March 28, 2017

What Does President Trump’s Energy Independence Executive Order Do, and Why Does it Matter?

Dan Byers

Today, President Trump signed what might be the most consequential energy-related Executive Order (EO) ever. The Chamber has been at the forefront of most of the policy issues addressed in the EO, and our Energy Institute president and CEO, Karen Harbert, was in the room at EPA Headquarters when the President signed the order. 

Today’s news comes on the heels of a flurry of pro-energy/pro-economy/pro-jobs measures advanced during the President’s first months in office. Consider that, even prior to the latest EO, the President and his team had already taken action to:

  • advance permitting decisions for the Keystone XL and Dakota Access pipelines;
  • stop the costly and cumbersome data-collection program for oil and gas facilities—an intended precursor to eventual regulation;
  • withdraw the Environmental Protection Agency’s “Waters of the U.S.” rule;
  • repeal restrictions on fracking on federal lands (action also addressed in the EO); and
  • sign Congressional Review Act legislation repealing the Bureau of Land Management’s anti-coal Stream Buffer Rule and land-grabbing “Planning 2.0 Rule”

It’s clear that the President views energy growth as necessary to achieve his economic agenda, and his efforts in this area are off to a flying start.

But what does this latest action do, and why is it important? It’s a bold order, with an overarching vision statement followed by a package of supporting actions involving numerous agencies and aspects of the energy economy. Most of the individual measures involve complex regulatory actions that we summarize below, but the bottom line is that President Trump is serious about energy and about right-sizing regulations. He’s devoting his time, attention, and political capital to unleashing energy resources in support of “Making America Great Again.” It’s the right policy at the right time, and for that, we thank him.

To help understand the rule, here is a quick look at some of its most important provisions (stay tuned for further analysis on specific details over the coming days):

  • Energy Independence (sections 1 and 2). The subtitle of the order is “Establishing National Policy in Favor of Energy Independence, Economic Growth, and the Rule of Law.” This establishes clear guiding principles for the order’s execution and indeed for the Trump Administration’s overarching energy policy. The order further declares promotion of U.S. energy resources in the national interest and essential to ensuring geopolitical security. In support of this objective, it tasks each federal agency to identify rules and policies that “serve as obstacles or impediments to energy production.”

We couldn’t agree more. As Chamber CEO Tom Donohue noted in his statement on the Executive Order, “These executive actions are a welcome departure from the previous administration’s strategy of making energy more expensive through costly, job-killing regulations that choked our economy.”

  • CEQ NEPA Guidance (section 3). The EO rescinds “guidance” issued by President Obama that encourages agencies to make mitigation of upstream and downstream greenhouse gas emissions a condition of federal environmental permitting. The Chamber warned of the sweeping harm from this guidance upon it’s issuance in August 2016:

“While we fully support the fundamental goal of NEPA, which is to ensure that the impact on the environment is considered in proposed federal actions, we are concerned that this expansion of authority goes beyond environmental protection, and in doing so has handed special interests another tool to stop infrastructure development and land management activities in their tracks…This will obstruct our ability to build badly needed infrastructure of all kinds and render the investments that are being talked about on the campaign trail meaningless. From railroads, bridges, and highways, to energy, forests, and land management—permits will be more difficult to obtain.”

Status and outlook: action is effective immediately.

  • Review of EPA Clean Power Plan (section 4). This section directs the EPA Administrator to immediately review the agency’s Clean Power Plan (CPP) regulations on existing fossil-fuel power plants, as well as its New Source Performance Standard (NSPS) rule for new plants, and to begin rescinding or altering them as appropriate (note: the EO is carefully written not to prejudge this official review, but it is of course highly likely that EPA will in fact take action to rescind the rules).

These sweeping regulations threatened to transform the way electricity in the U.S. is generated, transmitted, and used. As U.S. Chamber CEO Tom Donahue stated, “The U.S. Chamber has long argued that EPA’s power plant regulations are not only unlawful, they are a bad deal for American families and businesses.” That is why more than 160 challengers took legal action EPA to block the CPP, including 28 states and a Chamber-led coalition of 16 national business groups. Additionally, more than 166 Chambers and business groups from 40 states filed an amicus brief in support of the lawsuit to stop the CPP.

Status and outlook: In February 2016, the Supreme Court issued an unprecedented stay of the CPP, halting EPA implementation of the rule during judicial review. The DC Circuit Court of Appeals heard oral arguments in September of 2016, and could issue a decision sometime this spring. Meanwhile, separate litigation brought by the Chamber and others to block the NSPS is slated for oral argument on April 17th. Notably, the EO also calls on EPA to coordinate with the Attorney General in case he seeks a stay of the litigation itself in light of EPA’s review and likely withdrawal of the rules. Consistent with this, EPA and the Department of Justice are expected to ask the D.C. Circuit to hold both cases in abeyance.

Finally, it’s important to remember that President Trump’s action on CPP and NSPS is only the first step in what will be an involved deregulatory process, complete with a proposal, public comment period, and inevitable follow-on litigation. But once that process is completed, there is every reason to believe that the Trump Administration will successfully send the CPP and NSPS to the regulatory ash heap.

  • Moratorium on Coal Leasing (section 6). The EO directs the Secretary of Interior to withdraw a 2016 order arbitrarily imposing a moratorium on coal leasing on federal lands, and to resume leasing activities consistent with applicable laws. The Chamber was an outspoken opponent of the moratorium, calling it part of a foolish crusade to eradicate coal from our energy mix.

Status and outlook: In response to the President’s direction, the Secretary of Interior is expected to take swift action to formally rescind the moratorium. While the immediate impact of the Obama Administration’s moratorium was limited because existing leases offer sufficient supplies of coal to meet current demand, lifting the restriction on leasing will ensure sufficient long-term supplies and is an important signal that the war on coal is now over.

Stay tuned for more updates and analysis from the Energy Institute team, including an overview of several additional provisions in the EO.