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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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Time for a True All-of-the-Above Energy Policy

Forbes contributor David Blackmon wrote an article recently entitled “The Best Energy Policy Is the Least Energy Policy.” In the article, Mr. Blackmon makes many interesting points in regards to the federal government’s energy policy.

The President has focused a great deal of energy trying to pick winners and losers in the energy sector, yet during his State of the Union address, he singled out the natural gas revolution the country has enjoyed while highlighting his administration’s positive role in this boom.  This claim is remarkable given the administration’s effort to regulate hydraulic fracturing and their hesitation to expand oil and gas exploration on federal lands, both on shore and off shore. It is important to note that most of the exploration and production of natural gas has taken place on private and state lands where the federal government’s regulatory arm cannot reach.

The President made a great show of claiming to support all-of-the-above energy policy and, as Blackmon points out, the administration continues to ramp up emissions regulations on coal fire power plants and soon others.  The President has denied that there is a war on coal and yet scores of power plants have either been closed or have announced that they will close within the next couple of years.

Mr. Blackmon goes on to point out that the President claims he wants to continue to work with the oil and gas industry to make sure production and job growth continue, yet he talks about using his Presidential authority to put more federal lands off limits and increase the tax burden on the energy sector.

If our economy is going to grow and become energy self-sufficient we need the federal government to work with the energy industry to find ways to explore, produce and transport energy in a safe and reliable way. We don’t need the federal government to throw up roadblocks and hurdles and to drive up the cost of energy. As my dad would say, “If you are not part of the solution then you must be the problem!”

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Enriching our Nuclear Capabilities

Almost 20 percent of electricity consumed in this country is generated by nuclear power plants. That percent has remained relatively steady over the last 30 years. Today in the United States we are building additional nuclear power plants and worldwide there are over 173 power plants that are either under construction or in the planning process. Interestingly enough, about 100 of those plants are scheduled to be built in various countries in Asia (59 are in China).

For fuel, these plants use low-enriched uranium (LEU), which only a small number of countries produce for export, according to a November 2013 Center for Strategic & International Studies (CSIS) report entitled “Recapturing U.S. Leadership in Uranium Enrichment.” The United States’ ability to produce LEU has steadily decreased during the past 30 years and today, for the first time in approximately 60 years, we have no ability to produce LEU using American technology. According to the CSIS report, about 85 percent of our LEU needs are met by other countries. There are a number of reasons for this as outlined in the report, but the fact remains that for strategic and energy purposes the United States needs to maintain the capacity to produce LEU.

USEC Inc. is working to bring the next generation of enrichment technology to market. The American Centrifuge Plant in Piketon, Ohio holds great promise and is successfully completing a 19-month research, development, and demonstration program with the Department of Energy.  America needs its own technology to produce LEU not only for our energy security and non-proliferation purposes but for national security needs, which by law and treaty can only be met with indigenous U.S. technology.

The CSIS report lays this out in great detail and provides a detailed analysis of the current global state of uranium enrichment. If we are truly going to support an “all of the above” energy approach then we must have a strong and competitive nuclear energy supply chain and that includes nuclear fuel from American technology for our power plants.

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Analysis Shows Costs of Proposed EPA Overreach

Last week, Bloomberg BNA obtained a leaked copy of the EPA/Army Corp of Engineers’ cost-benefit analysis on the draft Waters of the United States rule. The draft analysis looks at the costs of implementing new rules that expand federal jurisdiction and the benefits to be gained. Manufacturers are more than a little skeptical of this analysis and believe the EPA/Corps have underestimated the costs and over valued the benefits. For example, nowhere in the study does the EPA or the Corps discuss the costs of delays in projects and the inevitable cost of citizen suits as a result of the expanded jurisdiction.

On the other hand, the analysis acknowledges that the costs will rest squarely on the shoulders of landowners, natural resource extraction companies, developers, states, local governments and tribes investing in infrastructure, and manufacturers. These costs will come in the form of higher permit fees, additional permits and additional mitigation costs.

The EPA and the Corp continue to seek to expand their jurisdiction over waters that have typically not been under their purview.  Upon hearing the words “navigable waters” one conjures up the image of ships, barges, tankers, sail boats, canoes, rowboats, perhaps even a raft, but the EPA has long ago moved past traditional navigable waters in terms of their jurisdiction. They are looking at such things as tributary streams both natural and artificial, farm ponds, ephemeral streams, and water flow of all kinds.  They want to regulate all ponds, lakes and wetlands regardless of how tenuous their proximity might be to navigable waters.

If finalized, this rule will give the EPA and the Corps the ability to regulate virtually any body of water and claim there is a nexus to navigable waters. Manufacturers strongly opposed the rule in this form.

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New Management Wanted

On Tuesday the D.C. Circuit ruled that the Department of Energy (DOE) can no longer collect fees for the Nuclear Waste Fund. What does this mean and why should you care?

First, this means DOE can no longer collect fees for a program that is virtually non-existent and non-operational. Since the mid-1980s the agency has collected more than $30 billion from nuclear utilities to build a long-term nuclear repository. Over 35 states have paid into this fund and all the money has come from rate payers, like you and me and, yet we still have no place to store nuclear waste.

Second it is encouraging that the court is enforcing the law as written and holding DOE accountable. The court’s decision was more than a slap on the hand – it was a reprimand in front of the entire nation. The court sent a loud and unambiguous message, something needs to change and what you have been doing is not working.  New management wanted!

It is clear that Congress bears a share of the responsibility for this repository not being built. If we truly want to have an “all of the above energy” policy that includes nuclear power then Congress and the agencies need to find solutions that meet our national rather than parochial interests.

 

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LNG, Coal Terminals Will Boost Exports and Infrastructure Investments

Last week President Obama traveled to the Port of New Orleans to talk about the need to upgrade our infrastructure as part of his goal to double U.S. exports by 2015.

Although government investment in upgrading, expanding and modernizing our nation’s transportation network is critical, often lost in this conversation are the numerous ongoing efforts in the private sector to build the infrastructure necessary to increase exports.

Two examples of large-scale projects are liquefied natural gas (LNG) and coal export terminals, multi-billion dollar projects that will have a huge impact on not only the local economies but also the national manufacturing economy.

Currently, there are four LNG terminals that have been approved by the Department of Energy, with another twenty or so applications pending.  There are three coal export projects in the Pacific Northwest that are ready to be built, but are waiting for approval on federal, state and local permits.

Manufacturers are frustrated with the delays in considering applications for these projects, and agree with the President’s comments last week when he noted that “the first thing we should do is stop doing things that undermine our business and our economy. It is like the gears of our economy, every time they are just about to take off, someone taps the brakes and says, ‘Not so fast.’”

In order to get our economy moving at full speed we need to appropriately invest in our infrastructure and a big part of that is allowing the private sector to move forward with these projects.

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