The One Big Beautiful Bill

00:00:03 Adrian Huth
This episode of the Energy Pipeline is sponsored by Caterpillar Oil and gas. Since the 1930s, Caterpillar has manufactured engines for drilling, production, well service and gas compression. With more than 2100 dealer locations worldwide, Caterpillar offers customers a dedicated support team to assist with their premier power solutions. 

00:00:28 Russell Stewart
Welcome to the Energy Pipeline Podcast with your host, Russell Stewart. Tune in each week to learn more about industry issues, tools and resources to streamline and modernize the future of the industry. Whether you work in oil and gas or bring a unique perspective, this podcast is your knowledge transfer hub. Welcome to the Energy Pipeline. Hey, everybody. As always, thanks for listening. And thanks to Caterpillar Oil and Gas for sponsoring the show. And today my guest is Adrian Huth. Adrian is the air quality engineer for Innovative Environmental Solutions Incorporated. Adrian, thanks for coming on the show today. 

00:01:14 Adrian Huth
Thanks for having me. 

00:01:14 Russell Stewart
Well, we're going to talk about the one big beautiful bill today, so I'm very excited to talk to you. Adrian, tell me a little bit about yourself and tell me about innovative environmental solutions. 

00:01:32 Adrian Huth
Yeah, you bet. First off, Innovative Environmental Solutions, or IES, we've been around for the last 25 to 30 years, mostly focusing on the oil and gas industry. We work with operators all across the country. It's really helped them stay on top of environmental compliance. We do everything from greenhouse gas inventories, emissions monitoring, helping folks with regulatory interpretation, technical support. Big part of what we do lately is helping clients respond to evolving methane rules, practical leak detection and repair programs. We've really got a strong reputation with our clients for bringing real world knowledge to the regulatory side of things. We work with a lot of trade associations to respond to rules, write comments, that kind of thing. Really just try and help people out with regulatory compliance however we can. I got my start with IES about 10 years ago, right out of college. I've got a background in aerospace engineering. Came on as we had a research project trying to improve the EPA dispersion model. Air mod. So got my start with that kind of transitioning into the environmental world and then just learned the industry from the ground up doing, you know, compliance surveys and working my way through the ranks. 

00:03:12 Russell Stewart
So aerospace engineering. So you're a rocket scientist. So you go from rocket. You go from rocket science to environmental, huh? 

00:03:20 Adrian Huth
Yeah, yeah, that's. That's what they call me. 

00:03:23 Russell Stewart
So, so, so where did you go to school? 

00:03:27 Adrian Huth
I went to Iowa State. 

00:03:29 Russell Stewart
Okay. 

00:03:29 Adrian Huth
So it was. It was an interesting transition, but some of the aerodynamics stuff played well with the downwash and dispersion stuff. So just. It was, it Was an odd fit, but it was natural. 

00:03:42 Russell Stewart
That's interesting. That's very interesting. So are you in iowa? 

00:03:46 Adrian Huth
I am actually in western Wisconsin right now. 

00:03:49 Russell Stewart
Western Wisconsin. 

00:03:50 Adrian Huth
Kind of close to. Close to the border. Not too far away from, like, Minneapolis. 

00:03:55 Russell Stewart
Okay, so is that where IAS is? 

00:03:58 Adrian Huth
We're actually. We're all over the country at this point. There's. We're a small shop. There's six or seven of us. We have a couple of people in illinois, Kentucky, California. Just kind of all over the place. 

00:04:12 Russell Stewart
Okay, and do you do any. Any international work? 

00:04:17 Adrian Huth
We have in the past, but we're not doing any right now. 

00:04:21 Russell Stewart
Okay, so you don't have any folks down here in texas? 

00:04:27 Adrian Huth
We work with people in Texas. 

00:04:28 Russell Stewart
I bet you do, but it's. 

00:04:31 Adrian Huth
What was that? 

00:04:31 Russell Stewart
I said, I bet you do. 

00:04:35 Adrian Huth
Yeah. Yep. Yep. I was. Me and one of our other employees were just down in houston for. For a presentation to the industry, so. 

00:04:44 Russell Stewart
Oh, okay. Well, next time you get down to Houston, you'll have to look me up. 

00:04:49 Adrian Huth
Sounds good. 

