Energy Update: Week of October 7

Friends,

Congressional recess continues this week to celebrate Yom Kippur, the holiest day of the year for Jews. Yom Kippur means “Day of Atonement,” as the verse states, “For on this day He will forgive you, to purify you, that you be cleansed from all your sins.”  It starts tomorrow at Sundown and goes to nightfall on Wednesday when the Jewish people abstain from food and drink, do not wash or apply lotions or creams, do not wear leather footwear and spend the day in synagogue, praying for forgiveness. Here is a Yom Kippur 101.

It was a fun sports weekend for the Maisano crew...My son Adam ran his first half-marathon and posted a 4^th place finish with a time of 1:16.26 which I thought was impressive and fast.  As well, Hannah scored two more goals in a 3-2 OT win against Clark and took a ball to the forehead which lead to six post-game stitches. (She refused to come out and made the Trainer “Spray Tape” her cut to keep playing).  Finally Olivia played great on Saturday and ended up on the front page of the Annapolis Capital’s sports page. 

Back in the action, last Friday, the EPA and USDA said in a statement that they are committing to ensure that the level of ethanol blended into the fuel supply will exceed 15 billion gallons.  Accompanying the announcement will be commitments to facilitate ethanol infrastructure and reform of the RINs market.  The President continues to be committed to addressing economic harm to the refining sector, important as it is to consumers, workers and energy security.   A full report below, including statements from Senators that disagree.

Given the mid-week holiday, not much happening this week.  The Supreme Court does return today for its new term with a docket filled with several cases that delve into environmental issues like the Clean Water Act and Superfund. Our friends at SCOTUSblog and Politico highlighted three key cases including the December 3^rd argument in Atlantic Richfield (clean-up questions at Superfund sites); a case focused on the Atlantic Coast pipeline and agency authority to approve its route across the Appalachian Trail; and finally, the November 6^th scheduled arguments on Maui County v. Hawaii Wildlife Fund, which looks at how the Clean Water Act treats water pollution discharges that travel through groundwater. 

Today in North Dakota, EPA Administrator Andrew Wheeler joins Sens. Kevin Cramer and John Hoeven for a roundtable on WOTUS in Bismarck, while tomorrow CSIS discusses a report on oil and gas industry engagement on climate.  Then on Thursday, WCEE holds its annual litigation roundtable with EPA AJs.  Also, FERC Chair Neil Chatterjee addresses AWEA’s Finance Conference in NY, which is on Thursday and Friday.

Finally, in Colorado, the Society of Environmental Journalists (SEJ) holds its annual meeting at Colorado State University in Fort Collins Wednesday to Sunday.   There will be lots of action including a session with Interior Secretary David Bernhardt and a political panel that will talk 2020 elections.  Of course, Bracewell hosts its annual Thursday reception for the 19^th straight year.  See you in CO!!!

Best,

Frank Maisano

(202) 828-5845

C. (202) 997-5932

 

FRANKLY SPOKEN

“Despite clear commitments made by administration officials to pursue policies to contain costs, today’s announcement will hurt blue-collar refinery workers whose jobs are threatened by high RINs prices. In fact, since the rumors first began that the president’s relief for small refineries would be undermined, RINs have skyrocketed by over 150%. Now is not the time to increase regulatory costs and endanger U.S. jobs. Instead, we should be strengthening our economy and working together to implement win-win solutions that benefit both our hardworking corn farmers and refinery workers.”

                Sen. Ted Cruz

“Any plan to transfer small refineries’ biofuel obligations to other refineries will do more harm than good. No one should be surprised if it leads to closed refineries, lost jobs, and higher fuel prices. Refineries – both large and small – employ millions of Americans nationwide. This proposal risks mass layoffs and higher gasoline and diesel prices. It’s not a winning strategy for American workers or our nation’s economy.”

Senate EPW Chair John Barrasso, commenting on ethanol

“These concessions to well-lobbied interests only further expose how broken the ethanol mandate is and the skyrocketing costs to prop it up. At the end of the day, these proposals will only fuel the continued conversion of prairies to croplands, expose everyday Americans to farm runoff, pollute drinking water supplies, undermine hunting and outdoor recreation throughout the country, and fragment wildlife habitat.”

David DeGennaro, agriculture policy specialist for the National Wildlife Federation.

