President-elect Donald J. Trump, set to take office following a stunning upset of Hillary Clinton, is poised to sweep away renewable energy initiatives and stringent oversight launched by the Obama administration and enact an all-of-the-above energy strategy, experts said Wednesday.

Political pundits said major climate change, air and water policies that were enacted during the Obama administration now are in doubt, if Trump moves forward with some of the proposals he outlined during a grueling campaign. Among other things, he promised to eliminate 70% of federal regulations, cancel the global climate agreement negotiated last year and bring back energy jobs lost in coal country (see Shale Daily, Nov. 8).

The president-elect has championed every form of U.S. energy development, even those that compete against each other, like coal and natural gas. He has proposed allowing states to regulate energy development over the federal agencies and opening up more federal lands to drilling.

His transition team is said to be eyeing Continental Resources Inc. CEO and founder Harold Hamm, a major GOP contributor and Trump adviser, as energy secretary.

“We are looking forward to President Trump doing what he promised, which is to undo many of the onerous regulations that have plagued our industry throughout an Obama presidency,” Hamm said. However, he demurred during an interview on CNBC Wednesday when asked about whether he had discussed the appointment, noting he had a company to run.

“With Democrats no longer able to filibuster nominees, Trump should have little trouble getting his picks confirmed,” said Wednesday. “Energy priorities like pipeline construction may get prominent billing in any Trump infrastructure bill, alongside likely rollbacks of environmental rules that he could not achieve without cooperation from Congress.”

Trump’s stunning victory could lead to a reversal of several big energy rules now tied up in the courts, including the Clean Power Plan (CPP) and Waters of the United States (WOTUS) rule.

Also potentially lost could be regulations tied up in court that are designed to reduce methane emissions from hydraulic fracturing.

Friendlier Administration, Say Experts

Lawyers at Baker Botts LLP see a Trump administration as being friendlier to oil, natural gas and coal development, infrastructure buildout and energy exports, while slashing environmental policy enacted by President Obama.

“The election of Donald Trump is likely to have a considerable impact on U.S. environmental policy as President-elect Trump has made no secret of his belief that American business is overregulated,” said Baker Botts partner Steven L. Leifer. “President-elect Trump has said he will cut funding to the Environmental Protection Agency and roll back several recent EPA initiatives, including the Clean Power Plan and the Waters of the United States rule,” otherwise known as WOTUS.

Leifer added that Trump’s belief that there is too much frivolous litigation by environmental groups means the country could see efforts to shift enforcement of the coal ash rule out of the hands of private parties and into the purview of state regulatory agencies.

Trump will also likely remove impediments for U.S energy development and infrastructure. “President-elect Trump has said that America should focus on developing its fossil fuel reserves to achieve energy independence,” which may lead to withdrawing the Bureau of Land Management (BLM) rule, “now in litigation, purporting to regulate hydraulic fracturing on federal lands.

“As well, President-elect Trump has expressed a more favorable attitude towards energy projects such as the Keystone Pipeline,” Leifer said. “With respect to federal lands, he favors keeping them in federal hands, which places him at odds with mainstream Republicans who support turning over ownership of a portion of those lands to the states.”

In fact, on the campaign trail this past May, Trump told a Bismarck, ND, energy industry audience that one of the first things he planned to do in his “first 100 days” agenda in the White House was to invite TransCanada Corp. to re-apply for the Keystone XL oil pipeline, which he plans to approve, but on renegotiated terms that would give the U.S. treasury a lot more money for the green light (see Daily GPI, May 26).

TransCanada officials on Wednesday said Trump’s election could be the spur Keystone needs. The Obama administration rejected the northern segment of the pipeline last year, which would have carried up to 730,000 b/d to southern Nebraska, then connect the supplies to systems moving south (see Shale Daily, Nov. 6). The pipeline giant said it was “evaluating ways to convince the new administration on the benefits, the jobs and the tax revenues this project brings to the table. TransCanada remains fully committed to building Keystone XL.”

Baker Botts partner Jason Bennett sees a boost for oil, natural gas and coal development. “We anticipate an initial period of uncertainty while energy policy is more closely formulated and direction is provided to the agencies. Federal agencies will likely continue current Obama administration policies until directed otherwise,” he said. “We anticipate that President-elect Trump will provide support for oil and gas drilling and the coal industry as sources of high wage middle class jobs.”

Bennett also believes the energy export process will be streamlined under Trump. “A likely reduction of the constraints on U.S. exports of hydrocarbons,” including more permissive liquefied natural gas export policies. “Over the medium term, a reduction in regulation in the energy sphere and a promotion of investment in energy infrastructure and activities.”

Bracewell LLC’s Policy Resolution Group (PRG) experts said Wednesday that Trump’s election was a “watershed moment” that would change politics as the country knows it going forward.

Trump is “clearly” in favor of enhanced exploration and production in the United States and the impact on domestic energy security policy, said Bracewell’s Scott Segal. Trump’s bullishness on domestic energy is seen in his key energy adviser Hamm. And Trump already has reached out to the industry at recent energy conferences, “delivering a message of strong development,” that would include lifting restrictions on developing public lands. He also favors dropping EPA authority over hydraulic fracturing and other shale processes.

