Collateral Damage: 20 Energy-related Reforms Impacted by the Government Shutdown
This morning at the annual U.S. Chamber of Commerce State of American Business address, our president and CEO Tom Donohue implored Congress and the Trump Administration to come together and end the partial government shutdown. A Chamber letter to Congress highlighted alongside Donohue’s address detailed the numerous harmful impacts of the closure, which is already the second longest in U.S. history.
Among these growing impacts is a near-blanket stoppage of work on key energy-related regulatory reforms that are important to sustaining and growing America’s competitive position in the global economy. This is because the primary agencies responsible for such reforms—the Department of Interior and EPA—are both closed for business.
Even before the shutdown, 2019 was poised to be a pivotal year for these agencies’ initiatives, as a large number of major reforms were set to be completed and several others were on track for release and completion in late 2019 or early 2020. While a couple of weeks may not seem like a big deal, as the shutdown drags on, it is not an exaggeration to say that it may soon have a material impact on the ultimate success or failure of these efforts.
To appreciate the importance of timing to successful completion of regulatory initiatives, we need look no further than the Obama Administration. A number of high profile regulations were not completed until the final months of 2016 (in fact some “midnight regulations” were not finalized until after the 2016 election), and as a result were vulnerable to legislative veto using the Congressional Review Act (CRA). Congress repealed 14 Obama Administration rules using CRA in 2017 (two of which were energy-related).
For regulatory actions completed outside the CRA window, a future administration could undertake efforts to reconsider and revise recently finalized actions, and/or stop defending them in the courts. The list of Obama Administration rules impacted in this way is long, and it is not difficult to envision similar efforts to undo rules in 2021 in the event of a new president or a change in Congressional makeup. In fact, with further delays, many of the Obama-era regulations that the Trump Administration is attempting to reform could find themselves swinging back with the pendulum to be changed yet again.
With that as background, we have compiled a list of 20 energy-related regulatory reforms that are likely being impacted by the ongoing shutdown. Some of these impacts are immediate and clear, while others involving actions scheduled for later in the year are more uncertain. But with EPA, Interior, and even parts of the White House on an extended holiday leave, work on all of these reforms has ground to a halt.
(NOTE: most projected timelines in this list come from the Administration’s October 2018 semiannual regulatory agenda. Some deadlines have already passed without action, and due to the shutdown and other factors, it is reasonable to expect further delays to most projected timelines.)
In approximate chronological order of expected actions that could be delayed, here we go…
Outercontinental shelf (OCS) leasing plan
Agency: Interior (Bureau of Ocean Energy Management)
Summary: A key component of the Administration’s “America First” energy strategy, the OCS leasing plan initially proposed in March 2018 called for 47 proposed lease sales in the U.S. Atlantic, Arctic, and Gulf of Mexico waters.
Endangered Species Act (ESA)
Agency: Interior (Fish and Wildlife Service) and Commerce (National Marine Fisheries Service)
Summary: Just before the shutdown, the Department of Interior was poised to finalize a package of three proposed regulations pertaining to the process for listing and delisting species and designating critical habitat.
Summary: A campaign promise and key priority for President Trump himself, proposed reforms to EPA’s WOTUS rule were announced on December 11th, but the agency was unable to formally publish the proposal in the Federal Register before the government shutdown 10 days later. A public hearing on the rule originally scheduled for January 23rd has already been postponed.
ANWR Oil and Gas Leasing
Agency: Interior (Bureau of Land Management, Fish and Wildlife Service)
Summary: On December 20th, the Department of Interior released a 700-page draft environmental impact statement pertaining to oil and gas leasing in the Arctic National Wildlife Refuge. The plan initiated a 45-day public comment period, after which companies were expected to be issued permits to begin seismic testing necessary for future exploration. While the comment period is open, furloughed federal employees are unable to review and respond to comments—a prerequisite to permit issuance and seismic testing. Because such activities require heavy equipment that can only be used on frozen tundra, they must be undertaken between December and May. Therefore, an extended shutdown could force testing companies to wait until next winter.
