New Trump Budget Blueprint Has A Few Surprises

This week President Trump released his fiscal 2018 budget blueprint and it has a few big surprises. No surprise is the huge cut at EPA by as much as 31 percent, but another interesting figure and one that both parties may cite is that the reduction would eliminate about 3,800 jobs at the agency. It’s an easily understood number that allows Republicans to tell voters about cutting government bureaucrats and Democrats and environmentalists can bemoan the loss of protection against polluters.

What is a surprise is that the budget increases funding for the White House Office of Information and Regulatory Affairs. OIRA has served as the government’s regulatory gatekeeper, performing cost-benefit analyses and reviewing major federal actions. Due to the President’s mandate to cut red tape, it appears that the President has recommended more funding for the OIRA staff to have more personnel reviewing rules for repeal. This is to further supply a “quality control check” on the legal and economic rationales for undoing current standards. At the same time, the fiscal 2018 budget blueprint would keep funding relatively flat for the Council on Environmental Quality at $3 million and the Office of Science and Technology Policy at $6 million.

Another surprise is the White House’s proposal to sell off half of the nation’s emergency oil stockpile and the entire backup gasoline supply. The budget would raise $500 million in fiscal year 2018—and as much $16.6 billion over the next decade—by drawing down the Strategic Petroleum Reserve (SPR). The SPR currently holds 687.7 million barrels of oil in salt caverns and tanks at designated locations in Texas and Louisiana, which allow for quick distribution when natural disasters or unplanned incidents occur. The White House budget plan calls for selling 270 million barrels of reserve oil over the next decade beyond already planned sales, and it proposes closing two of the four Gulf Coast reserve sites. After the sales are completed, the reserve would hold about 260 million barrels, the blueprint said. Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski says she is “willing to look” at a proposed draw down of the SPR if it is tied to increased production. The plan also seeks to close the Northeast Gasoline Supply Reserve, an emergency gasoline stockpile created in 2012 after Hurricane Sandy left some New York gas stations without fuel. It holds 1 million barrels of gasoline, all of which would be sold in fiscal year 2018 under the White House proposal.

What wasn’t a surprise was the administration’s recommendation to open up about 1.4 million acres to oil and gas drilling over the next decade. They claim it will bring in over $1.8 billion in revenue to be collected by the Interior Department by leasing out the land for energy exploration. About 9 million of the 19 million acres is already wilderness, and President Obama recommended the rest be designated as wilderness in 2015.

However, with all the talks about budget numbers, the most important number to remember is not in the budget book but in the narrow margin of seats Republicans hold in the Senate. Democrats working together can filibuster any spending bill. So while the budget blueprint in most cases represents the President’s campaign promises, a final bill will likely go through dramatic changes in the appropriations committees of Congress. This could make it more likely for us not to see the President’s budget or any new budget at all, but instead another continuing budget resolution. Click here to see highlights of the President’s budget.

















          More Russian Crude Comes to the U.S., While Bakken Crude Heads Overseas


          Five years ago, an attack on nearly two dozen U.S. natural gas utilities set off alarm bells in the U.S. intelligence community. A hacker using the nickname UglyGorilla stole troves of sensitive data from gas pipeline companies, breaching the nation’s 300,000-mile web of steel that’s a critical backbone for the nation’s economy. News of the hacks trickled out in May 2012. Homeland security officials scrambled to schedule classified briefings with U.S. pipeline operators, and the wheels of law enforcement started building the case. Two years later, the Justice Department unveiled charges against five members of an elite cyber division of China’s military, outing People’s Liberation Army officer Wang Dong as UglyGorilla and throwing light on a wide-ranging, “sophisticated” campaign of cyber theft dating back to 2006. Since then, increased reliance on natural gas for power generation has made the gas transmission system one of the most consequential hacking targets in the country. Today, Wang and his team likely hold some of the blueprints needed to launch a cyberattack that could plunge parts of the nation into darkness for days, if not a lot longer, experts say. Many gas companies say they have shored up security since then. But the sector’s overall cyber readiness is a black box even to those charged with overseeing it. The Transportation Security Administration, better known and better funded for its role in aviation security, is tasked with ensuring the nation’s biggest gas transmission companies stay at least a step ahead of hackers. Yet TSA’s pipeline security office remains critically understaffed to tackle cybersecurity. “There appears to be an increasing level of activity, sophistication and maturity of threat actors, in particular nation state actors, that wish to disrupt the U.S. bulk power system and the U.S. gas transmission or distribution system,” gas and electric utility holding company Dominion Energy Inc. noted in a recent filing with the Securities and Exchange Commission, echoing similar disclosures from many of its publicly traded peers in the industry. The director of the National Counterintelligence and Security Center in the Office of the Director of National Intelligence, said in March that a briefing from energy officials on the pipeline threat “really scared me. Courtesy of E&E.



          Michael Best Strategies’ Energy Team

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