January 27, 2022

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Biden’s battle of the Chesapeake

With help from Ben Lefebvre and Annie Snider.

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— The Biden administration faces a politically tricky challenge in deciding how hard to push Pennsylvania to pull its weight in cleaning up Chesapeake Bay.

— Russian energy remains a potential target for sanctions if the country invades Ukraine, but energy concerns also complicate Western Europe’s willingness to back a firm U.S. stance.

— The Interior Department will release money to plug orphan wells within the coming months, tapping funds from the bipartisan infrastructure package.

HAPPY FRIDAY! I’m your host, Matthew Choi. Congrats to Aramco’s Paul Greenough for knowing the song the residents of Bikini Bottom sang at the end of “Band Geeks” is titled “Sweet Victory.” For today’s trivia: What is the national bird of Jamaica? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.

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: Hochul’s green energy vision for New York.

BIDEN’S PENNSYLVANIA POLLUTION PROBLEM: The Biden administration is facing a politically-fraught decision in the coming months as it figures out how aggressively to push Pennsylvania into pulling its weight in the cleanup of the Chesapeake Bay heading into the midterm elections, Pro’s Annie Snider reports.

Six states and D.C. signed onto a landmark blueprint to clean up the bay in 2010, using strict, measurable pollution reduction goals and regular check-ins on each state’s progress. But as it enters its final phase, Pennsylvania is far off track in meeting its pollution reduction targets.

The Keystone state faces an uphill battle on the clean up effort, with the Susquehanna River dumping 25 million gallons of water daily into the bay after passing through the state’s farm country. Most of those farms aren’t regulated under the Clean Water Act and therefore must to be wooed with incentives to implement conservation practices. While Pennsylvania has crafted plans to persuade the farmers, it’s short hundreds of millions of dollars each year to fund them.

The cleanup blueprint designates EPA as the referee in the effort, and the agency has some leverage to push individual states if it does not feel they are keeping up with par. But prior administrations have been reluctant to use them given Pennsylvania’s status as a key swing state. That may be all the more true in 2022, as Democrats are predicted to lose the House, and seats like Rep. Conor Lamb’s (D-Pa.) in a vulnerable Pittsburgh-area district will be up for grabs as he runs to replace the retiring Sen. Pat Toomey (R-Pa.). Pennsylvania’s governorship will also be on the ballot.

“I recognize they have political issues they have to deal with with Pennsylvania. It’s not as pure as I’d like,” Sen. Ben Cardin (D-Md.), one of the staunchest advocates for Bay cleanup, told Annie. Read more here on the political and regulatory dance behind the restoration of one of the country’s most iconic water systems.

OSTPOLITIK: The Biden administration is warning Russia that it will face painful sanctions if it makes aggressive moves toward Ukraine, with its energy, mining and shipping sectors all potential targets.

But though Europe’s leaders have also pledged to impose penalties on Moscow should it invade, behind the tough talk, there appear to be splits among European countries, some of which appear worried about the potential economic and energy fallout, POLITICO’s Matthew Karnitschnig, Nahal Toosi and Paul McLeary report. Eastern European nations in Russia’s shadow are on high alert, but leaders farther from the Eastern Front are consumed with a litany of their own domestic issues, including containing the Covid pandemic and maintaining economic resilience.

Russian natural gas remains a critical energy source for the continent, particularly Germany, which would receive the fuel from the contentious Nord Stream 2 pipeline, and some there are nervous about undermining economic links to Russia (though the Green faction of Germany’s ruling coalition is pressing for a more aggressive stance on both the pipeline and Moscow). Austrian Chancellor Karl Nehammer also said it would be “false to link Russia’s behavior in the conflict with Ukraine with the operation” of the contentious Nord Stream 2 pipeline.

Those concerns could put a wrinkle in the Biden administration’s posturing, but officials in Washington are keeping an optimistic tone. “The Europeans are divided, but we’ve been positively impressed with their stance so far,” a senior Biden administration official said. “The proof will be in the pudding, but no one should doubt serious sanctions if an invasion goes ahead.”

CRISIS IN KAZAKHSTAN: Farther east, the Collective Security Treaty Organization — the military alliance of some former Soviet states, including Russia — agreed to send troops to quell civil unrest in Kazakhstan that was spurred by rising fuel prices. The spike in LPG prices in the resource-rich Central Asian country prompted protests against the autocratic government, which President Kassym-Jomart Tokayev cast as a domestic security threat and used to call on Moscow for foreign intervention.

The U.S. has far less leverage in Central Asia than in Ukraine, but the administration is still monitoring the situation with alarm. White House press secretary Jen Psaki told reporters Thursday: “We have questions about the nature of this request and whether it was a legitimate invitation or not. We don’t know at this point.”

Instability in Kazakhstan could have major ripple effects on energy worldwide. The country controls about 40 percent of the world’s uranium supply, and prices have spiked since the unrest began. U.S. producers are already lining up to kickstart output if the situation crumbles, Reuters reports. The country, a member of OPEC+ and producer of about 1.6 million barrels per day, is seeing impacts on its petroleum production as well. Chevron said it lowered production in the country as many contract employees partake in the protests. The Wall Street Journal has more on the energy landscape and POLITICO’s NatSec Daily has more on the diplomatic front.

PLUGGING ORPHAN WELLS: Interior will start disbursing money from its newly-funded orphan well remediation program at the end of February, the Bureau of Land Management’s deputy director of policy and programs Nada Culver said during a Thursday web conference. Culver and other Interior officials outlined the basics of the $4.7 billion program, including a timeline that would start plugging operations on March 1.

