POLITICO Morning Energy for 5/21/2015
By DARIUS DIXON, with help from Alex Guillén and Darren Goode
CALIF. OIL SPILL PUTS GREENS ON THE ATTACK: The pipeline rupture in California that spewed thousands of gallons of crude oil into the Pacific Ocean on Tuesday has environmentalists hoping the industry will get more than a tongue-lashing over the incident. As spilled oil from a failed pipeline spread to cover 9 miles, befouling one of California’s iconic beaches, the safety of fossil-fuel infrastructure took on fresh urgency for green groups that have made climate change the core of their campaign against the Keystone XL pipeline, Pro Energy’s Elana Schor and Andrew Restuccia report. The oil leak onto Santa Barbara’s Refugio beach from a 28-year-old line operated by Plains All American Pipeline could total 105,000 gallons, according to a worst-case estimate released Wednesday by a response team that includes the company as well as state and local officials. The Obama administration’s pipeline safety regulator dispatched four inspectors to the scene, a presence insufficient to quell criticism from environmentalists who warn that the system is broken. Elana and Andrew have more for Pros: http://politico.pro/1egP906
IT WOULDN’T BE A QER HEARING WITHOUT A DELAY: If you were hoping to pull out the popcorn this morning and take in a hearing about the Obama administration’s Quadrennial Energy Review, it’s just not your day. The House Energy and Commerce subcommittee that invited Energy Secretary Ernest Moniz to discuss the QER and related draft legislation the panel is crafting was forced to reschedule. While the Senate Energy and Natural Resources Committee had to postpone a similar hearing with Moniz a few weeks ago because the QER wasn’t finalized yet, this delay is on Congress: E&C’s full committee markup on the 21st Century Cures Act started earlier this week but when an agreement was reached Wednesday plans were made to reconvene at 8:30 a.m. this morning — a bit too close to the hearing with Moniz. But never fear, the Secretary will talk QER with the committee on June 2, after Congress’ Memorial Day recess.
YOU’RE SOOOO CLOSE TO MEMORIAL DAY WEEKEND: I’m Darius Dixon, and while your host isn’t a huge fan of David Letterman it never really occurred to me that he might “retire.” He always seemed like a from-my-cold-dead-hands kinda guy. Last year, Emily Nussbaum wrote that “Late-night television is the most static genre on TV.” I don’t disagree but I will check out the “Tonight Show” occasionally to check out The Roots, and for those silly lip sync battles: http://bit.ly/1Sfnuwh. Send your energy tips to ddixon@politico.com, and follow us on Twitter @dariusss, @Morning_Energy and @POLITICOPro.
MOVIN’ ON UP: We have some inside news here on the Pro Energy team. Deputy Energy Editor Matt Daily has successfully removed the sword from the stone and will soon become POLITICO’s new Energy and Transportation Editor. Our outgoing head honcho, Bob King, is taking a deputy managing editor spot here at Pro.
FERC SURVIVES FIRST LEGAL TEST IN HUNT FOR BARCLAYS FINE: Barclays Plc lost a bid to dismiss a lawsuit by FERC seeking to force it to pay $488 million in fines for manipulating trades on electricity contracts, Bloomberg reports. U.S. District Judge Troy Nunley in Sacramento, California, said in a ruling that “FERC has alleged both a sufficient factual and legal basis to support its claim of manipulation.” http://bloom.bg/1Agz6JK
ME dug up the 34-page order for you: http://politico.pro/1BduZsW
HOUSE COMPETES ACT NARROWLY PASSES: The GOP’s America COMPETES Reauthorization Act of 2015 passed the House Wednesday night on a vote of 217-205. Nearly two-dozen Republicans turned their backs on the bill, including Reps. Justin Amash and Tom McClintock, ostensibly because it’s still too big-government. Not a single Democrat voted yes. For you roll call nerds: http://1.usa.gov/1SfkMXv
The bill, which authorizes science programs across the federal government, boosts funding for the National Science Foundation and the Energy Department’s Science office while cutting funds for climate and renewable energy research. It also bars DOE research from being used in any federal regulations. Only six of the twelve amendments stood for floor votes when debate ended and most of the Democratic measures flamed out. Democratic amendments to reauthorize DOE’s Energy Innovation Hubs, for instance, were passed on voice votes. Later, however, efforts to scrap language requiring NSF grants to include a “national interest” justification, and Science Committee ranking member Eddie Bernice Johnson’s attempt to rewrite the bill entirely, failed. A Democratic amendment that sought to continue allowing DOE to produce drop-in biofuels with the Pentagon failed more narrowly than the overall bill passed: 208-215.
