WOTUS Woes. “We hate to say, ‘We told you so’”.

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Today’s Key Takeaways:  Amicus briefs to Supreme Court supporting Sackett’s challenge to WOTUS are piling up – AK included. 16 AG’s ask Biden to reauthorize Keystone XL – AK included. Russian miners want tax relief during war. DOE taps CO2-removal expert for top role in fossil office.


From the Washington Examiner, Daily on Energy:

CLEANING UP WOTUS: Republicans, red states, and business groups are piling on the amicus briefs in support of Idaho couple and Supreme Court “WOTUS” petitioners Michael and Chantell Sackett, hoping that justices will finally help stakeholders to avoid remaining trapped in what one amica said amounts to “the water regulatory version of Groundhog Day.

The court took Sackett v. EPA in January on appeal from the Ninth Circuit and is positioned to rule in some way on what kinds of bodies of water constitute “waters of the United States” under federal jurisdiction under the Clean Water Act.

Briefly, the Sacketts ran into the WOTUS wall when they began building a home near Idaho’s Priest Lake in 2007 (yes, they’ve been at this for 15 years). EPA notified them that wetlands on their property were subject to the agency’s WOTUS regulations, meaning a permit would be required to build.

The Sacketts, and parties to the briefs friendly to their position, want the court to revisit Rapanos v. United States, which failed to reach a majority to define a standard for WOTUS jurisdiction.

Who stands where: Members of the Congressional Western Caucus, made up largely of western Republicans, filed a brief last week saying the nation’s farmers, businesses, and landowners “deserve certainty” of the rule’s scope.

Monday, nearly 200 Republican members of Congress filed a brief of their own arguing that, with the Clean Water Act, Congress made clear it sought “a limited federal regulatory presence in cooperation with the States.”

Importantly, a number of these same lawmakers have asked the Biden administration to hold off on developing its own WOTUS definition until the court rules on the case.

Who else is chiming in: The states of Alaska and West Virginia, the libertarian Cato Institute, and mining interests all also filed briefs this week supporting a narrower definition of WOTUS, too, as did the U.S. Chamber of Commerce.

Andrew Varcoe, deputy chief counsel for the Chamber’s Litigation Center, said the court’s task is to resolve the “mystery and confusion” created by years of litigation and rule rewriting under multiple administrations.

“There’s a lot of disagreement among, let’s say environmental groups, and the business community, and DOJ about what the test should be,” Varcoe told Jeremy. “I think that if you apply the lie detector test to most people, even those who don’t admit it, I think most would agree that this unstable 4-1-4 construct [in Rapanos] isn’t working.”

Varcoe said it’s clear the court got tired of the “regulatory ping pong” around WOTUS in taking the case (In November, the Biden administration undid Trump era WOTUS rule, which itself had undone the Obama era rule, and each of the latter got tied up in their own legal troubles.)

Clarity from the Sackett case is especially necessary, Varcoe said, beyond how it would affect the Chamber’s members.

“Anybody who owns land in the United States needs to know, do I need to get a permit from the Army Corps of Engineers before I build?” he said. “Because I don’t really want to go to jail for guessing wrong, nor do I want to pay thousands, or tens of thousands, or hundreds of thousands of dollars in fines for guessing wrong.”

Where the Biden administration stands: The Justice Department has yet to file its merits brief laying out its case yet, but in its brief urging the court not to take the petition in October, DOJ asked the justices to be sympathetic to fact that the Sacketts “ask the Court to impose a categorical limit on the agencies’ authority before either the forthcoming rule or the administrative record underlying it has been finalized” and to decline the case.

“But even if clarification by this Court ultimately becomes warranted, it should occur after the agencies have completed their work,” DOJ argued.

That’s basically the same argument the administration made in asking the court to reject petitions in West Virginia v. EPA, which the court also took up and has already heard argument on.