00:04:50 Russell Stewart
Okay. So, Adrian, our u. S. Congress just passed and our u. S. President just signed the one big beautiful bill. So let's. I wanted to have you on and talk about that to talk about the impact on the oil and gas regulatory landscape and I guess especially as compared to what was the inflation reduction act of 2022. So any new opportunities or challenges for the industry in the one big beautiful bill legislation as opposed to the inflation Reduction act of 2022? 

00:05:40 Adrian Huth
Well, as far as the one big beautiful bill act goes, it really opened up a lot of opportunity for the industry. On the exploration side, it opened access to areas that had previously been off limits, like the arctic national wildlife refuge, parts of the gulf of mexico, actually mandating regularly sales within those areas over the next 15 years. So from a financial standpoint, it also offered a lot of relief, Rolling back some of the cost increases from the inflation reduction act, Reducing royalty rates, doing a lot with the carbon capture tax credits, extending bonus depreciation through 2031. So overall, for the industry, it did a lot as far as financial incentives to produce more. On the other hand, from the emissions standpoint, there's a lot of uncertainty from that. It's not really laid out well within the budget bill. We're kind of waiting on feedback from epa and the staff reorganization and everything as far as what regulations are going to still be in place, what's getting removed, everything there. I guess one other point with the. The budget bill was that the methane fee got taken off the table until 2035. So that was. That's really one of the biggest. 

00:07:24 Russell Stewart
Because the Inflation Reduction act that included a. They called it, I think, methane waste emissions charge. Everybody just called it a methane fee. And that generated a lot of oil and gas operators kind of jumping out there trying to find new methods and technologies to mitigate methane emissions. So is that gonna slow that down or what do you think? 

00:07:59 Adrian Huth
Yeah, the methane fee or the WAC was. It was definitely a hot topic with the ira, I think. Yeah. Like you said, everyone was pushing for new technologies, trying to capture every metric ton of methane that they could in order to avoid that fee. I think with it being delayed until 2035, with the budget reconciliation, it's off the table, but we know it still exists and it's coming at some point. So the companies are still pushing forward with a lot of that technology, even without the financial incentive from the wec. But there's. There's a whole list of voluntary programs that a lot of companies are involved in as they. Emissions are still a focus for investors and customers and state regulators. So really a strong incentive to keep everything moving forward. 

00:09:02 Russell Stewart
I really am glad to hear you say that, because if I, If I were going to guess at the answer to that question, that's exactly, that's exactly what I would have guessed. People have heard me talk before. I was a moderator at a methane emission conference two or three years ago, and I said to the panel that I thought the oil and gas industry wasn't the problem with the environment. I thought they were going to be the solution to the environment and they were going to find methods and technologies to mitigate methane emissions and they were going to figure out ways to make it profitable. And I've seen, I've actually had guests on my show who are working on those kind of technologies. So contrary to popular belief, and we're huge advocates of the oil and gas industry, in fact, when I said the oil and gas industry isn't the problem with the environment, it's going to be the solution to the environment. If looks could kill from that panel, I wouldn't be talking to you right now. But. But, you know, the oil and gas industry is not for, you know, dirty air and dirty water and, you know, pushing grandma off the. Off the cliff or whatever, you know, and so I think that's. I'm glad to hear you say that. You think that's still going to be a focus and maybe the fact that they pushed it out a little while is going to, you know, create. Create even more opportunity. 

00:10:38 Adrian Huth
So sorry Just to add on to that. 

00:10:42 Russell Stewart
Yeah, dude, please. 

00:10:43 Adrian Huth
You know, there's, there's a lot of good research work being done as far as reducing the methane emissions. It's, it's kind of a catch 22 of where we're at with, with the IRA and the budget bill and the airplay between them because with the IRA was going to contribute a massive amount of money to research for the industry to try and advance technologies and reduce emissions and everything in order to, you know, counteract that wac. The, the money from that was supposed to go to that. And right now a lot of, you know, a lot of the consultants within the industry that had contracts for DOE work for, for that technology, we're kind of just sitting, waiting in the wings wondering if, if that obligated money is actually going to come so that we can, can finish that work. Because right now there's, there's a lot of half baked research that was counting on that, those funds to kind of push things forward. So we're hoping that, you know, we get the benefit to the industry from the budget bill of more exploration, more opportunity, more financial incentive, but you know, also the benefit of reducing emissions from the industry. So. 

