This article is based on a collection of archival stories.
When it comes to energy, perhaps the only thing President Trump loves more than coal is oil and gas. Just a day shy of 100 days into his presidency, Trump is expected on April 28 to sign an executive order to open more offshore oil drilling in U.S. waters.
The move is meant to spur the economy and reverse President Obama’s decision last December to ban drilling from large swaths of sensitive marine environments. Regardless of whether Trump succeeds in overturning Obama’s protections, it’s clear oil won’t be flowing from new offshore wells anytime soon. Why is that? And will Americans even support this promised offshore boom? Our academic experts offer some answers.
Obama used an obscure provision of a 1953 law to “indefinitely” protect 120 million acres of marine environments in the Arctic and Atlantic oceans. Environmental law professor Patrick Parenteau from the University of Vermont explains the legal justification for the ban and why Congress is a critical player in Trump’s plans to open up drilling.
The law “does not provide any authority for presidents to revoke actions by their predecessors. It delegates authority to presidents to withdraw land unconditionally. Once they take this step, only Congress can undo it,” Parenteau writes.
Lessons from Shell’s misadventures
Meanwhile, are oil and gas companies clamoring to get into the Arctic and other offshore sites? Two years ago, Royal Dutch Shell pulled out of the waters off Alaska, citing disappointing results from its exploratory well. It also ran into serious troubles, requiring help from the U.S. Coast Guard, after its offshore drilling rig broke loose and ran ashore. Despite all the technical challenges, though, oil majors have been eyeing the Arctic for decades – and facing opposition to their plans, writes historian Brian Black from Penn State.
“A dramatic emphasis on Arctic drilling reopens debate on the pros and cons of development, arguments that have remained largely unchanged since interest commenced in the 1960s. These include the challenges of technology and climate; impacts on wildlife and native peoples living in the region; and strong resistance from environmental organizations,” Black says.
When it comes to safety, Shell’s about-face in the Arctic was instructive, says Robert Bea, an expert on assessing and managing risk from the University of California, Berkeley. While guidelines for offshore drilling have been updated following the Deepwater Horizon blowout disaster in the Gulf of Mexico, the Department of Interior guidelines do not follow the best available safety processes, Bea says.
“Reliance is being placed on the Department of Interior best practices of experienced-based, ‘piece by piece’ prescriptive guidelines and regulations. These have not been proved or demonstrated to be adequate for the unique drilling systems, operations and environment involved in Shell’s operations in the Chukchi Sea this summer,” he wrote in reviewing Shell’s troubles.
Even with these safety concerns and relatively low oil prices, the industry is moving ahead in the Arctic, in part because of fracking, the drilling technique that revolutionized the energy industry onshore, from Pennsylvania to North Dakota.
“Although it has gone largely unnoticed outside the industry, foreign firms are partnering with American companies to pursue these new possibilities. I expect this new wave of Arctic development will help increase U.S. oil production and influence in world oil markets for at least the next several decades,” Scott Montgomery from the University of Washington wrote recently.
Meanwhile, how does the U.S. public feel about offshore drilling overall? Certainly, few consumers will complain about cheaper gasoline – one of the justifications for boosting oil production. But support for offshore drilling dipped substantially after the Deepwater Horizon spill in 2010, according to an analysis of public polling by David Konisky from Indiana University.
“The fluctuating nature of recent public opinion suggests sensitivity to external factors such as accidents, oil prices, and Middle East politics. But more broadly, one can reasonably interpret the U.S. public as divided on how to achieve the right balance between energy development and environmental protection,” he wrote.
On Tuesday, March 28, President Trump traveled to the Environmental Protection Agency to sign an executive order rolling back a number of climate-related regulations that have taken effect over the past eight years. The president’s team claims this effort will help bring our nation closer to energy independence, and that it will begin the process of resuscitating a coal industry that has experienced serious decline in the past decade.
