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Howard Feldman's testimony regarding EPA's request for stakeholder feedback on reducing regulatory burden

As prepared for delivery

Howard J. Feldman
Senior Director, Regulatory and Scientific Affairs
American Petroleum Institute
Public Meeting on the
Environmental Protection Agency Request for Stakeholder Feedback on Reducing Regulatory Burden (Executive Order 13777) Air and Radiation Office
April 24, 2017

The American Petroleum Institute is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. API’s more than 625 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. 

America is now the world’s leading producer and refiner of oil and natural gas, a reality that was unimaginable just a decade ago. We’ve transitioned from an era of energy scarcity and dependence to one of energy abundance and security. The developments of the past decade have brought cost savings for American consumers, good paying jobs, renewed opportunities for U.S. manufacturing, a stronger economy and greater national security. Record U.S. production and refining is happening alongside greater environmental progress: CO2 from power generation is down to near-30 year lows, thanks in large part to greater use of natural gas. Also, cleaner burning transportation fuels and industry investments in emissions reducing technologies have enabled reduced emissions of criteria air pollutants. In 2015, energy-related savings put an extra $1,337 back in the pocket of the average American family, and AAA reports that drivers saved as much as $550 in fuel costs. Energy abundance has helped cut energy and material costs for American manufacturers and is helping to attract manufacturing back to the U.S. 

Technological innovations and industry leadership have propelled the oil and gas industry forward, despite the unprecedented level of federal regulatory actions targeting our industry. Consistent with President Trump’s stated objectives of American energy independence and economic growth, EPA and other federal agencies should embrace smart, cost-effective regulations. In 2011 and 2015, API supported EPA efforts to relieve the burdens imposed by its rules and the time has come to review those regulations and the additional requirements imposed by the previous Administration, while continuing to promote public health, safety and the environment as industry and citizens support.

API is preparing detailed written comments. Today I would like to highlight three of the key air regulations we urge EPA to review: oil and gas New Source Performance Standards, Renewable Fuels Standards and Ozone NAAQS implementation.

First, regarding the oil and gas final NSPS rule issued last year,[1] API submitted a detailed petition for administrative reconsideration of the final rule to Administrator McCarthy in August, 2016.  The previous 2012 standards, developed in collaboration with industry, and innovation, driven by industry's incentive to capture more of what we sell, are already effectively reducing emissions. We are encouraged by EPA’s April 4, 2017 announcement to review the 2016 standards,[2] and API supports revision of those standards.  Additionally, we recommend that EPA act quickly to extend the rapidly approaching compliance deadlines while the agency reconsiders the rule.

Second, there are a number of problems with the outdated Renewable Fuel Standard Program.  API recommends:

(1)    EPA should utilize its waiver authority to reduce the advanced, cellulosic, and total renewable fuel obligations to ensure the mandate does not exceed the E10 blendwall. 

(2)    In order to maintain a market for ethanol-free gasoline, EPA should not set a RFS mandate that would cause the average ethanol content to exceed 9.7 percent of projected gasoline demand. EPA should use realistic projections of E0, E15, E85 and cellulosic demand when setting the annual RVOs.

(3)    EPA should reject calls to move the RFS Point of Obligation.  The RFS has significant structural flaws, and moving the point of obligation will not alleviate them; it will simply reallocate the problems to a different group of fuel supply chain participants. The issue was considered by the two previous administrations and both appropriately decided to place the obligation with refiners and importers.    

(4)    EPA should work with Congress to reform and ultimately end this unworkable program as the program does reflect current market realities and it creates the potential for economic harm.

Third, regarding the Ozone NAAQS, API has commented previously that the more restrictive ozone standards imposed by EPA in late 2015 were unnecessary, because ambient ozone levels were declining under the 2008 standards and the public health was already protected with an adequate margin of safety.  We also pointed out, as EPA correctly identified, that ozone levels would keep falling as the country worked to fully implement the older standards and other federal regulations. Unfortunately, EPA’s new standards create tremendous burden on states and risk significant impacts on job growth, and the potential number of U.S. counties thrown out of attainment could more than triple.

API supports EPA reconsideration of the 2015 Ozone NAAQS based on the issues API identified in its comments and court briefs, and is encouraged by EPA’s motion to continue oral argument on the 2015 Ozone NAAQS. Since the deadlines pertaining to the 2008 and 2015 ozone NAAQS are staggered and both standards are progressing, it is difficult for states to harmonize activities toward the implementation of the NAAQS. For this reason, we encourage EPA to expeditiously complete its review.

In conclusion, we look forward to further working with Administrator Pruitt, EPA leadership and staff on these and other rules. Federal regulatory policy can either strengthen or weaken the U.S. energy renaissance, with impacts that extend far beyond our industry. Regulatory actions should be rooted in sound science and data, with a consideration of the costs and benefits, while protecting public health and the environment. With these goals in mind, we stand ready to work with EPA and the rest of the Administration to find reasonable solutions to the challenges before us. 

[1] Final Rule (June 3, 2016; 81 Fed. Reg. 35,824) for the Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources (NSPS OOOOa rule)

[2] 82 Fed. Reg. 16,331

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