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WHITE HOUSE OFFICIALS FLAGGED LEGAL CONCERNS DAYS BEFORE FUEL ECONOMY RULE’S RELEASE: Just 12 days before the Trump administration unveiled its fuel economy rule, White House officials raised concerns about whether federal agencies had done enough to secure the rule from legal challenges.
“The legal justification is lacking in actual justification for the Final Rule,” reads a March 19 email from Office of Management and Budget official Matthew Oreska to officials at the Transportation Department and the EPA, including the agency’s top air and legal officials.
Oreska, summarizing comments the fuel economy rule had received in interagency review, added it “does not do enough” to explain why the agencies had settled on a standard of 1.5% year-over-year fuel economy increases (after proposing to freeze the standards).
“The legal justification reads very cursory,” he wrote in the note, which was released Friday in a batch of emails posted to the public rulemaking docket. Additional points of concern included that the agencies hadn’t explained why assumptions made by the Obama administration had been proven incorrect and had only rebutted “at a superficial level” opponents’ criticism.
And attached to Oreska’s email was a draft of the rule marked up with comments, some of which simply highlighted portions of the agencies’ rule and asked “Why?” and “More explanation?” In several instances, the interagency reviewers suggested the EPA and the National Highway Traffic Safety Administration needed more analysis and explanation as to why 1.5% was the right number.
The pointed concerns could make the Trump administration’s defense harder: The move to relax the fuel economy standards is the White House’s biggest deregulatory move to date, and it limits the Obama-era climate policy that’s achieved some of the largest emissions reductions thus far.
But the legal fight will be fierce. California Attorney General Xavier Becerra, a Democrat, said Friday he would challenge the rule, and he expected to be joined by many state allies, though he didn’t say when the states would be bringing their lawsuit.
“We said from the very beginning that we would challenge that,” he told reporters, noting the rollback especially hurts California, which has “set the bar for decades” on clean car standards.
The Trump administration’s fuel economy rule also already faces a legal challenge — from the Competitive Enterprise Institute alleging the standards are still too strict. CEI, in a lawsuit filed Friday, argues the agencies should have stuck to their proposal to freeze the standards, and didn’t adequately consider the public safety impacts of a 1.5% increase.
It isn’t clear whether the agencies addressed White House officials’ concerns: The agencies defended the rule, saying it is supported by “over 6,000 pages of legal and policy analysis, technical modeling and responses to public comments,” but the EPA didn’t say whether the concerns had been addressed, according to Argus Media.
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NATURAL GAS’ SURVIVAL STORY: The U.S. natural gas price is stable. Why? The demand picture hasn’t changed much.
“The negative impact on demand in gas markets is not as significant as it is with oil because it’s not being driven by transportation,” Dustin Meyer, director of market development at the American Petroleum Institute, told Josh.
U.S. natural gas production has remained steady as people stuck at home depend on it for power and heat.
While some important uses for gas are falling, without the need to power or heat large office spaces and some nonessential manufacturing facilities, demand has picked up in other places, such as in feedstock for plastics used to make key health equipment.
“Instead of seeing a very low price market or negative pricing like we did with oil, you are seeing something that looks like price stability or even resilience with natural gas because its primary end use in this country hasn’t changed all that much,” said Kevin Book, managing director of the research group ClearView Energy.
Read more in Josh’s story from the weekend.
MANDATED OIL PRODUCTION CUT IN TEXAS ‘IS DEAD’: The idea of forcing companies in the nation’s largest oil-producing state to cut their output “is dead,” according to the lone Texas Railroad Commission member who supported the measure.
Ryan Sitton told Bloomberg TV Monday that he won’t make a motion for the commission to vote on so-called “pro-rationing” at Tuesday’s meeting, where the item is on the agenda, because he is outnumbered.
“It looks like the market is bottoming out, Texas producers are shutting in. Frankly we have missed our opportunity to lead on this,” Sitton said. “At this point, we are not going to pro-rate tomorrow.”
Wayne Christian, the commission’s chairman, came out against pro-rationing last week, while the third member, Christi Craddick, has expressed concerns about the legal viability of such a move.