In reality, it will do neither. We do not import coal into the United States. There are no jobs coming back from overseas. Moreover, and somewhat ironically, the chief reason for the decline in the coal industry is not Obama-era regulations, but a rapidly changing energy market.
Any energy market analyst will tell you that advances in hydraulic fracturing and horizontal drilling have provided us with cheap, abundant, natural gas. Add to that declining price curves in wind and solar generation, and one begins to appreciate that a difficult road lies ahead for coal. These are markets that are growing with rapid technological innovation.
The shift is underway
The fact is that the Obama administration’s Clean Power Plan codified where the utility industry was already going. With publicly announced retirements, roughly 45 percent of the existing coal capacity in the western grid will be retired by 2030. According to utility integrated resource plans, by 2026, just shy of half of the total energy in the West will be generated from zero-emitting resources.
The 11 western states that my center had been convening around implementation of the Clean Power Plan are, collectively, in compliance with the plan’s 2026 targets under business as usual. Ironically, removing the Clean Power Plan just eliminates a potential for market-based emission trading that would lower costs to consumers and provide some states with a glide path to meet their targets.
This is not to say that the regulatory rollbacks in President Trump’s order will have no impact. The international community, which crafted the landmark Paris Accord, will not have the benefit of U.S. leadership on climate change. Other nations will fill that void – while reaping the economic rewards of serving a growing global market with low-carbon technologies. One of the most troubling long-term impacts of these actions will be a declining global view of America as a source of innovation and investment.
At home, should the Clean Power Plan expire, states that have been reticent to advance a clean energy agenda will no longer be required to plan for emissions reductions. The Clean Power Plan brought certainty to energy planning. If you talk to American utility executives and their investors, they crave certainty because it lowers the cost of capital and saves money for consumers. The executive order is a step away from stability in our energy markets and away from America’s leadership as an innovator developing the technologies that will serve a growing global market.
States, cities and businesses are moving forward
Attempts to roll back important environmental safeguards are being sold to the American people under the rubric of job creation. Let’s put this in the proper context: There were 65,971 jobs in coal mining nationwide in 2015. According to the Department of Energy, more than twice as many jobs – 133,000 – were created last year just in the energy efficiency industry. In 2016 the solar workforce grew by 25 percent to 374,000 and the wind workforce grew by 32 percent to 102,000. One in 50 new jobs in America is now in solar energy.
From 2007 to 2011, as Governor of Colorado, I signed 57 pieces of legislation intended to transition Colorado to a clean energy economy. After leaving office I founded the Center for the New Energy Economy at Colorado State University with the intention of working with governors, state legislators and utility regulators on clean and advanced energy policy. In our work at the center, my team and I have become confident that states, cities and private companies are taking the lead in the clean energy transition, even as the federal government flounders. Today 37 states, comprising two-thirds of the U.S. population, have renewable portfolio standards that require electric utilities to generate or purchase a percentage of their power from renewable energy.
Governors from both parties have led this transition. Seventeen governors have joined the Governors’ Accord for a New Energy Future, including the Republican Governors of Nevada, Iowa, Michigan, Massachusetts, New Hampshire and Vermont. In doing so, they have all committed to diversify their states’ energy generation with clean energy sources, modernizing energy infrastructure and encouraging clean transportation. In addition, 129 U.S. cities have signed the Compact of Mayors’ pledge to address climate change.
Thirty-three U.S.-based companies, the likes of Coca-Cola, GM, Goldman Sachs, HP, Johnson & Johnson and Nike, have committed to a goal of using 100 percent renewable energy as part of the RE100 Initiative. Some 50 U.S. companies will need to purchase 17 gigawatts of renewable energy by 2025 – enough to power the entire state of Colorado – in order to fulfill their existing corporate targets.
True leadership requires a vision that looks to new markets, new technologies and new solutions. Unfortunately, the president’s actions on Tuesday look backward toward a fading horizon, rather than forward toward a bright and promising future.
