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What’s in, what’s not for the energy conference (Correct)

July 13, 2016 Mark Drajem

The First Word Energy team draws on Bloomberg’s worldwide resources to cover all aspects of energy policy. Learn how Bloomberg Government can help your energy lobbying or policy analysis—contact Peter Hsu at yhsu24@bloomberg.net or 202-416-3035.

Today’s Agenda

Now that the Senate’s (finally!) agreed to go to conference with the House on energy legislation, the question is:  What’s on the negotiating the table? Democrat Maria Cantwell says that House Republicans agreed to drop veto-bait measures. That would mean that much of the House’s initial energy package, H.R. 8, is out. In particular, the White House has taken issue with provisions that would change FERC deadlines for natural gas pipeline approvals and limit environmental reviews for hydropower projects.

Of the three-dozen measures the House added to its energy package in May, two other bills have veto threats: California drought bill H.R. 2898 and the research funding bill H.R. 1806. The White House also “strongly opposes” public lands management bill H.R. 2406, minerals bill H.R. 1937, wildfire funding billH.R. 2647 and Native American energy bill H.R. 538, but stopped short of veto threats.

The next step is for staffers to start negotiating “chunks” of the remaining measures, starting with the easiest stuff. First up will probably be provisions on the National Park Service Centennial and energy workforce development, a Murkowski aide says.

A House Divided Over Biomass

In its veto message for the EPA-Interior appropriations bill, which is being debated in the House this week, the White House said one provision was especially egregious: wording that would mandate the EPA consider biomass as carbon neutral. One of the Obama administration’s cabinet officials, however, needs no convincing. Agriculture Secretary Tom Vilsack wrote his U.K. counterpart earlier this year, advocating that they consider wood pellets a tool to address climate change. “Biomass generation provides significant greenhouse gas benefits to the U.K., due to reduced fossil fuel combustion,” Vilsack wrote to Amber Rudd, the secretary of state for energy, in March.

Now Vilsack’s advocacy is prompting blowback from environmental advocates here at home. In a letter set to sent to him today, the Partnership for Policy Integrity and other groups say that Vilsack’s claims are misleading, as it cited purported growth in southern forest cover that is actually a change in methodology: The U.S. Forest Service included arid woodland in Texas and Oklahoma as forest.

The House spending bill would preempt an EPA study of the issue, mandating that the agency find that emissions from biomass “do not increase overall carbon dioxide accumulations in the atmosphere,” as long as the overall forest stocks are stable or increasing. The White House objected, saying it would compel EPA to “disregard the scientific recommendations of its own Science Advisory Board and other technical studies.”

A Cleaner RFS Battle

The comments submitted to EPA over its 2017 RFS proposal fell into a familiar pattern: Refiners and oil companies said the agency’s proposed were too high, and should be cut; ethanol producers and their representatives said the agency should restore the quotas to the levels set in the 2007 legislation. But there was one advocate we hadn’t heard before: Soap makers weighed in, and urged the agency to minimize the use of animal fats under the RFS. They want EPA to weigh the impact of losses to its industry from biodiesel demand for the animal fat.

“Animal fats are a key feedstock used by oleochemical producers, which help supply the production of soaps, laundry detergents, fabric softeners,” the American Cleaning Institute argued in its comments. “The proposed volumes would continue to divert large quantities of a finite inelastic supply of animal fats to the biofuels market, thereby critically disadvantaging the domestic oleochemical industry.”

Voting for Judicial Activism?

The Natural Resources Defense Council found some irony in the House vote for H.R. 4768, which would upend Chevron deference. The measure, if it became law, would instruct judges not to defer to regulators in determining what is a reasonable determination of a law. But wait, isn’t judicial activism something conservatives opposed, NRDC’s David Doniger asked in a blog post. “If it became law, the bill would as likely result in unelected judges’ overruling the decisions of future conservative administrations,” he said. “It’s worth remembering that NRDC was the losing party in the Chevron decision.”

Tweet of the Day

Drajem’s Don’t Miss

Bloomberg Government is hosting a webinar this afternoon on the key Senate races to watch this November with Greg Giroux and Loren Duggan. Among the topics will be whether Republicans will be able to hold their majority.

Chart of the Day

640x-1 (8)

Has the drop in coal consumption by utilities bottomed out? Each month this year EIA has lowered its forecast for coal demand, as the floor dropped out of the market due to cheap natural gas prices. But now that EIA is predicting an uptick in natural gas prices in the second-half of 2016, it’s also predicting a commensurate jump in coal demand. As this graph shows, it’s not a large jump — so far — and EIA did lower its estimate for how much coal was consumed in the second quarter of this year. (If you had to wager, take the under on EIA forecasts for fossil-fuel demand.)

