A Changed Regulatory Environment: Next Steps after the Trump Energy Independence Executive Order

by Kathleen Sgamma, President on April 3, 2017 - 12:16pm

Optimism abounds in the oil and natural gas industry since November 9th when Donald Trump unexpectedly won election. Like any industry, ours is a diverse one with all political viewpoints. But it was no secret that the Obama Administration was hostile to our industry and used regulatory overreach to make American development and production of oil and natural gas more difficult. The optimism results from not having four more years of a hostile regulatory environment, and the chance to overturn the redundant federal regulatory overreach that went far beyond reasonable oversight of oil and natural gas.

That optimism increased as the new Administration issued orders to move forward with the KeystoneXL and Dakota Access pipelines, and started the process to rescind the Waters of the U.S. rule. The WOTUS wasn’t about clean water, which the states are already tasked with protecting under the Clean Water Act. It was about an out-of-control EPA grabbing more power and expanding its jurisdiction to controlling productive activities on dry land.

Optimism increased as Congress got in on the action and overturned the Bureau of Land Management’s

Planning 2.0 rule, which would have layered on more redundant National Environmental Policy Act (NEPA) documents in nearly never-ending cycles of analysis and multi-year project delays. We were especially relieved when newly confirmed EPA Administrator Pruitt halted a fishing expedition for confidential company information that went far beyond legitimate regulatory purposes.

But the recent Executive Order (EO) on Energy Independence and Economic Growth was a clear signal that this Administration is serious about clearing out federal regulatory overreach that provides little environmental benefit but kills jobs and economic opportunities. Repealing the Clean Power Plan (CPP) had been anticipated for months, but the breadth of the EO tackling several other regulations that are preventing energy development was unexpected.

  • BLM venting and flaring rule
  • EPA OOOOa new source methane rules
  • BLM hydraulic fracturing rule
  • National Park Service oil and gas rule
  • National Wildlife Refuge System oil and gas rule
  • President Obama’s mitigation memo
  • Council on Environmental Quality’s Guidance on Climate Change
  • White House Climate Action Plan
  • Social Cost of Carbon (SCC)
  • Social Cost of Methane (SCM).

All of these policies were major impediments to American energy production. Overturning the SCC/SCM was anticipated, since they had become tools used in countless regulations to inflate the supposed benefits of what otherwise would be cost-ineffective rules. For example, the SCM magically turned the BLM venting and flaring rule’s $174 million cost into a $188 million benefit.

The hydraulic fracturing rule was also not surprising, as the administration had already communicated its intention to overturn it in a filing to the Tenth Circuit Court of Appeals in mid-March. But the intention to review and rescind the BLM and EPA methane rules was a welcome surprise. Overturning both makes sense along with the withdrawal of the SCC and SCM. Western Energy Alliance has argued in court that both methane rules are not lawful without a corresponding endangerment finding for methane. We urge the Trump Administration to take the next logical step of redoing the endangerment finding for carbon.

Finally, the completely unexpected piece of news in the EO was the withdrawal of the 2015 presidential memo on mitigation. That memo set in place a cascade of policies, guidance documents, and rules that all together and if fully implemented would made development of food, fuel or fiber on public lands incredibly complex if not impossible in many cases. By our count, the Department of the Interior spawned 21 various documents in reaction to the memo, all designed to slow development. Oil and natural gas companies mitigate environmental impacts as a normal course of doing business, going above and beyond to ensure activities disturb as little land as possible, and that wildlife habitat is protected. But the policies were on track to require improvements many times greater than the actual impact of operations. Rescinding these policies will ensure the environment is still protected while enabling reasonable development and job creation.

Next Steps

President Trump will be pilloried for harming U.S. leadership on climate change. I know it’s not the orthodox narrative, but the reality is that the United States leads the world in meaningfully addressing climate change, and our industry is the primary reason.

GHG Reductions

Change in Major Countries’ Greenhouse Gas Emissions

Our nation leads not through international climate change agreements and overreaching federal policies, but in actually delivering greenhouse gas reductions. Natural gas has been the primary reason the United States has reduced greenhouse gas emissions more than the European Union or other countries that impose top-down climate change policies. Our industry did that by thousands of companies delivering an abundant, affordable supply of natural gas that has increased fuel switching in the electricity sector.

CO2 Reductions by Source

The hard work isn’t over. Rescinding the rules requires new rulemaking processes with public notice and comment, which will take many months. Environmental group lawsuits will inevitably follow. Western Energy Alliance will be actively engaged in those rulemaking processes, and will support the administration as it looks to clear out the regulatory.