On March 28, 2017, President Trump signed an executive order titled "Promoting Energy Independence and Economic Growth" that reverses or materially alters many of the actions that the federal government undertook during the Obama Administration to address climate change. According to the Executive Order, President Trump is mandating these actions to promote development of the nation's natural resources, ensure that electricity is affordable, reduce regulatory burdens on companies and respect the role of states in environmental regulation. The Executive Order requires "particular attention to [the burdens on] oil, natural gas, coal, and nuclear energy."
The Executive Order includes a general review of all agency actions that could burden domestic energy production and requires reviews or repeals of specific federal regulations. The most immediate effects relate to review of projects by federal agencies under the National Environmental Policy Act ("NEPA"), coal leasing on federal lands and climate change initiatives within federal agencies. Longer-term impacts relate to regulation of air emissions from new and existing fossil fuel-fired power plants and regulation of oil and gas development, as well as other programs to be identified that burden domestic energy industries. The range of actions could reduce burdens on renewable energy development as well.
General Requirements
The Executive Order broadly mandates that all federal agencies "review all existing regulations, orders, guidance documents, policies, and any other similar agency actions . . . that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources." By July 26, 2017, agencies must submit a draft report identifying regulations and policies that the agency could "suspend, revise, or rescind" to "alleviate or eliminate aspects of agency actions that burden domestic energy production." By September 24, 2017, agencies are required to finalize their proposed actions and then implement the revocations, modifications or other changes as soon as "practicable" thereafter. The private sector will likely assist agencies in identifying burdens to domestic energy development and recommend suspension, revision or rescission of specific regulations prior to the July 26, 2017, draft due date.
Revocation of Executive Orders, Policies and Reports
President Trump's Executive Order rescinds prior policy statements, executive orders and reports that established climate change objectives, including the following:
- Agency Planning: Executive Order 13653 of November 1, 2013 (Preparing the United States for the Impacts of Climate Change, which is a general mandate for agencies to integrate impacts of climate change into agency planning).
- Clean Power Plan: The Presidential Memorandum of June 25, 2013 (Power Sector Carbon Pollution Standards, which led to the Clean Power Plan regulations discussed below).
- Coal Leasing: Secretary of the Interior Order 3338 dated January 15, 2016, as needed to lift any and all moratoria on federal land coal leasing activities.
- Social Cost of Carbon: Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866 (February 2010) and related technical updates and addenda.
- NEPA Review: Council on Environmental Quality guidance titled "Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act [NEPA] Reviews."
Generally speaking, these documents established federal policies governing federal agencies in their regulatory and procurement activities, and all relate to climate change issues. The rescission of these orders, memoranda and reports does not directly affect the private sector, except with respect to coal leases on federal land or projects subject to ongoing or future review under NEPA.
Action on Specific Regulations
President Trump's Executive Order also directs the Environmental Protection Agency and Department of the Interior to "immediately take all steps necessary to review the [following] final rules . . . and, if appropriate . . . publish for notice and comment proposed rules suspending, revising, or rescinding those rules":
- Power Plants
- Clean Power Plan for Existing Electric Generating Units. 80 Fed. Reg. 64,661 (October 23, 2015). The Clean Power Plan required fossil fuel-fired electric generating units built prior to June 2014 to reduce their carbon dioxide emissions to 32 percent below 2005 levels by 2030.
- Carbon Pollution Standards for New, Modified and Reconstructed Electric Generating Units. 80 Fed. Reg. 64,509 (October 23, 2015). This rule set emissions standards for fossil fuel-fired electric generating units newly constructed, modified or reconstructed after June 2014.
- Oil and Gas Sector
- Emission Standards for New, Reconstructed and Modified Sources. 81 Fed. Reg. 35824 (June 3, 2016). This rule created performance standards for volatile organic compounds ("VOCs") and methane emissions from oil and gas operations, including technical requirements for completions of wells and leak detection.
- Hydraulic Fracturing on Federal and Indian Lands. 80 Fed. Reg. 16,128 (March 26, 2015). This rule set standards for hydraulic fracturing of wells on federal and Indian lands, including requirements for validation of well integrity, disclosure of hydraulic fracturing chemicals through FracFocus and storage of recovered waste fluids.
- General Provisions and Non-Federal Oil and Gas Rights. 81 Fed. Reg. 77,972 (November 4, 2016). This rule set standards for non-federal oil and gas operations in national parks, including geophysical surveys, drilling wells, use of wells for gas and oil production, installation of gas and oil flow lines, plugging and filling wells for abandonment, and site reclamation.
- Management of Non-Federal Oil and Gas Rights. 81 Fed. Reg. 79,948 (November 14, 2016). This rule set standards for non-federal oil and gas operations in national wildlife refuges (including Alaska).
- Waste Prevention, Production Subject to Royalties and Resource Conservation. 81 Fed. Reg. 83,008 (November 18, 2016). This rule restricts venting, flaring and leaks during oil and natural gas production activities on onshore federal and Indian land, and imposes royalty payments on leaked gas.
Analysis
The scope of the Executive Order is so broad, and its ultimate effects so undefined, that the primary result of the Executive Order is likely to be regulatory uncertainty for the duration of President Trump's current term, and potentially beyond.
