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TRUMP’S REMARKS IN WEST VIRGINIA COULD MEAN COAL PLAN IS IN LIMBO: President Trump didn’t mention a White House plan to save uneconomic coal plants when he was in Wheeling over the weekend, which could mean the plan is not ready for prime time.

Instead, Trump decided to become very specific about the type of coal his administration has sought to save by encouraging mines to open in Appalachia.

The type of coal is “metallurgical,” which is required in the chemical process to required to make steel. It was the first time Trump has mentioned with this level of specificity the type of coal that the mines opened under his watch are producing.

Coal and steel tariffs go together: It also helps him boost his administration’s narrative that the tariffs on steel imports are increasing jobs.  

“They're opening up mines all over the place, we're opening up steel mills,” Trump said on Saturday in Wheeling. “American steel is building plants all over the country, steel workers are back and the miners are supplying the metallurgical coal.”

Of course, it may not help if much of that coal is being sent overseas in exports to Asia, which Trump also touted.

“The war on beautiful, clean coal and in just the last year, our coal exports have skyrocketed,” Trump said.

Trump’s military plan: But there was no talk of the nebulous “military plan” to save coal-fired power plants that Trump hinted at when he was last in West Virginia. He was referring to a plan the White House is developing to make a national security case for ordering grid operators to keep uneconomic coal plants open. The plants have been struggling because of increased competition from natural gas and renewable energy.

Energy Secretary Rick Perry told reporters last week that his agency’s work is done on the coal plan, and it is now in the White House’s court, so to speak, to make a decision.

Opponents of Trump’s plan to save coal plants say the White House has been struggling to find a strong legal defense for moving forward with the plan.

“[T]hey're struggling to come up with a funding mechanism that will survive the legal challenge,” John Hughes, president and CEO Electricity Consumers Resource Council, told John in an interview last month. “It's widely recognized that any funding mechanism is going to have to be approved by FERC [the Federal Energy Regulatory Commission], and there's a century of case law that's going to restrict what FERC can and can't do in doing this.”

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...MEANWHILE, COAL PRODUCTION SLUMPS IN SECOND QUARTER, SAY FEDS: The Energy Department’s Monday morning reporting for coal didn’t jibe with the president’s optimism, as both second quarter production and consumption lagged from the beginning of the year.

U.S. coal production in the second quarter of 2018 dropped by 3.7 percent compared to the first quarter, and was 3.4 percent lower than the the second quarter of 2017, the Energy Information Administration reported Monday morning in its quarterly coal report.

The coal mines in the West were actually producing more than the mines in West Virginia and in the East, but that didn’t stop coal production there from falling 5.5 percent compared to the same time last year.

Energy dominance, but …: Coal exports did rise by about 13 percent from the first quarter. Both exports of metallurgical coal for steel and steam coal for power plants were up in the second quarter. But at the same time, the U.S. also continued importing coal from Canada, Colombia, and Indonesia. Most of the coal imports are coming from Colombia, according to the report.

Coal consumption is six percent lower than the same time last year. Most of the coal consumption in the second quarter came from the electricity sector.

Low, and getting lower: Coal stocks at power plants have also fallen since the first quarter, to 121.5 million short tons from 126.4 million short tons, EIA reported.

AND EPA PREPARES TO WEAKEN MAJOR OBAMA-ERA MERCURY RULE FOR COAL PLANTS: The Environmental Protection Agency has completed a proposal to weaken a major Obama-era coal rule for regulating mercury and toxic air pollution from power plants, according to reports.

The White House received the proposal from the EPA to relax the 2011 Mercury and Air Toxics Standards, or MATS, and is has initiated its review of recommended changes, the Washington Post reported.

Industry considers the rule the most expensive air emissions regulation ever implemented, but it has already spent $18 billion to comply with it, and states have been making their air pollution targets based on those investments and the rules remaining law. However, the coal industry blames it for forcing the closing dozens of coal plants across the country.

What EPA wants to do: EPA is not looking to cancel the regulation entirely. Mercury is a neurotoxin that can especially harm the nervous systems of children and fetuses.

But the agency intends to provide legal justification for weakening it, and perhaps other air pollution rules by proposing to change the way the EPA calculates the costs and benefits of regulations.

