The Upstream Oil and Gas Industry Under the Trump Administration: A Year of Executive Actions

Authors: Kathleen L. Doody Slattery, Marino & Roberts New Orleans, LA.

Wayne D’Angelo Ana Ramirez (paralegal) Kelley Drye & Warren, LLP , DC.

§ 1.01 Introduction

Each year in the first term of a new United States Presidential Administration (the “Administration”) is significant in some way, but the first year of an Administration is particularly interesting because it provides the first insight into the new Administration’s priorities and the means by which the Administration will attempt to advance those priorities. Indeed, while presidential campaigns in the United States are often filled with promised priorities and plans of action, it is the actions taken by the President and his Administration after taking office that begin to pare away the rhetoric and reveal what initiatives may actually materialize.

For the energy industry, which is regulated or impacted by rules and other actions across multiple federal agencies, an Administration’s overall approach can be difficult to divine. The broad contours of the Trump Administration’s approach, however, have been quite conspicuous from the start. This Administration is focused on (i) across-the-board deregulation of the federal government; (ii) shifting regulatory power to States, (iii) expediting high priority energy and infrastructure projects that will create jobs and increase national security, (iv) promoting development of domestic energy resources to achieve energy independence and dominance, which includes increased access to federal land, and (v) an enforcement approach that is increasingly centered around compliance assistance.

§ 1.02 Executive Actions in the First Year of the Trump Administration

[1] Introduction

The first year of an Administration provides a rough agenda and a broad framework for accomplishing its regulatory agenda. Because of the longer lead times necessitated by notice and comment rulemaking under the Administrative Procedure Act (“APA”), most of an Administration’s material actions come from executive orders, agency guidance and directives, personnel decisions, and court filings. It is not uncommon for an incoming Administration to utilize these types of actions to further their substantive policies and goals. For example, incoming Administrations frequently issue Executive Orders to temporarily freeze still-pending agency rules issued by their predecessors. This action gives the new Administration an opportunity to review such regulations to ensure consistency with overall policy priorities, and is not necessarily a harbinger of massive deregulation. Perhaps the most conspicuous aspects of many of the executive actions discussed below are the ease with which they are wielded and the near immediacy of their impact. President Trump’s capacity and willingness to quickly and unilaterally effect major policy and regulatory changes has been questioned by some and cheered by others – and not with much consistency. Indeed, President Trump’s executive actions were so numerous and effective because President Obama’s executive actions were similarly numerous and effective.

Executive orders and memoranda do not require congressional approval, do not require observance of often protracted rulemaking proceedings, and are not easily challenged in court. That is not to say, however, that executive orders are immune from the vagaries of politics. In fact, elections are the Achilles heels of executive actions. Unlike statutes that require congressional approval or regulations that require rulemaking processes, executive actions come into effect and are removed with the stroke a single person’s pen. As discussed below, these executive actions include, not only orders and memoranda, but also appointments.

[2] Key Appointment/Key Agencies

The turnover of an Administration is a huge undertaking, especially when it comes to staffing the more than 4,000 positions, many of which require Senate confirmation. A newly elected President cannot come into office with all of his or her nominees selected. Overall, President Trump’s Cabinet-level appointments have generally been on pace with previous Administrations, but he has been much slower nominating and securing appointments for important undersecretary and staff positions.

Compared to prior Administrations, President Trump’s Cabinet is largely made up of individuals with more business experience as opposed to governmental experience. Lacking government and military experience, it was generally believed that President Trump’s Cabinet appointments would reflect how he intended to govern. While this belief may be arguably unfounded with respect to this Administration’s ability to advance certain of its key policies and goals, with respect to energy and environmental policies and goals, the Trump Administration has been fairly aligned, supporting fossil fuel development and deregulation of the federal government.

Examples of President Trump’s key energy and environmental appointments include the following:

[a] Department of Interior –

Ryan Zinke began his public service career as a U.S. Navy SEAL officer for 23 years. From 2009 to 2011, Secretary Zinke served in the State Senate and subsequently, represented the state of Montana in the U.S. House of Representatives since 2014. Sworn in on March 1, 2017, Secretary Zinke is the 52nd Secretary of the Interior.

