With help from Annie Snider, Zack Colman and Eric Wolff
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— The United States is likely to become a net importer of crude oil and petroleum products later this year, according to the Energy Department’s statistical agency.
— A circuit court ruled EPA was wrong to stop entirely enforcing an Obama-era rule limiting hydrofluorocarbons.
— A bipartisan group of senators called on the Agriculture Department to help struggling biofuels producers amid the coronavirus pandemic.
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PRODUCTION CUTS COMING: U.S. crude oil production is expected to drop by 500,000 barrels per day this year stemming from the steep decline in prices and fuel demand, according to an updated forecast from the U.S. Energy Information Administration. The statistical agency had forecast last month that U.S. output would rise to a record level this year, POLITICO’s Ben Lefebvre reports, but its new figures released Tuesday put U.S. oil production at a decline to 11.76 million barrels per day.
The United States is also likely to become a net importer of crude oil and petroleum products later this year, according to the new forecast, undercutting a crucial part of the president’s “energy dominance” agenda. U.S. oil prices are hovering in mid-$20s per barrel, about one-third the price at the beginning of the year.
While the Tuesday forecast is still relatively mild compared to predictions from other analysts, it did warrant a statement from the Energy Department, which said the expected decline in U.S. production shows that the Trump administration doesn’t need to intervene in the oil market to achieve the sort of cuts that OPEC and Russia are seeking. “The private sector and the free market are driving those cuts,” a department spokesperson said.
That statement echoes comments made by the president on Monday that suggested U.S. output will fall at the hands of market forces, even if the U.S. government does not commit to cutting U.S. oil production. “I think the cuts are automatic, if you’re a believer in markets,” President Donald Trump said. The EIA estimate could also factor into this week’s OPEC+ meeting Thursday, where the U.S. can expect pressure from the Saudis and Russia to cut its output. A senior administration official told The Wall Street Journal that the White House plans to use the new production forecast to show the market is working and that U.S. oil producers are ramping down.
What about CO2? EIA also estimates energy-related carbon dioxide emissions will fall by 7.5 percent this year, according to EIA, while coal-fired power output will plummet 20 percent this year, Pro’s Zack Colman reports.
TRUMP TAPS EPA IG FOR ACTING IG AT DoD: Trump has removed acting Pentagon watchdog Glenn Fine from his post, upending the panel of federal watchdogs overseeing implementation of the $2 trillion coronavirus law that he was supposed to lead, POLITICO’s Kyle Cheney and Connor O’Brien report. Trump also assigned EPA Inspector General Sean O’Donnell to serve as the temporary Pentagon watchdog in addition to his responsibilities at EPA. Lawmakers were given notice of the change on Tuesday.
The coronavirus relief law includes multiple layers of oversight, the most powerful of which is the panel of inspectors general given wide latitude to probe any aspect of its implementation. Fine was named by fellow inspectors general to head that panel just last week. Now, his colleagues will be forced to select a new leader.
COURT: EPA WAS WRONG TO STOP ENFORCING HFC RULE: The D.C. Circuit Court of Appeals said EPA was wrong to stop entirely enforcing a rule limiting hydrofluorocarbons just because part of the rule was struck down by the court, Pro’s Alex Guillén reports. The D.C. Circuit in 2017 struck down a portion of a 2015 EPA rule that required users of HFCs to switch to newer substances that do not contribute to climate change or harm the ozone layer, saying it exceeded EPA’s statutory authority. But the court upheld other provisions, including requiring that anyone still using older ozone-depleting substances to switch to the newer, safer chemicals.
In response, EPA in 2018 said “confusion” about the court’s ruling meant it would stop enforcing the entire rule, even the provision upheld by the court. That decision was made without the requisite notice-and-comment rulemaking, Chief Judge Sri Srinivasan wrote Tuesday for a split three-judge panel. Srinivasan vacated EPA’s 2018 decision as a “fundamental flaw,” which will effectively reinstate the regulatory requirements for users of non-HFC ozone-depleting chemicals.
COURT REJECTS APPEAL ON RFS EXEMPTIONS: The 10th Circuit Court of Appeals rejected a request by refiners for an en banc hearing of the January case that voided three small refinery exemptions under the Renewable Fuel Standard, Pro’s Eric Wolff reports.
DOE STAFFER DIES FROM CORONAVIRUS: An Energy Department employee who worked at the agency’s Washington headquarters has died after contracting the novel coronavirus, E&E News reports. The department also said Tuesday two more employees based at its headquarters have tested positive for the virus. One of the employees has been away from the building since Feb. 14 and the other since March 30. Both employees are currently in self-quarantine.
TOILETS GET EPA’S OK: Despite Trump’s complaints about toilets requiring multiple flushes to get the job done, EPA on Tuesday opted to maintain its current water efficiency standards. The review of the WaterSense labeling program, mandated by Congress in the 2018 America’s Water Infrastructure Act, was aimed at potentially tightening standards that were set prior to 2012.
The decision comes after Trump complained in December that “people are flushing toilets 10 times, 15 times as opposed to once” and that “they end up using more water.” Trump said at the time that EPA was “looking at, very seriously, at opening up the standard.” EPA, however, does not regulate water efficiency in bathroom fixtures; the WaterSense program is a voluntary labeling program aimed at encouraging consumers to choose more efficient products.
