With each passing day, we learn more about the implications of the 2016 election and how President Trump's administration will approach federal policies that impact the energy industry. As you prepare for the year ahead, here are several key areas to watch:
- New Faces - Former Texas Governor Rick Perry (DOE), Oklahoma Attorney General Scott Pruitt (EPA), and Montana Congressman Ryan Zinke (Interior) have been tapped to lead energy-focused federal agencies for President Donald Trump. Their efforts will fall under the jurisdictions of Senate Energy Committee Chairman Lisa Murkowski (R-AK), Senate Environment Chairman John Barrasso (R-WY), House Energy & Commerce Chairman Greg Walden (R-OR) , and House Natural Resources Chairman Rob Bishop (R-UT). Also watch for new EPA regional administrators who will oversee much of the agency's day-to-day work, including permitting and enforcement. The Senate confirmation hearings for Perry, Pruitt, and Zinke are complete, and their confirmations are expected in early February.
- Clean Power Plan - While President Trump ran successfully against many parts of President Obama's climate policies, much of what Obama accomplished through the Clean Power Plan is already baked in. Many states remain politically committed to their carbon targets and renewable portfolio goals, and market forces are more responsible for the coal industry's current challenges than any one federal policy. However, Attorney General Pruitt is known as a proponent of states' rights who is more likely to give states flexibility - and reward their creativity - in achieving compliance with the CPP and other federal environmental statutes.
- Permitting Federal Projects - President Trump quickly followed through on his campaign pledge to revisit the previous Administration's rejection of the Keystone XL and Dakota Access pipelines, signing executive orders in his first week to revive the projects and streamline their approval. President Trump also signed an order giving the Department of Commerce the lead on permitting new manufacturing facilities, a response to the outsized role that EPA has enjoyed in the federal permitting process recently. Pruitt is expected to address how EPA approaches permitting and may steer the agency away from taking a de facto lead on the tough issues even if on paper it is only a consulting agency. Also look for a less burdensome EIS process generally, with less focus on climate impacts. The White House and Congressional Republicans are taking a close look at the role regulatory reform should play in a major infrastructure package to be unveiled later this year. There is widespread concern among Republicans that permitting federal projects takes too long and has become too expensive, and the infrastructure package may provide a legislative vehicle to address permitting reforms.
- Supreme Court - President Trump will soon nominate a Supreme Court justice to succeed the late Justice Antonin Scalia and restore a 5-4 conservative majority on the Court. Court watchers have been wondering whether and when the justices will revisit the Court's famous Chevron v. NRDC The Chevron doctrine provides that courts should give deference to an agency's statutory interpretation when Congress has not directly spoken to a particular issue. It has been blamed for helping expand the power and reach of the administrative branch of government at the expense of Congress. Revisiting Chevron could limit future efforts by EPA and other agencies to regulate in areas without specific Congressional authority.
- Paris Accord - Many pundits are predicting Trump will not fully honor President Obama's decision to commit the United States to the carbon reduction goals in the Paris climate accord. When and how will Trump walk away from Paris and what are the consequences? Like all international agreements, Paris has mechanisms for withdrawal. Trump could trigger those immediately. He could also decide that the Accord should be a treaty and send it to the Senate for ratification, where it will likely fail. That gives Trump more political cover to walk away from Paris.
- Obama-Era Regulations - Republicans in Congress are eager to begin rolling back Obama-era regulations affecting a variety of industries, especially the energy sector. Congress has two filibuster-proof tools at its disposal. First, the Congressional Review Act allows Congress to pass a resolution to strike down any regulation that has been promulgated in the last 60 legislative days (which roughly tracks with days Congress is in session). The President must sign the resolution too for it to take effect. Republicans have identified a number of regulations promulgated in 2016 that they can overturn using the CRA. The second tool is budget reconciliation, which allows Congress to pass laws that have a budgetary impact. Overturning or modifying major regulations may create the revenue impact that makes those moves germane to a reconciliation bill, and thereby avoid a Senate filibuster.