President Trump’s Executive Order Withdraws the Social Cost of Carbon

On March 28, 2017 President Trump issued an executive order that seeks to completely reverse the Obama Administration’s climate policies. Executive Order 13783, Promoting Energy Independence and Economic Growth signals a profound shift in federal climate change policy, and reflects the Trump Administration’s desire to systematically reduce regulatory burdens across the energy industry and to promote the development of American energy resources.

A critical component of the Executive Order is the disbandment of the Interagency Working Group (IWG), which the Obama Administration had tasked with developing Social Cost of Carbon metrics for use in federal policy making. The Order also withdraws all of the technical documents that set forth the analytical framework for considering the Social Cost of Carbon in regulatory analyses.

The Social Cost of Carbon is an analytical tool that attempts to quantify the incremental climate impact that will result from a unit of carbon dioxide emissions so that an economic value can be assigned to the emissions. That value is then used as a point of comparison for regulatory actions that reduce carbon dioxide emissions.  Many competing models exist, and each offers different productions about the future interactions between human behavior and the climate.  These models frequently predict how climate change will affect net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services.

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EIA: Crude production in Gulf of Mexico Continues to Increase

Our humble little blog is so focused on the onshore shale plays, we sometimes need to be reminded that offshore crude oil production is increasing as well.   According to the U.S. Energy Information Administration, “U.S. crude oil production in the Federal Gulf of Mexico (GOM) set an annual high of 1.6 million barrels per day (b/d) in 2016, surpassing the previous high set in 2009 by 44,000 b/d. In January 2017, GOM crude oil production increased for the fourth consecutive month, reaching 1.7 million b/d. On an annual basis, oil production in the GOM is expected to continue increasing through 2018, based on forecasts in EIA’s latest Short-Term Energy Outlook.”

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Hearings: Week of April 3

Senate Energy and Natural Resources Committee on efforts to protect U.S. energy delivery systems from cybersecurity threats.
Date: Tuesday, April 4, 10 a.m.
Place: 366 Dirksen Bldg.
Witnesses: Patricia Hoffman, acting assistant secretary of Energy for the Office of Electricity Delivery and Energy Reliability
Andrew Bochman, senior cyber and energy security strategist at Idaho National Laboratory
Gerry Cauley, president and CEO of the North American Electric Reliability Corporation
Duane Highley, president and CEO of the Arkansas Electric Cooperative Corporation
Dave McCurdy, president and CEO of the American Gas Association
Col. Gent Welsh, commander of the 194th Wing in the Washington National Guard

Senate Foreign Relations, Subcommittee on Africa and Global Health Policy hearing on “A Progress Report on Conflict Minerals.”
Date: Wednesday, April 5, 2 p.m.
Place: 419 Dirksen Bldg.
Witnesses: Rick Goss, senior vice president for environment and sustainability at the Information Technology Industry Council, Washington, D.C.
Mvemba Dizolele, lecturer at Johns Hopkins University, Washington, D.C.
Arvind Ganesan, director for business and human rights at Human Rights Watch, Washington, D.C.

House Energy and Commerce, Subcommittee on Environment hearing on “Discussion Draft: Brownfields Reauthorization.”
Date: Tuesday, April 4, 10 a.m.
Place: 2123 Rayburn Bldg.
Witnesses: TBA

Domestic Crude Oil Production Down in 2016

According to the U.S. Energy Information Administration, ““Despite increasing crude oil prices throughout most of 2016, total U.S. crude oil production in 2016 was below its 2015 level. However, monthly production began growing in the fourth quarter of the year after declining over the first three quarters. Total 2016 production remained above the five-year average. With the removal of restrictions on exports of domestically produced crude oil at the end of 2015, crude oil exports increased. At the same time, the difference between Brent and West Texas Intermediate (WTI) crude oil prices narrowed, which made crude oil imports relatively more attractive and caused total imports of crude oil in 2016 to also increase.” 

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Trump’s SCOTUS Nominee is a Chevron Skeptic

On January 31, President Trump introduced Judge Neil Gorsuch as his nominee for the Supreme Court vacancy left by Justice Antonin Scalia.  Gorsuch, who currently sits on the U.S. Court of Appeals for the Tenth Circuit, has been widely-praised for his lucid, well-reasoned opinions on a wide range of federal law questions.  Like Scalia, his opinions reveal a textual orientation in matters of constitutional and statutory interpretation, a belief that criminal laws should be clear and interpreted in favor of defendants even at the expense of government prosecutions, and a skeptical stance toward administrative agencies.

Unlike Scalia, however, Gorsuch has criticized the so-called Chevron doctrine – the rule that courts must defer to permissible agency interpretations of ambiguous statutory language – which Scalia generally defended.  Indeed, Gorsuch’s view of Chevron is more conservative than Scalia’s.  In the words of Eric Citron at ScotusBlog:

[Gorsuch] believes even . . . broadly worded enforcement statutes have objective meanings that can be understood from their texts; that it is the job of the courts to say what those laws mean and to tell agencies when they do not have the best reading; and that if the agency disagrees, the only proper recourse is for Congress to change the law or the Supreme Court to correct the error.