00:12:12 Russell Stewart
The one big beautiful bill. Did that, did that replace the Inflation Reduction act or is the Inflation Reduction act still there? It's just been modified by this other budget bill. What's the deal on that? 

00:12:29 Adrian Huth
It's a good question and I'm not sure if I have a great answer for you. There's a lot of uncertainty as far as what all still applies and what's off the table at this point. 

00:12:45 Russell Stewart
Okay. So we're going to have to take a kind of a wait and see approach. I'm sorry, Adrian, that's my job is to ask good questions. 

 00:12:52 Adrian Huth
Yeah, no, it's a great question. And if, if I knew the answer, I'd tell you. But yeah, right now, right now all I can say is a lot of the, a lot of the things from the Inflation Reduction act were essentially tabled with the new budget bill or from some other congressional action, you know, sending things to, to budget reconciliation or OMB or really, however they've been able to kind of hit a pause on things. 

00:13:26 Russell Stewart
Okay. So that leads to the question, do you think states might follow a different approach to regulating methane emissions as opposed to the federal government? 

00:13:43 Adrian Huth
Yeah. So we're already seeing states like California and New York step in in anticipation of. The Fed is not regulating methane as much right now. From the federal standpoint, the greenhouse gas reporting program is going to omb they're doing a rulemaking. We're not entirely sure what's going to come of that. We'll probably see something come out within the next couple of months as far as what industries still apply to that rule. So the states, in anticipation of that potentially going away for the oil and gas industry, are stepping in. But often if you leave it to the states, especially California and New York, they're going to take a much more aggressive approach than what we've had to deal with in the past. So just to give an example, New York, the it's the proposed part 253 which I don't want to go into all the gory details of it, but it essentially it lowers the reporting threshold, almost cutting it in half, well more than cutting it in half from the federal and then changing global warming potentials. So every ton of methane that you emit is just more impactful to your overall numbers. And then once you're put into that reporting program, your obligations from complying with it are much more stringent than what we had at the federal level, which it requires third party audits which get extremely expensive. And then if you have any sort of error or omission in your reports from that, you get penalized, which when we've had experience with the federal rule over the past 10, 15 years, you essentially just resubmit your reports if you have new information. So it's a lot higher stakes. There's financial stuff involved and they're taking these state methane rules and using them to drive some sort of cap and invest program, essentially a state level methane tax. Instead of the federal. 

00:16:02 Russell Stewart
You mentioned New York and California. What about Colorado? Hadn't they already promulgated some greenhouse gas reduction goals and Knox intensity reduction goals? 

00:16:19 Adrian Huth
Yeah, Colorado, they're definitely leading the way with some aggressive goals for greenhouse gases and Knox emissions. They're setting a pretty strong precedent for other states. They've laid out pretty clear targets of I think it's 26% GHG reduction by 2024, 5 which were already there and then 50% by 2030 with a net zero goal by 2050. And then for Knox they're targeting a 50% reduction by 2030 in ozone non attainment areas. That kind of structure combined with just required data collection and everything that goes into that, it's really going to inspire other states to follow suit. Again, just taking the place of federal requirements, especially those struggling with non attainment challenges, feeling pressure from local stakeholders. Just the more the federal pace slows down, the states are just going to Pick up and operate in a vacuum. 

00:17:27 Russell Stewart
Interesting. Okay, so do you foresee deregulatory activity towards the EPA's various regulations? What do they got? They got, they got NAAQS regulations. Is that right? What is that? 

00:17:44 Adrian Huth
Yeah, so that's the federal max, the National Ambient Air Quality Standards. Specifically the hot topic lately has been around ozone and if you've heard of the Good neighbors rule, which is essentially it's regulating upwind states ozone production and not being a precursor to ozone. So right now the good neighbors rule is stayed in the courts. So it's not applicable right now. But states are still struggling to show compliance through state implementation plans. And so the nacs, the Natural Ambient Air Quality standard is still in place. So states still need to comply with that, which they're just going to have a harder and harder time complying with that. With the increased summer temperatures, the increase in data centers just producing more knots into the, into that environment. So I don't expect a rollback of the standard. Timelines might get stretched. But right now we're seeing a lot with the epa, budget cuts, early retirements, everything that's just kind of slowed down, just driving enforcement more to be state driven. So really looking at continued pressure on the states to show progress even if there's no federal policy. 

