Legislative Update

By Energy Workforce Government Affairs Team

The energy services and technology sector faces many critical policy issues that affect the more than 600,000 American workers who make up our Member Companies and workforce.

Energy Workforce is a strong advocate for our members by engaging with government at both the state and federal levels to elevate the industry and tell the story of the men and women of the sector who bring affordable, clean energy to the country and the world.

“Build Back Better”

With the clock ticking on this Congress as the summer moves forward and the October break for campaign season approaches, Sen. Joe Manchin is looking for a last minute “hail mary” to salvage some of the climate provisions that were contained in the “Build Back Better” bill that he torpedoed earlier this year.

Of particular importance to our Membership is the prospect of a revival of the methane fee becoming a part of this package. Sen. Manchin has repeatedly expressed interest in including the language in any package and has been discussing the prospect over the past few weeks. While actual bill text has not been officially circulated, it is understood that it may be similar to language passed by the House earlier this Congress.

Administration Letter to Industry

In mid-June President Biden sent a letter to several companies with major oil refining operations on the topic of high gasoline prices and what could be done to bring prices down. The letter was sent to the heads of Exxon Mobil, Valero Energy, Marathon Petroleum, Phillips 66, Chevron, BP and Shell and specifically addressed their oil refining operations.

Taking a strong tone throughout, President Biden made historical comparisons between the price of gasoline and price of oil per barrel. He went on to acknowledge how the war in Ukraine contributed to the recent spike in prices, while also claiming that refiners are intentionally operating at reduced capacity. He asserts that these companies are exploiting a wartime situation to increase profit margins at the expense of the American consumer.

The letter goes on to implore companies to increase the supply of refined goods to the U.S. market. President Biden suggested he may invoke additional emergency authorities to increase refining capacity and output.

Although he didn’t specify any new actions that may be taken, he listed previous orders from his Administration like the Strategic Petroleum Reserve release, the E15 expansion and the Defense Production Act for solar and wind components. The letter concluded with an insistence that companies explain the rationale for their reduced refining capacities, and prepare solutions to resolve this issue without further delay.

This letter sparked several immediate responses from many of the companies addressed in the letter, which included facts about specific refining operations and assurances that companies were not taking part in nefarious actions to inflate the price of gasoline. Additionally, some initial solutions were publicly offered including a temporary waiver of the Jones Act and streamlining of federal permitting processes.

The Biden Administration plans to continue conversations on this issue with the companies addressed in the letters, along with a wider group of companies represented at the National Petroleum Council led by Secretary Jennifer Granholm.

REGROW/Orphan Wells Update

In November 2021, Congress passed a bipartisan bill led by Senators Ben Ray Luján of New Mexico and Kevin Cramer of North Dakota, which funds a plan to plug every documented orphan well in the United States and lays the groundwork to reduce the number of unplugged orphan wells going forward. The Revive Economic Growth and Reclaim Orphaned Wells (REGROW) Act of 2021, which was integrated into the bipartisan infrastructure bill, provides $4.275 billion for orphaned well cleanup on state and private lands, $400 million for cleanup on private and tribal lands, and $32 million for research.

The Department of Interior released a memo in early January indicating there are more than 130,000 documented orphaned wells – more than twice the amount previously estimated by the Interstate Oil and Gas Compact Commission. Plugging orphaned oil and gas wells presents an opportunity to mitigate harmful emissions and provide an economic boost to communities transi- tioning away from fossil fuel economies.

The bidding process for each state’s orphan well contracts started in March of this year and the RE- GROW-allocated funds began rolling out to contractors in early May. The funds distributed to the states through the REGROW Act are based off of the state’s orphan well profile.

SEC Proposed Rule on Climate Disclosures

More than a year after requesting public input on potential rules on climate-related disclosures, the Securities and Exchange Commission (SEC) released a proposed rule in March of 2022. In sum, under this rule companies would be required to disclose climate-related risks, including physical and transition, that could impact businesses and this information would be included in typical financial disclosure documents that are provided to investors. The SEC proposed rule aligns very closely to the Task Force on Climate-Related Financial Disclosures (TCFD) and experts are recommending companies familiarize themselves with the framework.

In response, Energy Workforce & Technology Council carefully analyzed the new draft regulation and submitted comments to the SEC. These comments focused on serious concerns that the proposed rule, especially the Scope 3 requirements, are beyond the jurisdiction of the SEC and if enacted would put a significant burden on the energy services sector and the economy. Additionally, the Energy Workforce comments requested increased time for implementation and stronger protections for filers.

It is likely that the proposed rule will now go through a review process by the SEC where they analyze the comments and finalize the rule. This process usually takes around six months so we should not expect a final rule before the end of the year. Once the final rule is published, there will likely be both legal and legislative challenges in the House and Senate.

The Congressional Review Act is a process that Congress can use to challenge regulations issued that it feels are overly burdensome or beyond the scope of the submitting agency. Depending on the scope of the ultimate final rule, we can expect a challenge. However, while the initial challenge could pass with a simple majority, the President would likely veto such a resolution, and the prospects of this effort are not certain.