President Obama gave environmental advocates a Christmas present when he announced in late December that he was banning oil and gas drilling in huge swaths of the Arctic and Atlantic oceans. This action “indefinitely” protects almost 120 million acres of ecologically important and highly sensitive marine environments from the risks of oil spills and other industrial impacts.
President Obama acted boldly to conserve important ecological resources and solidify his environmental legacy. But by making creative use of an obscure provision of a 1953 law, Obama ignited a legal and political firestorm.
Republicans and oil industry trade groups are threatening to challenge the ban in court or through legislation. They also contend that the Trump administration can act directly to reverse it. But a close reading of the law suggests that it could be difficult to undo Obama’s sweeping act.
The power to withdraw
Congress passed the law now known as the Outer Continental Shelf Lands Act in 1953 to assert federal control over submerged lands that lie more then three miles offshore, beyond state coastal waters. Section 12(a) of the law authorizes the president to “withdraw from disposition any of the unleased lands of the outer Continental Shelf.”
Starting in 1960 with the Eisenhower administration, six presidents from both parties have used this power. Most withdrawals were time-limited, but some were long-term. For example, in 1990 President George H. W. Bush permanently banned oil and gas development in California’s Monterey Bay, which later became a national marine sanctuary.
President Obama used section 12(a) in 2014 to protect Alaska’s Bristol Bay, one of the most productive wild salmon fisheries in the world. In 2015 he took the same step for approximately 9.8 million acres in the biologically rich Chukchi and Beaufort seas.
Obama’s latest action bars energy production in 115 million more acres of the Chukchi and Beaufort seas – an area known as the “Arctic Ring of Life” because of its importance to Inupiat Peoples who have lived there for millennia. The order also withdraws 3.8 million acres off the Atlantic Coast from Norfolk, Virginia to Canada, including several unique and largely unexplored coral canyons.
Why Obama acted
In a Presidential Memorandum on the Arctic withdrawals, Obama provided three reasons for his action. First, he asserted, these areas have irreplaceable value for marine mammals, other wildlife, wildlife habitat, scientific research and Alaska Native subsistence use. Second, they are extremely vulnerable to oil spills. Finally, drilling for oil and responding to spills in Arctic waters poses unique logistical, operational, safety and scientific challenges.
In ordering the Atlantic withdrawals, Obama cited his responsibility to “ensure that the unique resources associated with these canyons remain available for future generations.”
Market forces support Obama’s action. Royal Dutch Shell stopped drilling in the Chukchi Sea in 2015 after spending US$7 billion and drilling in what proved to be a dry hole. Since 2008 the Interior Department has canceled or withdrawn a number of sales in Alaskan waters due to low demand. Shell, ConocoPhillips, Statoil, Chevron, BP and Exxon have all to some degree abandoned offshore Arctic drilling.
Low oil prices coupled with high drilling costs make business success in the region a risky prospect. Lloyd’s of London forecast this scenario in a 2012 report that called offshore drilling in the Arctic “a unique and hard-to-manage risk.”
What happens next?
Critics of President Obama’s action, including the state of Alaska and the U.S. Chamber of Commerce, say they may challenge Obama’s order in court, in hopes that the Trump administration will opt not to defend it. But environmental groups, which hailed Obama’s action, will seek to intervene in any such lawsuit.
Moreover, to demonstrate that they have standing to sue, plaintiffs would have to show that they have suffered or face imminent injury; that this harm was caused by Obama’s action; and that it can be redressed by the court. Market conditions will make this very difficult.
The Energy Information Administration currently projects that crude oil prices, which averaged about $43 per barrel through 2016, will rise to only about $52 per barrel in 2017. Whether these areas will ever be commercially viable is an open question, especially since rapid changes are taking place in the electricity and transportation sectors, and other coastal areas are open for leasing in Alaska’s near-shore waters and the Gulf of Mexico.