Sitton, with the support of two Texas-based shale companies, had recommended the commission impose a temporary 1 million barrel per day production cut — 20% of Texas’ output — to help stem a price crash that has hit the Permian Basin particularly hard.
The majority of the all-Republican commission, along with oil industry groups and larger companies, opposed the idea of pro-rationing, saying it violated free-market principles and arguing that companies are shutting-in their production voluntarily due to low prices and little demand.
OFFSHORE DRILLERS GET GUIDANCE ON ROYALTY RELIEF: The Trump administration released updated guidance for reeling offshore oil and gas drillers seeking relief from royalty payments to the government.
The guidance from the Bureau of Safety and Environmental Enforcement falls short of the broad-based relief that some offshore drillers are seeking, instead allowing companies to apply individually for a “special case” exemption for a specific lease or project.
“It is important to remember that the Gulf of Mexico energy industry is extremely interconnected and the goal of royalty relief should be to support the thousands of companies spread throughout Gulf Coast communities,” Erik Milito, president of the National Ocean Industries Association, told Josh. “A broad, accessible and temporary application of royalty relief is what will most assuredly help the industry weather this storm.”
Justin Williams, a NOIA spokesman, said special case exemptions have been granted in a limited fashion in the past. Between 2000-17, there were 13 applications, with 10 of them being approved. It usually takes up to 18 months to go through the application process, he said, but the updated BSEE guidance is intended to expedite it.
COURT VACATES NEARLY 300 OIL AND GAS LEASES: Judge Brian Morris, in a ruling Friday, invalidated the leases, which cover 145,000 acres of public land in Montana, saying the Bureau of Land Management failed to meet the requirements of the National Environmental Policy Act. In particular, Morris said the BLM didn’t adequately assess whether drilling would contaminate local groundwater, didn’t consider alternatives that would have less of an effect on water supplies, and didn’t examine the “cumulative impacts of climate change” from the leases.
“In other words, the Court does not fault BLM for providing a faulty analysis of cumulative impacts or impacts to groundwater, it largely faults BLM for failing to provide any analysis,” Morris wrote.
This isn’t the first blow to Trump’s attempts to expand drilling: And it comes as the White House has proposed changes to NEPA regulations that environmentalists say would all but eliminate the requirement federal agencies consider the climate change effects of their projects.
The Montana court’s ruling, though, shows court precedent weighs strongly in the opposite direction, that agencies must consider climate change effects in their NEPA analyses.
“Climate change certainly poses unique challenges in the cumulative impact analysis,” Morris wrote. “[T]hese unique challenges do not obviate the need to follow Ninth Circuit case law. This case law requires a catalogue of past, present, and reasonably foreseeable projects.”
TRUMP WATER RULE CHALLENGERS WEAVE COMPLICATED LEGAL WEB: Trump officials’ replacement of the Waters of the U.S., or WOTUS, rule now faces multiple different lawsuits, in multiple different courts, signaling a lengthy legal battle over which waters are covered by federal protections.
A coalition of 19 attorneys general, from 17 states, D.C., and New York City, joined the fight Friday, arguing the Trump administration’s much narrower rule undercuts protections for waters that have been covered federally for decades, even before the Obama-era WOTUS rule. The Trump rule “collides with” the Clean Water Act, Supreme Court precedent, and the agency’s own scientific data, said Becerra, who led the challenge.
So far, every lawsuit has been brought in a different federal district court: Most of the challenges, from clean water advocates and environmental groups, are arguing the Trump administration’s rule is far too weak. But two lawsuits filed by cattle growers’ groups say the Trump replacement rule is still too strict. The latest of those was also filed Friday, by the Oregon Cattlemen’s Association as a supplemental claim in a prior lawsuit, per Bloomberg Environment.
GOP LAWMAKER SEEKS FEDERAL REVIEW OF HARVARD STUDY: Congressman Andy Harris of Maryland is asking federal agencies to conduct a review of the preliminary Harvard study, which found areas with higher levels of long-term exposure to fine particle pollution experience higher death rates from the coronavirus.
