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Federal Energy Policy: An Assault on Our Democracy

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Paul DeCotis's picture
Senior Director, Energy & Utilities Practice West Monroe Partners

     Paul A. DeCotis is senior director and head of West Monroe Partners’ east coast Energy & Utilities practice, based in New York City. He leads the firm’s executive advisory and regulatory...

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  • May 11, 2019 12:26 am GMT

As such, it represents an assault on science, the environment, and our democracy. While this statement might appear provocative, it is agnostic to what might be considered right or wrong and is apolitical, independent of political persuasion.

Making an end-run around Congress and regulatory due process for making or rescinding regulations that guide many aspects of private-sector activities ties policy decisions up in the courts. The lengthy court battles that ensue from circumventing foundational democratic principles by issuing EOs that do not have the force of law creates confusion and uncertainty in markets. It also ignores the rationale that necessitated the law and subsequent regulations being challenged in the first place. To date, attempts by the administration to circumvent existing laws and regulations have been overturned by the courts, and rightly so. Facts and democratic principles matter.

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The Issue 

This column has argued that regardless of the politics surrounding energy infrastructure projects, all should be evaluated on their merits and contributions to the national interest. This means taking into consideration, jobs created, and environmental and local community impacts—including disruptions and improvements, health and safety concerns, social and economic dislocations, and federal energy and environmental policy objectives. Large energy infrastructure projects should not be assessed single-mindedly as to whether temporary construction jobs will be created or whether an industry needs saving, as the president has repeatedly tried to do unsuccessfully with coal. 

Market fundamentals are having the greatest impact on coal-fired electricgenerating plants closing, not environmental regulations. End-runs around wholesale electricity markets to subsidize coal plants, as the administration has tried to do through the Federal Energy Regulatory Commission (FERC), have also failed. Time and time again, end-runs around law and regulation have failed; the courts as our third branch of government are fulfilling their obligation.

Several of the president’s EOs attempting to dictate energy policy are intended to bypass due process and change the narrative espousing the importance of bringing back jobs in exploration, drilling, and mining fossil fuel resources, and supporting infrastructure to bring these resources to market. Without taking a position on the merits of government helping industries remain viable based on their importance to the economy and any given region of the country, government financial and regulatory assistance should be awarded on the facts and science, not politics. 

National interest should dominate infrastructure decisions, not the politics of any persuasion. Unlike the rule of law, executive actions are not enforceable, and simply signal policy direction and provide guidance to executive branch departments and agencies on the administration’s priorities. Let’s revisit some of the administration’s EOs as they affect energy and natural resources.

On April 10, 2019, the president signed two EOs in effect usurping states’ rights to intervene in the permitting process for oil and gas pipelines. The rationale for the EOs was to dismiss and bypass any concerns raised about merits and impacts of projects by special interest groups.

Special interest groups are a broad categorization and include state and local governments, local economic development organizations, environmental groups, industry and trade associations, and environmental justice organizations, to name a few. If energy projects bypass state and local and community interests and circumvent the rule of law, we would have no way of knowing whether the project served the national interest.
The “Promoting Energy Infrastructure and Economic Growth” EO seeks to enable the timely construction of energy infrastructure projects and calls on the federal government to promote efficient permitting processes and reduce regulatory uncertainties that make energy infrastructure projects expensive and discourage new investment.

The EO seeks to reinterpret Section 401 of the Clean Water Act (33 U.S.C. 1341) by issuing new guidance to expedite the review and permitting process, narrowing the scope of inquiries into permitting. The EO also requires the US Department of Transportation to alter rules and guidance for transporting liquefied natural gas (LNG), making it possible to transport LNG via rail car, which is currently prohibited. The EO calls for a study of the economic “opportunities, through the federal government, to promote economic growth of the Appalachian region, including growth of petrochemical and other industries.”

The “Issuance of Permits with Respect to Facilities and Land Transportation Crossings at the International Boundaries of the United States” EO seeks to provide the president with exclusive authority for approving or denying pipelines and other energy projects across international borders, taking the role away of the secretary of state. 

The EO has the effect of stripping authority from the State Department and states delegated this authority under Section 401 of the Clean Water Act. States and interest groups continue to argue that states have authority under the Clean Water Act to protect water resources and grant permits and that an EO does not supersede the states’ rights. In either case, once again the issue will be decided by the courts, which have consistently ruled against presidential EO authority for projects crossing international borders (e.g., the Keystone XL pipeline).

The president has singled out New York State for hindering gas pipeline expansion over environmental concerns by delaying or withholding water permits. Whether warranted or not, stripping the state of its authority and responsibilities under federal law is not the answer.

While it is difficult to determine precisely the final impacts of the EOs if they are upheld in the courts, we can discuss their political reasoning. On January 24, 2017, the president signed a presidential memorandum to advance approval of pipeline construction by expediting pipeline environmental review. On March 29, 2019, the president issued an EO providing a presidential permit approving the Keystone XL pipeline.

The Keystone XL pipeline is projected to move 800,000 barrels of crude oil from tar sands in Canada to the Gulf Coast, traveling through the Central Plains. The Dakota Access Pipeline, also under review, would carry between 470,000 and 570,000 barrels of crude oil per day from the Bakken shale oil fields in North Dakota through South Dakota and Iowa to terminals near Patoka, Illinois. A presidential permit is required for both projects to supersede states’ rights, because they move through multiple states and jurisdictions.

Read the original article in Natural Gas & Electricity. DeCotis, Paul A. (May 2019). “Federal Energy Policy: An Assault on Our Democracy.” Natural Gas & Electricity 35/10, ©2019 Wiley Periodicals, Inc., a Wiley company.

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