Alternatively, Donald Trump could issue his own memorandum in office seeking to cancel Obama’s. However, section 12(a) does not provide any authority for presidents to revoke actions by their predecessors. It delegates authority to presidents to withdraw land unconditionally. Once they take this step, only Congress can undo it.
This issue has never been litigated. Opponents can be expected to argue that Obama’s use of section 12(a) in this manner is unconstitutional because it violates the so-called “nondelegation doctrine,” which basically holds that Congress cannot delegate legislative functions to the executive branch without articulating some “intelligible principles.”
However, one could argue that Obama’s action was based on an articulation of intelligible principles gleaned from the stated policies of the OCSLA, which recognizes that the “the outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public.” The law expressly recognizes both the energy and environmental values of the OCS. Thus President Obama’s decision reflects a considered judgment that the national interest is best served by protecting the unique natural resources of these areas, while at the same time weaning the nation from its dangerous dependence on fossil fuels.
The section 12(a) authority is similar in some respects to the authority granted by the Antiquities Act, which authorizes the president to “reserve parcels of land as a part of [a] national monument.” Like the OCSLA, the Antiquities Act does not authorize subsequent presidents to undo the designations of their predecessors. Obama has also used this power extensively – most recently, last week when he designated two new national monuments in Utah and Nevada totaling 1.65 million acres.
Some laws do include language that allows such actions to be revoked. Examples include the Forest Service Organic Administration Act, under which most national forests were established, and the 1976 Federal Land Policy and Management Act, which sets out policies for managing multiple-use public lands. The fact that Congress chose not to include revocation language in the OCSLA indicates that it did not intend to provide such power.
What can the new Congress do?
Under Article IV of the Constitution, Congress has plenary authority to dispose of federal property as it sees fit. This would include the authority to open these areas to leasing for energy development. Members of Alaska’s congressional delegation are considering introducing legislation to override Obama’s drilling ban. But Democrats could filibuster to block any such move, and Republicans – who will hold a 52-48 margin in the Senate – would need 60 votes to stop them.
On the other hand, Congress may be content to let President-elect Trump make the first move and see how it goes in court. If Trump attempts to reverse the withdrawal, environmental groups contesting his decision would face some of the same obstacles as an industry challenge to Obama’s action. It could be especially challenging for environmental groups to show that the claim is “ripe” for judicial review, at least until a post-Obama administration acts to actually open up these areas for leasing. That may not occur for some time, given the weak market for the oil in these regions.
In the meantime, this decision is a fitting capstone for a president who has done everything within his power to confront the existential threat of climate change and rationally move the nation and the world onto a safer and more sustainable path.
A former governor of Texas – the state that produces more crude oil, natural gas, lignite coal, wind power and refined petroleum products than any other – would seem to be a natural choice for secretary of energy. Yet, assuming he is confirmed by the Senate, Rick Perry will face a paradox.
While the Department of Defense defends us, and the Department of Treasury manages federal finances and supervises banks, the Department of Energy does not provide America’s energy. Yes, it markets hydroelectric power from dams run by the Army Corps of Engineers, but U.S. energy production is overwhelmingly a job for the private sector.
The Energy Department is a hodgepodge of organizations, some of which existed decades before DOE was created in 1977. But it has two core missions: nuclear energy, weapons and cleanup, which account for 68 percent of the department’s fiscal year 2016 budget; and research and development (including basic science) to advance cleaner or more efficient ways to produce and use energy, which constitutes 28 percent of its budget. The incoming secretary will need to marshal these nuclear and scientific capabilities to meet key national security challenges, including a resurgent Russia and the threat of nuclear proliferation and terrorism.
The Energy Department’s 17 national laboratories focus on physics, chemistry, and materials and other sciences. They operate at a high level: 115 scientists associated with the department or its predecessors have won Nobel prizes. These laboratories are precious national resources that enhance American welfare, prosperity and security.