ON THE PODCAST

POLITICO Energy Podcast Looks at Perry Visit, SCOTUS Fall – A new podcast from POLITICO looks at Energy Secretary Rick Perry’s trip to Eastern Europe as he faces new questions in the impeachment inquiry centered on Ukraine. Anthony Adragna provides some context about why the region has been so important to Perry. Plus, Alex Guillén and Annie Snider unpack one of the big environmental cases before the U.S. Supreme Court in the term that opens today.

FUN OPINIONS

Chatterjee Says Must CyberSecurity Must Improves AS Grid Does – A new opinion piece in FORTUNE by FERC Chair Neil Chatterjee says the power grid is evolving so cybersecurity must adjust too.  Chatterjee writes securing our nation’s critical infrastructure is a complex and multi-faceted problem. But simply piling on more mandatory standards on industry isn’t the solution. Instead, I believe that technological advancement will play a critical role in building the stronger and more secure grid of tomorrow. To allow for that innovation to flourish, we as regulators must continually evaluate our rules, ensuring that utilities can both harness the benefits of new technologies and mitigate associated risks.  He adds 1) cybersecurity standards must clearly address new technologies and help define when and where these technologies could be used; 2) cybersecurity standards must provide reasonable assurance that known risks are being mitigated and 3) standards must be flexible as technology is constantly changing.

FROG BLOG

Morton: Realizing the promise of offshore wind – A new blog from AWEA’s Offshore Wind director Laura Morton highlights the increasing interest in the technology.   Morton says there are currently more than 26,000 MW of offshore wind in various stages of development off the East Coast and in the Great Lakes, with additional potential off the West Coast.  Morton also highlights AWEA’s upcoming Offshore WINDPOWER Conference & Exhibition, taking place later this October in Boston.

IN THE NEWS

Ethanol Plan Released – The EPA and USDA in a statement indicated a commitment to ensure that the level of ethanol blended into the fuel supply will exceed 15 billion gallons.  Accompanying this will be commitments to facilitate ethanol infrastructure and reform of the RINs market.  The President continues to be committed to addressing economic harm to the refining sector, important as it is to consumers, workers and energy security.  Here are a few points for the record from Bracewell’s Scott Segal, who works with independent and small refiners:

1. Of course, the devil will be in the details – To effectuate these commitments, there will have to be administrative process sufficient to meet both the Administrative Procedure Act and the Clean Air Act.  That will be a tall order and substantial litigation is likely.  To the extent that expanded volume of ethanol use is predicated on the existence of small refinery exemptions, there is no authority to do so under the Clean Air Act.  In fact, any attempt to undermine the effectiveness of SREs as a safety valve under the Act will run counter to the statute and applicable case law.
2. Will this deal satisfy the ethanol sector? – It's hard to see how.  With the ethanol industry, too much is never enough.  The Administration really has no assurance that agribusiness won’t demand more and more, just as they always have.  
3. Based on False Premise – The entire concept of prospectively recovering SRE volumes is based on a false premise.  The overwhelming consensus of data shows that SREs do not suppress ethanol demand.  Domestic ethanol production is already robust and blending levels are high.  Therefore, there is no evidence that arbitrary expansions in mandated ethanol use will come from domestic production.  If history is any guide, additional volume almost certainly will be satisfied by imports, not America ethanol production.  
4. Actually It Is Bad Politics – As previously discussed, I’d note it’s a particularly bad gambit given the position of the unions.  Union workers will be risk in key rust belt states like PA, & OH   See:

AFL-CIO: http://www.fuelingusjobs.com/library/public/Letters/Delco-Rins-Letter.pdf

NA Building Trades Union: http://www.fuelingusjobs.com/library/public/Aug-Statements/President-Trump-re-RFS-and-SREs-002-.pdf

United Steelworkers: http://www.fuelingusjobs.com/library/public/Letters/19-09-06-POTUS-RFS-letter.pdf

And we doubt Iowa is at risk given everything the president has already given them, and there connection with him on social policy, gun rights and foreign policy among other issues.   And this may risk a state like Texas which is much more important to his reelection: https://www.axios.com/texas-republicans-retirements-2020-837d4d98-ab51-4025-8784-761be418a6e0.html

Small Refiners Push Back on Ethanol – LeAnn Johnson who represent the Small Refiners Coalition also raised major concerns:

Let’s not sugar coat it, ethanol mandates are being raised because a handful of corn-state Senators have extorted it from the President using election year politics. This decision has nothing at all to do with farmers or “lost” or “waived” small refinery volumes because small refinery fuel is already blended.  There is hard data showing that ethanol blend rates are at an all-time high and zero evidence of ethanol demand destruction. Since small refinery exemptions are uncertain in any given year and granted retroactively, small refiners will now be forced to buy more RINs at a higher price as they wait to hear whether EPA will grant them a stay of execution.  This action puts manufacturing jobs at risk in Pennsylvania, Ohio, West Virginia and Texas, and other states with small refineries across the nation.