[i] Bureau of Ocean Energy Management Acting Director: Walter Cruickshank, Ph.D. Dr. Cruickshank has worked in the Department of Interior for over 30 years. Prior to becoming Deputy Director of the Bureau of Ocean Energy Management, he served as the Deputy Director of the Bureau of Ocean Energy Management, Regulation and Enforcement.

[ii] Bureau of Land Management Deputy Director, Programs and Policy: Brian Steed

Brian Steed joined the Bureau of Land Management in October 2017. Prior to this, he served as Chief of Staff for Representative Chris Stewart of . Steed also taught economics at Utah State University and was once a deputy county attorney in Iron County, Utah.

[iii] Bureau of Reclamation Commissioner: Brenda Burman

Confirmed on November 16, 2017 by the Senate, Brenda Burman is the 23rd Commissioner for the Bureau of Reclamation. Burman previously served in the Department of the Interior as Reclamation’s Deputy Commissioner for External and Intergovernmental Affairs. Her experience includes working in Congress as legislative counsel for water and energy for Senator Jon Kyl to state agencies.

[iv] Bureau of Safety and Environmental Enforcement Director: Scott A. Angelle

Scott Angelle joined the Bureau of Safety and Environmental Enforcement on May 24, 2017. In 2013, Angelle was elected as Commissioner of District II, Public Service Commission where he served until appointed in 2017 to the bureau. Angelle also served as Secretary of the Louisiana Department of Natural Resources and in 2010 was appointed as Interim Lieutenant Governor of Louisiana.

[v] Fish & Wildlife Service Principal Deputy Director: Greg Sheehan On June 17, 2017, Greg Sheehan was appointed as Principal Deputy Director of the U.S. Fish & Wildlife Service. Prior to his appointment, Sheehan served as the director of the Utah Division of Wildlife Resources for the last 5 years of his 25 year tenure.

[b] Department of Energy – Rick Perry

Rick Perry currently serves as the 14th United States Secretary of Energy. Secretary Perry is a veteran of the United States Air Force and the longest-serving Governor of . Prior to being elected as Lieutenant Governor in 1998, Perry also served two terms as Texas Commissioner of Agriculture and three terms in the Texas House of Representatives.

[c] Department of Commerce – Wilber Ross

Wilber Ross was sworn in on February 28, 2017 as the 39th Secretary of Commerce. Secretary Ross is the former Chairman and Chief Strategy Officer of WL Ross & Co. LLC and has over 55 years of investment banking and private equity experience. Over the years, Secretary Ross has been deeply involved in finance matters and served as privatization adviser to New York City Mayor Rudy Guilani and was appointed by President to the board of the U.S.- Russia Investment Fund.

[i] National Marine Fisheries Service Assistant Administrator: Chris Oliver

Chris Oliver most recently served as Executive Director of the North Pacific Fishery Management Council for 16 years. Additionally, Mr. Oliver served as a fisheries biologist for the council. Prior to his time at the council, he built a foundation of knowledge in the Gulf of Mexico fisheries as a Research Associate at Texas A&M University.

[d] Environmental Protection Agency- Scott Pruitt

On February 17, 2017, Scott Pruitt was confirmed as the 14th Administrator of the U.S. Environmental Protection Agency. Administrator Pruitt previously served eight years in the State Senate and subsequently was elected as Attorney General for Oklahoma. In addition to his public service, Administrator Pruitt is a former co-owner and managing general partner of an Oklahoma minor league baseball affiliate team.

[e] Occupational Safety & Health Administration – Scott Mugno (nominated but not yet confirmed)

Nominated in late October 2017, Scott Mugno served as the Managing Director for FedEx Express Corporate Safety, Health and Fire Protection in Memphis, Tennessee. Twice he has received the FedEx Five Star Award, the company’s highest honor. Mr. Mugno’s strong background in developing, promoting and facilitating safety and health programs makes him well- equipped to serve as head of the Occupational Safety and Health Administration.