Many people in Washington might laugh at the thought, but the National Nuclear Security Administration, or NNSA, which accounts for almost half of the department’s US$30 billion budget, arguably rivals Apple in producing three different but related products at a world-class level. The U.S. nuclear weapons program is first-rate in terms of science, safety, security and reliability. The naval reactors program, which designs and maintains the systems that power the Navy’s submarines and aircraft carriers, ensures that our underwater fleet is unmatched in stealth and reliability, and therefore in military effectiveness. And the nuclear nonproliferation program, which works to prevent nuclear proliferation and terrorism and to inform arms control policy with technical expertise, has a wider international reach and a deeper roster of activities than any other such effort in the world.
Management challenges for the next secretary
DOE and its laboratories also have major management challenges. Many of the department’s facilities are one-of-a-kind and operate at the border between science and technology, in a high-security environment, often using potentially hazardous material or processes.
All of these factors introduce risk, which is inherent in employing novel technologies required to meet highly demanding technical requirements. One example is the National Ignition Facility at Lawrence Livermore National Laboratory, the world’s largest laser instrument, designed to create temperatures and pressures unseen outside of stars. All too often these ambitious goals and rigorous standards have resulted in cost overruns.
To be successful, the next energy secretary will need to focus relentlessly on three priorities. First, he or she will need to improve contract and project management. The Department’s Office of Environmental Management and the NNSA – which together spend more than half of the agency’s budget – have been on the U.S. Government Accountability Office’s high-risk list for years. Agencies and programs on this list are vulnerable to fraud, waste, abuse and mismanagement or in urgent need of transformation.
Starting in the George W. Bush administration, and continuing under the Obama administration, the department greatly improved its operations, but much remains to be done. If Congress does not have confidence in how the department is spending precious taxpayer dollars, it is likely to cut funding for DOE programs.
Second, the next energy secretary will need to complete ongoing efforts to reverse the decay of our nuclear weapons complex. Much of the U.S. nuclear arsenal and the facilities necessary to make and maintain it have outlasted their expected lifetimes. Deferred maintenance can no longer be put off and obsolete facilities can no longer operate.
Third, the next energy secretary will need to reinvigorate work to prevent nuclear proliferation and terrorism. NNSA operates the largest programs to detect, secure and dispose of dangerous nuclear material in the world. These programs are vital to U.S. security, and each of the last four presidents has put his stamp on them.
President George H. W. Bush began the process in 1991 by signing the Nunn-Lugar legislation, which provided money as the Soviet Union broke apart to secure and remove Soviet nuclear weapons and materials from the new countries of Belarus, Ukraine and Kazakhstan. President Clinton set the agenda and established programs to install physical protection and materials accounting, detect nuclear smuggling and consolidate the number of facilities that stocked weapons-usable nuclear materials.
After the 9/11 terrorist attacks, President George W. Bush doubled the program budget and accelerated its pace. And President Obama broadened the effort by convening four nuclear security summits, where world leaders pledged to take hundreds of steps to protect nuclear materials and prevent nuclear terrorism.
Now those summits are over and cooperation with Russia is in tatters. DOE’s funding requests for nuclear security cooperation have declined every year since 2011, and the budget now is smaller than when President Obama took office. It is vitally important for the Trump administration to set ambitious new goals and provide enough resources for these programs.
Past secretaries of energy have come from a wide range of backgrounds, including the Navy, industry and academia. The most successful ones focused sharply on accomplishing two or three big goals and avoiding the myriad distractions that DOE’s sprawling bureaucracy constantly raises. They also trusted senior DOE staffers’ scientific and technical judgment, but asked hard questions.
The Trump campaign did not lay out detailed nuclear policy or energy research and development plans, which is understandable because those issues were not high priorities for the electorate. It will therefore fall to the next energy secretary to define them – and national security, not energy production, will be the highest priority.