Large Crude Draw Sends Oil Prices Higher
Irina Slav, OilPrice.Com, April 20, 2022

  • EIA: commercial crude inventories fell by 8 million barrels.
  • Gasoline stocks saw an 800,000-barrel draw.
  • Distillate stocks fell by 2.664 million barrels.

Crude oil price moved higher today after the U.S. Energy Information Administration reported a crude oil inventory draw of 8 million barrels for the week to April 15.

This compared with an inventory increase of 9.4 million barrels for the previous week, which, however, failed to move prices in any significant way.

A day earlier, on Tuesday, the American Petroleum Institute estimated a crude oil inventory draw of close to 4.5 million barrels.

At 413.7 million barrels, the EIA said, inventories were 15 percent below the five-year average for this time of the year.

Oil was trading higher at the time of writing, as bullish factors combined to push it further up. Among these was the force majeure on Libyan export terminals and the shutdown of two major fields including Sharara, the country’s largest, and news that Russian oil shipments abroad had fallen by 25 percent over the past seven days.

Additional upward pressure on prices came from the International Monetary Fund, which on Tuesday revised down its growth forecast for the global economy for this year, saying it will likely be one percentage point lower than previously forecast.

Meanwhile, the EIA added to the bullish sentiment by also reporting an inventory draw of 800,000 barrels for gasoline, with production at 9.8 million bpd last week.

This compared with a gasoline inventory draw of 3.6 million barrels for the previous week, and average daily production of 9.5 million barrels.

In middle distillates, the authority estimated a stock draw of 2.7 million barrels for the week to April 15, with production averaging 4.8 million barrels daily.

This compared with an inventory draw of 2.9 million barrels for the previous week and average daily production of 4.7 million bpd.

At the time of writing, Brent crude was trading at $107 per barrel, with West Texas Intermediate at $102.20 per barrel, both slightly down since the opening of trade.


16 attorneys general urge Biden to reauthorize Keystone XL
Carlos Anchondo, Energywire, April 19, 2022

 More than a dozen state attorneys general lambasted President Joe Biden yesterday over his handling of the Keystone XL pipeline, urging him to reauthorize the controversial project and reinstate its cross-border permit.

In a letter, Republican attorneys general from places such as Texas, Montana and West Virginia laid into Biden for his “ill-considered, day-one decision to nix” the project.

The proposal aimed to move crude oil from Alberta to southern Nebraska before connecting to the existing Keystone pipeline system. Developer TC Energy Corp. terminated Keystone XL last year (Energywire, June 10, 2021).

It had become a climate flashpoint as environmental groups and opponents of eminent domain sought to block the pipeline and other oil and gas infrastructure projects.

“Following your revocation of President Donald Trump’s 2019 permit for the Keystone XL pipeline on the first day of your administration, we have repeatedly asked you to reconsider this misguided (and we continue to believe unlawful) decision,” 16 attorneys general said in the new letter to Biden.

They said they’d warned Biden that there would be “detrimental consequences” if he didn’t reverse course on Keystone XL.

They continued, “We hate to say we told you so,” before detailing a laundry list of ongoing quandaries, including elevated gasoline prices and Russia’s onslaught against Ukraine.

Earlier this month, a White House spokesperson said in an email that Keystone XL would not have gone into service until 2023 and that roughly 8 percent of the pipeline was built at the start of the Biden administration.

“The Keystone XL pipeline project was terminated in June 2021 and will not proceed,” a TC Energy spokesperson said in an email yesterday. A White House spokesperson did not respond to a request for comment yesterday evening.

Biden’s decision “set a dangerous precedent for future permits and projects that would enhance our nation’s energy security and independence,” the attorneys general said in their letter, which also was signed by attorneys general from Alaska, Louisiana, and Wyoming.

The signatories, who accused the president of vilifying “the American fossil fuel industries,” also touched on a Wall Street Journal report from earlier this month that said Biden officials were looking for ways to increase oil imports from Canada, despite not wanting to revive Keystone XL (Energywire, April 8).