00:19:23 Russell Stewart
So what was that Good Neighbors rule? 

00:19:27 Adrian Huth
So yeah, the good Neighbors rule essentially it's, it's downwind states that are having trouble showing compliance with the ozone standard because the state's upwind are producing and it's just, it's making it hard for other states to comply with the ozone standard based on upwind production of it. So there, there were pretty stringent requirements with that and controls that you had to put on everything. But like I said right now that's stayed so. 

00:20:11 Russell Stewart
Okay, so that got challenged in court then, huh? 

00:20:14 Adrian Huth
Yeah, yeah. 

00:20:15 Russell Stewart
Okay. And so does that have something to do with non attainment zones and things like that? 

00:20:21 Adrian Huth
Yes, it does. 

00:20:22 Russell Stewart
Okay, so we don't know whether that's going to grow in size or become more stringent until it works its way through the courts. 

00:20:29 Adrian Huth
I think right now it's really going to be on a state by state basis. And like you said, with Colorado advancing everything there, they're going to show, you know, requirements for other states to, to do something about production. 

00:20:49 Russell Stewart
So that's, that's going to be the next emissions regulatory goal or initiative probably that impacts oil and gas industry. 

00:20:58 Adrian Huth
Yeah, methane and knots are really going to be continuing to lead the emissions issues. It's just, you know, those are Our two big byproducts. So methane probably going to be deemphasized in federal regulations for several years to come. And states just taking, taking control of that. Yeah, the, the other things that we might see more control over the hazards, air pollutants, btex, that kind of thing. But it's really hard to say at a federal level. 

00:21:43 Russell Stewart
Okay. So it's, we're going to be looking at, instead of a uniform federal level thing, you're saying we're going to be looking at everything on a state by state basis. 

00:21:56 Adrian Huth
I think it's very, very likely. 

00:22:00 Russell Stewart
Okay. All right. 

00:22:02 Adrian Huth
Well, so, so I think just, just one thing that we're trying to convey to a lot of our clients right now is that, so we do a lot of, you know, comments and stuff on rules and we work closely with trade association and epa and we're really trying to emphasize that we've had these big pendulum swings from the Trump administration, even back to Obama, back to Biden and now back to Trump. And it's been put a really stringent rule on, take everything off, replace it with an even more stringent rule, take it off. So we don't, we're trying to tell people, you know, when we're lobbying for rules and requirements to try and help EPA put something in place that makes sense, that helps control emissions but is not overly stringent, you know, looking at really costly replacement repair stuff for small sources, you know, look at, look at the big issues, look at, you know, where emissions are actually worth chasing and get something in place that we can comply with now while the administration is friendly to the industry rather than having who knows what come down the line later. Yeah. 

00:23:38 Russell Stewart
So that's all the more reason companies need, need you Innovative environmental solutions, huh? Because you guys are keeping up with this and, and you're actually trying to, to navigate the landscape. 

00:23:53 Adrian Huth
Yeah, yeah, absolutely. We're working closely with a lot of companies trying to, trying to get something that makes sense in place. And while we're doing that, you know, helping companies comply with everything that's currently going on, you know, it's, it's a very complicated environment right now. 

00:24:15 Russell Stewart
Well, Adrian, I really appreciate you coming on and helping us try to wade through some of this. And we'll Definitely put your LinkedIn contact information in our show notes and innovative environmental solutions website so people can reach out to you for help in that area. Again, I really appreciate, appreciate you taking the time to come on the show. Hopefully when people listen to this podcast, it will go seamlessly and they won't know the technical issues we had during the podcast. 

00:24:55 Adrian Huth
Anyway, yeah, thanks for having me and I welcome anybody to reach out with questions on regulatory stuff or if they need any help with you know, survey work permitting. Really anything we we can handle at all. So. 

00:25:11 Russell Stewart
All right, that sounds good. Well again thanks Adrian and as always to everybody out there, thanks for listening and making this one of the top rated oil and gas podcasts. We really appreciate when you post us on LinkedIn and leave reviews and tell your friends to listen to us and we'll see you next time. Thanks for listening to oggn, the world's largest and most listened to podcast network for the oil and energy industry. If you like this show leave us a review and then go to oggn.com to learn about all our other shows. And don't forget to sign up for our weekly newsletter. This show has been a production of the Oil and Gas Global Network.