With help from Eric Geller, Anthony Adragna and Gavin Bade
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— The Justice Department has recovered most of the ransom Colonial Pipeline paid to hackers last month, following a cyberattack that rattled the Southeast’s fuel markets.
— The Biden administration is aiming to shore up the supply chain to make advanced batteries and diversify the sources of rare earth minerals under a new strategy to be unveiled today.
— Secretary of State Antony Blinken told Republicans Monday that the Biden administration thinks it’s too late to stop the Nord Stream 2 pipeline from being completed.
Here’s to a phenomenal Tuesday! I’m your host, Ben Lefebvre, filling in while Matthew Choi is on vacation. Anthony Adragna will be taking the reins tomorrow. Congrats to Ed Chen at the Natural Resources Defense Council for being the first to answer that William McKinley was the president felled by a Detroiter. Today’s trivia question: What is the White House connection of one of the men heard in the opening chatter of Marvin Gaye’s “What’s Going On?” Send your answer and news tips to Anthony at [email protected], or find him on Twitter @anthonyadragna.
Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today’s episode: Biden’s LNG dilemma.
CRYPTO UNEARTHED: The recovery of about half of the Colonial Pipeline’s $4.4 million ransom serves as a dramatic coda to the hack, which sent drivers in the Southeast U.S. into a gasoline-buying panic that forced many of the region’s gas stations to close shop.
Deputy Attorney General Lisa Monaco’s announcement Monday was especially surprising, given that Colonial paid the ransom to Russia-based hacker group DarkSide using cryptocurrency, which makes it easy for parties in transactions to remain anonymous.
“The old adage ‘follow the money’ still applies,” Monaco said at a press conference. “And that’s exactly what we do.”
Colonial said it contacted federal law enforcement agencies in Atlanta, Northern California and Washington D.C., as soon as it learned it had been hacked on May 7. “Holding cyber criminals accountable and disrupting the ecosystem that allows them to operate is the best way to deter and defend against future attacks of this nature,” company CEO Joseph Blount said in a statement. “The private sector also has an equally important role to play and we must continue to take cyber threats seriously and invest accordingly.”
The sleuths traced the payment across the ostensibly anonymous cryptocurrency ecosystem, where the government was able to locate and seize $2.27 million from a virtual currency account used by the hackers.
The recovery of the funds will offer Blount a strong talking point when he goes before the Senate Homeland Security Committee today at 10 a.m to talk cybersecurity and critical infrastructure.
STOCKING THE SHELVES: With the lessons of the pandemic still fresh, the Biden administration is directing agencies to shore up production of crucial items, including pharmaceuticals and computer chips as well as supplies for the new technologies needed for the energy sector. The Energy Department will release a 10-year “blueprint” for battery production and release $17 billion for manufacturing and recycling from its Loans Office. The administration also plans to create a cross-agency working group with corporations, tribes and other local governments to explore new mining and recycling options for rare earth minerals, with DOE making $3 billion available immediately for new projects.
The moves come at the conclusion of 100-day reviews of supply chains for the four sectors that were launched in February. Those reviews sought to ascertain whether industries critical to U.S. national security are overly reliant on foreign suppliers, particularly in China, or were affected by pandemic-related shortages, like semiconductors and lumber. Gavin Bade has more here.
WITH THE WHITE HOUSE INFRASTRUCTURE TALKS LIMPING ALONG, climate hawk Sen. Sheldon Whitehouse aired his fears that aggressive climate action might get pushed the side. The Rhode Island Democrat admitted on Twitter that he’s “officially very anxious about climate legislation.” Partly to blame is the White House’s work to garner Republican in an effort to bring a bipartisan infrastructure package to Congress. That could mean the administration will have to strip out provisions tackling climate change to win over the GOP lawmakers, and there may not be enough time to take those provisions and write a separate climate-focused bill. “Climate has fallen out of the infrastructure discussion, as it took its bipartisanship detour,” he wrote. “It may not return. So then what?”
Whitehouse isn’t the only one skeptical that there’s enough time to pass two bills. “In theory, Democrats could work with Republicans to pass a ‘conventional’ infrastructure passage (e.g., roads, bridges, etc.) and use the reconciliation process to enact the climate- and social-reform-related provisions of the Jobs and Families plans that seem unlikely to garner bipartisan support,” ClearView Energy’s Kevin Book wrote in an analyst note Monday. “Practically speaking, however, a short Congressional calendar may not allow for a two-step of this sort.”
