projections about the first 100 days of the new administration, michael j. nasi

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Texas Water Conservation AssociationMarch 3, 2017

Mike Nasi Jackson Walker L.L.P.

[email protected]

Forecasting Environmental Regulatory Reform in the New

Administration

mailto:[email protected]

• “Coal is our nation's greatest energy resource.” • It must play a decisive role in America's energy future… • We must increase our use of coal. . . and provide

employment where jobs are needed the most. • We must lead the Western World in developing a program

for increased use of coal in Europe, Japan, and the developing nations.”

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NAME THAT PRESIDENT: Who said:

Answer: Jimmy Carter

(Quote from Democratic Party Platform, Aug. 11, 1980)

The Progress We Have Made

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How Did We Get Here?The Rise of Extreme Environmentalism

• 2012: “This country needs an all-out, all-of-the-above strategy that develops every available source of American Energy.” – Barack Obama

• 2015: “We need to keep fossil fuels in the ground, and move to 100 percent renewable energy.” – Bernie Sanders

• 2016: “By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place.” – H. Clinton

NIMBY -> BANANA -> NOPE

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Source: Karen Harbert, Institute for 21st Century Energy, citing to Competitive Enterprise Institute.

George H.W. Bush Bill Clinton George W. Bush Barack Obama0

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3057 CAA FIPs 30 Threatened CAA FIPs

The Age of Coercive Federalism

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Outline• Status Update on Actions & Appointments

• Broad Reforms to Expect on Energy

• Specific Environmental Rule Discussions

• Debunking Some Post-Election Myths

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PRESIDENTIAL ACTIONS ON ENV. REGULATIONS

Feb. 28, 2017: Executive Order requesting EPA and USACE to review WOTUS Rule and propose rule rescinding or revising the Rule; orders all agencies implementing Rule and Attorney General litigating Rule to ensure consistency with new review of WOTUS Rule.

Feb. 27, 2017: President’s proposed budget blueprint released, including significant reductions in EPA’s and other agency budgets.

Feb. 24, 2017: Executive Order to establish “Regulatory Reform Task Forces” within agencies to evaluate existing regulations for repeal or modification.

Jan. 30, 2017: Executive Order to require the elimination of two regulations for every new one enacted.

Jan. 24, 2017: Memorandum expediting approval of the Keystone XL Pipeline.

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Jan. 24, 2017: Executive Order to expedite environmental approvals for "high priority infrastructure projects"• Chair of White House Council on Environmental Quality (CEQ)

determines what qualifies as "high priority" based on:• importance to the general welfare, • value to the Nation, • environmental benefits, and• such other factors as the Chairman deems relevant.

• Triggered by request of a Governor, head of executive department/agency, or Chair’s own initiative.

• Note that CEQ will also be directing NEPA reforms so critical to ability to expedite environmental reviews.

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Jan. 24, 2017: Memorandum directing the Secretary of the Army (i.e. the U.S. Army Corps of Engineers) to review and approve in an expedited manner the Dakota Access Pipeline.Jan. 24, 2017: Issued a Memorandum requiring the Secretary of Commerce to develop a plan to require American-made steel for pipelines in the United States, to the maximum extent possible. Jan. 24, 2017: Issued a Memorandum requiring all federal agencies to review manufacturing regulations and require the Secretary of Commerce to seek public input from the public on how to streamline those rules.Jan. 24, 2017: Initial media blackout on EPA and other agencies (partially lifted).Jan. 24, 2017: Initial freeze on EPA staff awarding new grants/contracts (lifted Jan. 27, 2017).Jan. 20, 2017: Issued Memorandum placing a freeze on regulations from all agencies, pending final appointments of Cabinet members.

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INITIAL CONGRESSIONAL ACTIONS ON REGULATIONS

Rule Description/Status Announcement/ActionEPA - Oil and Gas Methane NSPS for New, Recon., Mod. Sources

June 2016: Final rule published.July 2016: Multiple suits filed challenging the rule.

