Amid uncertainty, industry leaders pursue better federal relations

Feb. 6, 2017
Oil and gas industry association officials in Washington, DC, are by no means certain what kind of treatment they and their members will get from the incoming Trump administration. It probably will be better than their dealings with Barack Obama's, most suggested.

Oil and gas industry association officials in Washington, DC, are by no means certain what kind of treatment they and their members will get from the incoming Trump administration. It probably will be better than their dealings with Barack Obama's, most suggested.

"Basically, we need to help take government back to the people. That's what they said they wanted on Nov. 8," American Petroleum Institute Pres. Jack N. Gerard said at a press conference following his 2017 State of American Energy address on Jan. 4. "This is a once-in-a-lifetime opportunity. We need to come together and give them what they want. That should include low-cost, reliable energy."

"It's difficult for some of our members to work their way through this federal regulatory maze. We hope there will be a reset between energy and the environment, and federal and state roles."-Barry Russell, president, Independent Petroleum Association of America

Members of the US House of Representatives were discussing at the time whether to create a border tax adjustment to raise revenue to offset possible business and other tax cuts. Gerard told reporters that API was studying the idea, particularly since it could raise crude oil import costs.

The nation's largest oil and gas trade association generally supported other House bills aimed at reversing policy and regulatory moves in the Obama administration's final months. "We'll ask what new federal regulations are unnecessary, and duplicate what starts are doing already," Gerard said.

"Basically, we need to help take government back to the people. That's what they said they wanted on Nov. 8. This is a once-in-a-lifetime opportunity."-Jack N. Gerard, president, American Petroleum Institute

After working 3-4 decades for effective regulations largely at the state level on controlling methane and other air emissions, ground-level ozone, and hydraulic fracturing, US independent producers saw much of these taken over by the federal government in the last 8 years, Independent Petroleum Association of America Pres. Barry Russell said.

"It's difficult for some of them to work their way through this maze," he told OGJ on Jan. 11. "We hope there will be a reset between energy and the environment, and federal and state roles." Soon after the November elections, IPAA began to develop a list of regulatory issues to present to the presidential transition team. "We've had a lot of contact with it. We have the first chance in a long time to readdress several fundamental questions," Russell said.

'We became the bad guys'

American Fuel & Petrochemical Manufacturers Pres. Chet Thompson said that overregulation felt like the prevailing theme during the last 8 years to his member companies. "It felt as if agencies almost considered us the enemy and regulated accordingly," he told OGJ on Jan. 12. Thompson noted that when he worked at the US Environmental Protection Agency during George W. Bush's presidency, "you could do your job without being anti-business. That has been lost. We became the bad guys."

"I hope that people in our industry don't squander the opportunity we have in the next few months. We're still in the eye of the storm. It won't always be this favorable."
-Chet Thompson, president, American
Fuel & Petrochemical Manufacturers

Thompson said he supported Oklahoma Atty. Gen. Scott Pruitt's nomination to be EPA administrator. "He's very familiar with the bigger issues EPA has to address. Now, he'll have to deal with them," he said. "I think he'll faithfully fulfill EPA's mission, but within its authorized boundaries. He may need to prove himself to career staff there, but they're professionals used to changes and they'll support him."

Meanwhile, National Ocean Industries Association Pres. Randall B. Luthi said, "We're more optimistic about the unknown that what we seemed to know before Nov. 8." Many unfavorable regulations and policies were instituted in the last 8 years, he told OGJ on Dec. 30, 2016. Expectations may be unrealistically high about what Congress can do, so administration appointments will matter, down to the directors at specific agencies who may not be on the job for months, Luthi said.

"We're more optimistic about the unknown that what we seemed to know before Nov. 8. We're encouraging a pause in regulations which haven't been finished."-Randall B. Luthi, president, National Ocean Industries Association

"We're encouraging a pause in regulations which haven't been finished, such as offshore air-quality requirements. Their underlying studies aren't finished yet to provide their basis. We're recommending a halt," Luthi said. Bonding and decommissioning cost requirements that are being considered also have offshore industries' full attention, he said, adding, "[NOIA and its members] are willing to work with [the US Bureau of Ocean Energy Management and US Bureau of Safety and Environmental Enforcement] to make sure no liability reverts to the taxpayer."

Natural Gas Supply Association Pres. Dena Wiggins noted, "I hope we'll have a more welcoming presence for fossil fuels at the federal level. From what I've seen from the incoming administration, that will be the case." Some changes might come quickly under the Congressional Review Act (CRA), while others will depend on confirmed administration appointees getting acclimated to their new positions, she told OGJ on Jan. 10.

