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Environment & Energy Report

Oil-Gas Sector Wants Return to EPA Enforcement After Virus (1)

May 27, 2020, 7:50 PMUpdated: May 27, 2020, 9:30 PM

The nation’s oil and gas sector favors snapping back to the EPA’s pre-coronavirus regulatory regime once the pandemic subsides, its largest trade group said on Wednesday.

The American Petroleum Institute discussed the Environmental Protection Agency’s temporary relief measures during a webinar addressing the state of the industry. The agency announced March 26 that it would stop seeking penalties from those not performing routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification activities.

API president Mike Sommers during the webinar commended the EPA’s decision to relax enforcement, calling it “similar to the IRS changing tax day from April 15 to July 15.” But he expects the agency to return to “the same regulatory regime” that existed before the pandemic.

“And we would advocate for that once the pandemic is over,” he said.

Environmentalists and congressional Democrats have assailed the EPA for rolling back enforcement during the pandemic. In response, agency Administrator Andrew Wheeler has repeatedly said no one can increase emissions under the new guidance.

Frank Macchiarola, API’s senior vice president for policy, economics, and regulatory affairs, told Bloomberg Law that the trade group in March requested guidance from the EPA on regulatory relief. But API isn’t seeking any permanent change to the agency’s enforcement approach, he said.

Macchiarola also said he hasn’t heard from any oil and gas companies about whether they have asked for relaxed enforcement or benefited from it.

‘Nothing to Fear’

Sommers also hailed the EPA’s temporary waiver in late March of a shift to cleaner-burning gasoline, which came after the virus caused a sharp drop in demand and left a nationwide glut of winter-grade fuel. Refiners and distributors had been required to stop selling winter gasoline on May 1.

“That regulatory relief, we thought, was entirely appropriate, given the demand-side issues we were facing as a consequence of some of these government decisions that affected the economy as a whole,” Sommers said, referring to the nationwide self-quarantine orders.

But Lukas Ross, senior policy analyst at Friends of the Earth, scoffed at Sommers’ reaction to the EPA’s regulatory tweaks.

“The reality is that the oil and gas industry has nothing to fear from the EPA as long as Andrew Wheeler is still in charge,” Ross said. “A return to normal after the crisis is really not a nightmare scenario for them. No federal agency under the Trump administration is ever really going to be a regulatory threat to Big Oil.”

An EPA spokeswoman said Ross’ characterization of the agency’s enforcement policy was inaccurate. Since March 16, the agency has opened 52 criminal cases, charged 10 defendants, concluded 122 civil enforcement actions, and initiated 115 civil actions, she said.

“EPA continues to enforce environmental laws and protect human health and the environment nationwide during these unprecedented times,” she said.

Creative Destruction

Sommers further said he expects the shutdown of the global economy to weed out smaller and weaker oil and gas companies. Such creative destruction is “how the free market should work,” and it won’t slow down production industrywide, he said.

“We know where these resources are in the United States, and we know how to extract them,” Sommer said. “So I’m confident that, as this industry gets out of this pandemic, we’re going to continue to be able to produce in the United States, because we have the technology and we have the resource going forward.”

API doesn’t support bailouts for the oil and gas industry, Sommers said.

(Updated with EPA comment in paragraphs 12 and 13.)

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bloombergindustry.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com; Rebecca Baker at rbaker@bloombergindustry.com

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