“The hypocrisy would be stunning if it weren’t so insulting to American energy workers and those in rural communities who benefited from the pipeline’s many economic opportunities,” the letter continued. It said Keystone XL could have helped carry output from Bakken oil fields in Montana and North Dakota, as well as Canadian oil, to U.S. refineries.

The letter came after the Biden administration announced on Friday that it would resume oil and gas leasing on federal lands — a move blasted by some environmental groups, which said it betrayed Biden’s campaign promises (Greenwire, April 15).

In 2020, Biden said, “No more drilling on federal lands” during a debate (Climatewire, March 16, 2020).

White House press secretary Jen Psaki told reporters yesterday that the new oil and gas lease sales on public lands were “the result of a court injunction that we continue to appeal.”

“In terms of how long it will take to set up drilling because of the court action, I don’t have any assessment on that from here,” Psaki said, adding that Biden remains committed to addressing the climate crisis.

“I would just note that we are going to continue to fight this court injunction that is forcing our hand and allowing this to proceed, even as we have taken actions to reduce by 80 percent the areas to lease and impose stringent environmental standards,” Psaki also said.


Russian metals producers want Putin to ease taxes amid war
Bloomberg News, April 20, 2022

Russian metals tycoons and chiefs met President Vladimir Putin on Wednesday, as they seek an easing of taxes with the war in Ukraine hurting their businesses.

Mining and metals companies want the tax system to return to how it was before changes made last year that effectively raised levies, or to at least fix the price level used for defining tax, according to three people familiar with the matter, who asked not to be identified as the information isn’t public.

Russia in September agreed on tax changes with its biggest metals firms that linked both mineral-extraction tax rates and a new excise on crude steel to global prices, and which affected coal, steel, and fertilizer producers as well as nickel and palladium giant MMC Norilsk Nickel PJSC. Surging commodities prices at the time prompted Russia to re-consider levies on the metals and mining industry, which has traditionally faced a lower burden than the energy sector.

The war is now pushing the industry to ask the government to reconsider the taxes. While metal is largely still flowing to overseas factories — many traders and fabricators who buy from Russian companies are tied in to pre-existing deals that can extend over years — a growing number in the industry say they won’t take on new Russian business. That’s making it harder for Russian producers to sell output that’s not already contracted.

Commodities buyers around the world are also facing the dilemma of deciding whether to stop buying Russian materials, at a time when crucial metals like aluminum and copper are in tight supply and prices are near all-time highs.

Sanctions against Russian businesses, including metals companies, are breaking World Trade Organization principles, Putin said in televised address before the meeting started.

“Unfriendly steps against Russian metals companies were taken in favor of momentary political interests,” he said. “Under this pretext, the ties that have been developed over the years, based on such rational things as business reputation, mutual interest and economic efficiency, are crossed out.”

No other details of the meeting were disclosed.

The Russian government had planned to collect 160 billion rubles ($2 billion) a year from 2022 through 2024 from the metals and mining taxes that were revised last year. As an example of how that affects companies, top steel producer Novolipetsk Steel PJSC saw the new taxes costing an additional $300 million to $500 million a year.

Wednesday’s meeting with Russia’s top business representatives was the first since Putin convened a gathering of them on the day the invasion started. That meeting was later cited by the European Union as justification for sanctions against some individuals because it showed they were members of the “inner circle of oligarchs” close to the president. 

Commodities tycoons under sanctions include Severstal PJSC owner Alexey Mordashov, Magnitogorsk Iron & Steel PJSC owner Victor Rashnikov and EuroChem Group owner Andrey Melnichenko.

It’s not yet clear whether the Russian metals and mining industry’s plea will be heard by the government. Despite the challenges producers face, high commodity prices mean they are still making profits. The government has also asked steel, nickel, and aluminum producers to keep domestic prices low as part of measures to support the economy hit by sanctions.


