Trump’s Energy Deregulation Head-Fake

Favoring fossil fuel incumbents over their clean energy competitors is not deregulation.
10/30/2017 01:39 pm ET Updated Oct 30, 2017

When Scott Pruitt, the Environmental Protection Agency Administrator, announced plans to repeal the Clean Power Plan, he repeated the Trump Administration’s spin that it is deregulating the energy industry, commenting that “regulatory power should not be used ... to pick winners and losers.”

Three days later, Energy Secretary Rick Perry defended his pitch for the Federal Energy Regulatory Commission to boost the coal and nuclear industries by testifying to Congress that “[w]e have subsidized the energy industry for a long time” and “I, frankly, don’t have a problem with that.”

<i>Energy Secretary Rick Perry proposes artificially propping up coal and nuclear power plants.</i>
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Energy Secretary Rick Perry proposes artificially propping up coal and nuclear power plants.

Perry acknowledged what Pruitt should — but will not — admit, namely, that the Trump administration is not engaged in a serious deregulatory exercise. There is no plan to follow the telecommunications playbook and dismantle outmoded monopoly practices and incumbent preferences that are holding back competition, innovation, and customer choice in the energy industry.

To the contrary, the administration’s “deregulatory” agenda directly advocates a suite of anti-competitive utility industry practices. At the same time, it seeks to bolster the competitive position of fossil fuel energy companies by eliminating some of their most fundamental economic and environmental obligations.

Energy Secretary Perry’s proposal to artificially prop up coal prices, resulting in increased regulation and higher consumer costs, illustrates the point. Perry’s actions, if implemented, would blatantly torque the interstate bulk electricity market and artificially favor the coal industry over its clean energy competitors.

In the same vein, the Energy Department recently announced billions of dollars in loans for dubious, non-competitive power plant choices made by vertically integrated utilities. And the Federal Energy Regulatory Commission is doing the bidding of monopoly utilities by approving expensive gas pipeline projects that will be paid for by captive customers. These moves threaten to lock up incumbents’ market share, reduce clean energy competition, and limit customer choice.

<i>Despite what it says, the Trump administration is not engaged in a serious deregulatory exercise of the nation&rsquo;s ene
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Despite what it says, the Trump administration is not engaged in a serious deregulatory exercise of the nation’s energy sector.

The Interior Department and EPA are using different, but equally effective, pseudo-deregulatory tools to benefit conventional energy providers over clean energy competitors. Rather than providing outright financial and market support like the Energy Department, Interior and EPA are taking a back door approach by selectively targeting fiscal and environmental responsibilities for elimination.

Interior Secretary Zinke, for example, is working to reduce payments that incumbent fossil fuel companies owe U.S. taxpayers for coal, oil and gas they are extracting from public lands. Zinke has terminated review of the non-competitive federal coal leasing program; he is rolling back reforms that stop coal, oil and gas companies from cheating the government out of royalty payments; and he wants to repeal prohibitions on oil and gas practices that waste marketable gas extracted from public lands.

If successful, Zinke would wipe out approximately $100 million in annual payments that coal, oil and gas companies owe to federal and state taxpayers, giving fossil fuel incumbents an unfair market advantage over clean energy competitors. Not coincidentally, Zinke also is showing little interest in providing new leasing opportunities to wind and solar developers on public lands, while backing potential oil exploration in the iconic Arctic National Wildlife Refuge.

<i>The Trump administration supports oil exploration in the iconic Arctic National Wildlife Refuge. </i>
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The Trump administration supports oil exploration in the iconic Arctic National Wildlife Refuge.

By repealing the Clean Power Plan, EPA Administrator Pruitt also is working to give the coal industry a market advantage by failing to require compliance with the industry’s mandatory Clean Air Act responsibilities to reduce carbon emissions. Pruitt’s efforts to repeal restrictions on methane emissions would do the same for the oil and gas industry.

Selective repeal of mandatory, statutory environmental obligations is not deregulation. It is a cynical way to provide a market advantage for an incumbent industry that should be held to the same standard of compliance with environmental laws as its clean energy competitors.

<em>State attorneys general are advancing a quintessentially American agenda that will continue to use legal tools to promote
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State attorneys general are advancing a quintessentially American agenda that will continue to use legal tools to promote clean energy competition, innovation and growth.

Thankfully, progressive state attorneys general are exposing the Trump Administration’s false deregulatory narrative. Their lawsuits have put the brakes on virtually all of these attempted energy industry rollbacks of environmental and fiscal protections and reforms.

State attorneys general will not be satisfied playing defense, however. Working under the banner of progressive federalism, many state attorneys general are advancing an energy agenda that does not ignore climate change or favor fossil fuel energy companies and monopoly utilities. Theirs is a quintessentially American agenda that will continue to use legal tools to promote clean energy competition, innovation and growth.

David J. Hayes is the Executive Director of the State Energy and Environmental Impact Center at the NYU School of law. He served as the Deputy Secretary at the Department of the Interior in the Obama and Clinton Administrations.

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