Jan. 6, 2017: HJR 22 disapproving rule introduced.

DOI/OSM - Stream Protection Rule

Dec. 2016: Final rule to impose nearly 500 changes to existing regs.Jan. 2017: Multiple challenges filed in courts and requests to stay rule.

Feb. 1, 2017: House votes to disapprove rule (Vote 228-194). Feb. 3, 2017: Senate votes to disapprove rule (Vote 54-45).Feb. 16, 2017: Signed by President Trump.

DOI/BLM – Methane Venting and Flaring on Fed./Indian Leases Rule

Nov. 2016: Final rule promulgating new regulations to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian (other than Osage Tribe) leases; clarifies royalties for venting, flaring, or leaked gas.

Feb. 3, 2017: House votes to disapprove rule (Vote 221-191)Pending: Senate vote.

ENERGY/ENVIRONMENTAL NOMINATIONS

AGENCY NOMINEE STATUS

Env. Prot. Agency AdministratorScott Pruitt

Confirmed – Feb. 17, Vote 52-46(Chief of Staff - Ryan Jackson, former Sen. Inhofe aide and Staff Director of Senate Env. & Public Works Committee )

Env. Prot. Agency Regional Admins. Pending appointment of Regional AdministratorReg. 6 Acting Admin. Sam Coleman

Council on Env. Quality Chair Pending appointment of Chair (KHW?)

Energy SecretaryRick Perry

Confirmed – Mar. 2, Vote 62-37(Chief of Staff – Brian McCormack, former EEI VP–Ext. Affairs)

Interior SecretaryRyan Zinke Confirmed – Mar. 1, Vote 68-31

Interior Surface Mining Direct. Pending Nomination of DirectorInterior USFWS Director Pending Nomination of Director

Agriculture SecretarySonny Perdue No hearing set – Potentially Mid-Feb.

FERC ChairmanCheryl LaFleur Term Expires June 30, 2019

FERC CommissionerColette Honorable Term Expires June 30, 2017

FERC CommissionerNorman Bay resigned. Potential replacement: Barry Smitherman (former PUCT and RCT Chairman), Neil

Chatterjee (COS of Sen. McConnell), and Patrick McCormick (Special Counsel to Sen. Energy and Nat Res. Committee)

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OTHER NOMINATIONS INFLUENCING ENERGY/ENV.

AGENCY/POSITION APPOINTEE STATUSWhite House, Special Assistant to the Pres.

Council of Econ. Advisers, Energy and Env. Policy

Mike CatanzaroStarted Feb. 21

White House, Special Assistant to the Pres.

Senior Dir. for InternationalEnergy & Env.

George David BanksStarted Feb. 16

Attorney General Attorney GeneralJeff Sessions Confirmed – Feb. 8, Vote 52-47

State SecretaryRex Tillerson Confirmed – Feb. 1, Vote 56-43

Commerce SecretaryWilbur Ross Voted out of Committee (voice vote); pending full vote

Labor SecretaryAlexander Acosta Committee hearing TBD (replacement)

Transportation SecretaryElaine Chao Confirmed – Jan. 31, Vote 93-6

Small Business Admin. AdministratorLinda McMahon Confirmed – Feb. 14, Vote 81-19

Office of Man. & Budg. DirectorMick Mulvaney Confirmed – Feb. 16, Vote 51-49

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• Broad Reforms to Expect on Energy • Specific Environmental Rule Discussions


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REFORM # 1: Stop Flood of New Regs

Source: Karen Harbert, Institute for 21st Century Energy, citing to Senator Mike Lee (R-UT).

