This week, the U.S. Court of Appeals for the District of Columbia rejected a challenge by the Sierra Club to the Freeport LNG facility, a natural gas export project in Texas. The Sierra Club’s strategy was fairly typical in the playbook of challenges to infrastructure projects: argue that the permitting agencies didn’t consider X, Y or Z and hope the court either forces the agency to start over or take more time to review. Every extra day of waiting increases the chances the project will be shelved. Read More
On June 28, the House Energy and Commerce Committee will mark up H.R. 806, the Ozone Standards Implementation Act of 2017. This bill would create a more flexible glide path for manufacturers to comply with the 2015 ozone standard, harmonizing the compliance process for the 2015 standard with the behind-schedule process for the 2008 standard. In doing so, it would allow real ozone reductions to continue through 2025 without the unnecessary economic pain of ozone nonattainment. H.R. 806 would change the five-year review cycle for new standards to a more reasonable 10-year cycle, which is the typical time the Environmental Protection Agency (EPA) needs to complete these reviews. The bill also takes positive steps to address manufacturers’ permitting challenges as they pertain to ozone standards and requires real examination of the impact of international air pollution on domestic ozone levels.
The Clean Air Act has successfully improved air quality across the United States over the past four decades, leading to major reductions of virtually every single air pollutant. Ozone levels have declined roughly one-third since 1980, and the precursors that contribute to ozone—nitrogen oxides and volatile organic compounds—have been cut in half. In fact, the Obama EPA projected that the United States would achieve nearly the same air quality by 2025 even if the 2015 ozone standard was never implemented.
However, incremental improvements in ozone are now coming at an exponential cost. Even though most states can meet the 2015 standard by 2025, they would be unnecessarily thrown into “nonattainment,” a sort of economic penalty box, if the 2015 standard’s deadlines were to stay in place. H.R. 806 solves this problem by phasing the 2015 ozone standard implementation to align with air quality improvements that the Obama EPA found will occur anyway by 2025.
The NAM supports H.R. 806 and looks forward to working with the committee to get this important legislation to the president’s desk.
The White House is making this week “Energy Week” and is putting the focus on America’s diverse energy mix and benefits it provides. Manufacturers are seeing this firsthand, as U.S. energy dominance is making manufacturers more competitive.
A recent study sponsored by the National Association of Manufacturers found that as a result of the increase in domestic shale gas production, we saw real GDP increase by $190 billion and 1.4 million more jobs. Just the construction of new natural gas pipelines to transport all this new energy meant more than 347,000 jobs in 2015, with almost 60,000 in manufacturing. Downstream, the benefits are even more striking: our friends at the American Chemistry Council estimate that abundant natural gas and natural gas liquids from shale resources have driven the chemical industry to invest in 294 new projects representing $294 billion in new economic output and 462,000 new jobs.
The energy renaissance is not limited to oil and gas. More than 100,000 workers contribute to the energy production at the nation’s 99 nuclear power plants, including manufacturers providing on-site repair, operations and maintenance as well as replacement components, modifications and upgrades when necessary. Pending retirements are spurring the industry to hire another 25,000 employees over the next few years, and in anticipation of new nuclear plant construction, U.S. companies have created in excess of 15,000 new U.S. jobs since 2005, which include manufactured products like turbines, polar cranes, pumps, valves, piping and instrumentation and control systems. Renewable energy sources have also steadily grown—consumption from wind, solar and geothermal energy sources have increased more than 400 percent over the past decade—now accounting for about 10 percent of total U.S. energy consumption and about 13 percent of electricity generation. Overall energy intensity in manufacturing (i.e., energy consumed per each dollar of goods produced) has steadily improved as manufacturers have grown more energy efficient. And even though the coal industry has faced its share of headwinds in the electric power sector—and is receiving much-needed regulatory relief—coal use in the non-electric-generation manufacturing sector has remained relatively stable, at around 43 million short tons of coal per year.
Manufacturers use a tremendous amount of energy, accounting for roughly one-third of the energy consumed in the United States. For energy-intensive manufacturers like chemicals, paper, metals and refining, energy is one of the largest costs. Manufacturers also make up the supply chain for every single energy source and technology, from fossil fuels, to renewables, to energy efficiency. The bottom line: when the energy sector is competitive, manufacturers are competitive. And that’s certainly what we are experiencing today.
Manufacturers appreciate the Trump administration’s focus on energy and look forward to a great week.
This afternoon, the Environmental Protection Agency (EPA) informed governors that the agency will grant states an additional year for initial compliance designations under the 2015 ozone standard. This is welcome regulatory relief for manufacturers, who are working hard to comply with the 2008 and 2015 ozone standards but run the risk of falling into “no-grow zones” if their states do not reach the 2015 levels quickly enough.
The 2015 ozone regulation could be one of the most expensive regulations ever issued by the U.S. government. The 2008 standard of 75 parts per billion (ppb)—the most stringent standard ever—was never even fully implemented, while emissions are as low as they have been in decades and air quality continues to improve. The EPA itself admitted that implementation of the previous standard of 75 ppb, when combined with the dozens of other regulations on the books that will reduce ozone precursor emissions from stationary and mobile sources, will drive ozone reductions below 75 ppb (and close to 70 ppb, the current standard set in 2015) by 2025.
