability.

“Not even the Trump administration was audacious enough to claim that was allowed under law,” Walke said.

However, Jeff Holmstead, an attorney for Bracewell and former EPA air chief during the Bush administration, emphatically argued the proposed changes in the Senate bill wouldn’t increase air pollution. Walke’s comments were “dispiriting” and “bordering on dishonest,” he told senators.

“In the real world, even if Congress decided to exempt all existing power plants from NSR entirely, which this bill doesn’t do, there would not be an increase in power plant pollution because of the many other programs that regulate the same pollutants from these facilities,” he said.

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.

AS DANLY PASSES TEST, A SENSE FERC IS CREEPING INTO POLITICS: James Danly is going to be confirmed to the Federal Energy Regulatory Commission after maneuvering through his confirmation hearing unscathed, but not without damage to the independence of the institution — at no fault of his own — Democrats say.

We focused our coverage of Tuesday’s confirmation hearing on the issues asked of Danly. But there was also a sense that the Trump administration is politicizing one of the few federal bodies that has seemed to be above it all by refusing to nominate a Democrat to pair with Danly.

“I am disappointed that the White House has chosen to send us a nomination for only one of two open seats,” said Senator Joe Manchin, the top Democrat on the Energy and Natural Resources Committee. “I am concerned that the decision is driven by political maneuvering instead of a desire to ensure this independent commision is fully seated.”

Manchin, nonetheless, suggested he’d vote for Danly, who he called “clearly bright and well qualified.”

However, Danly’s confirmation will come at a cost: Says Martin Heinrich, who is wary of giving Republicans a dominant 3-1 seat advantage.

“It risks creating a back and forth that would be truly untenable for our energy grid,” the New Mexico Democrat said. “We risk tearing down norms that have made this body so effective and apolitical for so long.”

“You will be responsible for ensuring FERC behaves as a regulatory body as opposed to a political body,” Heinrich warned of Danly.

SHALE SLOWDOWN SCARE: U.S. shale production is slowing down fast, marking the end of the boom that made us the world’s largest oil producer.

U.S. shale production achieved 2 million barrels per day of annual growth in 2018, an all-time global record, but will essentially flatten out in 2021, when no growth is expected, according to a report Wednesday from IHS Markit.

“This is a dramatic shift after several years where annual growth of more than one million barrels per day was the norm,” said Raoul LeBlanc, vice president for North American unconventionals at IHS Markit.

What’s the problem? There are two of them. Producers are facing a prolonged period of lower prices, while access to financing on capital markets has become more difficult.

IHS Markit projects the WTI crude oil price to average around $50 per barrel in 2020 and 2021. That is short of a $65-per-barrel price that would “provide the ability to post strong volume growth while also providing meaningful returns to shareholders.”

As a result, annual capital spending for shale could face a nearly $20 billion decline over the next three years to around $83 billion in 2021 compared to $102 billion this year.

NUCLEAR COULD CHEAPEN DECARBONIZATION: Making room for more use of nuclear power could significantly reduce the carbon price needed to achieve deep decarbonization, assuming lawmakers eventually set up a policy to do that.

The U.S. power sector could cut emissions 90% from 2005 levels if Congress puts a price on carbon emissions, according to a new report from the MIT Joint Program on Science and Policy of Global Change.

Creating a “substantial” role for nuclear, however, could reduce the level of the needed carbon price by two-thirds. While wind and solar could reach 40% of the U.S. power supply with minimal costs, the MIT researchers say, costs would rise after that, as investments in storage and other backup capacity would be required.

What policymakers should do: The report concludes they should spend on the existing nuclear fleet to relicense and extend the life of plants, and seek to reduce the costs of developing smaller advanced nuclear technologies.

EPA VERSUS ITS WATCHDOG: The EPA Office of Inspector General is accusing agency chief of staff Ryan Jackson of stonewalling two probes, and the fight could get ugly.

The EPA’s watchdog office sent a so-called “seven-day letter” to EPA officials last week, saying Jackson refused to cooperate and provide information for an audit and an administrative investigation, at least one of which dates back to the Scott Pruitt era. That “seven-day letter” required EPA Administrator Andrew Wheeler to notify Congress of the inspector general’s concerns.

But Wheeler, in his letter to Congress, strongly defended Jackson. The EPA suggested inspector general office staff have harassed Jackson and tried to trap him in a “bait and switch” to get him to provide “incorrect or inconsistent information,” according to a letter Jackson sent Wheeler.

HONOLULU WANTS TO JOIN LEGAL FIGHT AGAINST BIG OIL: The Hawaii city and county is just a few procedural steps away from filing a lawsuit against several major oil companies, seeking damages for their role in causing climate change.

