Shortly after assuming office, former President Barack Obama famously told the Republican congressional leaders, “Elections have consequences, and at the end of the day, I won.” Truer words were never spoken. Indeed, what a difference an election makes.
Half a year ago, companies in the U.S. oil and natural gas industry were feverishly trying to figure out how they were going to comply with the latest raft of major, heavy-handed regulatory actions being handed down from Obama regulators in Washington, D.C. Energy Transfer, the operator of the Dakota Access Pipeline, was in the middle of the largest, often violent and destructive protest action ever assembled against any oil and gas-related project; and management at TransCanada had most likely accepted what appeared to be the reality that its proposed northern leg of the Keystone XL pipeline system would never be completed. Almost everyone expected — indeed, assumed — that Democratic nominee Hillary Clinton would become the next president of the United States and would simply continue the Obama regulatory offensive and obstruction of major new pipeline systems.
But then an odd thing happened: Republican nominee Donald Trump managed to turn the previously blue states of Wisconsin, Michigan and Pennsylvania red, and in doing so won the presidential election. The voters had spoken and decided they preferred a radical shift in the direction of the federal government rather than the continuation of the status quo promised by Clinton.
It did not take long for oil and gas companies to begin to feel the impact of that radical shift in direction. Trump is proving to be a man who keeps his campaign promises, and he made several very specific promises related to the oil and gas industry specifically and energy policy in general during his campaign. During his first three months in office, he has done everything within his control to keep each and every one of those promises.
Indeed, within four days of assuming office, President Trump had already issued his promised executive order designed to restart the dormant Keystone XL Pipeline project and to issue the easement necessary for the completion of the final leg of the Dakota Access Pipeline (DAPL). By the end of March, the construction of DAPL was completed and it was preparing to go into service, and the final cross-border permit had been issued to TransCanada by the Department of State.
During the campaign, Trump also promised to open up more federal lands and waters to leasing for oil and gas exploration. By the end of March, the Department of the Interior (DOI) held an extremely successful lease sale in the eastern Gulf of Mexico and announced a first-ever Gulf of Mexico-wide lease sale to take place in August. The Trump DOI also worked on plans to offer up significantly more federal lands in the Intermountain West for leasing in the near future.
When Congress convened in January sporting Republican majorities in both houses, there was great hope that many of the abusive, economy-killing regulations the Obama administration had shoved through the process during its final months in office would be reversed under the Congressional Review Act (CRA). The CRA allows a new Congress to review and possibly reverse last-minute regulations implemented during the final six months of the prior administration.
To be fair to Congress, the House of Representatives has indeed used the CRA to pass resolutions that would reverse dozens of Obama-era regulatory actions. Unfortunately, the Senate has not cooperated, with the GOP leadership using the Democrats’ delaying tactics as an excuse for inaction. The truth is that the GOP leaders have simply failed to make the use of the CRA one of their top priorities, and, as a result, only a handful of Senate resolutions under the CRA have made their way to the President’s desk.
But the Trump administration has not stood idle in the face of Senate inaction.
A great example is an Obama-era regulation finalized in early January by the DOI, which would radically change the regulations governing the valuation of federal royalties on oil and gas produced from federal lands. When it became apparent that the Senate would not move a resolution related to this money-grabbing regulation, the Trump administration first announced it was placing this regulation on hold pending further review, and then, at the end of March, announced it was administratively canceling the regulation entirely.
Another good example is the last-minute DOI regulation that would govern the conduct of hydraulic fracturing operations on federal and Native American lands. The industry had opposed this regulation because such operations are already regulated by the states in which they occur. Again, faced with a lack of action under the CRA, President Trump issued an executive order directing DOI to place the regulation on hold pending further review.
The President took a similar action on a major EPA power grab under the Clean Water Act, the so-called Waters of the United States (WOTUS) rulemaking. Characterized by the EPA’s public relations campaign as simply an effort to clarify which federal agency has primary jurisdiction over specific types of waters, this is in reality a massive expansion of EPA authority to regulate every minor creek, pond or drainage ditch in America. It was finalized during 2015, and thus does not fall under the parameters of the CRA. However, the rule-making was placed on hold by a federal court injunction in early 2016 and remains on appeal at the federal appellate court level.
As a candidate, President Trump actively campaigned against WOTUS, singling it out for action in speech after speech. Few “expert” observers really expected him to follow through with any action should he be elected. But in late February, Trump signed an executive order specific to WOTUS, ordering EPA to conduct a thorough review and reissue a new regulation that does in fact conform to the agency’s stated “jurisdiction-clarifying” mission.
Trump also specifically campaigned on a promise to rescind the Obama Clean Power Plan, which was in reality the Obama administration’s effort to kill the country’s coal industry. At the end of March, President Trump again followed through on his promise, issuing a far-reaching executive order that impacts not only the coal industry, but the oil and gas industry as well.
This order directs the Council on Environmental Quality to reconsider its artificial Social Cost of Carbon construct that formed the justification for many Obama-era regulatory efforts. It also rescinds the Obama executive order that instructs the DOI and EPA to consider climate change in all permitting and leasing decisions, an order that had been used by bureaucrats to create massive delays in those processes.
No president can force Congress or the courts to do his or her bidding. Thus, President Trump has already experienced difficulties related to his promise to repeal and replace the Affordable Care Act, and to implement parts of his promised immigration policies. But the President, barely three months into his term (as I write this article), has already by and large kept every major promise over which he has control to act, and the oil and gas industry is one of the major beneficiaries of that reality. Yes, elections do matter.
About the author: David Blackmon is Associate Editor for Oil and Gas for SHALE Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles, and the last 22 years engaged in public policy issues at the state and national levels. Contact David Blackmon at [email protected].