The money is aimed at permanently closing abandoned oil and gas wells — which leak the greenhouse gas methane — after operators move on. The conference highlighted not only the environmental benefits of plugging in the wells, but also the job opportunities, especially as Interior recently doubled its estimate of how many orphaned wells exist to 130,000.

“I think we’ll need a bigger workforce” than first imagined, Jason Walsh, executive director of environmental-labor partnership BlueGreen Alliance said during the conference.

The money provided by the bipartisan infrastructure package isn’t likely to be enough to complete the job, Environmental Defense Fund attorney Adam Peltz said during the conference. “Four billion dollars goes far, but it doesn’t go as far as you think given how expensive all this work is,” Peltz said. Another worry flagged was that the oil and gas industry might take advantage of the program in ways Congress may not have intended.

“If they capture this process, put it into the usual gears that they have so well manipulated over the years, then we lose this opportunity to really break out and change things,” said Don Schreiber, a New Mexico rancher who said there were about 120 wells on or near his land. “I hope what we’re going to do is restore some of what’s been lost over the years, to achieve some accountability for mineral development on federal land.”

CEQ LOSES EJ LEAD: Cecilia Martinez, who led the White House’s environmental justice efforts, is leaving the Council on Environmental Quality today. Martinez was charged with engaging with environmental justice organizations and working on guidelines for the Justice40 Initiative to deliver 40 percent of federal benefits to disadvantaged communities. Her departure comes as activists seek greater clarity on the details of the administration’s environmental justice goals, namely how the benefits will be distributed and how to determine who qualifies for what.

“From the campaign and the presidential transition to this critically-important first year of the administration, Cecilia has been the heart, soul, and mind of the most ambitious environmental justice agenda ever adopted by a president,” CEQ Chair Brenda Mallory said in a statement. Pro’s Zack Colman has more.

THE NEW POSTAL FLEET: The Postal Service is sticking to its plans to have only 10 percent of its new delivery fleet run on electric batteries, with the rest chugging along on internal combustion engines. USPS plans to publish an environmental review in the Federal Register today for its plan to buy between 50,000 and 165,000 new delivery vehicles over the next 10 years. The exact mix of EVs to ICEs isn’t yet set in stone, since the new review says the 10 percent figure is the floor, which could give EVs a greater share. Still, environmentalists aren’t pleased.

“The U.S. Postal Service confirmed that it’s dead set against considering the real-world financial and health benefits of transitioning to zero-emitting electric vehicles,” Patricio Portillo, transportation analyst at the Natural Resources Defense Council, said in a statement. “This is a lost opportunity and a huge disappointment.”

USPS could acquire more electric vehicles if it gets federal funding to do so — a point Portillo made in pushing for greater EV funding under Democrats’ reconciliation package.

OH NO OKLO: The push for advanced nuclear reactors faced a hiccup Thursday when the Nuclear Regulatory Commission denied Silicon Valley-based Oklo’s application to build and operate a reactor at in Idaho. It was the first application for an advanced reactor and Oklo heralded its plans as a “landmark milestone” in the development of advanced fission technology. It was the first privately funded application for a commercial advanced reactor.

NRC cited a lack of information on the design and safety of the project in its decision. But hope is not lost on the effort. Oklo will have 30 days to request a hearing on the decision, and NRC indicated it is open to a reapplication in the future. Pro’s Kelsey Tamborrino has more.

INTERIOR OPENS UP FOR CHACO PROTECTION TAKES: The Bureau of Land Management formally proposed protecting 351,000 acres of federal land around Chaco Culture National Historical Park this week, opening up the floor for public comment on the move until April 6. The move would block new federal oil and gas leases within a 10-mile radius of the park, though current leases won’t be affected.

BLM and the Bureau of Indian Affairs will also probe ways DOI can “manage existing energy development, honor sensitive areas important to Tribes and communities, and build collaborative management frameworks toward a sustainable economic future for the region,” according to a release.

Interior Secretary Deb Haaland announced her intention to protect the area back in November, citing its cultural importance to local Indigenous communities.

GUNNING FOR A SECOND GO AT SCOTUS: An Idaho couple who already won big once at the Supreme Court in a case challenging federal Clean Water Act rules is up for a second go at the issue today, with justices considering a petition asking the high court to review the couple’s long-running wetlands permitting battle.

The case, which tees up fundamental questions about the scope of the 1972 water law, involves a patch of property owned by Michael and Chantell Sackett along Priest Lake, a popular vacation spot. The couple bought the property in 2004 with plans to build a dream home, but instead it has sat empty as they fought a 17-year-long challenge to the federal government’s authority over wetlands on the property. They’re represented by the Pacific Legal Foundation, a property rights group that has a strong track record at the high court on water cases, including on the Sacketts’ 2012 case concerning the right to challenge compliance orders.

The odds aren’t in their favor, since justices accept less than 1 percent of petitions before them. And the Biden administration has urged justices not to take the case, since it’s already begun a rulemaking on the central question. But, the high court already took up another big environmental case concerning regulations that are in flux – the one concerning EPA’s authority to regulate greenhouse gas emissions from power plants. And the Sacketts’ case is the first centered on the heated legal question of federal water authority one to come before the court since conservatives took a 6-3 majority.

— “German finance minister promises support for high energy prices,” via Reuters.

— “Canada minister defends oil sands despite pursuing emissions cuts,” via The Financial Times.

— “‘Crazy’ Carbon Offsets Market Prompts Calls for Regulation,” via Bloomberg.

— “World’s largest coal port to be completely powered with clean energy,” via The Hill.

THAT’S ALL FOR ME!

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