Amendment debate got tense: As GOP Rep. Morgan Griffith argued for his amendment to allow the Speaker and the Senate Majority Leader to make appointments to a STEM education advisory panel, Johnson made her opposition plain. “I just don’t trust your amendment,” she told him on the floor, adding that it was “the very definition of politicizing science.” Griffith’s measure passed 234 to 183. House Science Chairman Lamar Smith’s bill drew the wrath top House Democrats. Minority Leader Nancy Pelosi made a visit to the floor and said the new COMPETES bill was “destructive” and “betrays everything” about the original legislation of yore. And Minority Whip Steny Hoyer says that the bill will never become law anyway because the White House has already threatened to veto it.
Smith insisted that his bill advances science while making tough fiscal choices. “Our colleagues on the other side of the aisle would have you believe that the only way you can be pro-science is to spend more taxpayer money than the Budget Control Act allows,” he said. “Since the last Congress, we have worked hard to reach an agreement with the minority on numerous policy issues. But we have been clear since the beginning that increases in spending need to have reasonable offsets. Real priorities require making choices.”
NOT QUITE ON THE SAME PAGE: On the Senate side, COMPETES falls to Sen. John Thune’s Commerce, Science and Transportation Committee. Yet, earlier on Wednesday, a bipartisan septet of well-positioned senators — such as Sen. Lamar Alexander, chairman of energy and water spending — introduced an energy-only version of the COMPETES reauthorization that plugged in considerably more money than Smith’s bill: http://politico.pro/1FCA6db
** A message from America’s Advanced Biofuel: From coast to coast, biodiesel is getting us where we need to go. Made from sustainable resources, biodiesel is diversifying our fuel supply, making our economy stronger and our communities healthier. Get biodiesel going in your community. Learn more today at www.AmericasAdvancedBiofuel.com. **
EPA MAY HAVE DROPPED CCS FROM CARBON RULE FOR FUTURE POWER PLANTS: A report yesterday from Inside EPA that the administration may have dropped the carbon capture and sequestration requirement from its carbon rule for new power plants has EPA World in a tizzy — though the prospect of CCS getting dropped isn’t surprising for those who have been following this rule. The CCS requirement has long been controversial given the dearth of commercially viable projects. Despite assurances from EPA chief Gina McCarthy as recently as February that CCS is a feasible option for new coal plants, CCS’s image has taken a hit with the Mississippi Kemper plant’s troubles and the death of the FutureGen project earlier this year. Dropping CCS would help EPA sidestep a sticky legal argument raised by House Republicans about using projects that received government support to justify using CCS in the rule. And EPA certainly wants to get the rule for new power plants right; should that rule fall, the separate and much more impactful rule for existing power plants could be in trouble as well.
— “Carbon capture and storage is critical not only for low-emissions use of coal and natural gas, but for enhanced oil recovery, so removing it would be profoundly short-sighted,” said Paul Bledsoe, a former Clinton administration climate official and now a senior fellow at the German Marshall Fund. “I hope this is not a case where excessive legalistic precaution trumps a sensible policy priority.”
However, it’s unclear what has really happened to the CCS requirement. An agency spokesperson said the rule is not yet finalized and declined to speculate. One environmentalist close to the rule told ME that, based on recent knowledgeable communications, they have “no reason to believe” CCS has been dropped from the rule. One argument in favor of dropping CCS is that given market dynamics, gasoline prices and regulations like EPA’s mercury rule, no one is building coal plants anymore. Dropping the CCS requirement would almost certainly require EPA to raise the emissions levels for potential future coal-fired power plants, though former EPA air chief Jeff Holmstead told ME that EPA could set a standard requiring emissions achievable via “ultra supercritical” boilers, a relatively new and more expensive technology.
NO SYMPATHY FOR THE DIABLO: NRC leaders are affirming votes at 8:55 a.m. on whether to grant a hearing request from Friends of the Earth on PG&E’s Diablo Canyon plant, which has attracted new concerns about seismic risks.
MOVER, SHAKER: The Environmental Defense Fund’s Courtney Taylor has joined the Cypress Group to help manage and expand the firm’s new energy and environmental practice. Taylor served as EDF policy director of ecosystems and helped secure the passage of the RESTORE Act following the 2010 oil spill in the Gulf of Mexico. She has worked on environmental law and regulation as an attorney advisor at the Interior Department and as a litigator at the Justice Department.