[3] Administrative Deregulation Actions

President Trump has made no secret that one of his Administration’s top priorities is to “deregulate” the federal government. In 2017, the Administration implemented many executive actions, including those identified below, targeted to either roll back, repeal or streamline federal regulations and policies of prior Administrations, including those that govern domestic energy exploration and production.

[a] Memorandum for the Heads of Executive Departments and Agencies (January 20, 2017) (“Regulatory Freeze”)

Shortly after his inauguration, President Trump, on January 20, 2017, issued a entitled Memorandum for the Heads of Executive Departments and Agencies, otherwise known as the Regulatory Freeze Memorandum. This memorandum, communicated to all executive departments and agencies, essentially halted any ongoing rulemaking that carried over from the prior Administration, subject to certain exceptions identified therein, to allow Trump’s Administration an opportunity to review and approve them, including pending regulations previously approved by the Obama administration, agency guidance documents, unpublished regulations sent to the Office of the Federal Register (“OFR”), and regulations published in the OFR, but not yet effective.

[b] 13771, Reducing Regulation and Controlling Regulatory Costs (January 30, 2017) (“‘2 for 1’ Policy”)

On January 30, 2017, President Trump issued , targeting federal overregulation. This Executive Order, entitled Reducing Regulation and Controlling Regulatory Costs, implemented the Trump Administration’s “2 for 1” Policy, directing federal executive departments and agencies to eliminate, subject to certain express exclusions, at least two existing regulations for every new regulation promulgated or publicly proposed for notice and comment to the extent permitted under applicable law. The goal of this Executive Order is to strategically offset the cost of any new regulations by eliminating existing costs. For fiscal year 2017, the total incremental cost of all new regulations to be finalized, including repealed regulations, was not to be greater than zero.

For fiscal years 2018 and beyond, the head of each agency must, as part of its annual regulatory cost submissions to the Office of Management and Budget (“OMB”), (1) identify for each new regulation that increases incremental costs, the offsetting regulations described in this Order, and (2) provide its best approximation of the total costs or savings associated with each new or repealed regulation. During the presidential budgeting process, the director of OMB must identify a total amount of incremental costs that will be all allowed for each agency with respect to issuing and repealing its regulations - any regulations exceeding an agency's total incremental cost allowance will, in most cases, not be permitted in that fiscal year.

Elimination of costs under existing regulations or repealing federal regulations themselves must be done in compliance with certain statutory and regulatory requirements, including the APA, and may require agency rulemaking in accordance with (i) public notice and comment, (ii) a cost-benefit analysis, (iii) in compliance with the paperwork reduction act, (iv) an analysis and justification for the change in the agency position, and (v) in many cases, compliance with National Environmental Policy Act (“NEPA”), the Endangered Species Act, and other requirements.

[c] Executive Order 13777, Enforcing the Regulatory Reform Agenda (February 24, 2017) (“Executive Order 13777”)

Closely intertwined with the “2 for 1” Policy, President Trump issued Executive Order 13777 on February 24, 2017, to alleviate unnecessary regulatory burdens on the American people. Executive Order 13777 directs federal agencies to: (1) designate an agency official as its Regulatory Reform Officer to oversee the implementation of President Trump’s regulatory reform initiatives within their agency; and (2) establish a Regulatory Reform Task Force to review and identify regulations that should be repealed or modified, consistent with applicable law, which would include all environmental, health and safety, and natural resources regulations proposed or promulgated by any executive department or agency. These directives provide the procedural framework for pinpointing targets for repeal or replacement.

For example, this Executive Order provides that, at a minimum, each Regulatory Reform Task Force must identify certain specified burdensome regulations, including, without limitation, those that: (i) eliminate jobs, or inhibit job creation; (ii) are outdated, unnecessary, or ineffective; (iii) impose costs that exceed benefits; and (iv) create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies. Those regulations identified as outdated, unnecessary, or ineffective, however, must be given priority when implementing regulatory offsets.

