Archive | Fracturing RSS feed for this section

What will 2017 Bring? Dramatic Change?

20 Dec 2016

edit_calendar_ssk_47433454In prior years, we knew that regulatory and environmental change was coming but we expected it to be slow and incremental.  With an unknown quantity like President Elect Trump, one thing is clear – no one really knows what may happen.  Here are a few possibilities:

1.  Coal/Cleaner Energy Generation – revitalizing the coal industry was part of Mr. Trump’s midwest stump speeches.  Will Mr. Trump be able to reverse Barack Obama’s Clean Power Plan? What about the Paris Climate Accord?  Certainly, his team is looking at both of those right now. The dispute in Michigan v. EPA, decided in June 2015, continues to rage.  In 2015, the US Supreme Court ruled that the EPA didn’t properly justify its rule governing mercury and toxic pollution (MATS) from power plants because it did not specifically address costs at the initial stage of the rulemaking process. In April, the EPA announced it was standing by its MATS rule and concluded that the benefits far outweighed the costs.  Petitioners continue to litigate whether the EPA properly evaluated costs.  Here in Michigan, new legislation has been passed (and is awaiting the Governor’s signature) intended to encourage additional investment in energy generation and transmission while balancing consumer choice and a greater percentage of renewable energy generation.  Will it work? At a reasonable cost?

2. Power Generation Subsidies/Oil/Gas Generation – Mr. Trump’s attacks on “crony capitalism” would seem to mean that he will stop financial incentives for solar and wind generation.  Will he also attack oil and natural gas supports in the tax code?  Will he open up ANWAR to oil/gas exploration?  Will he scale back attempts to regulate fracking?  This will be difficult in light of the December EPA Report  which concluded that fracking posed problems such as:  fracking water withdrawals compete with other water needs; spills of hydraulic fracturing fluids and chemicals or produced water may impair groundwater resources; injection of hydraulic fracturing fluids into wells may allow gases or liquids to move to groundwater resources; discharge of inadequately treated hydraulic fracturing wastewater to surface water resources; and contamination of groundwater due to disposal or storage of fracturing wastewater.

3. Pipelines – will Mr. Trump reverse the Obama administration’s dim view of oil and gas pipelines such as the Keystone XL and Dakota Access Pipelines?  How will this affect Michigan where public awareness of two 60+ year-old pipelines under the Mackinac Straits has galvanized both sides of the political spectrum into action.  In 2014, Michigan convened a pipeline task force which issued a report in 2015.  In September, 2015, the State entered into a written agreement with Enbridge to prevent the transport of heavy crude oil through the Straits Pipelines.  The task force also recommended that the pipelines be independently evaluated and that additional financial assurance be provided.  The State solicited Requests for Information and Proposals (RFPs) and Enbridge agreed to pay $3.6 Million for the evaluation of the Straits Pipelines.  An independent evaluation of alternatives to the Line 5 pipelines is also underway.  When those will be completed is not known.

4. Infrastructure – Mr. Trump campaigned on infrastructure (although to hear him tell it, that only encompasses airport quality), and Governor Snyder appointed a 21st Century Infrastructure Task Force which concluded that the State needed to be investing $4 Billion more than it was in infrastructure to address roads, bridges, internet, water, sewer and other infrastructure needs.  Given the recent nationally publicized Flint Water debacle, will Michigan find the intestinal fortitude to fully invest in infrastructure or will we continue to patch and delay?  Given the State’s recent fight against a federal judge’s order to deliver clean water, and Michigan legislators “default anti-tax setting,” the future does not bode well.

5. Brownfields – as previously reported, Michigan adopted legislation streamlining its brownfield funding laws and deferred action on Dan Gilbert’s “transformational” brownfield funding legislation.  Will that resurface in early 2017?  I expect it will.

6. Other issues – there are a number of other issues on the horizon including cleanup standards, the maturing of the Great Lakes Water Authority and its ability to deliver clean water and septic services at a reasonable price, Michigan’s effort to reimagine its solid waste program, water withdrawals and protection of the Great Lakes from invasive species and nutrients leading to algal blooms.

What will be the top stories of 2015?