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Other Needed Broad Reforms on Energy

• Eliminate Reliance on Claimed Co-Benefits of Rules– Benefits must come from pollutant being regulated– No benefits should be assumed for reductions below NAAQS

• Re-establish Credibility with Science-based Approach– Reform scientific review process to ensure objectivity– Restore legitimate standards for causation (monitors > models)

• Reform NEPA Guidance to Comport with Original Intent:– Restore effective & efficient reviews with appropriate scope– Retract/reform guidance mandating consideration of GHG/climate effects

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Environmental Rules Likely to be Walked Back

• Greenhouse Gas Regulations – Power Plants (111 (b) & (d))– Methane Rules– Round 2 of Tailpipe Rules?

• Other Air Regulations– Ozone

• The Rest: – Social Cost of Carbon– NEPA– WOTUS

Waters of the United States (WOTUS) Rule

• Timeline: June 2015 – Final Rule released; Oct. 2015 – Stayed by 6th Circuit; Jan. 2017 – SCOTUS agrees to hear case on jurisdiction (not merits of rule).

• Effect of Rule: Defines “navigable waters” to regulate countless ephemeral drains, ditches and “wetlands” that contain water only when it rains; effectively federal zoning.

Source: Karen Harbert, Institute for 21st Century Energy, citing to Farm Bureau. 18

CEQ Actions Potentially Invalid Under Vacancies Reform Act

• Aug. 5, 2016: Final Guidance on Consideration of GHG Emissions/Climate Effects in NEPA Reviews

• Oct. 7, 2015: Memorandum on Incorporating Ecosystem Services into Federal Decision Making

• June 15, 2015: Implementing Instructions for Planning for Federal Sustainability in the Next Decade

• Dec. 24, 2014: Revised Draft Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions/Climate Effects in NEPA Reviews

• Dec. 24, 2014: Final Interagency Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies

• Dec. 23, 2014: Final Guidance for Effective Use of Programmatic NEPA Reviews

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Myth #1: TX Should Have Liked EPA’s Power Plant Rules Because They Help Natural Gas

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Truth: 1. CPP BSER precedent is very

dangerous for Oil/Gas /Petrochemical source categories because pipes could = "System."

2. Existing simple cycle gas plants would be forced to retire if plants are regulated for GHGs by EPA.

3. New NGCC are being suppressed by market distortions due to renewable-forcing policies.

4. Electric prices will increase – which hurts oil and gas E&P, refining and petrochemicals.

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EPA Statement About New Gas Power

“Emission reductions achieved through the use of new NGCC capacity require the

construction of additional CO2-emitting generating capacity, a consequence that is

inconsistent with the long-term need to continue reducing CO2 emissions beyond

the reductions that will be achieved through this rule.”

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Myth #2: Texas can “Save” Water By Prematurely Retiring Coal & Gas PlantsTruth: Straining the grid is BAD water policy.• Closing an existing power plant under the theory

that a new plant will be more water-efficient is like… • ...destroying an existing surface water reservoir in

Texas under the theory that a new project will be more water-efficient (e.g., less evaporation)

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TEXAS HAS

NO MEGAWATTS OR ACRE

FEET TO SPARE!

Comparison of Power Plant Water Consumption Rates

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WATER COOLED POWER PLANT WATER CONSUMPTION RATES (gal/kWh)

FUEL SOURCE Cooling Tower Once-ThroughAVERAGE RATE

OVER TEXAS FLEET

Coal .60 - .66 .34 - .45 0.51

Natural Gas (water cooled)

Simple Cycle -.70 -1.03Combined Cycle-.22-.23

Simple Cycle - .35-.37Combined Cycle-.22-.23 0.73

Nuclear .60 .60 0.67

Sources: Water Consumption and Withdrawal for Power Generation in Texas, TWDB, 2008, 2012.

Cherry-picking consumption rates to allege water “savings” is misleading.

BOTTOM LINE: Not enough water difference to warrant in-fighting and

Myth #2: CPP was about Climate Change.