Quote of the Day

“Too often, we judge other groups by their worst examples, while judging ourselves by our best intentions,” former president George W. Bush said at the memorial service in Dallas yesterday. “But Americans, I think, have a great advantage. To renew our unity, we only need to remember our values…We are bound by things of the spirit – by shared commitments to common ideals.”

We’re Also Watching

The operator of one of the nation’s 20 largest coal plants succumbed to environmentalists’ pressure and agreed to shutter two of its four units yesterday. The news for Montana’s Colstrip plant, however, looks a bit more mixed on closer inspection. Talen Energy, which runs the plant, agreed to shutter by 2022 a total of 614 MW of coal units that are four decades old; the two newer units that will remain untouched have more than double that capacity, 1,480 MW. (More on that below.) And, a bit of good news in a world in desperate need of it: The nation’s oldest full-time park ranger returned to work three weeks after an assailant attacked and robbed her in her Bay area home. Betty Reid Soskin, 94, began working as a ranger a decade ago.

Contact Us

Send us your comments, tips and where you will be to watch the Mt. Ventoux stage of the Tour de France tomorrow: Mark Drajem is the editor (mdrajem@bloomberg.net or@drajem), Catherine Traywick (ctraywick@bloomberg.net or @ctraywick) and Laura Curtis (lcurtis7@bloomberg.net or @LouKCurtis) cover Congress and regulation.Bloomberg Government subscribers can get this and any of our eight other newsletters in their inbox every morning. Click here to modify your subscriptions. Contact Peter Hsu at 202-416-3035 or yhsu24@bloomberg.net for more information or if you have colleagues that would also value access.

Inside the Beltway

The House Continues Working Through Amendments to H.R. 5538, the Interior-Environment Spending Bill.  While the $32.2 billion package already faces a veto threat from the White House because the administration says the bill underfunds the EPA and Interior Departments and rolls back climate and safety rules, a few Republican amendments adopted last night are sure to exacerbate the administration’s complaints.An amendment offered by Charles Boustany of Louisiana would prohibit the Interior Department from implementing or enforcing a proposed rule on gas and oil leasing on the Outer Continental Shelf. A measure by Paul Gosar would shift $70 million in funds from the EPA’s environmental programs and management fund to U.S. Forest Service for wildfire management. Other adopted amendments, from Colordao Republican Doug Lamborn, would block the “Hydraulic Fracturing on Federal and Indian Lands” rule and one by Georgia Republican Barry Loudermilk that would block a proposed rule for emission standards for medium- and heavy-duty vehicles with respect to trailers.

Amendments to get recorded votes today include one by Republican Bradly Byrne of Alabama that would block funding for the Obama administration’s National Ocean Policy and another by Rep. Kevin Cramer of North Dakota that would prohibit the use of funds for the “Management of Non-Federal Oil and Gas Rights” rule. Florida Republican David Jolly’s amendment would prohibit funds to be used to research, investigate, or study offshore drilling in the Eastern Gulf of Mexico Planning Area of the Outer Continental Shelf and another by Boustany would block implementation of the Interior Department’s Well Control Rule, slated to go into effect later this month.

The House meets at 10:00 a.m. for morning hour and 12:00 p.m. for legislative business when lawmakers will continue with amendments to H.R. 5538.

BP Fined $20 Million for Rigging U.S. Natural Gas Markets   BP Plc faces more than $20 million in penalties and surrendered profits after a U.S. regulator found that the energy giant manipulated commodity markets in Texas.The Federal Energy Regulatory Commission said BP rigged prices at a Texas natural gas hub in 2008, according to an order issued Monday, upholding an earlier ruling by the agency’s judge. BP had denied the allegations.“We find the violation here to have been very serious,” the commission said. “BP manipulated the market to profit.”

House Appropriators Bar Spending on Climate Fund   President Barack Obama’s Green Climate Fund was in the crosshairs once again July 12 as House appropriators moved to prohibit any U.S. contribution to an effort to help developing nations address climate change impacts, Dean Scott reported. Republicans on the House Appropriations Committee included the restriction in the fiscal year 2017 State Department spending bill, which the committee passed by voice vote July 12. The prohibition now in the House version of the FY 2017 State, Foreign Operations, and Related Programs spending bill stands in stark contrast to the Senate version of the spending measure, which specifically authorizes a $500 million U.S. contribution to the Green Climate Fund.