23 Jan 2015

edit_calendar_ssk_47433454Happy new year!  I know it’s almost February but as this is my first blog post of the year, I thought (particularly after hearing the State of the Union and the State of the State speeches)  I’d predict the big stories of 2015 in no particular order:

  • Wetland Rules – the EPA and the Army Corps of Engineers finally proposed rules in 2014  to address the fallout of the Rapanos case.  The proposal was met with a firestorm of disapproval, particularly from the farming world.  Will they ever finalize them?
  • Brownfield TIF Legislation – after all that work last year, will the Legislature take up streamlining this program and expanding it to allow Michigan to be even more competitive in redeveloping brownfields?
  • EPA Greenhouse Gas Rules vs. Congress – in September, 2013, EPA issued a proposal for carbon pollution from new power plants; in June  2014, EPA issued a proposal to cut carbon pollution from existing power plants – the GOP and coal and oil interests in Congress have fought this for some time.  Will the rules be adopted and enforced?  Will there be enough time for electricity generators to get alternative plans in place before being forced to shutter their oldest, least efficient and most polluting plants?
  • Keystone Pipeline – President Obama and Congress have been locked in a politically charged dispute over the Keystone XL pipeline for almost 3 years now – he seemed to indicate in the State of the Union that he’d veto legislation – will he?
  • Energy Policy – Governor Snyder has pushed for an energy policy, legislation is expected this year and the Governor recently mentioned an intention to develop a new energy agency that would make Michigan more competitive for business.  What that will entail in light of the likely changes due to federal regulations will be interesting to see – will Michigan upgrade or discard its renewable portfolio standard? Can Michigan reduce electrical cost while improving both reliability and environmental performance?
  • Water Policy – the Governor’s long-awaited great lakes policy is expected this year.
  • Pipelines – in addition to the Keystone pipeline, there has been a lot of interest in pipelines in, under and around the Great Lakes – could there be federal and state changes there?
  • Detroit’s Water Authority – it is supposed to morph into a regional authority – as I said previously, the easy part was getting to the agreement last year – will the hard work succeed or will it fail, causing major shockwaves for roughly half of the State’s population?

Earth Day at 44…. still crying?

22 Apr 2014

Earth Day brings me right back here

Earth Day brings me right back here

Happy Earth Day 44.  We have come a long way from the challenges and problems that led to the first Earth Day –  a 1969 oil spill in Santa Barbara, California; the dead zone in Lake Eriesmog in Los Angeles and burning rivers in the Midwest.

The first Earth Day led to the creation of the US Environmental Protection Agency and the passage of environmental laws like the Clean AirClean Water, and Endangered Species Acts.  As the EPA and its state counterparts have continued to regulate, there has been a backlash of business and media outcry which certainly impacts the public’s views.

The challenges we face today are more complex and likely more daunting than those of 44 years ago.  We still have oil spills, but they are from rail cars, pipelines, larger ships and deeper wells.  Lake Erie and many other bodies of water are still challenged by more diffuse and “below the radar” sources of contamination.  While reducing the impacts of asbestos, lead and NOx from our daily lives, and healing the ozone hole, we now face questions regarding greenhouse gasses, smog impacts from and in China unlike anything LA ever faced, and the challenges and benefits posed by fracking.

Once the “low hanging fruit” of easy cleanups were “picked,” what we were left with was less shocking or engaging than dead fish and burning rivers.  Consequently, there’s much more debate about the best way to address them or whether they need to be addressed at all.  The issues are just as important – maybe more so, but it’s unlikely that our polarized nation would agree on what changes would be best, if any.

What can one man do against climate change?

9 May 2013

So, the President said in January and in February, that climate change was one of his priorities and Congress could either work with him or he’d go it alone.   What might the President do on sustainability and climate change without Congress ? Well, the Armed Forces are thinking about, talking about and planning for heightened conflicts caused by climate change and the challenges of waging war in a more intense environment.

What else might the President do? He could:

1.  Impose heavier regulations on existing power plants, which reportedly account for 1/3 of U.S. greenhouse gas emissions.

2.  Fully disapprove the Keystone XL Pipeline which many have said will result in few permanent jobs but perhaps the “dirtiest” oil available.

3. Attempt to regulate fracking – which will be difficult under the current Congressional regime.

4. Ramp up government procurement – making sustainability a mandate; retrofitting government buildings and pushing renewable power for government operations.

5. Attempt to require methane capture during natural gas production.

6.  Continue pressure on automakers to improve gas mileage.

7. Adopt even more energy efficiency standards for household appliances and industrial equipment.

8. Promote planning and codes for resilience in design and construction to guard against catastrophic harms from events like Hurricane Sandy.

Interestingly, without governmental involvement, the market itself appears to be pushing companies to assign monetary value to their impacts on the environment as part of an overall drive toward “sustainability.”  Once you start measuring the impacts, it becomes easier for shareholders and the marketplace to drive less efficient companies toward efficiencies.  So, perhaps the President doesn’t need to do anything.