Throughout the 2015 ozone rulemaking, hundreds of governors, mayors, local development officials, manufacturers and other leaders warned the EPA that they could not comply with a tighter standard under the strict timelines the EPA requires. Air quality officials from cities and states across the country have testified before Congress that they may run out of controls before they even reach the levels mandated by the EPA. Manufacturers appreciate that the EPA is acknowledging this very real problem.
The EPA also announced it would continue to look into three issues the NAM raised in its comments on the 2015 rule and in subsequent requests to the agency: (1) how the EPA calculates background ozone; (2) the impact of emissions from outside the United States on local ozone levels; and (3) timely consideration of exceptional events designations. Fixing these issues will go a long way toward more flexibility for manufacturers as they continue to reduce their emissions.
This afternoon, the Senate Environment and Public Works Committee will hold a hearing to examine the implementation of the 2015 Environmental Protection Agency (EPA) ozone standard and to discuss legislation to improve the challenges this new regulation has created for manufacturers. In late 2015, in the face of overwhelming opposition from governors, mayors, economic development councils, transportation authorities and all segments of the industry, the EPA tightened the ozone standard to 70 parts per billion (ppb), down from 75 ppb. This move was certain to place counties across the United States into nonattainment, essentially turning them into “no-grow zones” that businesses typically avoid.
The National Association of Manufacturers (NAM) didn’t like the new standard—in fact, we were forced to enlist our own Manufacturers’ Center for Legal Action to litigate the final rule—but if that standard is to stay in place, we certainly need help implementing it. More importantly, we need help now, since the 2015 rule’s deadlines are still running. For many areas, the pain could start very soon.
For instance, the San Joaquin Valley Air Pollution Control District told a House subcommittee last year that, to reduce ozone, it already has taken such extreme steps as banning residents from using their fireplaces in most winter months and implementing regulations that limit the amount of time lids can be off paint cans. Even with these measures, they will not meet the current ozone standard even if they eliminate emissions from all stationary and area sources, off-road equipment, farm equipment, passenger vehicles and heavy-duty trucks. It’s not just California that has these problems. The Georgia Department of Natural Resources noted in its 2015 comments to the proposed rule that there were no effective control measures left available to the state, beyond those already identified and being implemented, to reduce ozone levels in the Atlanta nonattainment area.
The committee will examine two bills designed to address Ozone implementation issues: the Ozone Standards Implementation Act of 2017 (S. 263) and the ORDEAL Act of 2017 (S. 452). Both would create a more flexible glide path for manufacturers to comply with the 2015 standard, allowing reductions to continue through 2025 without the unnecessary economic pain of ozone nonattainment. Both would also change the five-year review cycle for new standards to a more reasonable 10-year cycle, which is the typical time the agency needs to complete these reviews. S. 263 also takes positive steps to address manufacturers’ permitting challenges as they pertain to ozone standards and requires real examination of the impact of international air pollution on domestic ozone levels.
The NAM looks forward to working with the committee to fix the implementation challenges related to the 2015 ozone standards.
The American Society of Civil Engineers’ (ASCE) most recent report card gave our nation’s energy infrastructure a D+ grade, pointing out that most U.S. energy infrastructure predates the 21st century. The ASCE says aging electricity infrastructure contributed to 3,571 total outages in 2015, and oil refineries have been operating at around 90 percent capacity. The future presents even bigger challenges: a changing electric grid, new technologies and new sources of energy and changes to where and how energy is being produced will all require improved infrastructure, and it’s not clear that we can keep up. The ASCE projects the investment gap for energy infrastructure to be $177 billion from 2016 to 2025.
The NAM’s “Building to Win” blueprint puts forward several recommendations to improve our energy infrastructure. Recommended actions include the following:
- Reform existing laws and regulations to facilitate a more transparent, streamlined and coordinated regulatory process for the siting and permitting of all energy delivery infrastructure, including oil and natural gas pipelines, energy transport by rail, energy export terminals and interstate electric transmission infrastructure.
- Promote new energy infrastructure investments as a means of increasing U.S. infrastructure’s resilience to climate change by designing for projected future climate conditions. Regulators should work to more quickly approve smart investments.
- Examine innovative financing mechanisms for new energy infrastructure to encourage private investment.
- Coordinate underground infrastructure work for road, water, gas, electric and broadband to yield construction savings and reduce traffic disruptions from construction work.
- Invest in regions without a developed pipeline network to bring down home heating costs in places like New England and make manufacturers more competitive.
The National Association of Manufacturers has been encouraged that lawmakers are focusing on energy as a key component of a broader infrastructure package. We’ll be at the table working to drive solutions that make manufacturers more competitive.
This Wednesday, the town of York, Nebraska (pop. 7,957) will play host to a public hearing on the Keystone XL pipeline where anyone with an opinion on the project can provide three to five minutes of public comment. That’s right…the most hotly debated energy project of the past decade is officially back. Here are the answers to your burning questions.
