December 13, 2016

Energy and Environment in the 115th Congress

Gabe Rozsa, Stefan Bailey

President-elect Donald Trump made energy and climate issues a key theme of his campaign for the White House. While it is still difficult to get a complete picture of all that the president-elect hopes to accomplish, the general theme and several specific issues are clear. In outlining steps he will take in the first days in office, energy and environment policy feature prominently. He has pledged to roll back President Obama’s signature Clean Power Plan, withdraw the United States from the Paris Agreement on climate, undo scores of Obama Administration environmental regulations, and boost fossil fuel development, among others.

The Trump Administration will have a number of tools at their disposal to accomplish the goals outlined, and Congress will play a major role. However, the procedural reality confronting the president-elect couple with a narrowly-divided Senate will present numerous challenges to the GOP’s energy and climate agenda.

The following provides a snapshot of the energy and climate agenda in 2017.

Nomination of Scott Pruitt. The nomination of Scott Pruitt, currently the Attorney General of Oklahoma, to be the Administrator of the Environmental Protection Agency (EPA) is a signal that Mr. Trump intends to pursue aggressively the rolling back of Obama-era energy and environment policy. Pruitt is a climate change skeptic and vocal opponent of President Obama’s environmental policies who previously has called for the elimination of the EPA. He has criticized the Renewable Fuel Standard (RFS) and sued the EPA over its Clean Power Plan and the Waters of the United States (WOTUS) rulemaking. A coalition of Senate Democrats will seek to derail his nomination by appealing to Republican Senators who take a more moderate view of climate and environmental policy while Pruitt is likely to argue for a return to more traditional and consensus based approaches to protecting air and water as an alternative to more aggressive climate policies.key-players-energy

Obama-era Regulations. President-elect Trump has targeted a number of President Obama’s executive actions for elimination, including those limiting carbon emissions at power plants and the Waters of the U.S. rulemaking. The Trump transition has identified dozens of Obama-era environmental regulations for roll back or elimination. However, the process for upending rules that have been promulgated and finalized is complicated and time consuming. To address these administratively, the Trump Administration will have to engage the formal rulemaking process and legally justify the need to overturn a final rule – a process that could take several years to complete and become mired in legal challenges. The incoming administration may rely on the courts to halt or overturn certain rules, refuse to defend those Obama rules currently under judicial review, or halt judicial appeals currently being pursued by the Obama Administration. The Trump team and GOP congressional leaders also will attempt to utilize the Congressional Review Act to overturn administrative regulations. A bold approach may be to try to reverse the “endangerment finding” issued by EPA that found that carbon emissions endanger public health and the environment. The courts have held that this finding is the basis for most of the Administration’s rules promulgated to control carbon emissions under the Clean Air Act, including the rules for existing and new power plants and for mobile source emissions of greenhouse gases. A reversal of the endangerment finding, if it can be done and can withstand likely legal challenges would remove EPA’s authority to regulate a host of activities.

Overturning the Clean Power Plan. Overturning the Clean Power Plan cannot be done with the stroke of a pen on January 20th. The EPA regulations are final, and it would take a lengthy regulatory process to reverse them administratively. However, the regulations are now in court with some states and regulated entities arguing they exceed EPA’s authority. The Obama Administration is vigorously defending the rules, but a Trump Administration is likely to decide not to. Nonetheless, the court could still reach the merits as most of these case involve multiple parties with states lining up on both sides of the case. Therefore, the fact that EPA or DOJ could decide to pursue the case does not necessarily mean that the cases would be dropped. The Administration could also decide to exercise enforcement discretion in not bringing an enforcement action but many of the environmental laws and regulation allow private parties to bring an action to enforce the rules in place. As mentioned above, reversing the endangerment finding could effective quash the legal authority for these regulations.

Pending Administrative Actions. President Trump can accelerate review and approval of administrative and regulatory approvals such as the approvals for pending LNG export facilities, oil and gas and mineral leasing decision and approvals of energy infrastructure projects like pipelines, and transmission lines. For example, the Obama Administration is holding up a pipeline in North Dakota (the Dakota Access Pipeline) to address issues being raised at the last minute by Native American tribal interests and environmental activists. With a change in Administration, those delays could quickly go away. However, expediting Federal approvals will likely shift the focus to state and local review which could still be an obstacle to completing projects. We would also look to the Administration to scale back funding and authority for EPA to regulate activities with more of that authority being delegated or entrusted to state agencies and local officials.

Keystone XL. As many have reported, the Keystone XL oil pipeline from Canada will be on the list for early action and can be done with a minimal amount of work using existing legal and regulatory regimes. TransCanada probably needs to reapply but can use earlier data to submit with the application. The application will still require a formal notice and comment process unless Congress acts to exempt the project legislatively. However, the agencies with jurisdiction can use data developed earlier and the timelines for review could be greatly shortened administratively. Interestingly, the Secretary of State is tasked with making the national interest determination that is required under the current Executive Order process for approval of KXL or any oil pipeline crossings into the U.S. from Canada or Mexico. Trump’s nomination of Exxon CEO Rex Tillerson, a strong advocate for KXL, increases the cements the likelihood that the pipeline will receive this determination.

Eliminating restrictions of domestic energy production. Trump’s proposals assert that he will overturn Federal restrictions on development of $50 trillion in energy resources. He has provided very little in the way of details, but we assume many relate to oil and gas drilling offshore and onshore, as well as restrictions on development of coal reserves and hydraulic fracturing. Additionally, some are limitations on where development can take place and others regulate how. Lifting all of them will not be without controversy. For example, drilling in the Eastern Gulf is not only subject to Federal restriction but strongly opposed by Florida residents in both parties. Restriction on “Mountaintop mining” in Appalachia will still require Federal Clean Water permits, which must comply with Federal law or be subject to environmental litigation.

Energy Legislation in the Next Congress. Congress was unable to move a major energy-themed legislative package in 2016 despite repeated attempts, and committee leaders will be looking for opportunities in the next Congress. Incoming House Energy & Commerce Committee Chairman Greg Walden (R-OR), who replaces current Chairman Fred Upton (R-MI), will play a major role in determining the House’s agenda. His counterpart in the Senate remains Lisa Murkowski (R-AK), who chairs the Senate Energy & Natural Resources Committee. It may still prove to be difficult to enact next Congress, where any major legislative action requires 60 votes to cut off a filibuster. Getting a majority of the House and 60 votes in the Senate to make modifications to streamline our environmental laws or to ease some regulatory restriction is very doable but a wholesale rewrite to strip away environmental protection would likely be very hard to do, particularly with a Senate so closely divided. Therefore, Republican leaders in Congress will look at how much they can add to one of the two budget reconciliation bills under consideration.


Gabe Rozsa

Gabe leads Prime Policy Group’s energy and environment practice and also assists on client work related to infrastructure and agriculture. His clients have included commercial clients in utilities, oil and gas, chemicals, and automotive as well as trade associations and state and local governments. Gabe’s most recent Capitol Hill experience was as Environmental Counsel on the Republican staff of the House Science Committee and Staff Director of its Energy Subcommittee.

 

Stefan Bailey

Stefan has been delivering results in Washington for more than 15 years. As a senior Congressional staffer and trusted advisor to corporate and association leaders, he has a well-earned a reputation for energetic, proactive approach to solving problems and creating opportunities. Stefan is adept at working across party lines, and providing the policy insight and strategic guidance that positively impact outcomes.