- Immediate Effects: The Executive Order takes effect immediately with respect to federal agency policies and guidance (not regulations). The prior executive orders, memoranda and policy-oriented reports may be rescinded by the President, and that rescission is essentially not appealable. The Executive Order will change the way federal agencies conduct their operations and, most importantly, their review of projects that require federal agency action subject to review under NEPA. Going forward, NEPA reviews will not be required to include specific references to climate change mandated by the rescinded executive orders and policies. Any proposed rules that are affected by the Executive Order may also be withdrawn or terminated to the extent not mandated by statute or prior agency actions.
- Effect on Final Regulations: President Trump's Executive Order immediately revokes previous executive orders and presidential memoranda, but does not (and cannot legally) change any regulations that are currently in effect. The Executive Order directs federal agencies to review regulations and commence rulemakings, if appropriate, to rescind or revise existing final regulations. To do this, federal agencies must propose new regulations, provide public notice and a period for public comment, and then finalize the rule. This rulemaking process typically takes at least six months to produce a proposed rule, and may take years for regulations that have significant impacts. Accordingly, the earliest that new regulations would be finalized is likely to be the fourth quarter of 2019. Regulations suspending, rescinding or modifying existing regulations would be subject to the types of challenges available for any new regulation, including the failure to adequately justify the agency action or inconsistency with governing law. Any litigation challenging the final regulations would likely require a year or more to reach resolution. It is therefore possible that the Executive Order's mandates would not be completed by the end of President Trump's first term as president.
- Effect on Pending Litigation: Most of the regulations that the Executive Order directs the EPA or Interior to revise or withdraw are currently being litigated in federal courts. To address this issue, the Executive Order states that the U.S. attorney general may, "as appropriate," request that a court presiding over a challenge to a final regulation not rule on the legality of the regulation until the Trump Administration decides whether it will withdraw or revise the rule. While courts have the discretion to grant such requests, it is not clear whether such requests would be honored by courts. A more important consideration may be whether the attorney general is able to use this direction to avoid aggressive defense of regulations or to decline to appeal decisions that invalidate targeted regulations. The impact on the various challenges to the Obama-era regulations will not be fully known for many months.
- Scope: The Executive Order did not cover all relevant policies, orders and regulations related to climate change. For example, the rescission of Executive Order 13653 did not affect Executive Order 13693, which requires agencies to conduct sustainability analyses and implement plans relating to climate change. Notably, the Executive Order does not mandate that the EPA reconsider its finding under the federal Clean Air Act that greenhouse gas emissions cause climate change and, therefore, endanger public health and the environment (known as the "endangerment finding"). The endangerment finding was upheld by the U.S. Court of Appeals for the District of Columbia Circuit, and the U.S. Supreme Court declined to review that lower court decision, which may indicate that the Supreme Court supports the endangerment finding, or may leave room for further challenges. As long as the endangerment finding is in effect, the EPA has an obligation under the federal Clean Air Act to issue regulations addressing greenhouse gas emissions. Therefore, even if the Trump Administration withdraws all the EPA rules addressing greenhouse gases, the Administration could be required by the courts to issue new regulations addressing greenhouse gases in some fashion.
- State Responses and Private Litigation: Many states have already implemented or have considered implementing state-specific climate change regulations and programs. One foreseeable response to the Executive Order may be for some states to take a larger role in addressing climate change, for example, by passing new restrictions on greenhouse gas emissions and offering new incentives for renewable energy. In addition, private citizens have already sued the federal government for failing to adequately address climate change and more suits could be expected in the future. For example, private citizens may sue federal agencies for failing to consider the impacts of climate change in the NEPA reviews, notwithstanding the withdrawal of the Council on Environmental Quality's guidance directing agencies to do so. The direction of these developments is largely unknown at this point, but the absence of a nationwide federal standard is almost certain to generate increased interest in alternative approaches by states and additional challenges in courts.
- Effect on Markets: On its face, the Executive Order seems to open up markets for domestic energy production and expand the use of domestic energy sources. This is certainly true with respect to some issues directly affected by the Executive Order, such as the scope of NEPA reviews and the availability of coal leases on federal lands. But that analysis does not account for regulatory uncertainty. Bigger issues, like greenhouse gas limitations on power plants, emissions regulation of oil and gas operations and restrictions on hydraulic fracturing on federal lands, must undergo a lengthy rulemaking process and then will be subject to litigation for which the outcome is not certain. In addition, the regulatory gap that will be created by the federal government's actions may be partly filled by states, which may take different forms in different jurisdictions, or by court decisions that expand climate change considerations in response to specific disputes. The ultimate effect is long-term regulatory uncertainty nationally and in each state that may adversely affect investment in specific energy developments.
Renewable Energy: The initial analysis of the Executive Order suggests that more liberal regulation of the fossil fuel sector will reduce the costs of conventional energy and provide additional cost or competitive pressures on development of renewables. But the Executive Order could benefit renewables, as well, by reducing other regulatory burdens imposed by agencies (such as enforcement of wildlife protection laws applicable to wind energy facilities) or reducing the time required for NEPA review of renewable facilities subject to such review. Other Trump Administration policies, like its proposals for tax reform that could affect tax incentives for renewable energy, could also greatly impact renewable development. Accordingly, it is uncertain whether the Trump Administration's actions will have an overall positive or negative impact on renewable energy development.
By Robert F. Lawrence and Shani Harmon