The future of the energy industry under President Trump: part 3

What will become of President Obama’s environmental legacy?

President-elect Donald Trump’s inauguration is this Friday and many people are wondering what impact his administration will have on the energy industry. In this five-part series, we asked Scott Segal, partner at Policy Resolution Group, for his insight on what he thinks the Trump presidency will have on the industry, its policies, and overall performance in the market.

So far we have looked at both the potential positives and drawbacks the energy industry might see under the Trump presidency. In this third instalment in the series, we asked Mr Segal about the future of environmental regulations. As of now, conventional wisdom says President-elect Trump’s likely softening/eliminating of regulation in the energy industry could all but erase President Obama’s environmental legacy. But is there a balance that could be struck?

The future of energy policy was not a significant aspect of the presidential debates, with the topic clocking in at under two minutes over the course of three 90-minute debates.  Nevertheless, we need not guess some of Donald Trump’s priorities when it comes to aspects of President Obama’s environmental legacy as it affects energy. Viewing the President-elect’s speeches and writings, we know of his intention to:

• withdraw from the Paris Agreement and to defund its underlying United Nations Framework Convention on Climate Change (UNFCCC). His antipathy towards the Paris Agreement is well known but the defunding of UNFCCC is framed around the UNFCCC’s decision to admit Palestine as a member of the organisation despite a prohibition in existing US law against funding UN organisations that make such an admission.
• undo or scrap the President’s Climate Action Plan. President Obama announced his plan on June 25, 2013. The plan set out to cut greenhouse gas (GHG) emissions, to spur efforts to make the US more resilient to climate impacts and to stimulate international leadership. Famously, the Plan set a goal to reduce GHG emissions by 26-28% below 2005 levels by 2025. The centrepiece of the approach would become the Clean Power Plan for existing power plants and another rule for new power plants. It is safe to say these regulatory initiatives including the Clean Power Plan, other US Environmental Protection Agency (EPA) regulations, the social cost of carbon methodology and even energy efficiency standards at the US Department of Energy. 
• undo or scrap rules focused on production or extractive activities, like newly developed EPA and interior regulations that would focus on shale development, the stream protection rule, the definition of the waters of the United States and other topics.

Beyond these clear targets, Mr Trump has premised his approach around a general hostility towards the EPA and other federal agencies and a support for systematic regulatory reform. The deregulatory impulse of the next administration will likely proceed through direct alteration or repeal of regulations, legislation, or use of more esoteric strategies like appropriations riders, resolutions of disapproval under the Congressional Review Act or even judicial settlements.

Can compromise be an option? In the selection of targets for reform, little compromise seems likely at the outset. However, sometimes it is difficult to achieve just what an administration may want, given the strictures of administrative law. So, one can imagine a greatly pared down version of the Clean Power Plan – say one only focusing on a reasonable approach to power plant efficiency – being the result if repeal becomes too difficult to sustain.

Another balance to keep in mind is between state and federal sources of authority. Current EPA administrator Gina McCarthy recently remarked that states are likely to ‘fill the gap’ if federal authority recedes. Likewise, if the federal government refuses to assert any jurisdiction over GHGs, the door may be open for tort liability previously dismissed based on federal preemption. So, there is at least some incentive for compromise.

With less than five days away from inauguration, the energy industry is keen to see what changes the Trump administration will bring. On Wednesday we will talk about safety culture within the industry and if there are any changes we might see in the next four years. On Thursday we will conclude this five-part series with what foreign oil and gas companies operating in the US can expect under a Trump Administration, along with the critical question, will we see $100 oil again under a Trump presidency?

Did you miss the first two blogs in the series? Read the first one, Potential positive policies, here and the second, Taking a look at both sides of the coin, here.

Scott Segal is a partner with PRG. He has over two decades of experience across a broad range of policy and communications issues, with particular experience dealing with energy, the environment, and natural resources. Other areas of experience range from healthcare to financial services to trade and manufacturing issues. A practising lawyer, Scott assists clients with effective participation in the legislative and regulatory processes. Read his full bio here.   

Policy Resolution Group

The Policy Resolution Group (PRG) at Bracewell helps clients around the world navigate our complex federal landscape. They create and implement successful strategies to achieve our clients’ government relations objectives. PRG provides counsel and services in Legislative and Regulatory Affairs, Information Gathering and Political Analysis, Strategic Communications and Legal Representation. Uniquely, PRG delivers results across all these areas – for corporations, industry coalitions, trade associations, entrepreneurs, investors, financial institutions and government entities.