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Shocking news! Production of fossil fuels from federal and Indian lands fell in 2013.

The U.S. Energy Information Administration (EIA) noted today in their daily “Today In Energy” that  “Sales volumes of fossil fuels from production on federal and Indian lands in fiscal year (FY) 2013 dropped 7% from FY 2012, according to EIA’s recently released annual report. Crude oil production on federal lands increased slightly in FY 2013, but that increase was more than offset by decreases in coal, natural gas, and natural gas plant liquids (NGPL) production. Sales of fossil fuels from federal and Indian lands accounted for about 26% of total fossil fuel sales volumes in the United States in 2013.”

The EIA went on to note that, “Since FY 2003, sales of fossil fuels produced on federal and Indian lands have fallen 21%, driven by declines in natural gas production and coal production. From FY 2003 to FY 2013, total U.S. fossil fuel production increased by 14%, with a 34% increase in production from nonfederal, non-Indian lands offsetting the decline from federal and Indian lands.”

“One of the main drivers in the decline in sales of fossil fuels from federal and Indian lands is the drop in offshore natural gas production, even as total U.S. natural gas production has grown rapidly because of rising production from onshore shale resources on private lands. Federal onshore natural gas sales volumes have generally increased over FY 2003-13, overtaking federal offshore production in FY 2007.”

There are a couple of things worth noting from this update. First, the percentage of our fossil fuels coming from federal lands continues to drop despite the United States’ abundance of resources. Second, the percentage of natural gas coming from federal lands offshore continues to decline despite improved extraction technology. Third, although federal onshore natural gas production has increased slightly it has been dwarfed by natural gas production from private lands.

This year the United States has become the largest producer in the world of natural gas and oil. Just last week Bank of America  announced that U.S. oil production has now exceeded both Saudi Arabia and Russia production. This is due to the fact that “Oil extraction is soaring at shale formations in Texas and North Dakota…” Most all of this is taking place on private lands using ever improving extraction methods.

If we want to continue to reduce the amount of oil we import from unfriendly parts of the world then we need to increase our energy production from federal lands and we need to finish the Keystone Pipeline so we can import oil from our friends to the north, Canada. We need federal energy policies that make sense and allow our country to increase our energy security and avoid relying on oil that comes from volatile regions of the world.

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FERC Approves of LNG Terminal = Jobs and Economic growth!

Earlier today the Federal Energy Regulatory Commission (FERC) authorized Sempra Energy Corp’s, Cameron LNG terminal expansion project. The authorization permits Sempra “to site, construct and operate facilities to liquefy and export domestically produced natural gas.” In addition, FERC authorized the construction and operation of a pipeline and compression facilities. This is the second terminal that FERC has authorized and the first facility since April 2012.

In reaching this decision, FERC completed a comprehensive environmental review of the project and determined that the project would not have a significant impact. As part of this review FERC required Sempra to agree to some 75 conditions to further mitigate any “potential environmental impacts.”

The only remaining regulatory piece is that the Department of Energy’s needs to provide final approval for Sempra to exports to non-Free Trade Agreement countries. The project received conditional approval to export to non-Free Trade Agreement countries in February of this year.

The Cameron LNG expansion will lead to 3,000 direct new jobs and tens of thousands of indirect new jobs. The project will invest almost $10 billion dollars which will generate hundreds of millions of additional economic development as well as millions of dollars in new tax revenues to local, county, state and federal governments.

Energy and Manufacturing continues to lead the effort to get our economy back on track. This latest approval demonstrates the ripple effect a project of this magnitude has on local and the national economy. This project will impact the manufacturing supply chain and create new opportunities for manufacturers and create thousands of new jobs. There are a number of other LNG projects still waiting FERC approval to move forward with construction and operation. These other projects also promise to create jobs and economic growth.

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‘Waters of the U.S.’ Analysis Flawed, According to New Report

According to a new report released today, the EPA has significantly underestimated the economic impacts the proposed “Waters of the United States” rule will have on local communities and businesses. The analysis, authored by University of California-Berkeley faculty member and Brattle Group principal Dr. David Sunding, examines the U.S. Environmental Protection Agency’s (EPA) estimates of probable costs and benefits associated with the proposed rule, which includes a significant expansion of the term “Waters of the United States” to include previously unregulated waters such as fire and drainage ponds, certain streams and tributaries, storm water, roadside and other ditches.

Manufacturers continue to face an onslaught of overly burdensome rules, regulations, and guidance from the EPA. While appropriate regulations have clear benefits, Washington has developed a regulatory instinct that is holding back growth and harming our competitiveness. The rule will dramatically expand EPA’s regulatory reach and encourage the EPA to go back to the drawing board on this rule.

In the analysis, Dr. Sunding chronicles how EPA systematically excluded costs, underrepresented the acreage that will now become jurisdictional areas and used flawed methodologies to arrive at much lower economic impacts. Dr. Sunding concluded that the errors in the study are so extensive as to render it unusable for determining the true cost of the proposed rule. His report underscores the need for EPA to withdraw the rule and complete a comprehensive and transparent economic review.