LINE 3 PIPELINE TENSIONS ESCALATE: Police began arresting dozens of protesters late Monday at the site where Enbridge is planning to build a replacement for its Line 3 pipeline in northwestern Minnesota. Thousands of Indigenous people and other opponents of the line that would bring 760,000 barrels of oil per day from Alberta, Canada to a terminal in Superior, Wisconsin have been setting up camps in the areas around the headwaters of the Mississippi River to halt construction of the project, and on Monday, they moved to block a highway and occupy the construction site, the New York Times reported.
The protesters are warning they will continue their actions through the summer to block the pipeline that Enbridge hopes to put into service later this year, and they’re hoping to sway President Biden to stop the work.
PHMSA’S EYE ON THE CALENDAR: The Pipeline and Hazardous Materials Safety Administration is reminding pipeline operators that they have six more months to comply with the PIPES Act passed last year, as your host reported. In an advisory bulletin that will be published in the Federal Register on June 11, PHMSA says it wants to see pipeline operators make the required updates to their plans to fix and prevent leaks of the potent greenhouse gas by Dec. 7.
The Biden administration is looking to use PHMSA to help meet its goal to cut methane emissions by 2030. “Minimizing methane emissions from pipelines will help improve safety and combat climate change, while creating jobs for pipeline workers,” PHMSA acting Administrator Tristan Brown said in a press release. “Pipeline operators have an obligation to protect the public and the environment by identifying and addressing methane leaks.”
That sounds fine to pipeline companies. The Interstate Natural Gas Association of America trade association said in a statement that it “looks forward to working with PHMSA to implement these updates, consistent with our commitment to work together as an industry towards reaching net-zero greenhouse gas emissions from our natural gas transmission and storage facilities by 2050.”
RIPPING OFF THE BAND-AID: At a House Foreign Affairs Committee hearing Monday, Blinken said out loud what had been discussed sotto voce for a while: The Biden administration most likely couldn’t stop Nord Stream 2 with sanctions, and the penalties would damage the relationship with a key ally it wants to keep. “By the time we took office, the project was 90 percent physically completed,” Blinken said under questioning from Rep. Brian Fitzpatrick (R-Pa.), as Pro’s Anthony Adragna reports. “The worst of all worlds is a pipeline that’s completed, which we continue to believe is a fundamentally bad idea, [and] a poisoned well with one of our closest partners, Germany.” The U.S. is now talking with the German government on ways to minimize the pipeline’s political impacts, Blinken added.
House Republicans were not pleased. Sixty House Republicans sent a letter to Biden calling his decision against slapping sanctions on the Russian company behind Nord Stream 2 and its executives “baffling,” Anthony reports. “We urge you to rethink your action and fully implement the Congressionally mandated sanctions against all responsible parties and actors to permanently stop completion of Nord Stream 2,” the Republicans wrote.
WELL PLUGGED: The American Petroleum Institute unveiled Monday a new industry standard for plugging old oil and gas wells, as Biden continues to make sealing up the old wells a cornerstone of his pledge to both reduce methane emissions and create jobs for union workers. The Wellbore Plugging and Abandonment standard will provide guidance for the design, placement and verification of cement plugs used in wells that will be temporarily or permanently closed, the trade association said.
The API standard “upholds state and regional environmental goals, while also supporting federal policy objectives included in the administration’s latest infrastructure plan to plug orphan wells,” API Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola said in a statement.
EPA has cited estimates showing there are between two million and three million of these orphaned wells, which are typically abandoned when their production falls off or their owners go belly up.
SHOT OF HYDROGEN: The Energy Department inaugurated its “Energy Earthshots” initiative Monday, calling for requests for information for projects that could cut the price of hydrogen fuel production. The goal is to bring the price of hydrogen fuel produced by renewable energy to $1 per kilogram within a decade — an 80 percent cut from where it’s at now.
POLITICO EVENT: Tune in on Tuesday, June 8, at 12 p.m. ET for a POLITICO Live conversation on what it will take to build both a circular economy and a low-carbon future. Deputy energy editor Gloria Gonzalez will moderate the discussion with panelists Rep. Chellie Pingree (D-Maine) and Jared Blumenfeld, California Secretary for Environmental Protection. Register here to watch live.
Emily Hammond, senior associate dean for academic affairs and law professor at George Washington University, is moving to the Department of Energy as deputy general counsel for litigation, regulation and enforcement.
Antha Williams, global head of the Environment Program at Bloomberg Philanthropies, joins environmental group Oceana’s board of directors.
— “Former Santa Barbara County Supervisor Sues Former Head of EPA,” via the Santa Barbara Independent.
— “Oil Traders Keep North Sea Crude on Tankers Despite Rally to $72,” via Bloomberg.
— “Options Traders Bet on Return of $100 Oil,” via WSJ.
— “EPA watchdog: Pandemic didn’t harm emissions testing,” via GreenWire.