[4] Administrative Infrastructure & Pipeline Actions

Federal agencies have the power to approve or reject construction and pipeline projects that cross international boundaries, are located on federal land or waters, or require federal permits. President Trump promised to advance his deregulatory agenda with regard to infrastructure and pipeline projects in an effort to expedite environmental assessments and approvals. Shortly after his inauguration, the Trump Administration issued executive actions, including those actions identified below, designed to (i) streamline and speed-up federal agency reviews and approvals of infrastructure or other projects that normally go through a lengthy and extensive environmental and permitting process, and (ii) expand oil pipelines in the United States.

[a] Infrastructure Projects

[i] , Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects (January 24, 2017) (“Executive Order 13766)

This order establishes a new system by which to fast-track the construction of infrastructure projects. It directs executive agencies to expedite environmental reviews and approvals for all infrastructure projects. Projects such as electrical grid improvements and upgrades to ports, airports, pipelines, bridges, highways, and other projects that are deemed a “high priority to the nation” should be granted preference in this process. Governors of States and executive agency heads may request that the Chairman of the White House Council approve infrastructure projects where a Federal review is needed. The Chairman shall provide a response within 30 days. The signing of EO 13766 came on the same day Trump signed Presidential memoranda, which approved the construction of the Keystone XL and the , and stipulated that all new pipelines in the United States must be constructed using materials and equipment produced in the United States.

[ii] Executive Order 13807, Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure (August 15, 2017) (“Executive Order 13807”)

This order seeks to ensure that the federal environmental review and permitting process for infrastructure projects is coordinated, predictable, and transparent. It establishes “One Federal Decision” for major infrastructure projects, assigning each project a lead federal agency and creating a performance accountability system to track its progress. It also sets a goal of cutting the review/permitting time from more than seven years (the current average when an Environmental Impact Statement is involved) to just two years. It also revokes EO 13690, which mandated stricter environmental review standards in floodplains as part of President Obama’s Climate Action Plan, and required planners to use flooding predictions that incorporated climate science.

[b] Pipeline Projects

[i] Presidential Memorandum Regarding Construction of American Pipelines (January 24, 2017) (“Pipeline Memorandum”)

The Pipeline Memorandum, issued on January 24, 2017, instructs the Secretary of Commence to develop a plan where all new pipelines (including retrofitted, repaired, or expanded pipelines) inside the United States use domestic materials and equipment produced in the United States,” specifically iron and steel.

[ii] Presidential Memorandum Regarding Construction of the (January 24, 2017) (“Keystone Memorandum”)

President Trump issued the Keystone Memorandum on January 24, 2017, inviting TransCanada Keystone Pipeline, L.P. (“Keystone”) to re-submit its application for a Presidential Permit to construct and operate the Keystone XL Pipeline to import petroleum from Canada to the United States. In addition, this memorandum directs the appropriate federal agencies to expedite the review and approval of the application, and any other requests for approvals and relief by Keystone related to other applicable laws and regulations. Keystone re-submitted its application, which was approved by the Trump Administration.

[iii] Presidential Memorandum Regarding Construction of the Dakota Access Pipeline (January 24, 2017) (“DAPL Memorandum”)

In connection with the issuance of the other pipeline actions, President Trump also issued the DAPL Memorandum, which directs the Secretary of the Army to, among other things, expedite the review and approval of the Dakota Access Pipeline. The DAPL Pipeline easement was granted shortly thereafter, subject to standard permit conditions.

[5] Administrative Domestic Energy & Environmental Actions

Shortly after President Trump’s inauguration, the Administration announced the “America First Energy Plan,” aimed to reduce environmental regulation and promote domestic energy production, with a focus on fossil fuels versus renewable energy. The Administration issued numerous actions to repeal prior administrations’ environmental policies and regulations, including those governing domestic exploration and development, to open-up restricted federal acreage for domestic energy development, to revise and repeal restrictive and burdensome EPA regulations, and to lift restrictions imposed on the coal industry.

