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In the U.S. these days, there is much concern about whether unrest and turmoil in various regions, whether it be in the Middle East, Ukraine or somewhere else, will affect U.S. trade, prosperity and national security—and, by extension, the health of the upstream oil and gas industry. Yet, as relates to the U.S. E&P industry, the greatest threat to its health is posed not by groups overseas, but by the single largest force within our own borders, the Executive Branch of the U.S. federal government.
More specifically, the White House is conducting a calculated agenda against upstream activity, using over-reaching rulemaking by the Environmental Protection Agency (EPA), the Bureau of Land Management, U.S. Fish and Wildlife Service and others. The motive behind this effort seems to be rooted in two things shared by some White House advisors: 1) A misplaced, naïve belief that if fossil fuels are eradicated, climate change will end; and 2) An in-your-face, watered-down Marxist ideology that would make Joe Stalin (or maybe Vladimir Putin) blush with embarrassment.
There is no doubt that the administration’s lead attack dog is the EPA, led by its left-leaning administrator, Gina McCarthy. A career bureaucrat and life-long environmental activist, McCarthy is more than happy to push the White House’s climate and anti-industry agenda.
To see why EPA is such a threat, consider five recent actions. First, in April 2014, EPA compiled a white paper on methane emissions and VOC leaks from oil and gas production, processing, transmission and storage, with an eye toward crafting much more stringent rules than those in force. Second, on July 1, EPA made good on its threat by proposing “updates and clarifications” to its 2012 New Source Performance Standards for the industry, which would, indeed, make life more difficult.
Third, in a move related to the previous two items, McCarthy & Co. on May 22 issued notice of a proposed rule, to “manage emissions from oil and natural gas production in Indian Country.” Fourth, on June 2, EPA issued its plan to cut Greenhouse Gas Emissions (GHGs) from power plants by 30% by 2030. While not tied directly to oil and gas, it is another example of EPA’s fossil fuels attitude. Last, and perhaps most insidious, EPA announced on July 8 that it has the authority to unilaterally garnish the wages of individuals, who have been accused of violating its rules, and floated a proposed rule to that effect.
Taken together, much of this daunting, federal executive over-reach may be illegal. Furthermore, none of these items requires consultation with, and approval by, Congress. Yet, precious little has been done to stop this out-of-control rulemaking. So far, very few people have tried to explain to the American public how this bad laundry list will cost them money and endanger their freedoms. But someone should—the first two items, on methane emissions and VOC leaks, will require equipment retrofits; create a lot of extra paperwork; and cost a ton of money and potentially some jobs.
The third item, production emissions on Native American lands, could potentially discourage new development, and that would cost various Indian tribes some of their oil and gas income. The fourth item, reducing power plant GHGs, has elicited the most reaction, since so many coal mining and electricity generation jobs are threatened. Indeed, the United Mine Workers of America staged a protest (see photo below) in Pittsburgh during late July, while EPA conducted public hearings on this proposed plan. This is one union, for which Mr. Obama’s “shtick” no longer works.
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| Worried coal miners protested EPA’s power plant GHG plan in Pittsburgh on July 30 (source: Pittsburgh Post-Gazette). |
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On the fifth item, garnishing wages, the Debt Collection Improvement Act of 1996 gives all federal agencies the power to conduct administrative wage garnishment, but only the Internal Revenue Service—which traditionally has had this role—has taken it seriously. Yet, EPA now says that it has this authority “without first obtaining a court order.” This should put chills down the spines of all industry executives—if their corporations are found to be in non-compliance with EPA rules, they could be held liable, too.
Beyond the coal miners, condemnation of EPA’s behavior is slowly growing. Last month, Republican Senators David Vitter (La.), Mike Enzi (Wyo.) and John Barrasso (Wyo.) sent a letter to McCarthy, in which they lectured her that “EPA’s new wage garnishment procedures provide an agency prone to regulatory abuses with even more power over Americans.” Two weeks later, Sen. Jeff Sessions (Rep. – Ala.) told McCarthy during a committee hearing, “The American people run this country—you don’t run this country.” Yet, an ever-defiant McCarthy responded that a Supreme Court endangerment finding on carbon pollution gave the EPA plenty of authority.
There are some in the natural gas sector, who think it’s okay for the feds to dismember the coal industry, because that would open up a wider window for gas generation of electricity. But that’s short-sighted thinking—the EPA is still going to attack oil and gas, whether or not the coal industry survives. Instead, we should all band together in a greater effort to fight off these federal tyrants. 
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