Didn’t President Donald Trump already greenlight this project?
Yes, but TransCanada still needs Nebraska to approve the portion of the route going through the state.
On January 24, 2017, President Trump issued an executive memorandum inviting TransCanada to resubmit its application for a presidential permit to construct and operate Keystone XL, directing the secretary of state to make a decision on the presidential permit within 60 days and directing the departments of the Army and the Interior to take all steps to review and approve any outstanding requests for approvals under their jurisdiction pertaining to Keystone XL. The State Department issued the presidential permit for Keystone XL on March 24, 2017.
That’s not the end of the road from a permitting standpoint. TransCanada filed an application with the Nebraska Public Service Commission in October 2015 after its previous Nebraska route approval became embroiled in a lawsuit challenging the underlying state law. Nebraska had not finished its route review when President Barack Obama rejected a federal permit for Keystone XL a month later. Now that President Trump has reversed course, Nebraska is the only state left that needs to approve the route. TransCanada refiled its application with Nebraska on February 17, 2017. Wednesday’s hearing is on this latest application.
Can I get involved if I’m not in Nebraska?
Yes. The Nebraska Public Service Commission is taking comments on its website here.
What does the NAM think?
We support Keystone XL and believe it should be approved as quickly as possible. We have long called for completion of this project and applauded President Trump’s actions to revive it in January. Pipelines are an efficient, safe way to transport energy, and every governmental entity that has looked at Keystone XL (federal and state) has concluded that it can be constructed and operated in harmony with the environment around it.
The energy landscape is changing for the better. We are using our resources in a cleaner and more efficient way, and we are becoming more energy independent as we develop a wide range of fuels and technologies right here on American soil. Manufacturers are parlaying this energy abundance into new and expanded facilities across the country. It’s an exciting time.
Pipeline infrastructure like Keystone XL is a much-needed conduit between domestically produced energy and the consumers who depend on it. Manufacturers benefit not only from the energy transported through the pipeline but also from the construction of it: between 32 and 37 percent of the cost of constructing a pipeline is directly for manufacturing inputs. The major types of manufactured goods used include equipment, line pipe, fittings, coatings and booster stations, including pumps. A recent NAM study found that at least 66 different manufacturing subsectors (out of 86 total) benefited from the construction of crude oil pipelines by $10 million or more in 2015. These include iron and steel, fabricated metals, cement, machinery and paints and coatings.
So what happens next for Keystone XL?
You can see a timeline for the Nebraska permit here. Over the next few months, there will be rolling public hearings along the pipeline route. Then there will be five glorious days of public hearings from August 7 to 11 in Lincoln, Nebraska. The commission expects to issue a final order by September 14.
The Department of Energy (DOE) today issued a license to Golden Pass LNG to construct and operate a liquefied natural gas (LNG) export terminal in Sabine Pass, Texas, on a site adjacent to the company’s existing LNG import terminal. The DOE authorized Golden Pass to export up to 2.21 billion cubic feet per day (bcf/d) of natural gas to any country not covered by a free trade agreement and not otherwise prohibited by U.S. law or policy. A copy of the DOE’s order can be found here, and background on the Golden Pass project can be found here. Read More
Tomorrow, the House Committee on Science, Space and Technology will hold a meeting to mark up two pieces of legislation: the Honest and Open New EPA Science Treatment Act of 2017 (the HONEST Act), introduced by Rep. Lamar Smith (R-TX), and the EPA Science Advisory Board Reform Act (the SAB Reform Act), introduced by Rep. Frank Lucas (R-OK). Manufacturers have long supported the SAB Reform Act and the HONEST Act’s predecessor, the Secret Science Reform Act, and we look forward to working with the committee to advance these important bills.
The SAB Reform Act would modernize the policies and procedures governing the SAB of the Environmental Protection Agency (EPA) to ensure that the SAB is best equipped to provide independent, transparent and balanced reviews of the science the EPA uses to guide its regulatory decisions. Manufacturers support policies that favor markets, adhere to sound principles of science and risk assessment and are informed by a public rule-making process that is open and inclusive. The SAB serves a quality control function for the science the EPA uses to justify new regulations; this bill helps strengthen the SAB so that it can be completely neutral in carrying out its duties.
The HONEST Act would require the EPA to make its underlying science and data sufficiently publicly available such that independent analysis can substantially reproduce the results. The public should have the ability to scrutinize the data behind regulations and verify the information (provided, of course, that confidential business information is sufficiently protected). This will create a more transparent regulatory system that will create better outcomes from the regulatory process.
Manufacturers support the EPA’s mission and strive to work collaboratively with the agency to achieve shared goals of environmental protection and a strong economy. We look forward to working with the House Committee on Science, Space and Technology to advance this legislation and improve transparency and public input.
National Association of Manufacturers Senior Vice President of Policy and Government Relations Aric Newhouse issued the following key-vote letter in support of H. J. Res. 36, providing for congressional disapproval of the rule submitted by the Bureau of Land Management relating to waste prevention, production subject to royalties and resource conservation.