Refiners, Unions Weigh In – The Fueling American Jobs Coalition, a group of refiners, unions and small retailers say the President is breaking his promise to union refinery workers:

"With today's announcement, the President has broken his promise to the manufacturing workers he promised to protect in Pennsylvania, Ohio, Texas and across the nation to benefit Senators in the pocket of the foreign biofuel lobby.  The entire concept of prospectively recovering SRE volumes is based on a false premise.  The overwhelming consensus of data shows that SREs do not suppress ethanol demand.  Domestic ethanol production is already robust and blending levels are high.  Therefore, there is no evidence that arbitrary expansions in mandated ethanol use will come from domestic production.  If history is any guide, additional volume almost certainly will be satisfied by imports, not America ethanol production." 

API, AFPM  Deeply Concerned about Biofuel Mandate – API’s Mike Sommers and AFPM’s Chet Thompson said they are deeply concerned about the Administration’s decision to, once again, play politics with our fuel system by increasing an already onerous biofuel mandate, placing greater strain on the U.S. manufacturers he promised to protect and threatening higher costs for consumers.

The misguided reallocation of volumes punishes companies working to comply with the RFS and is an empty attempt to force more E15 into the fuel supply — a fuel nearly 70 percent of vehicles on the road were not designed to use. This rushed policy announcement is equivalent to changing the rules in the middle of the game and is a loser for the American consumer. If this arbitrary policy was conceived to help farmers, it provides no immediate relief — instead it only further distorts the fuels market. It is by no means a win-win. We will vigorously challenge this new policy in the weeks to come and continue advocating for Congress to reform the RFS.”

Chamber, Enviro, Industry Groups Encourage Innovation, Efficiency – Put this one in the strange bedfellows category.  More than 25 organizations including the Chamber, Industry groups environmental groups and efficiency groups all signed a letter to Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer urging them to place legislation addressing energy and climate technology and innovation on the Senate’s fall legislative calendar. Read the letter here. The group is encouraging consideration of bills including the following:

• S. 383, the Utilizing Significant Emissions with Innovative Technologies (USE IT) Act, which would advance CO2 utilization and direct air capture research, permitting and development.
• S. 903, the Nuclear Energy Leadership Act (NELA), which would bolster America’s leadership in nuclear energy by facilitating the development of next generation nuclear energy resources.
• S. 1201, the Enhancing Fossil Fuel Energy Carbon Technology (EFFECT) Act of 2019, which would authorize DOE to support the development of technologies that improve the efficiency, effectiveness, costs, and environmental performance of coal and natural gas use.
• S. 1602, the Better Energy Storage Technology (BEST) Act, which would increase R&D in battery storage technologies to strengthen the electric grid amid the integration of renewables.
• S. 1685, the Launching Energy Advancement and Development through Innovations for Natural Gas (LEADING) Act of 2019, which would accelerate DOE’s research and development of commercially-viable carbon capture technologies for natural gas-fired electric generation facilities.

It is a broad swath of groups that includes an unusual mix of Groups agreeing that usually don’t. 

• Industry:  Air-Conditioning, Heating, & Refrigeration Institute, American Chemistry Council Carbon Utilization Research Council, Edison Electric Institute, Energy Storage Association Lignite Energy Council National Association of ManufacturersNational Hydropower Association, Nuclear Energy Institute, Portland Cement Association, The Aluminum Association, US Chamber Global Energy Institute, US Nuclear Industry Council
• Efficiency/Enviro Groups: Alliance to Save Energy American Conservation Coalition, American Council for an Energy-Efficient Economy,  Center for Climate and Energy Solutions, Clean Air Task Force Federal Performance Contracting Coalition, The Nature Conservancy
• Energy Think Tanks: American Council for Capital Formation, BPC Action, Citizens for Responsible Energy Solutions, ClearPath Action Information Technology and Innovation Foundation Great Plains Institute, Third Way