[a] Energy Independence Policy

[i] Executive Order 13778, Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the “Waters of the United States” Rule (February 28, 2017) (”WOTUS Rule”)

This order calls on federal agencies to revise the Obama administration’s Clean Water Rule or WOTUS Rule. Published in 2015, WOTUS expanded the number of water features subject to regulation under the (CWA) to include ephemeral streams, channels, ponds, and isolated water features that were not clearly covered by the statute or guidance issued by EPA and the Army Corps of Engineers. But the WOTUS rule can’t simply be repealed through executive order. Instead, both the Army Corps of Engineers and EPA must go through the federal rulemaking process to replace it. Accordingly, the order directs the administrator of EPA and the assistant secretary of the Army for Civil Works to review the WOTUS Rule and propose a new regulation that either revises or eliminates it.

[ii] Executive Order 13783, Promoting Energy Independence and Economic Growth (March 28, 2017) (“Executive Order 13783”)

This order seeks to dismantle many of the key actions that have been undertaken at the federal level to address climate change. The order directs EPA to review and potentially rescind or re-write major regulations such as the Clean Power Plan (CO2 emission standards for existing power plants), CO2 emission standards for new power plants, and methane emission standards for the oil and gas sector. It also revokes a number of executive orders and actions, including: guidance on calculating the social costs of greenhouse gas emissions, a moratorium on federal coal leasing, and guidance on how to account for climate change in environmental reviews. Finally, it directs all agencies to review existing regulations, orders, guidance documents, policies, and any other similar agency actions that could burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources, and to develop recommendations on how to alleviate or eliminate aspects of agency actions that burden domestic energy production.

[A] Clean Power Plan (“CPP”)

Under Executive Order 13783, the Trump Administration called for a review of, and if appropriate, reconsideration proceedings to suspend, revise or rescind the Obama Administration’s CPP and related rules and agency actions. The CPP established emission guidelines for states to follow in an effort to limit carbon dioxide (CO2) emissions from existing power plants. The CPP stemmed from an expansive view of agency authority that the Trump Administration proposes to determine is inconsistent with the Clean Air Act.

[B] Climate Action Plan

The Climate Action Plan focused on three areas: cutting carbon pollution in the United States, preparing infrastructure for the impacts of climate change, and making the United States a global leader in efforts to combat climate change. Executive Order 13783 called for the Climate Action Plan to be rescinded, further undoing the Obama Administration’s clean energy efforts.

[C] Social Cost of Carbon (“SCC”)

The SCC is an estimate in dollars of how much damage is caused over the long run by a ton of carbon dioxide (“CO2”) emissions in a given year. This estimate allows a determination of whether a proposed regulation is worth the cost to the environment. Executive Order 13783 set about the review of the SCC estimates, disbanded an interagency working group convened under the Obama Administration to address the social cost of greenhouse gas emissions, withdrew related technical support documents issued by this group related to how to price carbon emissions when calculating the cost of federal initiatives, and directs how agencies are allowed to monetize the value of changes in greenhouse gas emissions resulting from regulations.

[D] Climate Action Plan Strategy to Reduce Methane Emissions

In 2014, President Obama issued the Climate Action Plan Strategy To Reduce Methane Emissions. This Executive Office Report directed agency heads to issue rules and take other steps to mandate methane reductions at landfills, coal mines, farms, and upstream and midstream oil and gas facilities. This report’s directives regarding methane emissions from the oil and gas industry underlie the EPA and BLM rules that President Trump has already taken steps to rescind. Executive Order 13783 withdrew these directives and facilitated the agency actions undoing the prior administrations methane rule-makings.

[E] Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment

In November of 2015, President Obama issued a Presidential Memorandum directing his agencies to adopt mitigation policies that would result in no net loss of federal land and habitat. Critics of the policy contend that it created an inflexible structure that would reduce access to federal lands for hydrocarbon development and other uses. Executive Order 13783 rescinds that policy and directs agencies to similarly rescind agency-specific policies that were developed in response to President Obama’s directive.

