The next threat to Louisiana’s economy may not come from the Environmental Protection Agency or from the Department of the Interior—it may come from the independent Federal Energy Regulatory Commission (FERC) if chair nominee Mr. Ron Binz is confirmed. With all Republicans on the Senate Energy and Natural Resources Committee opposed to Binz’s confirmation as well as Democrat Senator Joe Manchin, a critical vote now rests with Louisiana Senator Mary Landrieu. Given Commissioner Binz’s anti-energy and anti-natural gas track record, it is surprising that Senator Landrieu has not already opposed Binz’s nomination.
Focus on Louisiana
Louisiana is an energy-rich state. According to the Energy Information Administration’s latest figures, Louisiana is second only to Texas in both U.S. natural gas production (2011 data) and U.S. oil refinery capacity (2013 data). In 2011, Louisiana produced over 3 trillion cubic feet of natural gas, which represents 13.6 percent of domestic natural gas supply. In terms of U.S. total energy production (adding BTUs across all energy sources), Louisiana was third behind Texas and Wyoming. Louisiana also has the only FERC-approved liquefied natural gas (LNG) export facility at Sabine Pass.
Nonetheless, as IER detailed in a research study by Louisiana State University economist Dr. Joseph Mason, the federal government often stands between the states and their energy resources. The study concludes that, if all off-limits federal lands were opened to oil and gas leasing, there would be a $14.4 trillion cumulative increase in economic activity over the next thirty-seven years. Louisiana has a huge portion of the market share of what makes such development possible—as oil and gas exploration, production, and refining increase, Louisiana stands to benefit greatly. For example, Louisiana has 18.7 percent of U.S. oil refining capacity, and Louisianans excel at the high skill jobs that are so integral to energy production.
If confirmed to head FERC, Ron Binz would be the administrative head of the federal agency with direct jurisdiction over much of the natural gas infrastructure in the U.S. FERC’s jurisdiction includes not only interstate natural gas pipelines, but also LNG export facilities. FERC’s LNG application process is actually longer and more expensive than the Department of Energy’s process—Cheniere Energy expects to spend as much as $100 million on its FERC application for their Corpus Christi facility.
To put another number on FERC’s impact, a study from the Congressional Research Service estimated that FERC’s economic reach in the natural gas industry is approximately $80 billion. In the future, that number will grow in lockstep with the projected growth in natural gas consumption.
Commissioner Binz’s Track Record
If Ron Binz were a neutral regulator, none of this would be cause for alarm. After all, FERC has had substantial jurisdiction over the natural gas industry since the Natural Gas Act of 1938. And while no agency is perfect, FERC earned a reputation as an agency made up of independent experts, not ideological activists. But Commissioner Binz’s track record is not the record of a neutral regulator, and a good example is what Commissioner Binz has said about natural gas. In March, Binz said:
“On a carbon basis, you hit the wall in 2035 or so with gas. I mean, you do. And it’s certainly helping my state [Colorado]…but we also have to understand that without [carbon capture and storage], I think that’s a dead end, a relative dead end—it won’t dead end until 2035 or so—but that’s when we’re going to have to do better on carbon than even natural gas can do.”
There are no laws requiring and no reason to see a “wall in 2035.” Congress has not authorized or created such a “wall.” So it is not clear why Commissioner Binz believes there is a “dead end” for natural gas other than some personal belief that we should not use natural gas because it creates carbon dioxide, just as we all do when we exhale.
As the Wall Street Journal recently wrote: “Natural gas is a dead end not because there will be too little gas but because by 2035 it won’t reduce carbon emissions as much as Mr. Binz wants.” Binz has also said publicly that the resource mix in 2050 will feature “the amount of coal and natural gas at 15 percent of current levels.” To put Binz’s radical energy restrictions in context, currently 67 percent of U.S. electricity generation comes from reliable, affordable American natural gas and coal.
This antipathy toward natural gas (and coal) is a cause for concern among those who support domestic energy production. Senator Lisa Murkowski expressed her concerns about Binz’s activism at the confirmation hearing:
“Based on my meeting last week with Mr. Binz and my due diligence, I regret that I must conclude that he lacks the temperament and judgment required of the leader of an independent commission and statutory CEO of an agency such as the FERC…. In addition, his conception of the role of regulation is not what we need at FERC right now. What is needed, now more than ever, is balance and independence.”
Support for Ron Binz has come primarily from the revolving door of affiliated government officials and former-officials-turned-lobbyists/consultants. Home State Senators Mark Udall and Michael Bennet urged his confirmation when they introduced Binz at his confirmation hearing. In a letter to the Wall Street Journal, a mix of former FERC Commissioners expressed their support and insisted that Ron Binz “will be a fair and impartial judge.” Environmental groups mounting campaigns against natural gas such as the Natural Resources Defense Council also gushed about the President’s “smart pick” to head FERC.
Former Secretary of the Interior Ken Salazar—the author of the moratorium and “permitorium” on drilling in the Gulf of Mexico that caused so much harm to Gulf communities—also voiced his support and tried to re-cast Binz as a mainstream nominee. In a statement to Politico, Salazar said:
“From my own experience with Ron Binz in Colorado, I’ve seen him as a pragmatist person. I think he should be confirmed, and I think he would be a practical voice as chairman of FERC…. Colorado’s an independent, in the center kind of state. And you wouldn’t have two United States senators from Colorado introducing him and endorsing him if he didn’t have that common sense view that comes from the West.”
Support from Senator Harry Reid and the White House was lukewarm, echoing the token support they also gave to controversial nominees Susan Rice and Gregory Jaczko. White House Deputy Press Secretary Josh Earnest recently said in a press conference: “Mr. Binz is a highly qualified nominee who would do a great job at the FERC. And we continue to work with Congress to ensure that he gets a fair hearing and gets confirmed in a timely fashion.” Senator Reid offered his support with a nod to the revolving door crowd: “Mr. Binz is the type of common-sense energy regulator that should be approved on a bipartisan basis and his nomination is supported across party lines by people who know FERC better than anyone.” And while Senator Reid did not explain why it was “common sense” to end the use of natural gas, he has spoken extensively on his belief that Americans should “stop using fossil fuels” that run most of our economy.
Louisiana’s energy economy is thriving, and natural gas is a huge part of that. The last thing the people of Louisiana need is a federal regulator who believes that natural gas is a “dead end” and who has the power to make that statement a reality. Since Senator Landrieu supports the production and use of natural gas, it is difficult to see how Commissioner Binz and his anti-energy and carbon dioxide-obsessed agenda will receive her support.
IER Policy Associate Travis Fisher authored this post.