A fight over the value of a regulation: It wants to reverse a Obama administration finding that the EPA must account for additional health benefits that result from regulations forcing the reduction of toxic pollution such as mercury from coal plants.

The Trump administration, and some conservatives and industry officials, say the EPA should not consider reductions in pollution outside the intended regulatory target as a benefit of a regulation. For example, power plants have installed “scrubber” technology to reduce emissions of mercury, however that has also produced a “co-benefit” of cutting pollution from other hazardous pollutants such as soot. The EPA proposal would not account for that side benefit when rationalizing a regulation.

OIL AND GAS INDUSTRY KEEPS INVESTOR PROTECTION IN NEW NAFTA DEAL: The Trump administration’s new NAFTA deal announced Sunday night provides a big win for the oil and gas industry, keeping in place investor protections for energy projects in Mexico.

The energy industry had worried that U.S. Trade Representative Robert Lighthizer would succeed in his push to eliminate NAFTA’s Investor-State Dispute Settlement process, which allows businesses to take legal action through third-party arbitration if a foreign government harms their investment in that country.

Critics of the process say the settlement provision encourages U.S. companies to invest internationally and move jobs overseas.

Energy could have felt pain: The protections are especially important for energy, because investments usually require substantial time to bear fruit, such as the process of exploring, and then producing crude oil in the Gulf of Mexico. While the new NAFTA deal mostly eliminates investor protections for Mexico, and gets rid of them entirely for Canada, the energy industry is among a few key industries that won an exception for investments in Mexico. Protections there are especially important as a hedge if the country’s new leftist government tries to nationalize its energy industry again.

TRADE DEAL REACHED AS CANADA BECOMES MORE IMPORTANT TO SWING STATES: The agreement with Mexico and Canada was reached as Ohio and other key swing vote states are becoming more reliant on Canada as a customer for their energy exports.

Ohio and Pennsylvania have become increasingly important energy producers from the shale oil and gas boom. And despite Trump's antagonistic trade relationship with its neighbor to the north, the states are important energy partners with Canada.

NAFTA and beyond: The Energy Department says U.S. shale energy states like Ohio and Pennsylvania are becoming more deeply connected to Canada and other foreign customers than ever before because of their vast energy production.

Ohio, a key voting state for Republicans, is also quickly becoming a destination for companies from around the world that want access to the liquid-rich byproducts that come from natural gas drilling, namely ethane. Ethane is used to make ethylene, which is used in nearly all manufactured goods.

Up in the ether: The Energy Information Administration, the Energy Department's analysis arm, calls ethane the next big U.S. energy export after oil and natural gas, and Canada wants a lot of it.

The demand is so high for the product from Ohio that one of the largest ethane pipelines linking the Buckeye State to refineries in Ontario was opened earlier this year.

RYAN ZINKE: NAVAL BLOCKADE IS AN OPTION FOR DEALING WITH RUSSIA: Interior Secretary Ryan Zinke says the U.S. Navy can blockade Russia if needed to keep it from controlling energy supplies in the Middle East as it does in Europe.

"The United States has that ability, with our Navy, to make sure the sea lanes are open, and, if necessary, to blockade...to make sure that their energy does not go to market," Zinke said on Friday at an industry event in Pittsburgh hosted by the Consumer Energy Alliance.

He was there to explain why hydraulic fracturing, or fracking, and the shale energy boom has given the U.S. an edge over its rivals Russia and Iran, by making the U.S. less dependent on foreign sources of energy.

"Russia is a one trick pony," Zinke said, explaining that its economy hinges on its ability to sell energy. "I believe the reason they are in the Middle East is they want to broker energy just like they do in eastern Europe, the southern belly of Europe."

The Trump administration has opposed Russia’s bigger energy projects, such as the Nord Stream II pipeline to Germany, because of the leverage it would give over Europe. President Trump wants the European Union to buy more U.S. natural gas to diversify the continent's energy supply away from Russia.

Energy Secretary Rick Perry this week reiterated that sanctions against the pipeline are still an option if Russia does not remain a good neighbor to its European customers.

SUPREME COURT’S FIRST CASE COULD DECIDE FUTURE OF AN ENDANGERED FROG: The Supreme Court will concern itself with the fate of an endangered frog when it opens a new term Monday one member short -- with Brett Kavanaugh’s nomination to the bench held up in limbo.