D.C. Circuit Upholding FERC LNG Approvals May Set Precedent   Two federal appeals court rulings dismissing Sierra Club petitions against the Federal Energy Regulatory Commission could set a precedent for other cases related to the agency’s approval of liquefied natural gas terminals, a FERC commissioner and attorneys said. Tony Clark, a Republican commissioner at FERC, and attorneys involved in the cases say the D.C. Circuit rulings set a precedent for other Sierra Club cases that are pending before the D.C. Circuit related to terminals for liquefied natural gas. “The precedent that’s set coming out of these cases is actually a very important precedent which is that FERC has been interpreting correctly how the law works with regard to indirect effects and cumulative impacts of projects,” Clark told Bloomberg BNA’s Rebecca Kern.

Refiners Get Extra Time to Comply With Some Air Standards   Refineries will get an additional 18 months to comply with some aspects of the Environmental Protection Agency’s 2015 hazardous air pollution standards covering the sector. The EPA, in a final rule, gave refiners until Aug. 1, 2017, to meet requirements related to venting during maintenance and controlling emissions from fluidized catalytic cracking units and sulfur recovery units during startup and shutdown procedures. The agency said the compliance extension is necessary because refinery operators need additional time to meet those standards in a way that adheres to federal Risk Management Program and Occupational Safety and Health Administration requirements.

Outside the Beltway

Large Montana Coal Plant to Close 2 Units: AP   A large Montana coal plant serving utility customers across the Pacific Northwest has agreed to shut down two of its four units and limit how much it pollutes in the meantime under a deal with environmentalists. A consent decree detailing the partial shutdown of the 2,100-megawatt Colstrip plant by 2022 was filed Tuesday in U.S. District Court in Montana. It needs approval from federal officials before becoming final.

Jury Can Hear About San Bruno Explosion in PG&E Trial: San Jose Mercury News   Declaring it “time to be honest with the jury,” the judge in PG&E’s federal criminal trial on Tuesday ruled witnesses will be allowed — for the first time — to mention the deadly San Bruno pipeline explosion. U.S. District Court Judge Thelton Henderson previously had imposed strict limits on questions and evidence to prevent jurors from hearing about the September 2010 blast. Until now, the trial has been narrowly focused on allegations that PG&E violated pipeline safety regulations by giving priority to profits over safety and whether the utility moved to obstruct the federal investigation into the explosion. Henderson’s ruling clears the way for witnesses, in response to questions, to discuss the blast, which killed eight people and leveled much of a San Bruno neighborhood.

U.S. Utilities Eye Decision in Virginia Coal Ash Trial: AP   Potentially cleaner rivers or possible higher electric prices. That’s what’s at stake in an upcoming federal court ruling in Virginia that could have far-reaching effects on how energy companies dispose of the waste known as coal ash, left over from decades of burning coal. Spurred by high-profile coal ash spills and new federal regulations, utilities are grappling with the disposal of vast amounts of the heavy-metal-laced waste.

Alcoa Sells N.C. River Dams to Maryland Clean-Power Company: AP   Alcoa Inc. is ending a century of ownership and its years-long relicensing fight over four North Carolina hydroelectric dams by selling them to a Maryland company that specializes in running clean-power projects. Spokeswomen for Alcoa and Cube Hydro Partners on Wednesday declined to disclose the purchase price for the dams, which were originally built to power an aluminum smelter on the Yadkin River. Alcoa said it sold the dams along with land in Ferndale, Washington, and a former Frederick, Maryland, smelter property to separate buyers for about $400 million.

Fracking Foes Put Fake Feces Under Donkey Art Displays: AP   Environmental activists have made an unconventional addition to some of the fiberglass donkeys positioned around Philadelphia ahead of the Democratic National Convention. Food & Water Watch says activists placed fake piles of feces below the behinds of 19 of the 57 donkeys around the city on Tuesday, symbolizing their stance that the Democratic Party’s platform on fracking is “crappy.”

Oil, Gas and Coal

Market Wrap:  Oil fell from the biggest gain in three months after U.S. industry data showed the nation’s crude stockpiles increased, adding to concerns about oversupply. West Texas Intermediate crude for August delivery fell as much as 72 cents to $46.08 a barrel on the New York Mercantile Exchange, and was at $46.18 at 9:03 a.m. London time. Natural gas for August delivery on the Nymex was little changed at $2.732/mmBtu at 7:50am London time.

(Corrects second paragraph from story that ran July 13 to reflect that the Obama administration said it opposes H.R. 2647, but didn’t threaten a veto of it.)