Earth Day at 43 – 43 shades of grey

22 Apr 2013

Earth Day 43 seems to have been lost given the recent events in Boston, Texas and elsewhere.  The environmental news continues to be a mixed bag – with reports of fewer Americans “caring” about the environment but perhaps more “acting” in a “green” way.

We have certainly come a long way from the challenges and problems that led to the first Earth Day –  a 1969 oil spill in Santa Barbara, California; the dead zone in Lake Erie; smog in Los Angeles and elsewhere and burning rivers in the Midwest.

The first Earth Day led to the creation of the US Environmental Protection Agency and the passage of the Clean Air, Clean Water, and Endangered Species Acts.  As the EPA and its state counterparts have continued to regulate, there has been a backlash of business and media outcry which certainly must weigh on the public’s views.

The challenges we face today are far more complicated and, to many, more daunting.  We still have oil spills, but now they are from larger ships and deeper wells.  Lake Erie and many other bodies of water are still challenged by more diffuse and “below the radar” sources of contamination.  While reducing the impacts of asbestos, lead and NOx from our daily lives, and healing the ozone hole, we now face questions regarding greenhouse gasses, impacts from and in China and the developing world, and the challenges and benefits posed by fracking.

As is often the case, once the “low hanging fruit” of black and white are picked, what we are left with is grey and grey isn’t as shocking or engaging as black and white.  The issues are just as important, and in many ways, very high profile, but it’s unlikely that our polarized country would agree on what changes would be best, if any.

Is this a carbon tax? A windfall profits tax? Or just a DOA tax?

18 Mar 2013

On Friday, President Obama announced in a speech his plans for an Energy Security Trust  to fund $2 Billion in research into energy technologies to help the United States, among other things: (1) get off oil altogether (particularly foreign oil); (2) develop clean coal technologies; and (3) improve efficiencies in the production of natural gas (thereby reducing greenhouse effects).

This hits at two interesting sweet spots –  1. It finally relates energy to national security; and 2. It focuses on something everyone agrees government should be supporting – basic research (vs that nasty old picking winners and losers). As a concept I really like this and think it’s the sort of future-thinking investment our government should be pursuing (like investing in education, clean water, good roads, etc.).

What I find interesting is the concept that this Trust will be funded by “Revenue from Profitable Oil and Gas Companies” and thereby won’t increase anyone else’s taxes.  Per the President’s speech, he wants to fund the Trust from oil and gas royalties on federal lands.

The government already collects around  $9.5 billion in oil and gas royalties.  Over half of the revenue goes to the U.S. Treasury. About a billion goes to the Land and Water Conservation Fund which is distributed to states and federal agencies to acquire and develop public lands. Finally, distributions are made to states or monies generated on federal lands within those states.

The concept has been used before. Back in a somewhat less contentious era, the federal Superfund was created to clean up “orphaned” waste sites.

It was funded in part by excise taxes on crude oil and refined oil products, on hazardous chemicals, on imported substances that used hazardous chemicals and by an environmental income tax of 0.12% on a corporation’s modified alternative minimum taxable income over $2 million.  Those taxes expired in 1995 and since then the EPA has funded Superfund based on Congressional appropriations of around $1.2 billion annually and whatever EPA recovers from companies liable for sites that EPA had cleaned up.

The President’s speech left out exactly where the $2 Billion would come from – will it be from: (1) an increase in royalties; (2) eliminating royalty waivers; (3) a reduction in payments for public lands; or (4) a reduction in payments made to states?  Based on the commitment not to raise taxes, it appears that the Treasury will continue to get its cut. I suppose another option would be to increase by some 20% the number of wells being drilled.  This appears to be the direction that the group that developed this concept wants to go.

We can see where this fight is going.  The House of Representatives and many in the Senate have taken the “no new taxes” pledge.  Liberals in Congress will fight more arctic and off-shore drilling.  Will the President dangling more drilling rights encourage the politicians to go for this and spur some of the world’s largest companies to agree to help subsidize their own potential extinction?  The odds of this proposal getting enacted seem very long, even if the goals are quite worthwhile.

University of Michigan Researchers To Report On Effects Of Fracking

11 Mar 2013

University of Michigan researchers are currently conducting a study of the potential environmental and societal effects of hydraulic fracturing in Michigan.  While there have been studies conducted on fracking in the United States, none, until now, have been conducted with a focus on Michigan. 

Initial findings are due out this summer with the final report due next year.  It is safe to say that those on all sides of the fracking debate will be eagerly awaiting the results.