The case, Weyerhaeuser Company v. U.S. Fish and Wildlife Service, tests the extent of the government’s authority to designate private land as a future habitat for an endangered species.

The endangered dusky gopher frog can only be found residing around a pond in the De Soto National Forest in Mississippi. But the federal government, to preserve the species, is seeking to designate private land in Louisiana -- more than 50 miles away -- as critical habitat where the frog can also live.

The key legal question: Under the Endangered Species Act, the government must identify critical habitat for animals deemed endangered, which can include land not currently occupied by the species. The law allows for this if the new land contains characteristics that are “essential for the conservation of the species.” The Supreme Court must decide whether the federal government is properly applying the law in the case of the gopher frog. Timber company Weyerhaeuser, and impacted landowners, argue the government abused its power, and say the Louisiana land isn't habitable for the frog.

Trump supports the frog: In a somewhat surprising twist, the Trump administration is defending the federal government’s attempt to designate private land to keep the gopher frog, even as it supports a Republican effort in Congress to modify -- environmentalists say weaken -- the Endangered Species Act.

GREEN GROUPS CRITICIZE CONGRESS FOR ALLOWING EXPIRATION OF CONSERVATION FUND FOR PARKS: Environmental groups are angry with Congress for failing to reauthorize funding for a key, decades-long conservation program for national parks before it expired Sunday.

Bills are progressing through the House and Senate to re-up funding for the the Land Conservation Fund, which has broad bipartisan support, but lawmakers couldn’t finish the deal in time.

“Late last night, one of the most successful conservation programs in American history expired due to the negligence of Congress,” said Diane Regas, president and CEO of The Trust for Public Land. “This is a big disappointment.”

How the fund works: The Land and Water Conservation Fund gets its money from offshore oil and gas leases -- rather than taxpayer money -- and pays for public lands projects. It provides money to federal, state and local governments for buying land and waters to improve parks, forests, wildlife refuges and other public areas.

But the impact of the program’s lapse is minimal: The fund still has $39 billion in it, the Interior Department said, enough to spend on projects. However, it cannot generate new money until Congress acts. Money normally dedicated to it from offshore oil and gas drilling will instead go to the general fund. Congress will likely act after election day, since the House is out of session until then.

EPA PLACED HEAD OF ITS CHILDREN’S OFFICE ON LEAVE TO REVIEW ‘ALLEGATIONS’: The Environmental Protection Agency on Friday said it recently placed the head of its Office of Children’s Health Protection on administrative leave because of “allegations” about her leadership.

Chief of Staff Ryan Jackson issued a statement after union officials representing EPA employees complained about the EPA’s move to sideline Dr. Ruth Etzel, a pediatrician and epidemiologist who had been with the agency since 2015.

Children are most vulnerable to pollution: The EPA’s Office of Children’s Health Protection, created by President Bill Clinton in 1997, focuses on how agency regulations and programs consider the impacts on children, babies, and fetuses, who are especially vulnerable to pollution.

Critics say the move to place Etzel on leave reflects a broader act by EPA to de-emphasize the children’s office. The New York Times reported that Etzel clashed with EPA political appointees who sought to weaken pollution regulations. EPA denies that claim. The agency is hosting a “Children’s Health Day” event at EPA headquarters on Monday morning.

RUNDOWN

Axios Inside Big Oil’s emerging climate strategy

Wall Street Journal Saudi Arabia shelves work on SoftBank’s $200 billion solar project

New York Times Iranian official says oil deal with Europeans is close despite threat of U.S. sanctions

Bloomberg The world’s most beautiful battery

SPONSOR MESSAGE: Interested in learning more about pipelines and the important role they play in the energy industry? Check out this clip on the construction process and safe pipeline installation.

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TUESDAY | October 2

10 a.m., 366 Dirksen. Senate Energy and Natural Resources Committee holds markup of pending legislation.

WEDNESDAY | October 3

2:15 p.m., 406 Dirksen. Senate Environment and Public Works Committee Superfund, Waste Management, and Regulatory Oversight Subcommittee hearing on "Oversight of the Environmental Protection Agency's Implementation of Sound and Transparent Science in Regulation."

4:30 p.m., 1740 Massachusetts Avenue NW. Johns Hopkins School of Advanced International Studies hosts a panel discussion on “Green Finance in China.”