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Trump Budget Calls for Expanded Funding for Fossil Fuel R&D

Federal programs that support expanded fossil fuel development would receive increased funding under a $4.4 trillion budget proposal for fiscal year (FY) 2019, as the Trump administration looks to continue "energy dominance" policies designed to make the U.S. a net energy exporter by 2026.

But in an illustration of the disparate spending priorities between the executive and legislative branches -- made even more apparent after Congress agreed to a two-year, $400 billion spending bill last week -- the White House also released a 26-page addendum on Monday, outlining its vision for an additional $540 billion in non-defense discretionary spending.

The 160-page budget plan, officially "Efficient, Effective, Accountable: An American Budget," calls for allocating $29 billion to the Department of Energy (DOE), $11.3 billion to the Department of Interior (DOI), and $5.4 billion to the Environmental Protection Agency (EPA) in FY 2019. All three agencies would receive additional money from the addendum: $1.53 billion for the DOE, $339 million for the DOI, and $724 million for the EPA.

Research and development (R&D) for fossil fuels at the DOE was a high priority for the White House, as shown by the combined $30.6 billion under the budget plan and the addendum.

While the original budget called for providing more than $300 million for R&D at the DOE's Office of Fossil Energy "to support national laboratory research on clean, efficient fossil fuels and systems, and bolster early-stage critical materials R&D," the addendum tacked on another $200 million for the office to conduct research "of clean coal technologies."

DOE Secretary Rick Perry said the department is "prioritizing the acceleration of transformative early-stage R&D, relying on our world-class national labs. This will advance everything from new clean energy technologies to supercomputing."

At the DOI, the department would receive a combined $11.7 billion for FY 2019 from the budget plan and the addendum. Of the total, $792 million would be devoted to energy matters, including $233 million for onshore oil, natural gas and coal leasing programs, and $348 million for offshore development.

Specifically, the White House proposed giving $1 billion to the DOI's Bureau of Land Management (BLM), including $137.2 million "to strengthen overall program capacity, improve management, and expedite permitting to facilitate increased environmentally responsible energy development." The BLM allocation includes $9.5 million to establish a competitive leasing program in Alaska's 1002 Area, which was officially opened to development with passage of a $1.5 trillion comprehensive tax reform bill last December.

In an effort to make additional tracts in Alaska and New Mexico attractive to oil and gas leasing, the BLM would be given $1.8 million to expedite processing of permits and requests for rights-of-way for associated infrastructure. Another $1.2 million would go toward enhancing BLM oil and gas management in New Mexico by centralizing reservoir management function.

Another DOI agency, the Bureau of Ocean Energy Management (BOEM), would receive $179.3 million, including $61.8 million for conventional energy development and $9.4 million to update BOEM's five-year Outer Continental Shelf Oil and Gas Leasing Program for 2019-2014.

"These resources will enable BOEM to conduct the necessary analyses and studies for areas under consideration, outreach and coordination with stakeholders, comment review and analysis; and fund lease sale [National Environmental Policy Act] assessments," the DOI said.

The White House called for the elimination of a climate change program at the EPA, as well as the distribution of grants to the states for environmental priorities.

The EPA would receive about $6.15 billion under the budget proposal and addendum. Of that total, $597 million would go toward the agency's categorical grant portfolio, including $27 million for so-called "multi-purpose grants."

"States have long sought flexibility to direct grant resources to their individual priorities, rather than receiving funding only through grants dedicated to specific programs," the White House's Office of Management and Budget (OMB) said. Under the grant system, states "would be able to spend this funding on any statutorily mandated delegated duty. This proposal would enable each state to set its own environmental priorities and quickly respond to new threats as they arise."

Under the EPA's proposed budget, funding for the agency's Underground Injection Control grant program would be cut by about one-third, from $10.6 million enacted in FY 2017 to just under $7 million in FY 2019. The agency's Underground Storage Tanks grant program, which totaled about $1.48 million in FY 2017, would be eliminated.

The OMB added that funding for EPA's Climate Change Research and Partnership Programs would cease, as the EPA "refocuses" on its "core mission."

Reaction

In a note to clients Monday, ClearView Energy Partners LLC said Trump's budget proposal has "little chance of surviving" since Republicans only enjoy a 51-49 advantage in the Senate, well short of the 60-vote threshold needed to avoid a filibuster from Democrats.

"We regard these proposed top-line cuts as largely symbolic," ClearView said. "In any case, Congressional appropriators have yet to finalize their FY 2018 spending packages."

Still, Randall Luthi, president of the National Ocean Industries Association, called Trump's budget "a forward thinking...proposal to enable industry to evaluate and explore for offshore energy resources safely while protecting the environment.

"The framework is a win-win for America. Offshore energy is an investment, not an ATM, and this budget recognizes that distinction."

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