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Keeping wall promise is blocking other signature Trump pledges

Andrew Burton/Getty

Keystone XL Pipeline on hold

-Play video: What Mexicans Think of Trump's Address

- Promises on biofuels, emissions and farm aid may be held up
- Trump's push to roll back regulations is largely on hold

By Ryan Beene and Jennifer A Dlouhy / Bloomberg

Petroleumworld 01 10 2019

President Donald Trump's promise to build a wall along the Mexican border is keeping him from honoring some of his other high-profile campaign pledges and policy priorities.

A State Department review of the Keystone XL pipeline could stall. Payments to farmers who lost sales due to the trade war with China were being processed by an office that is now closed. And his promise to Detroit to ease auto emissions targets has effectively been put on hold by the shutdown of more than a dozen federal agencies in a fight over funding the border wall.

Even his signature push to roll back regulations across the government -- announced with a mock cutting of ribbon surrounding a mountain of paper -- is largely on hold during the shutdown. Although the Federal Register, the government repository for rulemaking documents, is still being published, it hasn't contained any regulatory proposals since the shutdown began, said Amit Narang, a regulatory policy analyst with Public Citizen, a watchdog group.

“They've basically gone completely dark, and you cannot officially propose a regulation and kick off a public comment period until it's published in the Federal Register,” Narang said. “That is an enormous choke point that is really acting as a pause button for the Trump deregulatory agenda.”

More than a dozen major government departments have been shuttered and some 800,000 employees are either furloughed or working without pay, impeding work across the federal government.

Consider Keystone XL , TransCanada Corp.'s long-delayed pipeline to transport Canadian crude to Gulf Coast refineries.

Trump campaigned on a promise to approve the pipeline and took action to accelerate its construction his fourth full day in office, issuing an executive order that imposed a deadline on a new federal government review of the project.

Even at agencies exempted from the shutdown, it can be hard to get things done. Calls to experts won't be returned; emails go unanswered. Colleagues may be furloughed, even if some staffers are spared. And once the government reopens, picking up where agencies left off may be easier said than done.

But now, the shutdown has ensnared Keystone. A fresh State Department review of the $8 billion project appears to have been halted amid the lapse in funding. And TransCanada warned in a court filing Monday that the Calgary-based company faces lost profits and higher construction costs if work is significantly delayed.

It's not even clear if a court hearing scheduled for Jan. 14 will go forward, because the Justice Department, which represents State in the proceedings, lacks funding.

The now-idled Transportation Department and Environmental Protection Agency in August jointly proposed new fuel economy standards that recommended capping requirements for new cars at 37 mile-per-gallon from 2020 through 2026, instead of rising to a roughly 47 mpg fleet average under rules enacted by the Obama administration.

Why Trump Would Want to Slow Tough Fuel Standards: QuickTake Q&A

While the federal funding fight hasn't yet delayed work to finalize that rule, doing so by the administration's goal of March or April will become will become more difficult if the shutdown drags on into late January, a person familiar with the matter said.

“You can safely say that it will be at least a one-for-one delay in terms of how long the shutdown lasts,” said Lynn Ross, a professor at Georgetown University's McCourt School of Public Policy. “Let's say it lasts a month. It'll be at least a month's delay for that regulatory action to happen, but it'll probably be longer because there's a whole lot of inefficiency that's built into these shutdowns.”

Read more: Trump Is Giving Oil Industry a Bye in Shutdown, Critics Say

The EPA, meanwhile, is working on regulatory overhauls that are priorities for the oil industry -- and in keeping with Trump's pledge to remove rules he says are throttling economic development. The measures include a proposal to ease limits on methane leaks from wells, an effort that could be delayed as the shutdown drags on.

“A longer shutdown certainly isn't good for this industry,” said Mike Sommers, president of the American Petroleum Institute. “We want to make sure the efforts to put in place smarter regulations continue.”

Some ethanol producers are growing concerned the shutdown could make it impossible for the EPA to meet deadlines for allowing summertime sales of gasoline blended with as much as 15 percent ethanol, a change Trump promised last year. The agency aimed to propose unleashing so-called E15 gasoline in February, followed by final action in May -- just four weeks before those summertime fueling restrictions become binding.

Why Trump May Be Tweaking How You Fill Up Your Tank: QuickTake

The agency offered some assurance this week, with spokesman Michael Abboud insisting “the ongoing partial shutdown will not impede EPA's ability to keep to our deadline.”

The EPA will complete the regulatory shift “before this summer's driving season,” as it “is a priority for both President Trump and acting administrator Wheeler,” Abboud said.

But it could be tough. Just four workers in the EPA air office responsible for biofuel regulations and the auto emission standards are exempted from the shutdown, out of 1,083 total. And no employees are exempted in the office of the general counsel, where staff attorneys review regulations.

“EPA gave itself very little wiggle room to start out with,” Geoff Cooper, president of the Renewable Fuels Association said earlier Tuesday. “So this government shutdown is taking a tight timeline and making it even tighter, and honestly, with each passing day as this shutdown continues, we're growing more anxious and concerned about EPA's ability to get this done in time for the summer driving season.”

The regulatory action is critical for fuel retailers that face the risk of violating federal pollution rules if they sell E15 in some areas this summer before the rule change goes through. Some retailers may opt to forgo offering E15 this summer out of fear the change won't be formalized in time.

While most regulatory delays at the EPA and Interior Department won't create “immediate market impacts,” the E15 measure is an exception because of the potential effect on the summertime driving season, said Kevin Book, managing director of the Washington, D.C.-based research firm ClearView Energy Partners.

When a tit-for-tat tariff war prompted China to impose a levy on imports of U.S. farm products, Trump set up a program to provide aid to farmers who lost sales. But the Agriculture Department office that processes the applications is shut. The department on Tuesday said farmers would be given additional time to apply.

Similarly, U.S. companies can seek exemptions from Trump's steel and aluminum tariffs on certain imported products that aren't produced in sufficient quantities or of sufficient quality domestically. But the department stopped processing those requests during the shutdown, a Commerce Department spokesman said.

Trump also campaigned with a promise to upgrade U.S. roads, bridges and other infrastructure, but the shutdown could cause states to delay seeking bids or starting work on projects as long as expected federal funding isn't distributed, said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials.

“States are not going to be letting new projects because of the uncertainty associated with the federal program,'” Tymon said on a conference call with reporters Tuesday.

— With assistance by Jenny Leonard, Andrew Mayeda, Mark Niquette, and Rachel Adams-Heard


Original article



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Story by Ryan Beene and Jennifer A Dlouhy / Bloomberg from Bloomberg.

bloomberg.com 01 10 2019


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