The Fuse

Energy in the Lame Duck Session: What to Know

by Nick Cunningham | November 22, 2016

With an eye on his legacy, President Obama has tried to ink a few energy and environmental victories before he leaves the White House. The surprise loss for Democrats on November 8 has made the task of safeguarding Obama era achievements much more difficult, but the administration is acting on what it can with the time it has left.

The Obama administration is rushing to tie up loose ends in the remaining two months of his presidency. Since Election Day, his government has already made several key decisions on some controversial energy issues, but there are still some outstanding questions on other executive actions and regulations that may be addressed during the Lame Duck session.

President Obama’s environmental sprint

With an eye on his legacy, President Obama has tried to ink a few energy and environmental victories before he leaves the White House. The surprise loss for Democrats on November 8 has made the task of safeguarding Obama era achievements much more difficult, but the administration is acting on what it can with the time it has left.

Dakota Access pipeline. For example, the 1,172-mile Dakota Access oil pipeline that will run from North Dakota’s Bakken Shale to refineries in the Midwest has exploded onto the national scene as the most controversial energy infrastructure project in the country since Keystone XL. The Standing Rock Sioux Tribe and environmental activists have tried to disrupt construction of the $3.7 billion project and have called on the U.S. government to block it. In September, the U.S. Department of Justice and the Army Corps of Engineers delayed construction in order to take a second look at the project. Earlier this month, President Obama said his administration was considering rerouting the project. “We’re going to let it play out for several more weeks and determine whether or not this can be resolved in a way that is properly attentive to the traditions of the first Americans,” Obama said in an interview. Rerouting a project that is so far along is probably not in the cards, given that the project is 90 percent complete in areas outside the disputed zone near the Missouri River.

With nothing left to lose, the Obama administration delayed the project for the remainder of the president’s term. The Army Corps of Engineers issued a statement on November 14, saying it completed its review, but “determined that additional discussion and analysis are warranted in light of the history of the Great Sioux Nation’s dispossessions of lands.” The move was an attempt, however futile, to kill off the pipeline. After Donald Trump takes office, he is expected to revive the project next year, just as he promised to resuscitate the Keystone XL pipeline. The fortunes of Dakota Access have dramatically changed in just a few weeks. Before the November 8 election, Dakota Access was facing an uphill battle; now it is a near certainty. Energy Transfer Partners expects to complete construction in the first quarter of 2017, although that date could slip a bit because of the recent Army Corps announcement.

Arctic and Atlantic drilling. Another decision by the Obama administration could prove more difficult, or at least more time consuming, for Republicans to undo. On November 18, the Department of Interior released its 2017-2022 Five-Year Program, which offers up scheduled leases for offshore oil and gas drilling. The Interior Department excluded leases for the Arctic, Atlantic, and Pacific Oceans, as well as the Eastern Gulf of Mexico near Florida, which has long been off limits. “Given the unique and challenging Arctic environment and industry’s declining interest in the area, forgoing lease sales in the Arctic is the right path forward,” Secretary of Interior Sally Jewell said in a statement.

House Republicans have already stated their intention of rewriting the five-year plan, and the replacement of top officials at the Interior Department by President-elect Donald Trump will ensure a friendlier lease schedule for the oil industry.

House Republicans have already stated their intention of rewriting the five-year plan, and the replacement of top officials at the Interior Department by President-elect Donald Trump will ensure a friendlier lease schedule for the oil industry. However, the process for doing so could take as long as two years. Even then, it is unclear that any oil companies will be interested in bidding on new offshore tracts in the Arctic Ocean, especially after Royal Dutch Shell spent upwards of $7 billion on a failed exploration program in the Chukchi Sea. Low oil prices will deter drillers even if Donald Trump gives them the greenlight. Opening up the Atlantic could be more consequential, but it will take a few years before the Trump administration will be able to do that.