[F] Council for Environmental Quality (“CEQ”) – National Environmental Policy Act (“NEPA”) Guidance

In 2016, President Obama’s CEQ developed guidance governing the consideration of greenhouse gas (“GHG”) emissions and the effects of climate change in NEPA reviews. Under the 2016 guidance, agencies were instructed to consider, not only the direct impacts of the project under review, but also potential indirect contributions to GHG emissions and climate change. Executive Order 13783 directed the CEQ to withdraw this guidance.

[ii] Executive Order 13795, Implementing an America-First Offshore Energy Strategy (April 28, 2017) (“Executive Order 13795”)

On April 28, 2017, President Trump issued Executive Order 13795, broadly designed to (1) encourage domestic energy exploration and production on federal lands and waters to maintain America’s position as a global energy leader, and (2) foster energy security and resilience to ensure that any such activity is safe and environmentally responsible. This order reverses an earlier ban on Arctic leasing put in place by the Obama administration, and establishes a national policy of encouraging offshore energy exploration and production. It revokes decisions to withdraw certain areas of the Outer Continental Shelf in Alaska and the Atlantic Coast from leasing, and directs the Interior Secretary to review areas available for off-shore oil and gas exploration.

[6] Other Administrative Actions

[a] , Review of Designations Under the (April 26, 2017) (“Executive Order 13792”)

President Trump issued Executive Order 13792 on April 26, 2017, directing the Secretary of the Interior to review all Presidential designations or expansions of designations of national monuments under the Antiquities Act, meeting certain specifications described therein, made since January 1, 1996. This review would include monuments created under the Administrations of Bill Clinton, George W. Bush and . This review will allow the Trump Administration the opportunity to rescind or reduce the size of national monument sites, which will make available more federal land for development.

[7] Congressional Review Act

The Congressional Review Act of 1996 (CRA) established expedited procedures by which Congress may disapprove a broad range of regulatory rules issued by federal agencies by enacting a joint resolution of disapproval. While we recognize that CRA resolutions are not unilateral executive actions like the other actions discussed in this paper, but we opted to include them because of their significance.

Prior to 2017, the CRA has been successfully used only one time (to repeal the Clinton-era Ergonomics Rule). The Trump Administration signed 14 different CRA resolutions. Those with potentially direct impacts on the energy industry include the following:

[a] H.J. Res. 37 – Fair Pay and Safe Workplaces EO

This resolution rescinded a rule that would have prohibited government contracts to be awarded to companies accused of occupational health and safety violations – even prior to their adjudication.

[b] H.J. Res. 38 – Stream Protection Rule

This resolution rescinded a discharge regulation that the coal industry argued was costly, and unnecessary.

[c] H.J. Res. 41 – Oil Anti-Corruption Rule

This resolution rescinded the Oil Anti-Corruption Rule, which was viewed as disproportionately hurting domestic oil and gas companies.

[d] H. J. Res. 44 – BLM’s Land Use Planning Rule

This resolution rescinded Bureau of Land Management planning rules that were viewed as eliminating state and local management authority.

[e] H.J. Res 83 – OSHA Recordkeeping Rule

This resolution rescinded OSHA’s Recordkeeping Rule, which was viewed as conflicting with a court case that limited OSHA’s authority to enforce against companies for reporting violations after the statute of limitations had run.

§ 1.03 Conclusion

While it is always difficult to predict the future actions of an Administration, the number and scope of executive actions undertaken in President Trump’s first term suggests that the Administration will continue its focus on deregulation and access. Now that President Trump has a substantial number of appointments in place, we expect the Administration to segue from the unilateral actions that were emblematic of the Administration’s first year to rulemaking processes that require more time and agency resources. These regulatory actions are very important to Administrations because they are more likely to endure beyond the President’s term. Although President Trump accomplished a great deal with the stroke of a pen, those actions remain vulnerable to the whims of the electorate and the stroke of a successor’s pen.