“Let me be clear about this,” Segal said. “Mr. Trump is not a fan of the EPA or its proposed regulations on greenhouse gases,” including the CPP, now facing court challenges.

“I am certain CPP will be revoked, the only question is how…I’m quite confident in hearing from those close to the campaign that they do intend to make good on that promise…They will do it in a way to withstand legal scrutiny…” I think the environmental community will have a hard time challenging that. EPA is legally required to do CPP, but that’s an uphill battle.”

PRG partner Salo Zelermyer said during the Bracewell webinar that as far as environmental overreach, CPP “will be issue No. 1” for the incoming Trump administration. Upstream methane rules not yet final also “are on the chopping block,” along with the BLM fracturing regulations. In addition, WOTUS rules are causing “much angst,” and could be rolled back.

Pro-Business, Pro-Fossil Fuels

“There are few details regarding a likely Trump energy strategy, but clearly, President Trump will be pro-business and thus pro-fossil fuels,” said experts at ESAI Energy LLC. “Furthermore, we expect an approach that tends toward ‘energy‐autarky.’ That is, policies or nonpolicies that encourage the development of domestic energy sources with an objective of greater self‐sufficiency and less reliance on foreign sources…”

According to ESAI, the global oil market’s “most pressing issue today” is the potential for a deal by the end of this month to hold oil production flat by the 14-member Organization of the Petroleum Exporting Countries, OPEC. “As the election results sink in, one can connect this dot with Mr. Trump’s election, albeit with a loose, perhaps easily breakable connector.”

Trump’s election “subtly shifts the balance of power in the oil market,” according to ESAI. “A Trump presidency that is pro-business will encourage oil development, permit pipelines, reduce corporate profit taxes and generally make U.S. oil more competitive. This is a distinct departure from the anticipated climate friendly Obama-Clinton policies.”

Many analysts may believe weaker post-election oil prices will encourage an OPEC deal, but that may not be the case.

“OPEC’s power is in its ability to keep producing at low prices,” ESAI noted. “Raising oil prices will only strengthen the U.S. oil sector, intensifying competition, with an industry that now has the full backing of the president and a Republican Congress. This means if a good OPEC deal is unreachable, the Saudis are more likely to walk away under the pretense of taking a ‘wait and see’ attitude regarding the new president, while continuing to keep the pressure on U.S. shale.

“This also may give the Kingdom a bargaining chip down the road when regional security issues come up between the Saudis and the new president. So, now may not be the time for an OPEC deal. If indeed an OPEC deal falls off the table or is agreed in word but not deed, the recovery in crude prices will be delayed and constrained in 2017.”

Dodd-Frank Headed for Chopping Block?

Among the regulatory items apparently destined for the chopping block is the Dodd-Frank Wall Street Reform and Consumer Protection Act, the sweeping legislation passed six years ago in the wake of the Great Recession (see Daily GPI, July 22, 2010).

Of particular interest to the energy industry, the law marked the first time that the over-the-counter (OTC) derivatives market would be regulated by the federal government. It required OTC transactions to be traded on regulated exchanges much like stock, and to be cleared in clearinghouses in order to limit excessive speculation in markets. But, from the beginning, the road to full implementation of the controversial regulation was a rocky one (see Daily GPI, May 25, 2011; Nov. 22, 2010; Sept. 30, 2010).

“President-elect Trump has called for the total repeal or a partial dismantling of Dodd-Frank,” Baker Botts partner Jonathan Shapiro said Wednesday morning. “If that remains the plan, it is not at all clear today how or when he could get that done; what, if any, subset of Dodd-Frank would remain standing; and whether that process would bring still other reforms or other legislative accommodations.”

One possible successor to Dodd-Frank is the Financial CHOICE Act, which was introduced by Rep. Jeb Hensarling (R-TX), chairman of the House Financial Services Committee. Hensarling, who was returned for another term in Tuesday’s election, has said the bill would end Dodd-Frank’s “taxpayer-funded bailouts of large financial institutions; relieves banks that elect to be strongly capitalized from growth-strangling regulation that slows the economy and harms consumers; imposes tougher penalties on those who commit financial fraud; and demands greater accountability from Washington regulators.” The Financial Services Committee passed the bill in a 30-26 vote Sept. 13.

If it is still in limbo when Trump takes office, his administration would likely remove government roadblocks to the 1,200 mile Dakota Access oil pipeline. Following up on protests from the Standing Rock Sioux Native American tribe, Obama has stalled the project, directing the U.S. Army Corps of Engineers to see if there is a way of bypassing the contested path of the pipeline which is 70% completed.

The president-elect likely will have the opportunity of nominating two Republicans to fill the two vacant seats on the five-member Federal Energy Regulatory Commission, naming one of them to be chairman. In addition the term of Commissioner Colette D. Honorable will expire in June, 2017, giving him the opportunity to name a third Republican. Current Democratic Chairman Norman Bay has pursued aggressive enforcement policies at FERC, rendering decisions and high-dollar penalties against traders from banks and industry.