Agency: Interior (Bureau of Ocean Energy Management, BOEM)
Waiting on: EIS finalization, federal permits
Pre-shutdown projected timeline: Undetermined
Summary: On December 7, 2018, BOEM released a draft environmental impact statement for the 800 megawatt Vineyard Wind project off the coast of Massachusetts. A series of public hearings on the proposed EIS have been postponed, and federal regulators are unable to review comments during the shutdown.
Summary: In October 2018, President Trump directed EPA to develop regulations that would allow for the year-round sale of gasoline containing 15 percent ethanol (E15). (Currently, such sales are prohibited in the summer.) In order to complete a rule in time for the 2019 summer driving season, EPA faced an unusually truncated regulatory timeline, aiming to develop a proposed rule by February and finalize it by May. According to reports, this already tight timeline appears to be in jeopardy.
GHG New Source Performance Standards (NSPS) for Power Plants
Waiting on: Final Rule
Pre-shutdown projected timeline: No official projection
Summary: On December 20th, EPA formally proposed changes to the Obama Administration’s controversial NSPS standard (also referred to as “111(b) rule”) prohibiting the construction of coal-fired power plants without carbon capture and sequestration (CCS) technology. While the proposal made it into the federal register just before the shutdown and the comment period remains open, work on the rule has been halted and the agency was forced to postpone its public hearing on the proposal from January 8th to January 30th, thereby extending the comment period and with additional delays likely if the shutdown persists.
National Environmental Policy Act (NEPA)
Agency: White House Council on Environmental Quality (CEQ)
Summary: In August 2017, President Trump signed Executive Order 13807, which, among other things, directed CEQ to identify improvements to the federal environmental review process. CEQ responded with an Advanced Notice of Proposed Rulemaking in June 2018 seeking feedback on existing NEPA regulations as it develops a formal rulemaking proposing changes. Note: while CEQ is housed within the White House structure, it is largely shut down because it is funded through the Interior, Environment, and Related Agencies appropriations bill.
Summary: On December 27, 2018, EPA proposed changes to the cost-benefit analysis and issued its “risk and technology review” associated with the 2011 Mercury and Air Toxics rule. As a result of the shutdown, the proposal has yet to appear in the federal register, thus beginning the formal public comment and review period.
Summary: In February 2019, EPA was expected to release a rulemaking proposing to modify how it determines what facilities are subject to certain requirements under Section 112 of the Clean Air Act pertaining to National Emission Standards for Hazardous Air Pollutants (NESHAP).
Summary: In August 2018, EPA released the Affordable Clean Energy (ACE) Rule, which would replace the Obama Administration’s Clean Power Plan and address greenhouse gas emissions from existing fossil-fuel power plants. Completion of this top administration priority was scheduled to occur in March 2019, but will now likely be delayed.
Summary: In March 2018, EPA issued a memorandum to clarify its interpretation of how industrial sources must account for project emissions under NSR’s preconstruction permitting program. This regulation would institute and further clarify those changes.
Summary: In August 2018, EPA and DOT formally proposed changes to 2012 Corporate Average Fuel Economy (CAFE) and carbon dioxide tailpipe standards. Completion of this proposal remains on hold during the shutdown.
Summary: In August 2017, EPA announced its intention to pursue revisions to 2015 regulations involving effluent limitations from electric power plants. The agency set a goal to propose and finalize the rule in 2019, but work remains on hold during the shutdown.
Summary: EPA is considering whether the Section 401 certification process would benefit from updated rulemaking to promote nationwide consistency and regulatory certainty for states, permit applicants, and other stakeholders.
NAAQS (Ozone and PM2.5)
Waiting on: Integrated Review Plan and Proposed Rule
Pre-shutdown projected timeline: Multiple stages (see below)
Summary: In October 2018, EPA released a proposed outline to achieve the Administration’s goal of completing a review of National Ambient Air Quality Standards (NAAQS) for ozone by the end of 2020. A similar goal exists for standards addressing fine particulate matter (PM 2.5). Compliance with the ozone and PM 2.5 NAAQS impose significant challenges for manufacturing and industry in many areas of the country. The shutdown exacerbates an already challenging timeline for the agency to complete these reviews.