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Truth: IT WAS ALL PAIN, NO GAINU.S. & TEXAS PAIN• $220 to $292 billion increase in energy sector

expenditures between 2022 and 2033• Annual energy sector expenditures increase

between $29 to $39 billion per year• Double-digit electricity price increases in 40 states• Households will have $64 to $79 billion less to

spend• 47,000 megawatts of power plants forced to close• ERCOT: 39% increase in locational marginal prices;

44% increase w/Regional Haze Rule

WORLD GAIN• 0.2% reduction in CO2 concentration (see pie

chart)• Global temperature increase reduced by 0.01

F• Sea level rise reduced by less than 1/100th of an

inch (less than the thickness of 2 sheets of paper or 1 or 2 human hairs)

• In 2025, total annual US reductions will be offset by approximately 3 weeks of Chinese emissions

“Pain” Sources: NERA Economic Consulting, Energy and Consumer Impacts of EPA’s Clean Power Plan, November 7, 2015; ERCOT Analysis of the Impacts of the Clean Power Plan, Final Rule Update , October 16, 2015 (based on CO2 Price assessment). “Gain” Sources: “Climate Effects” of EPA’s Final Clean Power Plan, ACCCE, August 2015 (Intergovernmental Panel on Climate Change (IPCC) projected concentrations of CO2 in 2050 from 450 to 600 ppm); Statement of Karen Harbert, U.S. Chamber of Commerce, U.S. House of Representatives Comm. on Science, Space, & Technology, April 15, 2015; National Centers for Environmental Information, NOAA, Global Analysis – Annual 2014.

Modeled CO2 Reduction0.98 ppm

Remaining CO2 Concentration499.02 ppm

2050 GLOBAL CO2 CONCENTRATION

For every coal plant EPA predicted CPP would shut down:…31 more are already planned or being built across the globe!

Sources: U.S. Chamber of Commerce, Institute for 21st Century Energy, Coal-fired Power Plants Planned and Under Construction (citing Platts database, September 2015); EPA CPP RIA. 26

EPA-Projected Coal Retirements

U.S.38,000

Sources: International Energy Agency, World Energy Outlook 2014; Robert Bryce, “Not Beyond Coal,” October 2014.

Millions of People Who Have No Electricity

62123

169184521

World Energy Demand Ensures Coal’s Future• Over Last 20 Years: 830 Million Get First Electricity

• Now:1.3 Billion Still Living with no Access to Electricity

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PUDONG (Shanghai) in 1990

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PUDONG (Shanghai) Today

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Myth #3: “Coal is Dead and President Trump Cannot Bring it Back.”

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Truth: 1. Most announced retirements to date cite regulations, not market forces as cause.2. Without CPP, coal industry would look the same in 2030-2040; with CPP, coal

production would be about two-thirds current levels.

Sources: Jude Clemente, Natural Gas Prices and Coal Under the Clean Power Plan, Forbes, Nov. 28, 2016, citing to EIA, AEO 2016, JTC; King Institute for Regional Economic Studies, King University, An Economic and Statistical Analysis of the “War on Coal,” July 2016.

Coal-based Electric Generation:

2014:

9,459 TWh

2040:

11.8332 TWh

Coal Fleet Not Going Away Anytime Soon. . . Thankfully

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Small Changes in the Price of Gas Drive Big Changes in Power Markets

Source: ERCOT, 2016 and 2017 Demand and Energy Reports. “Other” includes Solar, Water, and Other generation sources, but excludes Net DC/BLT; percentages are rounded.

Jan-16 Feb-16

Mar-16

Apr-16

May-16

Jun-16 Jul-16 Aug-16

Sep-16

Oct-16 Nov-16

Dec-16

Jan-170

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

Natural Gas Coal NuclearWind Other

MW

h

January 2016NG: 12,720,786 MWhCoal: 6,853,636 MWh

January 2017NG: 8,171,820 MWhCoal: 9,731,896 MWh

46.2%

24.9%

14.9%

13.9%

0.7%

29.9%35.6%

19.8%

13.9%

0.9%

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QUESTIONS?

Mike Nasi Jackson Walker L.L.P.

[email protected]

mailto:[email protected]