SoCal Cities Speak Out against Electrification – More than 100 local governments across Southern California, representing approximately 6.75 million Californians, have passed resolutions challenging activists promoting electrification of all home appliances.  These resolutions were passed in response to concerns state policymakers are taking steps to prohibit the use of natural gas in new buildings. State energy regulators are actively considering calls for new regulations that would eliminate natural gas use in new buildings and have also proposed programs that would result in existing natural gas customers paying for all-electric retrofits to existing homes. The resolutions support affordable and balanced strategies to reduce emissions from buildings and that call on state policymakers to preserve consumers’ ability to choose either natural gas or electric appliances for their homes and businesses.  It is becoming a national issue as activists try to ban natgas appliances across the country.  Most recently, Seattle delayed votes on eliminating natgas after unions storm a City Council Meeting. A 2018 study by the California Building Industry Association found that replacing natural gas appliances in California homes with electric models could increase household energy costs by more than $850. Alternatively, another recent study found that replacing 2% of the natural gas California uses today with renewable natural gas could reduce emissions equal to electrifying every building in the state, at half the cost.

SCOTUS to Hear Pipeline Case – The U.S. Supreme Court said it will hear a case on Dominion's Atlantic Coast Pipeline challenging the 4^th U.S. Circuit Court of Appeals' decision that the U.S. Forest Service did not have the authority to grant the pipeline a right-of-way over National Park Service land. A final ruling is expected by next June, though the project has additional hold-ups related to authorizations from the U.S. Fish and Wildlife Service and U.S. Army Corps.

ON THE SCHEDULE THIS WEEK

Smart Cities Conference Set – The Smart Cities Connect Fall Conference and Expo is set for National Harbor, Md., tomorrow through Thursday.  The event will look at clean energy, recycling, infrastructure, and other issues. SAFE’s Amitai Bin-Nun speaks on autonomous vehicles. Also, on Wednesday, officials from DOE, EPA and other agencies give presentations on Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR).

CSIS to Look at Ocean Issues – Also tomorrow at CSIS, its Stephenson Ocean Security Project holds a forum on the relationship between climate stress and maritime security. Two panels and a keynote conversation will discuss the science and security implications of the Intergovernmental Panel on Climate Change’s (IPCC) forthcoming Special Report on the Ocean and Cryosphere in a Changing Climate. The forum will close with a keynote discussion with Admiral (ret) John M. Richardson, 31^st Chief of Naval Operations, examining how the United States can best adapt its security strategy to meet the challenges posed by the changing ocean.

EIA to Discuss Winter Outlook – The National Association of State Energy Officials and U.S. Energy Information Administration hold a Winter Energy Outlook Webinar tomorrow at 11:00 a.m. The webinar will address global oil supply uncertainty, and the effects of projected winter weather on the demand for heating and key transportation fuels. The webinar will include a presentation on EIA’s Winter Fuels Outlook, as well as presentations from well-known industry representatives and energy experts who will provide their views on factors that will affect energy markets this winter in the United States and globally.

CSIS to release Oil/Gas Climate Engagement Report – The CSIS Energy & National Security Program tomorrow will release Oil and Gas Industry Engagement on Climate Change: Drivers, Actions, and Path Forward, a new report at 1:00 p.m. on the oil and gas industry’s climate engagement and opportunities to drive further technological development. This event will convene experts on the energy industry, the energy transition, and industry strategy relating to climate change to illustrate the themes and the findings of the report. Panelists will discuss the industry’s investments in low-carbon technologies, how to take advantage of the investment made thus far, and what more companies can do to help get us on track to limit dangerous global warming.

SEJ Set for Colorado – The Society of Environmental Journalists (SEJ) holds its annual meeting in Ft. Collins, CO at Colorado State University on Wednesday through Sunday.   Colorado simultaneously boasts and suffers from a population explosion in Denver and other cities. It is also fertile ground for both clashes and collaborations among parties vying for rights to land, water and air, whether to preserve it for wildlife and human recreation or to use it for energy.   Of course, Bracewell Hosts its Thursday reception for the 19^th straight year.