Scalia, on the other hand, wanted to limit courts to the role of reviewing agency implementations of these kinds of statutes for clear error in order to prevent “ossification,” recognizing that the understanding of these kinds of laws might need to change from time to time to accommodate changing priorities among presidents and changing conditions on the ground. Continue Reading

Chevron Deference and the Proposed “Separation of Powers Restoration Act of 2017”

During its first month in session, Congress has proposed several pieces of legislation designed to reverse the dramatic shift in power over the last 50 years from Congress to the Executive.  The Regulatory Accountability Act of 2017 is one remarkable example.  It was introduced as a free-standing bill in 2016, but the Senate did not act upon it, perhaps because then-President Obama would almost surely have vetoed it.  But now the House of Representatives has re-introduced this legislation (on January 3, 2017) as H.R. 5.  If enacted, the law would have a profound effect on the agendas of administrative agencies, such as the Environmental Protection Agency, the Department of Energy, and the Department of Labor. 

 Title II of Regulatory Accountability Act, styled the “Separation of Powers Restoration Act,” would overturn two landmark Supreme Court decisions—Chevron U.S.A. v. NRDC, 467 U.S. 837 (1984) and Auer v. Robbins, 519 U.S. 452 (1997)—by amending Section 706 of the Administrative Procedures Act.  The key provision states that any court reviewing an administrative action shall “decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.”  “De novo” review means that the reviewing court gives no deference to the legal opinions of either the parties or lower court judges and administrators.  In Chevron, the Supreme Court held that reviewing courts should defer to an agency’s interpretation of an ambiguous statute.  Auer, written by the late Justice Antonin Scalia, similarly held that for an agency’s “own regulations, [its] interpretation of it is, under our jurisprudence, controlling unless ‘plainly erroneous or inconsistent with the regulation.’”

In recent years, several Supreme Court justices—including Justice Scalia—have questioned both the logic and constitutionality of Chevron and Auer.  These critics contend that judicial deference to agency interpretations of the statutes and regulations they administer violates separation of powers principles (hence the name of Title II).  Legislators who support the Separation of Powers Restoration Act have advanced related concerns: that Congress currently lacks an incentive to draft clear laws, and that the Executive Branch charged with resolving statutory ambiguities faces backlash for unpopular decisions, thus insulating Congress from political accountability.  They also argue that Chevron gives courts an incentive to shirk their role in striking down arbitrary and unlawful agency actions. Continue Reading

EIA – Energy Royalty and Rental Revenue on Federal Lands Declined Again in 2016

According to the U.S. Energy Information Administration (“EIA”) “In fiscal year (FY) 2016, the U.S. government collected almost $6 billion in revenues from royalties, rental costs, and other fees from activities related to energy production on federal and American Indian lands, according to the Department of Interior’s Office of Natural Resource Revenue. These activities include the production of coal, oil, natural gas, and hydrocarbon gas liquids (HGLs) as well as, more recently, renewables. From FY2010 to FY2013, federal revenues increased, driven by growth in offshore and onshore revenue during a time of relatively high oil prices. Revenues in FY2013 exceeded $14 billion and have since decreased in each successive year. Revenues in FY2016 were the lowest since at least FY2004.”

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Study Shows Hydraulic Fracturing Benefits Local Communities

The benefits of hydraulic fracturing on a national scale are well-known: lower energy prices, greater energy security, and reduced greenhouse gas emissions.  Yet there have been concerns that adverse health and social impacts outweigh these benefits for communities where drilling occurs. 

 Now, a new study out of the University of Chicago indicates that the average local benefits of fracking outweigh the costs.

The study examined local impacts in nine different shale regions across the United States.  The costs of fracking were measured by various quality of life factors, such as truck traffic, criminal activity, noise and air pollution from drilling activities, and perceptions about negative health effects. 

 The study found these costs are outweighed by fracking’s benefits, which total $1,200 to $1,900 per year for the average household.

These benefits include a 6 percent increase in average income, driven by increases in wage and royalty payments, a 10 percent rise in employment, and a 6 percent surge in housing prices.  On the cost side, fracking reduces a typical household’s quality of life by about $1,000 to $1,600 annually—discounting the increase in household income. 

 The study also observed that each region is affected differently, with some benefiting more than others.  For example, the estimated effect on housing prices was greater in North Dakota’s Bakken shale and Pennsylvania’s Marcellus shale than in other regions.  This heterogeneity reflects variation in how large fracking activity is relative to the local economy, as well as differences in local housing markets.  Despite the heterogeneity, the overall data is clear: for local communities, the benefits of fracking outweigh its costs.

 

 

SCOTUS Review of WOTUS Rule

On January 13, the Supreme Court granted a writ of certiorari in National Association of Homebuilders v. Department of Defense, a case challenging the Obama Administration’s “Waters of the United States” rule, which vastly expands federal jurisdiction over wetlands, and some not-so-wet lands.

At issue is whether a challenge may be brought in a federal district court or directly in a federal court of appeals.  The U.S. Circuit Court of Appeals for the Sixth Circuit adopted a restrictive approach to judicial relief, allowing only federal appellate courts to hear WOTUS challenges.  If upheld by the Supreme Court, this ruling would bar federal trial courts from hearing challenges brought by members of the regulated public; instead, these suits would be concentrated in the first federal Court of Appeals to hear a challenge.

 While this issue may seem like a legal technicality, determining the proper venue for WOTUS challenges is important for industry and private property owners alike.  If the Court reverses the Sixth Circuit, and allows WOTUS challenges to be filed in district courts across the country, this will allow further judicial review of the government’s justifications for this controversial rule.

 

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