This column addresses news from each branch of government — a Senate energy tax bill, a Supreme Court case involving climate change, the Department of Interior’s suspension of an oil and gas lease program, and pipeline/environmental developments at the Federal Energy Regulatory Commission (FERC).
Senate Regulatory News
“Wait a minute, that’s not all, there’s even more.” (Rascal Flats)
Senate Finance Committee Chair Ron Wyden (D-OR) and 24 Democratic Senators introduced the Clean Energy for America Act, which would consolidate 40 existing tax incentives (many involving the fossil fuel industry) and replace them with three emissions-based provisions designed to
- Boost clean electricity by creating an emissions-based tax credit for facilities with zero or net-negative carbon emissions.
- Promote clean transportation fuel by providing long-term incentives for battery and fuel cell electric vehicles and electric vehicle charging.
- Stimulate energy conservation with performance-based tax incentives for energy efficient homes and commercial buildings.
Senate Republicans believe that the bill would result in significant job losses in the oil and gas industry and increases in gasoline prices at the pump. Following a tied committee vote along straight party lines, Senator Wyden advanced the bill to the full Senate without further committee hearings.
“Wait a minute, that’s not all, there’s even more.” Before this bill passes Senate muster, it must first withstand a near certain threat of a filibuster and be supported by at least 50 Senators. However, Democratic Senators from oil and gas producing states may not be inclined to support a bill that could harm their states fossil fuel industry and eliminate their constituents’ jobs.
Supreme Court Regulatory News
“One more time. One more chance.” (Gary Allan)
In May, the Supreme Court issued an opinion, which although limited to a narrow procedural issue, amounted to a big victory for several oil and gas companies in a climate change suit. In 2018, Baltimore’s Mayor and City Council (Baltimore) sued several energy companies in a Maryland state court, claiming that they concealed the environmental impacts of their fossil fuels, which in turn caused the city harm. The defendants filed a motion with a federal district court to “remove” the litigation to the federal court and gave several reasons in support. In turn, Baltimore filed its own motion seeking to “remand” the litigation back to state court. The federal district court granted Baltimore’s motion. Generally, there is no right to appeal from a court’s remand decision. There is an exception, coincidentally one of the reasons identified by the defendants — a statute promising a federal forum for any action against a federal agency; the defendants said this applied because some of the challenged exploration and drilling was performed at the request of the government. The Fourth Circuit limited its analysis to that single reason, was unpersuaded, and affirmed the district court’s decision to remand. The defendants appealed.
In BP PLC v. Mayor and City Council of Baltimore, the Supreme Court held that the Fourth Circuit erred by limiting its analysis, instead finding that all the defendant energy companies’ reasons for removal should have been considered and rejecting Baltimore’s arguments concerning delays and gamesmanship. As such, the Fourth Circuit will have “one more time, one more chance” to consider all of the energy companies’ removal arguments. Whether the expanded review will change the Fourth Circuit’s decision is unclear.
Department of Interior Updates
“For the times they are a-changin’.” (Bob Dylan)
In early January (while President Donald Trump was still in office), after preparing an Environmental Impact Statement (EIS), the Bureau of Land Management (BLM) began administering an oil and gas program in the coastal plain of the Alaskan Artic Refuge, held a lease sale, and issued ten-year leases on nine tracts covering 430,000 acres. On his first day in office, President Biden imposed a temporary moratorium on these oil and gas lease activities, suggesting that environmental review by the Department of Interior (Department) was needed to consider possible legal issues with a drilling program approved by the Trump administration. It took less than six months for the Department to identify “defects” in the decision supporting the leases and suspend all activities under the leasing program, “pending completion of a comprehensive analysis of the National Environmental Policy Act (NEPA”). “The times they are a-changin’”; indeed, they have already changed, causing some to believe that comprehensive NEPA analysis will lead to a ban on leasing in the Alaskan Artic Refuge.
FERC Regulatory News
“It’s just a matter of time.” (Randy Travis)
On June 1, FERC granted certificate authorization for two new natural gas pipeline projects. The first involved Enable Midstream’s Gulf Run project to transport more 1.7 Bcf/d of gas to the Gulf Coast, where the pipeline will interconnect with the Golden Pass Pipeline, for ultimate delivery to a liquefied natural gas terminal near Sabine Pass, Texas. Gulf Run is financially backed by a 20-year commitment for 1.1 Bcf/d from cornerstone shipper Golden Pass LNG. FERC granted authorization for the construction of the Golden Pass Pipeline in 2005 and the Golden Pass Terminal in 2016.
The second certificate order involved WBI Energy Transmission’s (WBI) North Bakken Expansion Project, which is designed to provide up to 250,000 Dth/d from heart Tioga Compressor Station to a new interconnection with Northern Border Pipeline Company less than 100 miles away. The project will provide additional firm take-away capacity for increasing levels of natural gas production associated with oil production and, thereby, help reduce flaring. WBI held an open season, which resulted in precedent agreements with six unaffiliated shippers for 245,000 Dth/d of firm service for ten or 11-year terms.
In each of these proceedings, FERC staff prepared an Environmental Assessment (EA). While each EA analyzed greenhouse gas (GHG) emissions, each certificate order noted that the GHG analysis was “for informational purposes only, does not inform any part of this order’s holding, and shall not serve as precedent for any future order” and found that the projects would “not constitute a major action significantly affecting the quality of human environment.”
The orders were approved on a party-line vote, with Chairman Glick (D) and Commissioner Clements (D) dissenting because the EAs did “not assess the significance of the projects’ GHG emissions or their effect on climate change. Because we believe that this is insufficient to satisfy our responsibilities under NEPA, we have no choice but to dissent.” Note the authorizations were issued despite a Chairman Glick’s holding the gavel because Republicans retain the majority, and that majority will continue until Commissioner Chatterjee (R), whose term expires at the end of the month, leaves. Chatterjee recently indicated that he might stay at FERC until a Democrat replacement has been confirmed. As of early June, the White House has yet to nominate a replacement. Without a confirmed replacement, Chatterjee could stay at FERC until the end of the Congressional session, meaning that Republicans could retain the majority until the December.
That said, “it’s just a matter of time” before the White House nominates and the Senate confirms a replacement, that is, eventually there will be more Democrats that Republicans sitting around the FERC meeting table. When that happens, one thing is certain — the EA or EIS associated with a certificate proceeding will assess the significance of projects’ GHG emissions and their effect on climate change.
Washington Watch is a regular report on the oil and gas pipeline regulatory news landscape. Steve Weiler is partner at Dorsey & Whitney LLC in Washington, D.C. Contact him at firstname.lastname@example.org.