Changes will take time

"It will take a while to implement changes," Wiggins said. One matter to fix will be guidance the White House Council on Environmental Quality issued to federal departments and agencies in 2015 to consider climate change and greenhouse gas emissions in their regulatory activities, which she hopes will be rescinded. "If it is, it will take a weapon away from our industry's opponents, who already have said they expect to be more active at the state and local level," she said.

Association of Oil Pipe Lines Pres. Andrew J. Black expressed optimism that pipeline approvals will return to the rule of law and be less political in 2017 than in 2015-16. "I think there's recognition that pipelines bring more supplies, provide better transportation, and keep consumer costs low," he told OGJ on Jan. 13. "Many in this country have been worried that pipelines which passed all their environmental reviews will be held up by a vocal minority. In 2017, we expect pipeline applications to get the yeses they deserve."

"Many in this country have been worried that pipelines which passed all their environmental reviews will be held up by a vocal minority. In 2017, we expect pipeline applications to get the yeses they deserve."
-Andrew J. Black, president, Association of Oil Pipe Lines

John Stoody, AOP's vice-president of government and public relations, added, "We saw support for Keystone XL after November's election. The broader public understands pipelines' connection to lower-priced and more reliable energy, from business and manufacturers to consumers. There could be a reversal on Keystone XL. Really, it's recognizing pipelines' inherent safety and government officials' reviews of projects."

Five weeks after the November elections, when they spoke to OGJ, officials at the Interstate Natural Gas Association of America were trying to read early signals from the president-elect and his team. "There's always uncertainty during a presidential transition. Given signals we've seen so far, the best we can do is determine how they line up with our priorities and decide what we can contribute," INGAA Pres. Donald F. Santa said on Dec. 14, 2016.

INGAA Vice-Pres. for Legislative Affairs Martin E. Edwards explained: "The uncertainty comes from having a president-elect who hasn't held office or made policies. That makes it necessary to work with his advisors and help, with many others, to fill information gaps and move from what's aspirational to what can be implemented." A new US Pipeline & Hazardous Materials Safety Administration administrator will need to be appointed, along with a chairman and members of the US Federal Energy Regulatory Commission, he said.

"It's incumbent not just on the industry, but on groups which benefit from abundant gas, to focus on where it benefits the economy. There are a lot of areas where there's no effective substitute."
-Martin E. Edwards, vice-president, legislative affairs, Interstate Natural Gas Association of America

Work on safety continues

Both pipeline associations and their members expect to continue working with PHMSA on improving operating safety. A gas pipeline integrity management program that was part of the 2002 reauthorization bill now appears ripe for improvement, Santa said. INGAA was concerned that PHMSA's then-pending pipeline safety rule would be more prescriptive than goal-oriented, he said. "We still support the overall goals. Directionally, we're on the same page," he said.

Stoody said, "On pipeline safety, we look forward to working with the incoming administration. Members from AOPL and API work on all areas of pipeline safety including corrosion and cracking, and look forward to sharing our progress with the new administration."

While national associations normally don't become directly involved in local protests, their leaders said member companies are preparing for opposition to grow there and are recruiting allies from other businesses. Edwards suggested, "It's incumbent not just on the industry, but on groups which benefit from abundant gas, to focus on where it benefits the economy. There are a lot of areas where there's no effective substitute, from home heating to petrochemical and other manufacturing. When it comes to power generation, gas has helped us reduce environmental impacts at a relatively low cost to the economy."

"Our challenge is partly education It should be a conversation, probably more one-on-one than in groups, to explain what we do. We're all ambassadors for our industry."
-Dena Wiggins, president, Natural Gas Supply Association

Wiggins said, "Our challenge is partly education. We always have to be willing to go out and talk to people. Communities which aren't accustomed to pipeline projects need to be reassured. Beyond state and local permits, we need to start talking about social license. It should be a conversation, probably more one-on-one than in groups, to explain what we do. We're all ambassadors for our industry."

Wiggins said the New York state government's disapproval of essential permits for the Constitution Pipeline was a wake-up call, and expressed hope that the Second Circuit federal appeals court overturns it. "States shouldn't be able to veto a federally approved pipeline project on a clean water basis," Wiggins said.

Santa said, "Not many people appreciate how much gas is used and how it benefits so many people. We need to rally those who benefit from it to make the case for the resource and the infrastructure to deliver it not just to policymakers, but to peers in their communities."