The report was commissioned by the Waters Advocacy Coalition (WAC), which represents the nation’s manufacturing, construction, real estate, mining, agriculture, wildlife conservation, forestry and energy sectors. To learn more about the rule and its impact on manufacturers, click here.

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EPA Releases New Cooling Water Intake Rule

Late yesterday afternoon the Environmental Protection Agency (EPA) released their final rule on cooling water intakes at both power plants and manufacturing facilities. The EPA has been reconsidering this rule since May 2012 but this rule has been in process since June 2006. EPA was under a court order to publish the rule no later than May 16, 2014.

Section 316(b) of the Clean Water Act of the Clean Water Act “requires that the location, design, construction and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.” The regulations are estimated to impact over 1,065 manufacturing facilities, power plants, pulp and paper makers, refiners, chemical plants and metal manufactures. Almost half of the facilities impacted are manufacturing facilities.

Manufacturers have a number of concerns with this rule such as high compliance and mitigation costs and extensive endangered species reviews by the Fish and Wildlife Service.  This rule will impact numerous manufacturing facilities as operations will be required to mitigate the impact on aquatic life by using one of seven EPA approved options for meeting the “best technology available” requirements of the rule.

While a number of the newer plants and facilities may have already met these standards, numerous other facilities have not and will have to determine whether or not the economics of their operations will continue to make business sense. Manufacturers will need some time to better understand the implications of this rule on their operations and each facility will come to a different conclusion depending on location, operations, amount of water used and the cost of best available technology (BAT).

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Energy Efficiency Legislation Falls Victim to Politics

This week’s cloture vote on S.2262, “The Energy Savings and Industrial Competitiveness Act,” more commonly known as the Shaheen-Portman bill, failed on a near party-line vote of 55 yeas to 36 nays. Manufacturers are disappointed that this bi-partisan legislation was pulled for the second time this session from the Senate floor. The bill was pulled in despite of the fact that 78 Senators voted to bring the legislation to the Senate floor just last week.

Shaheen-Portman had incredible support across the political spectrum and included numerous provisions supported by both Democrats and Republicans. The bill helps to strength national building codes, establishes a Tenant Star program that encourages commercial tenants to be more energy efficient, establishes a pilot program, Supply Star, that would encourage the manufacturing supply chain become more energy efficient; encourages the federal government to be more energy efficient as they purchase new technology and requires the federal government to better measure energy performance and to be better designed to be more energy efficient.  Manufacturers think this bill makes a lot of sense and is good energy policy.

Perhaps the bigger story of this vote was that as consideration for S. 2262 came to a grinding halt the opportunity for a clean vote on the Keystone XL pipeline became collateral damage.  Senator Hoeven’s legislation to approve the Keystone XL pipeline, S. 2280, was tentatively scheduled for a vote later this week but with the failure of the Shaheen-Portman legislation this vote will not take place.

The NAM will continue to support S. 2262 whether it comes up again this session or next Congress — we believe it is a bill that should and can pass the Senate. In addition, we continue to strongly support the approval of the Keystone XL pipeline and urge the Senate to schedule a vote on S. 2280. We believe Keystone XL continues to be in the national interest and that from an energy policy stand point we need to quickly approve this project and secure the oil that is will bring to our national. We need leadership in the Senate not gamesmanship.

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Feds Need to Stop Dragging Feet in Energy Permitting

Just last week, the Congressional Research Service issued a report on “U.S. Crude Oil and Natural Gas Production in Federal and Non-Federal Areas.” This thirteen page report looked at the question of how much oil and gas is produced on federal lands as opposed to non-federal (state and private) lands. The energy and manufacturing sectors have maintained for the last several years that the uptick in energy production has occurred primarily on private and state lands, while production on federal lands has dropped by almost 11 percent since 2009.

The CRS report identifies several reasons for this drop in production, but the energy sector will tell you that much of this can be attributed to moratoriums, de facto moratoriums, delays in obtaining permits, and the regulatory uncertainty created by this administration and the economy. According to the report, the Bureau of Land Management (BLM) took an average of 127 days to process an application for permit to drill (APD) in 2006…127 days!! On the other hand, state Permits on state and private lands can take a little as five days.

Despite the federal government dragging their feet on permitting and energy production, the shale gas revolution has continued to thrive on private lands, resulting in an significant uptick in production and causing many manufacturers to relocate or build facilities in the United States. The results have been an increase in jobs, lower dependence on foreign energy and a more globally competitive U.S. manufacturing sector. Further, growth in the energy and manufacturing sectors has helped reduce our trade deficit.

We need the federal government to be strong partners as we work to rebuild our economy and become more energy independent. Overregulation, moratoriums, and slow federal permitting processes only serve to stifle this important growth.

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Manufacturers Deeply Concerned about WOTUS Proposal

On Tuesday, March 25, the Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps) released a copy of the proposed Clean Water Act rule on the Waters of the United States (WOTUS). The rule’s intended purpose is to clarify current regulations on EPA and the Corps’ jurisdiction over “navigable waters” of the United States, but unfortunately it has only created more uncertainty.