Reaction and Consequences

“The natural gas pipeline industry looks forward to working with President-elect Trump and the new Congress to ensure that our nation’s energy policies continue to facilitate the development of natural gas and the pipeline infrastructure needed to transport this abundant, clean-burning, domestic fuel to American consumers,” said Don Santa, CEO of the Interstate Natural Gas Association of America.

“Natural gas is critical to rebuilding our manufacturing economy and lowering consumer energy costs. Our industry stands ready to help America reach its energy potential — while creating jobs and economic prosperity — by continuing to serve as the indispensable link between natural gas producers and consumers.”

The American Chemistry Council said Trump’s victory was “a clear call by the American people that they demand the kind of change that will produce results in Washington and economic growth across the country.

“Thanks to our country’s vast shale resources, the chemical industry is driving a manufacturing renaissance and can be a major contributor to growing our nation’s economy and creating good, high-paying jobs that can sustain communities and provide families with a secure livelihood,” the American Chemistry Council said. “The business of chemistry will be a partner with leaders in Congress and the Trump/Pence administration to ensure the right policies are in place to support robust and responsible energy and infrastructure development that will keep our industry and our economy on a path to strong growth…

“The $175 billion in investment in new factories and expanded production capacity by chemical producers, thanks to domestic shale gas, has positioned the U.S. to substantially grow its role as a premier supplier of essential materials for markets around the world, but reaching that potential will require sound trade frameworks. We agree that trade should be fair, and also know firsthand that trade can unlock potential in our economy and create jobs here at home. We hope to work with Congress and the Trump administration to chart a path forward on trade that will help American businesses thrive and benefit American workers.”

Western Energy Alliance (WEA) President Tim Wigley said the organization “is overjoyed that we will not be experiencing a third term of the Obama administration. President-elect Trump understands that overregulation is killing American opportunity, and his plans to spur development of domestic shale oil and natural gas will create hundreds of thousands of blue-collar jobs while delivering widespread prosperity and low energy prices for consumers.

“We look forward to working with President-elect Trump’s administration to roll back many unlawful regulatory orders and to a federal government that is not beholden to the environmental lobby while ignoring the working class,” Wigley said. He later added that the WEA anticipates “good policies moving forward such as the Keystone XL and Dakota Access pipelines, liquefied natural gas exports, and energy projects on non-park, non-wilderness federal lands.”

Expect the Trump administration to be “unpredictable” and “think outside the box,” said Bracewell’s Segal. Trump is likely to seek advice not only from the regulatory community but also from the business community to refine his agenda.

“I believe his administration will rely heavily on corporate America” to grasp the issues that have limited economic growth in the country, Segal said. Trump’s Cabinet likely will include “guys that will have real world experience…”

Former Texas Republican Sen. Kay Bailey Hutchison, who also discussed the incoming administration during the Bracewell webinar, discussed the role for Congress during a Trump administration.

“I definitely think Congress will be a major force,” she said. “Trump is an outsider, he ran as an outsider, he won as an outsider,” but Congress is going to act as a governor to control his actions in shaping the promises he made. The Republican members of Congress and Trump “mostly agree on the economic policies…Congress has to work to shape that into what will be a good result…”

“My Republican colleagues and I took the message to the international community last year that the American people do not support President Obama’s climate commitments as part of the Paris agreement, but nobody wanted to believe us,” said Sen. Jim Inhofe (R-OK), who chairs the Environment and Public Works Committee.

“The message can no longer be ignored: Americans do not support it when their president sidesteps Congress. They also do not support economically damaging mandates that have no measurable impact to climate change. The president’s ‘commitment’ has been opposed by the majority of Congress and its legal soundness is questioned by the Supreme Court.

“Now a Republican administration will fill the vacant seat on the Supreme Court, which will decide the final fate of the Clean Power Plan. If the president’s carbon mandates were in place, the president’s Paris commitment would fall short by 45%, but now it could be as great as 60%.”

Inhofe said he “warned” Secretary of State John Kerry earlier this month that a future administration would have “numerous options to forego President Obama’s political commitments” under the climate agreement. “The fact that it will soon be in force is of no consequence. President Obama’s climate legacy has been solidified with Tuesday’s election results and will be remembered for being built on hollow commitments.”

Environmental groups also weighed in. Sierra Club urged donations to fight Trump’s agenda, while American Rivers on Wednesday underscored “the importance of clean water and healthy rivers to the well-being of all Americans” and vowed to safeguard clean water supplies and defend rivers from harmful development.

“Whether you are a Republican, Democrat, Green or Independent, we all need clean and safe water,” President Bob Irvin said. “Nothing in the election results changes the fact that clean water and healthy rivers are more important than ever for our families and communities. As a nation, we need to focus on what unites us, not divides us. At American Rivers, we will redouble our efforts to protect and restore rivers because they are essential to our nation’s economy and environment, and the health and well-being of every American.”