DOE taps CO2-removal expert for top role in fossil office
Carlos Anchondo, Energywire, April 20, 2022

 The co-founder of a climate nonprofit is joining the Department of Energy to focus on carbon removal and management, according to an announcement yesterday.

In a Medium post, Noah Deich said he’s taking a year off from Carbon180 to join DOE’s Office of Fossil Energy and Carbon Management (FECM), where he will be “leading work on carbon removal innovation before taking over as Deputy Assistant Secretary for Carbon Management” this summer.

Carbon180 promotes carbon removal technologies and has a stated goal of “a world that removes more carbon than it emits.”

Deich said he’s looking forward to working on DOE’s Carbon Negative Shot initiative — which the agency has called the U.S. government’s “first major effort” in carbon dioxide removal — and “supporting DAC hubs development,” referring to direct air capture, or technology which extracts carbon dioxide from the atmosphere.

“So excited to welcome Noah to FECM today!!!” Jennifer Wilcox, principal deputy assistant secretary for FECM, said on Twitter yesterday.

Marc Willis, a spokesperson for FECM, said in an email that Deich started yesterday as a director for CO2 removal and conversion and will shift to the deputy assistant secretary position in July.

Emily Grubert is currently serving as deputy assistant secretary for the Office of Carbon Management, Willis said, adding that Deich resigned from the Secretary of Energy Advisory Board last week.

Deich was named as an adviser to the panel last year (Energywire, Oct. 4, 2021). Willis said it is not known who will fill Deich’s spot on the board.

Described by the International Energy Agency as “one of few technology options available” to remove CO2 from the air, DAC received a boost in funding in the bipartisan infrastructure law signed by President Joe Biden last year. The law provides $3.5 billion to create four regional direct air capture hubs across the United States (Climatewire, Dec. 17, 2021).

In his note yesterday, Deich said “federal funding for carbon removal is at an all-time high.” In addition to DAC technology, carbon removal also includes approaches like afforestation, reforestation, and soil carbon sequestration.

“In my new role I will have an opportunity to direct this support towards a range of efforts that will catalyze innovation, deliver on promises to advance equity, and ensure economic benefits and environmental protections for communities,” Deich said.

In the Biden’s administration’s fiscal 2023 budget proposal, DOE’s fossil office would receive $893 million — up $68 million compared with fiscal 2022 enacted numbers, according to DOE documents (Energywire, March 30). Of that $893 million, the carbon dioxide removal program would get $65 million.

The office, which added the words “carbon management” to its name in July 2021, issued a strategic vision document last week that said “climate models have made it clear that [carbon dioxide removal] at the gigatonne scale” will be required to achieve net-zero emissions by midcentury.

Erin Burns, executive director of Carbon180, said that when Deich co-founded the organization in 2015, few people knew about carbon removal. “He has been one of the most effective carbon removal champions,” she said.

Deich’s departure from Carbon180 comes as Shuchi Talati, the office’s former chief of staff, returns to the climate-focused organization as a senior visiting scholar, Carbon180 said on Twitter yesterday. Talati, who stepped down from her post at the fossil office last month, will advise on “tech policy and overall policy strategy,” according to Carbon180’s post (Energywire, March 29).

Meanwhile, Jane Flegal, who until recently served as senior director of industrial emissions in the White House Office of Domestic Climate Policy, announced yesterday on Twitter that she is joining the climate team at Stripe Inc. to “help scale durable & responsible carbon removal” (Greenwire, April 19).

Separately, another former DOE official also is shifting jobs. Jess Szymanski, a press secretary at DOE during the Trump administration, left her position as a spokesperson for the American Petroleum Institute in January, the trade group confirmed yesterday. Szymanski is now communications director for Dave McCormick for U.S. Senate, according to her LinkedIn page.

McCormick, a Republican, is running to represent Pennsylvania in the Senate.