The proposed rule expands their jurisdiction to further regulate things such as fire ponds, dry ditches, ephemeral or seasonal streams, cooling ponds, isolated mosaic wetlands, snowmelt and storm drainage ponds. In doing so, this will significantly impact manufacturers’ ability to build new or expand existing facilities, and in some cases it will impact the ability to conduct day to day operations.

There are hundreds of activities that currently do not require a clean water permit, but with this new rule many of these activities will now need a permission slip from the government; or at the very least require companies to inquire of the agencies to determine if a permit is necessary. Waiting for these agencies to respond could take anywhere from weeks to months.

Another troubling aspect of this proposed rule is that the EPA chose not to wait for a final peer review of their “Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence” study. This study has been touted as the basis of the rule, but has not been peer reviewed by the EPA’s own Science Advisory Board (SAB). Further, a number of members of that board raised concerns with deficiencies in the report at a recent meeting.

Manufacturers are concerned about the negatives impacts and uncertainty that this rule will create, and will continue to provide input to the EPA and Army Corps.

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Time To Pick Up Pace On LNG Applications

This morning the Department of Energy (DOE) authorized the seventh export terminal, Jordan Cove Energy Project, L.P., to export domestically produced liquefied natural gas (LNG) to non-Free Trade Agreement (FTA) countries. Manufacturers are pleased with the approval of the Jordan Cove project but still believe these decisions should be coming much more quickly.

The law requires the Department of Energy to make an up-or-down national interest determination for each project on a case-by-case basis. Each project deserves the fairness of an up-or-down decision in a prompt fashion. In December 2013 the NAM released a report by James Bacchus, the former World Trade Organization (WTO) Appellate Body Chairman. Bacchus concluded in this report that the implementations of U.S. rules in ways that unnecessarily impede exports of LNG likely violate WTO trade rules.

This week the House and Senate Committees will hold hearings on the subject of LNG exports.  The House Energy and Commerce has asked Mr. Bacchus to testify on this topic along with other experts. The Senate Energy and Natural Resources Committee will hold a hearing that will include the Administrator of the U.S. Energy Information Administration, Adam Sieminski, the Minister of Energy of the Republic of Lithuania and a number of other energy experts.

The pressure will only increase on the Administration if these approvals continue to trickle out every six to eight weeks.  World events continue to demonstrate the demand for natural gas and illustrate the need for the U.S. to speed up their process and not run afoul of the WTO rules. In a Bloomberg interview Secretary Moniz recently acknowledged that perhaps the LNG approval process should take into account world events when he said, “maybe we will give some additional weight to the geopolitical criterion going forward.”  The U.S. doesn’t exist in a vacuum and we must pay attention to what is happening in the world around us. In this case we are getting strong signals from our allies that they are looking for our help. It’s time to get our heads in the game.

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DOE Approval Good News, But We Can Do Better

This morning the Department of Energy (DOE) authorized another export terminal, Cameron LNG, LLC, to export domestically produced liquefied natural gas (LNG) to non-Free Trade Agreement (FTA) countries. Manufaturers applaud the DOE’s move, but the process is still taking far too long and continues to put the remaining 19 or so applications at a disadvantage.

We encourage the agency to continue to process these permits in an expeditious fashion. When it comes to energy exports, manufacturers support free trade and open markets; we believe the free market can and will work if given the chance. However, it can only work if the government does not erect regulatory barriers that result in winners and losers.

The law requires the Department of Energy to make an up-or-down national interest determination for each project on a case-by-case basis. Each project deserves the fairness of an up-or-down decision in a prompt fashion. In December 2013 the NAM released a report by James Bacchus the former World Trade Organization (WTO) Appellate Body Chairman. Bacchus concluded in this report that the implementations of U.S. rules in ways that unnecessarily impede exports of LNG likely violate WTO trade rules.

Bacchus went on to say, “The United States has always been a strong advocate of rules that forbid export restrictions and has been forceful in challenging export restrictions imposed by other countries,” said Bacchus. “In short, the tables may be turned on the United States directly in the WTO, but also through other countries walking away from core principles that have long been critical to U.S. success in the global economy.”

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Ambassador Kirk Joins CASEnergy Coalition

Earlier today the CASEnergy Coalition introduced Ambassador Ron Kirk as the new co-chair. Ambassador Kirk’s experience as the U.S. Trade Ambassador will provide the coalition with important insights on job-training programs, careers in the nuclear industry and the importance of access to global markets.  CASEnergy’s mission is to work with its partners and member to better help education the public on the benefits and importance of nuclear power.

Nuclear energy plays an important role in our country’s energy mix by providing almost 20 percent of electricity. Nuclear energy is clean, sustainable and will be an integral part of our energy portfolio for years to come. Nuclear energy jobs are good jobs and we need to train the next generation of nuclear workers.

Ambassador Kirk understands the need to create jobs and the role that expanding our overseas markets will play in that job creation process. He will be a strong, respected voice with the Obama Administration and Congress. The NAM is excited to have him as part of the nuclear energy team and looks forward to continuing to work with Governor Whitman, Ambassador Kirk and CASEnergy on all of these issues.

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