Methane emissions. On November 15, the Bureau of Land Management finalized its “Methane and Waste Prevention Rule,” which targets fugitive methane emissions from oil and gas drilling on public lands. The rule phases in limits on venting and flaring, and over time will force companies to capture more of the associated gas that comes out of drilled wells, with a target of cutting methane emissions by 35 percent over the next decade. The industry calls the regulation unnecessary, and Republicans are already promising to overturn it. Unlike Arctic and Atlantic drilling, the methane rule will be easier to scrap. It is likely that Congress will take swift action in 2017 to repeal the rule.

The unfinished agenda

President Obama has precious few arrows left in his quiver regarding energy. Here is a look at a few more unresolved energy questions during the Lame Duck session, some of which the Obama administration is rushing to finalize, others will be passed onto President-elect Donald Trump and his allies in Congress.

Monument designations. Presidents can declare monuments to protect federal lands of historic or environmental interest, and they tend to designate monuments at the end of their term to cement their legacy. President Obama already has more national monuments to his name than any other president. Conserving public lands could be one of the tools that Obama chooses to use over the next two months.

Presidents can declare monuments to protect federal lands of historic or environmental interest, and they tend to designate monuments at the end of their term to cement their legacy.

Environmentalists have put Bears Ears at the top of their list, a scenic area of Utah in which oil and gas companies are interested in drilling. EOG Resources, a Texas-based shale driller, wants to drill on lands overlapped by the proposed Bears Ears designation. President Obama does not have much power left except for protecting public lands, and while President Trump could cancel the declaration, previous presidents have always honored national monuments declared by their predecessors, leaving a sliver of hope for environmentalists.

BLM’s fracking rule. The Department of Interior issued final rules for hydraulic fracturing on public lands in 2015, which set standards for well-bore integrity, wastewater disposal, and requiring the public disclosure of chemicals. The oil and gas industry sued to block the rules, calling them redundant and costly. A court agreed, striking down the rules earlier this year, but the federal government appealed. E&E News notes that oral arguments on the rule at the 10th U.S. Circuit Court of Appeals could take place in January, a time when President-elect Trump may not yet have his personnel in place to prevent the Justice Department from defending it. Of course, even if the court allows the rule to stand, President Trump’s Interior Department could withdraw the appeal, although that could spark more litigation. A more certain path would be an act of Congress. Either way, there is little the Obama administration can do at this point to ensure federal oversight of fracking except to defend the rule in court in January.

Congressional energy bill. One thing that looks like it won’t get done during the Lame Duck is the first major piece of energy legislation since 2007. Both the House of Representatives and the Senate passed a broad energy package earlier this year, a bill that would modernize the electric grid, enhance cybersecurity, improve energy efficiency, accelerate permitting for LNG exports, promote renewable energy, and also reauthorize funding for conservation programs. Led by Senate Energy Chairman Lisa Murkowski (R-Alaska) and Ranking Member Maria Cantwell (D-WA), the Energy Policy Modernization Act was nearly a two-year effort that was expected to be resolved by conference committee during the Lame Duck and signed by Obama. But Trump’s victory will put the bill on ice for now. Politico reported that the Republican controlled Congress will forgo passage this year and load up the legislative effort with more Republican priorities next year when they have an ally in the White House and a firmer grip over the levers of power in Washington.

Climate action coming to an end

“Most of us…are inclined to believe that this could be a very short Lame Duck.”

In fact, the Republican-controlled Congress could let nearly everything slip into 2017 when they have a much stronger hand. Senate Democrats hoped to address tax incentives for renewable energy as part of an omnibus spending package the Congress was planning on taking up in the lame duck. But now that effort looks dead. “I think that’s a pretty heavy lift,” Todd Wooten, a senior energy counsel at the Senate Finance Committee said on a conference call, according to Natural Gas Intelligence. “Most of us…are inclined to believe that this could be a very short Lame Duck. The incentive is really not there for the Republicans to cut any major deals—particularly when it comes to something on energy—because they likely have things that they want, which perhaps President Obama would veto but obviously President Trump would sign.”

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