HEADLINE: “Only Congress Can Reverse America’s Declining Regulatory Stability” By DAVID BLACKMON
“Energy companies doing business in the United States increasingly cite diminished stability in the U.S. regulatory system as making it harder to finance and execute big domestic projects.”
Only Congress Can Reverse America’s Declining Regulatory Stability
OCT 12
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PAID
Energy companies doing business in the United States increasingly cite diminished stability in the U.S. regulatory system as making it harder to finance and execute big domestic projects. It is a complaint I’ve heard from every executive I’ve interviewed since 2021, one that was recently echoed by the head of Shell Americas, Colette Hirstius.
“I think uncertainty in the regulatory environment is very damaging,” Hirstius said. “However far the pendulum swings one way, it’s likely that it’s going to swing just as far the other way.”
Hirstius’s observation is spot-on. Regulatory certainty and faith in the uniform application of prevailing laws across multiple presidencies of both parties is crucial for management teams to properly plan their companies’ business. This is especially important as it relates to major projects that require the allocation of billions of dollars in capital and years to complete. From oil and gas, to mining, to LNG exports, to nuclear power plants, to big wind and solar developments, such major projects are increasingly common in the U.S. as demand for all kinds of energy expands.
The U.S. enjoyed a high degree of regulatory and legal certainty for many decades, a happy fact that gave it a competitive advantage over other and less stable countries. That competitive edge enabled energy companies to attract billions of dollars in investment from sources all over the world to provide capital for U.S.-based projects.
But that all began to fade with the advent of the Obama administration and President Barack Obama’s oft-stated desire to “transform this country.” The radical climate agenda implemented in 2009 and expanded upon during the Joe Biden years helped produce voter backlashes in both 2016 and 2024, leading to the back-and-forth regulatory tug-of-war with both Trump presidencies.
The net result is that it is harder today to attract capital to any energy-related project in the U.S. than it had been prior to 2009, and the challenges of properly planning future projects and investments have, to no one’s surprise, expanded apace. The record inflation and chronic supply chain issues that characterized the Biden years only added to the complexity and uncertainty for management teams as they attempted to plan and execute their big projects.
The EPA’s 2009 endangerment finding related to greenhouse gases provided the foundation for the massive expansion of regulatory complexity during the Obama years. That finding – which holds that carbon dioxide, i.e., the atmospheric gas that is essential to all life on Earth, is a “pollutant” to be regulated under the Clean Air Act – gave rise to an unprecedented increase in the number and complexity of federal energy and climate regulations.
Unfortunately for Obama and his fellow Democrats, that finding and the economic upsets stemming from it also helped give rise to Donald Trump and his two presidencies. The major quadrennial shifts in energy and climate regulation since 2016 have only eroded the stability and confidence in America’s legal system.
A troubling aspect of how these major regulatory shifts have come about is that they have been largely implemented via hundreds of executive orders signed by all three presidents. Such orders are easily reversed by the next incoming president, rendering the system even less stable than before.
The failure – or perhaps “refusal” is a better word in many cases – by Congress to memorialize the big things into federal statutes has only served to worsen the situation. Today, the EPA under Administrator Lee Zeldin is working to rescind the Obama endangerment finding in response to an executive order signed by Trump, an action that would create the predicate for an even more radical regulatory shift and the rescission of dozens of Obama and Biden rules.
But unless the GOP majorities in congress act to memorialize these changes into law, the next Democrat who becomes president can quickly reverse them with the stroke of a pen, or an autopen, as the case may be.
This is a big problem that only Congress has the power to resolve. The fact that this piece was written amid yet another government shutdown does not provide confidence in Congress’s ability to get that done.
BOTTOMLINE: “This is a big problem that only Congress has the power to resolve. The fact that this piece was written amid yet another government shutdown does not provide confidence in Congress’s ability to get that done.“
A very good reminder to send letters to our representatives in Congress!