Harris, in a letter Friday to EPA Administrator Andrew Wheeler and Labor Secretary Alex Azar, cited recent criticism of the study from the chair of EPA’s Clean Air Scientific Advisory Committee, as well as a group of Canadian scientists. Harris also said it “raises serious ethical concerns” that the Harvard researchers recently revised down their findings about the link between particle pollution and COVID-19 deaths — from 15% to 8% — without disclosing why the findings had changed or updating the press release.
The Harvard study will undergo peer review, but Harris said “the urgent and rapidly evolving nature of the pandemic is ill-served by a months-long journal review process.” He asked the EPA and Labor Department, or its appropriate advisory panels, to review the study’s findings and the relationship between air quality and the virus, and report back “as expeditiously as possible.”
INVESTOR COALITION CALLS FOR CLIMATE-FOCUSED RECOVERY: “Recovery plans that exacerbate climate change would expose investors and national economies to escalating financial, health and social risks in the coming years,” the coalition of investors wrote in a statement Monday. “Governments should avoid the prioritisation of risky, short-term emissions-intensive projects.”
The group of investors, known as the Investor Agenda, includes the Carbon Disclosure Project, Ceres, UNEP Finance Initiative, and Institutional Investors Group on Climate Change, which has big-name firms like BlackRock and BNP Paribas as members. In their statement, they call on governments to require climate change transition plans from carbon-intensive companies that receive bailouts or other financial assistance and to accelerate investment in clean energy.
CALIFORNIA UTILITY EYES RECORD BATCH OF BATTERY STORAGE: Southern California Edison announced a massive procurement of energy storage contracts Friday bigger than the entire 2019 U.S. storage market.
The seven contracts are for a combined 770 megawatts of grid-scale battery storage systems, according to Greentech Media.
Most of the batteries will be paired with existing solar farms that will charge the batteries, allowing the sun power to be used when it’s not available.
The projects, which still must be approved by the California Public Utilities Commission, are expected to be a key contributor to the state’s goal of using 100% electricity from carbon-free sources by 2045. Southern California Edison wants to get the batteries up and running by August 2021, a record fast turnaround for such projects, to help replace lost power from four Southern California natural gas plants slated to close soon.
GOP-BACKED CARBON TAX LOBBYING GROUP HIRES UP: Americans for Carbon Dividends, the lobbying arm of the Climate Leadership Council, has hired Kevin Sweeney as its managing director.
Sweeney spent a decade working in the Senate and managed Lisa Murkowski’s campaign in 2010. He will lead a political campaign to encourage Congress to pass a carbon tax and dividend, the policy favored by the Climate Leadership Council, a group led by former Republican Secretaries of State James Baker III and George Shultz.
“His extensive background running government relations and political campaigns will help us transform our bipartisan carbon dividends plan into legislation that both parties can support,” said Ted Halstead, CEO of Americans for Carbon Dividends.
SENATE VOTES ON NRC NOMINEE UPON RETURN TO CAPITOL: The Senate is scheduled to return today, where they’ll vote to confirm Trump’s nominee for inspector general of the Nuclear Regulatory Commission, Robert Feitel.
Feitel had the backing of Sen. Tom Carper, the top Democrat on the Environment and Public Works Committee, and is expected to be approved with bipartisan support.
The Rundown
New York Times ‘This feels very different’
The Guardian Fossil fuel firms linked to Trump get millions in coronavirus small business aid
Bloomberg Nuclear is getting hammered by green power and the pandemic
Axios Inside Rev. Jesse Jackson’s push for a natural gas pipeline
Financial Times Pandemic crisis offers glimpse into oil industry’s future
Calendar
MONDAY | MAY 4
The Senate is in session. The House hopes to return soon.
WEDNESDAY | MAY 6
10 a.m. 106 Dirksen. The Senate Environment and Public Works Committee holds a business meeting to consider water infrastructure legislation. (Note: Senate office buildings are not open to the public at this time, and in-person visitors won’t be allowed at the hearing, per the committee.)