AEE TO EPA: FLIP FIP SCRIPT: The federal plan EPA will write for states that do not write their own plan to comply with EPA’s Clean Power Plan can, in fact, use methods like energy efficiency and voluntary credit trading to reduce emissions, according to a white paper out today from Advanced Energy Economy, a trade group of energy-saving and clean energy businesses. Supporters of the rule have long warned that a state-written plan will have more flexibility to comply and thus can do so more cheaply than a federally imposed plan, and critics have questioned how EPA could meet the reductions without stepping outside its jurisdiction. But AEE argues that EPA can in fact write a “portfolio”-style plan because “current electric sector practices demonstrate that owners of [power plants] have ample ability to directly invest in advanced energy or to procure credits associated with advanced energy investments as a means of offsetting their units’ output and associated emissions.” EPA is set to release a draft federal plan this summer, alongside its final carbon rules. AEE’s white paper: http://bit.ly/1ILZ2Q5
In case you were wondering: No, AEE isn’t suggesting that EPA make Oklahoma join RGGI. The group is just saying that power plant owners could be given the option to trade emissions credits through some voluntary program.
BUT WAIT, THERE’S MORE: The National Association of Clean Air Agencies, whose members will be among those writing state compliance plans for EPA’s carbon rules, will release a “menu of options” from which states can draw ideas for their plans. Expect a lengthy list of options on everything from making power plant operations more efficient to building more renewable sources to a state-level carbon tax. NACAA will release their menu right around lunchtime today.
DEEPWATER SETTLEMENTS: BP reached settlements Wednesday with Halliburton and Transocean, the other two major players tied to the deadly 2010 Deepwater Horizon rig disaster sparked by the rupture of the British oil giant’s Macondo well. Halliburton — BP’s cement contractor for the well — reached an agreement addressing all the claims between the two companies. “We are pleased to have reached an amicable resolution with BP, our valued customer, that allows us to close another chapter in the Deepwater Horizon case for Halliburton,” Halliburton Chairman and CEO Dave Lesar said in a statement. “This agreement allows Halliburton to strengthen its relationship with BP by negotiating a global master services agreement between the companies.” The statement doesn’t mention any monetary or other details of the agreement.
Transocean, which owned the Deepwater Horizon rig, announced [http://bit.ly/1AmvDZY] a deal where BP will indemnify Transocean for compensatory damages, including natural resource damages, and Transocean will indemnify BP for personal and bodily injury claims of Transocean employees and claims tied to future cleanup or removal of diesel or other pollutants stored on the rig. BP will also pay Transocean $125 million to compensate for legal fees. The deal means the two companies will also release all claims against the other.
BP issued a tidy two-sentence statement: “We are pleased to have resolved with Halliburton and Transocean the final remaining disputes stemming from the Deepwater Horizon accident. We have now settled all matters relating to the accident with both our partners in the well and our contractors.”
Transocean also announced a separate settlement with the Plaintiffs’ Steering Committee, a group of attorneys representing private individuals, local governments and other victims of the rig explosion and subsequent spill. Under the settlement, Transocean will pay roughly $212 million and attorneys’ fees. The settlement with the plaintiffs, unlike the one with BP, is still subject to approval by U.S. District Court for the Eastern District of Louisiana Judge Carl Barbier. Halliburton had previously announced a deal in September last year to pay nearly $1.1 billion to settle punitive damage claims by plaintiffs alleging damage to property and commercial fishing. Barbier last September also found BP to be grossly negligent, which could mean the company could be on the hook for as much as $13.7 billion in Clean Water Act fines.
QUICK HITS
— North Carolina Senate committee OKs green-energy freeze. The Charlotte Observer: http://bit.ly/1FynwcZ
— Utah energy officials blast feds’ ‘clean power’ rules. The Salt Lake City Tribune: http://bit.ly/1Sge3g2
— Texas city will still enforce fracking regulations. UPI: http://bit.ly/1FDkzd7
— Oil Sands Royalties Under Microscope as Alberta Prepares Cabinet. Bloomberg: http://bloom.bg/1PXYBky
— Judge temporarily halts ‘fracking’ permits in NC. The Associated Press: http://bit.ly/1IQJU2l
— Utah joins lawsuit against BLM for new proposed fracking rules. ABC 4 News: http://bit.ly/1HuYmvo
Tags: energy, fuel, gas, oil