Oil companies “need to pay just like Big Tobacco needed to pay,” Honolulu Mayor Kirk Caldwell, a Democrat, said in a press conference Tuesday. Caldwell said Honolulu would be able to file the lawsuit once the city council approves a resolution authorizing the city and country government to initiate legal action.

Honolulu joins Maui County, which announced plans last week to file a similar lawsuit. Caldwell said mayors and local officials in Hawaii have been talking for nearly a year about how to challenge oil companies for their role in climate change, and he hopes other local leaders in the state will soon follow.

The Honolulu lawsuit, once filed, would target eight fossil fuel companies, including Chevron, Shell, ExxonMobil, and BP.

“It’s going to be a hard road. Just like tobacco, it doesn’t mean you win in the first year,” Caldwell said. “Like any journey, you start with the first steps.”

SCIENTISTS, A LOT OF THEM, ARE READY TO CALL A ‘CLIMATE EMERGENCY’: More than 11,000 scientists from around the world are ready to “tell it like it is” and declare the globe is facing a “climate emergency.”

Scientists from 153 countries conclude in the journal BioScience that climate change is accelerating faster than expected, with its effects “more severe than anticipated, threatening natural ecosystems and the fate of humanity.”

The scientists recommend six steps to reduce the worst effects of climate change: Replacing fossil fuels with renewables; reducing emissions of “short-lived” pollutants including methane, soot, and HFCs; restoring coral reefs, forests, and wetlands; shifting to a mostly plant-based diet; prioritizing sustaining ecosystems and “improving human well-being” over economic growth; and gradually reducing population growth.

RESCUE ON THE WAY FOR MINERS: A bipartisan group of senators led by Manchin and Majority Leader Mitch McConnell partnered on legislation Wednesday to secure pensions and health care for miners at risk from recent coal company bankruptcies.

The Bipartisan American Miners Act would prevent the insolvency of the United Mine Workers of America 1974 Pension Plan. It will also protect the health care for miners who would lose coverage because of bankruptcies in 2018 and 2019.

Bill sponsors say these actions would secure the pensions of 92,000 coal miners and protect health care benefits for 15,000 miners. Other co-sponsors include Shelley Moore Capito, R-W.V., Rob Portman, R-Ohio, Doug Jones, D-Alabama, Tim Kaine. D-Virginia, Dick Durbin, D-Illinois, and more.

TRY, TRY AGAIN STRATEGY FALLING FLAT FOR EPA: The EPA can’t get out of having to enforce Obama-era limits on methane, a potent greenhouse gas, from landfills, a federal judge said Tuesday. The order — from a federal district court judge in California — slaps down the EPA’s request to amend a prior judgment requiring the agency to start implementing the rule.

The EPA has been fighting its obligation under Obama-era standards for more than two years, even after Judge Hawyood Gilliam in May told the EPA no more, handing a victory to a coalition of states and environmental groups. Gilliam, in his Tuesday order, again refused to show the EPA any leniency in bypassing its requirement to enforce the standards.

“The Trump Administration has gone to great lengths to avoid fully implementing these rules, even after the court ordered EPA to act,” said Rachel Fullmer, an attorney for the Environmental Defense Fund, which sued the EPA over the standards. “Today the court said emphatically that delays are unacceptable.”

INDUSTRY SEES KUMBAYA WITH GINA MCCARTHY AT NRDC: Industry officials offered a hand Tuesday to Gina McCarthy, the former EPA chief for President Obama, who is taking over as CEO of NRDC.

That might sound surprising, but industry enjoyed a strong working relationship with McCarthy as she kept on open ear while crafting Obama administration policies such as the Clean Power Plan.

“This will be great for NRDC,” said Jeff Holmstead, a former deputy administrator of the EPA in the George W. Bush administration who represents industry clients at the firm Bracewell. “They will benefit from having someone who understands EPA and just how complicated a lot of issues really are. Most industry folks would say that Gina always gave them a fair hearing, even when she ultimately didn’t come around to their way of seeing things.”

McCarthy starts at NRDC on Jan. 6, moving from her current position as a public health professor at Harvard because she “didn’t want to sit on the sidelines,” she told the Washington Post, preferring an active role in beating back Trump administration rollbacks of rules she worked on. NRDC has sued the Trump administration 96 times since 2017, the group said, winning 54 of 59 cases that have been resolved.

The Rundown

Reuters Keystone pipeline spill hardens landowner opposition to proposed expansion

Politico Sondland testimony raises new questions on Perry’s role

Wall Street Journal Saudis to press OPEC members for production cuts ahead of Aramco IPO

Reuters Cause of Philadelphia fire sounds alarm over aging US refineries

Calendar

THURSDAY | NOVEMBER 7

10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee holds a hearing on issues and legislation related to energy development on federal land