"There's always uncertainty during a presidential transition. Given signals we've seen so far, the best we can do is determine how they line up with our priorities and decide what we can contribute."
-Donald F. Santa, president, Interstate Natural Gas Association of America

Policy reversal prospects

Association leaders looked both to the 115th Congress and the Trump administration for ways to reverse policies and regulations that were imposed over the past 8 years. "The Obama administration used its authority to press regulations more aggressively than any other administration I've seen," IPAA Executive Vice-Pres. Lee O. Fuller noted. IPAA submitted 30 pages of oil and gas production regulatory issues to the presidential transition team. "While the agencies have day-to-day professionals, the kinds of questions we're raising will need to be addressed by political appointees," Fuller told OGJ.

"The Obama administration used its authority to press regulations more aggressively than any other administration I've seen. While the agencies have day-to-day professionals," political appointees will need to address the kind of questions we're raising.
-Lee O. Fuller, executive vice-president, Independent Petroleum Association of America

Congress potentially could use the CRA to tackle the US Bureau of Land Management's venting and flaring rule and Office of Natural Resources Revenue issues, he said. The Obama administration expanded its regulatory reach partly because Congress was gridlocked, Fuller said. Republicans now control both the Senate and House, but passage of bills will still be hard in the Senate where 60 votes are required. In the mean-time, IPAA is trying to educate new members and their staffs about the issues, as it has every 2 years for decades, he said.

"We've been at a breakneck pace, trying to work with people at the agencies on regulations which have been issued," said Mallori Miller, one of IPAA's government relations directors. "We look forward to a little reprieve and Congress getting back to more of its policymaking role. It's hard to know where to start." House Natural Resources Committee Chairman Rob Bishop (R-Utah) and his staff have been helpful, although "it looks overwhelming for Congress to decide where to begin," she said.

"We've been working at a breakneck pace with people at the agencies on regulations which have been issued. We look forward to a little reprieve and Congress getting back to more of its policymaking role."-Mallori Miller, government relations director, Independent Petroleum Association of America

NOIA's Luthi said offshore energy industries, which include wind, have the best opportunity to improve policies since early 2009. "We're not going to have a bait-and-switch mentality on 5-year plans that we had with the Obama administration," he told OGJ. Luthi spoke a week before BOEM denied six geophysical contractors permits to shoot the first seismic surveys in 30 years of the Mid-Atlantic Outer Continental Shelf, but suggested that Congress could reverse it under the CRA if it occurred.

Luthi said NOIA and its members have better relationships with career federal employees in agencies' regional offices. "Most are interested mainly in their agency's mission. They're willing to work with whoever comes in," he told OGJ. The programmatic environmental impact statement for the Gulf of Mexico affecting seismic just got started, and NOIA and its members are anxious to work with the new administration on it, he said.

A chance to fix RFS

AFPM's was optimistic that the 115th Congress will address problems in the federal Renewable Fuels Standard that was expanded significantly in the 2007 Energy Independence and Security Act. "More members see reform is needed," he told OGJ, adding that Rep. Greg Walden (R-Ore.), the House Energy and Commerce Committee's new chairman supports this, and Reps. Bill Flores (R-Tex.) and Peter Welch's (D-Vt.) bill had more than 100 cosponsors while Sen. John A. Barrasso (R-Wyo.) introduced an RFS reform bill in the 114th Congress. "We think the time to get this done is getting close," Thompson said.

"With ozone, EPA seemed to run amuck," Thompson said. "When [National Ambient Air Quality Standards] go beyond naturally occurring background levels, there's a problem. Right now, NAAQS requires reviews every 5 years. I think any professional at EPA would say it should be extended to 10 years. Otherwise, states are trying to implement limits when EPA starts the process again."

EPA's refinery residual risk rule also raised some concerns with AFPM members, particularly after the agency said there was no residual risk associated with the industry but nevertheless costly measures, Thompson said. "Some facilities' operators are concerned that new monitors are picking up contaminants that didn't come from their plants," he said.

Like other industry associations, AFPM is trying to win broader support. "We are developing programs to educate the public and policymakers on our products' value to our way of life and our communities," Thompson said. "Energy from fossil fuels is so taken for granted that people don't realize how much it contributes to their lives. I believe that value dwarfs any risk that could come from fossil fuels."

He also acknowledged that the climate for an improved federal oil and gas regulatory situation is not permanent. "I hope that people in our industry don't squander the opportunity we have in the next few months," AFPM's president said. "We're still in the eye of the storm. It won't always be this favorable."

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.