WCEE Litigation Forum Set – On Thursday at 6:00 p.m., the Women’s Council on Energy and the Environment (WCEE) hosts its Fourth Annual Litigation Roundtable with the women Administrative Law Judges of the Federal Energy Regulatory Commission and the Environmental Protection Agency. The Judges will discuss their experience as Administrative Law Judges, interesting developments in their careers, who mentored them along the way and who they themselves mentored, and share the “Dos & Don’ts” regarding hearings and settlement conferences.

Exelon Innovation Summit – Thursday

Chatterjee to Keynote AWEA Finance Conference – The AWEA Wind Energy Finance & Investment Conference is set for New York Thursday and Friday at the TimesCenter.  This year, the agenda includes sessions led by experts from across the sector who will be sharing their experiences, perspectives and outlook for the future of wind energy finance & investment.  FERC Chair Neil Chatterjee will keynote.

Kerry to Address Climate – The University of Chicago Institute of Politics hosts former Secretary of State John Kerry for talk on climate change on Friday at Noon. The conversation will be moderated by Institute Director David Axelrod.

IN THE FUTURE

Nuclear Science Week Set for Capitol Hill – Nuclear Science Week is coming to Washington, D.C. October 14-18^th. On Wednesday, October 16^th from Noon to 5:30 p.m. in the Rayburn Foyer, there will be a dynamic, interactive exhibits where people can learn about and discuss the benefits of nuclear science.   A list of events is here.

AEE Holds Western States Energy Conference – The Advance Energy Economy (AEE) holds its first annual Western Regional energy policy conference in Scottsdale, Arizona on October 16^th and 17^th.  The event brings together business leaders and policymakers from across the region to identify ways to achieve this goal, state by state and through a regional grid, powered by advanced energy growth from New Mexico to Washington State. Topics will include regionalizing electricity markets in the West, utility action for an advanced energy future, Electric Vehicles (EVs) as assets for cleaning the grid, challenges and opportunities for siting renewable energy projects and grid modernization. 

Senate Enviro Panel to Look at Air Issues – The Senate Environment panel; on Clean Air will hold a hearing on Thursday

ACORE Forum Set for SF – ACORE’s 2019 Renewable Energy Grid Forum will take place on October 17^th in San Francisco at the Hilton Financial District.   The event will feature a discussion on the reliability and resilience of 100% clean energy.  Event co-chair and Edison International’s Senior Vice President of Strategy & Corporate Development Drew Murphy will hold a fireside chat on the role of utilities in America's transition to renewable energy moderated by ACORE’s President and CEO Greg Wetstone.  Our friend Rob Gramlich also speaks.

Offshore Wind Conference Moves to Boston – The American Wind Energy Assn holds its annual Offshore WINDPOWER Conference & Exhibition on Tuesday October 22^nd and Wednesday the 23^rd in Boston at the Park Plaza.  The event has cultivated a dedicated and thriving global community of top developers and experts, making it the largest and most successful gathering of offshore wind energy professionals in the United States.  The decision to grant small refinery hardship is a legal decision, not a political one, and we’re pleased that USDA’s influence didn’t cause EPA to depart from the rule of law. Small Refiners hurt by broken #RFS #ethanol.

DOE to Host Atomic Wings – ClearPath and the Department of Energy will host an Atomic Wings lunch and learn on Capitol Hill on October 22^nd. This event continues the series of educational lunches on nuclear energy.

Forum to Look at NE Coastal Resilience – The Environmental and Energy Study Institute (EESI) holds a briefing on Wednesday October 23^rd looking at initiatives and partnerships that are helping protect Northeast shorelines and communities from extreme weather events and other coastal hazards. The briefing will showcase nature-based solutions that support coastal resilience for wilderness areas, small communities, and large cities such as New York City. Nature-based solutions can protect human lives and property while creating habitat for wildlife and providing co-benefits like water filtration. Panelists will describe this collaborative process and how buy-in for nature-based resilience projects can be achieved across diverse and sometimes competing interests.

ELI Annual Dinner to Honor Patagonia Leaders – The 2019 Environmental Law Institute Awards Dinner will take place on Tuesday, October 22^nd at the Omni Shoreham Hotel.  ELI will honor 2019 award winners, Yvon Chouinard, founder of Patagonia, and Rose Marcario, Patagonia's president and CEO.  Bracewell is a major sponsor of the event.