Watching Government: Regulatory mischief potential

Aug. 18, 2014
The two American Petroleum Institute officials had discussed concerns they had about possible new restrictions emerging at the US Environmental Protection Agency while Congress was in its August recess.

The two American Petroleum Institute officials had discussed concerns they had about possible new restrictions emerging at the US Environmental Protection Agency while Congress was in its August recess. Then the question arose about how this might fit into the Obama administration's second-term strategy to advance new policies by using executive authority.

"Certainly on climate we've seen EPA say it's not satisfied with Congress," responded Howard Feldman, API's regulatory and scientific affairs director, during an Aug. 8 luncheon with reporters. "But it has tried to twist the Clean Air Act to serve its needs, which is not the law's purpose."

Agencies have proposed new regulations when Congress has been away for its late summer recess before. The difference now is that US President Barack Obama has publicly expressed frustration with lawmakers' legislative gridlock, and suggested agencies might start using executive authority to move policy reforms forward.

"The administration appears to be taking as much authority as it can under the Clean Air Act," Feldman said. "Major policy changes should be made by elected officials, not the administration."

Ironically, the administration could exercise authority instead to benefit oil and gas—and the country's still fragile economic recovery, added Kyle Isakower, API's vice-president for regulatory and economic policy, who also participated. It could open more federal acreage to leasing, approve more LNG exports, and remove the crude oil export ban, he said.

Crude oil and petroleum products represented 10% of the country's total exports during this year's first half, he noted. "Without them, our trade deficit would be 17% higher," Isakower said.

Primary concerns

API's main ongoing concerns at EPA include possible new refining restrictions, greenhouse gas controls, and a possible new 60 ppb ozone standard, which many parts of the country couldn't to meet. "We know areas such as Yellowstone National Park have measured background ozone levels in the 66 ppb range," Feldman said.

This ozone restriction would affect the industry at multiple levels, he said. "Upstream, we've become an engine that creates jobs with production of inexpensive fuels that are bringing industries back to this county," he said. "Downstream, many refineries wouldn't be able to expand because they couldn't afford nitrogen oxide offsets. Fuel formulations could have additional requirements."

Isakower said, "The people in Washington wouldn't be in charge of implementing these new regulations. It would be the states and their governments which would have to do it." He said API recommends EPA affirm the 75 ppb standard it adopted in 2008 "and come back in 5 years to see how much progress has been made and what still needs to be done."