EXXON SLASHES SPENDING: ExxonMobil said Tuesday it would cut its capital spending by $10 billion, or 30 percent, for 2020, representing the biggest cut yet among oil producers amid industry downturn sparked by the coronavirus pandemic and glut of supply from Saudi Arabia and Russia. The cuts in spending will be focused on Exxon’s operations in the Permian Basin, the field that has been the biggest engine of oil production growth in the United States in recent years, Ben reports. Exxon also warned that further spending cuts could be considered.
KANSAS FED RINGS WARNING BELL: The Kansas City Federal Reserve — which monitors business activity in Oklahoma, Colorado, Kansas, Nebraska, Wyoming and portions of western Missouri and northern New Mexico — warned nearly 40 percent of the oil and gas companies in its region would go out of business in the next year if oil prices don’t rebound, Ben also reports. The Kansas City Fed board said Tuesday energy producers reported that revenues and activity in March reached their lowest level since the beginning of 2015, and a crash in oil prices to below $30 a barrel forced drilling to its lowest level since the board started its energy survey in 2014.
HELP AN INDUSTRY OUT: A bipartisan group of 15 senators urged Agriculture Secretary Sonny Perdue to direct some of the department’s coronavirus relief aid to struggling biofuel producers, Eric reports. In a letter released Tuesday and led by Sens. Chuck Grassley (R-Iowa) and Tammy Duckworth (D-Ill.), the senators say 4 billion gallons of ethanol production have been idled since March 1 due to lack of demand. “As the U.S. Department of Agriculture considers the allocation of additional funds provided to the Commodity Credit Corporation by the Coronavirus Aid, Relief, and Economic Stabilization (CARES) Act we ask that you use the authority provided to assist the biofuel industry,” the senators said.
POET SHUTTERS THREE, DELAYS FOURTH: POET, the largest ethanol producer in the country, said Tuesday it would idle three ethanol plants and delay opening a fourth, which in total had a capacity to produce 330 million gallons a year.
SENATORS INTRODUCE SPR BILL: North Dakota Sen. John Hoeven, and Texas Reps. Lizzie Fletcher and Michael Burgess, said Tuesday they will introduce bipartisan legislation to provide $3 billion in funding to purchase U.S. crude oil for the Strategic Petroleum Reserve, echoing a request from Trump and Energy Secretary Dan Brouillette that was left out of the last coronavirus relief package, H.R. 748 (116). The legislation is co-sponsored by Sens. John Cornyn, Kevin Cramer, Ted Cruz, Lisa Murkowski, Dan Sullivan, and Reps. Kelly Armstrong and Henry Cuellar.
Speaking of SPR: Texas Rep. Mike Conaway and Cuellar led a letter to House leadership, urging them to include support for DOE’s efforts to fill the SPR in any future relief package in order to “bring certainty to these beleaguered communities and American families.”
REPUBLICANS CALL FOR NEUTRALITY IN DOLING OUT STIMULUS LOANS: Cramer led a letter with 16 Republican senators, including Environment and Public Works Chairman John Barrasso, calling on the Federal Reserve to keep the financial assistance authorized under the coronavirus relief bill industry neutral and “fully available” to companies throughout the U.S. “Some outside groups have already advocated certain sectors of the economy be excluded from the loans made available under the CARES Act,” they wrote to Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell on Tuesday. “Acquiescing to these demands would be contrary to Congressional intent and would arbitrarily harm certain American workers.”
The letter points to BlackRock’s role in bond-purchasing under the legislation, and says congressional intent is for BlackRock and all private companies who serve as fiduciaries to act without regard for their individual investment policies.
STUDY LINKS COVID-19 DEATH RISK TO POLLUTION: People suffering from Covid-19 who have had long-term exposure to air pollution appear to be more likely to die than others who had less exposure to pollution, according to research from the Harvard University T.H. Chan School of Public Health. The researchers analyzed air quality and coronavirus data from more than 3,000 counties around the country and found that even a modest increase of 1 microgram per cubic meter of fine particulate matter in a region was associated with a 15 percent increase in the Covid-19 death rate, Alex reports. While the research has not yet been peer reviewed, it is an early indicator of a trend scientists have suspected: long-term exposure to air pollution worsens the virus’ effects.
FRED SINGER DIES AT 95: Fred Singer, the physicist who long led the charge against mainstream climate science, died Monday at age 95, the Heartland Institute said. He served in roles at the Transportation Department, Interior Department and EPA, where he was deputy assistant administrator for policy in former President Richard Nixon’s administration. Singer, who was affiliated with the Heartland Institute, established the Nongovernmental International Panel on Climate Change as part of his effort to prevent countries from taking action to restrict the use fossil fuels.
— “U.S. oil state senators to talk crude markets with Saudi officials Saturday: source,” via Reuters.
— “In Gulf’s oil rigs, crews fight virus to keep crude flowing,” via Bloomberg.
— “Wildlife group: Gulf oil spill still affecting wildlife,” via The Associated Press.
— “Oil companies are collapsing, but wind and solar energy keep growing,” via The New York Times.
— “Pandemic response test-drives climate policy. Will it work?” via E&E News.
— “Record-size hole opens in ozone layer above the Arctic,” via The Guardian.
THAT’S ALL FOR ME!
