With Republicans dominating both Houses and the office of President, future battles between business and activists over regulations are most likely to be fought out in the courts, according to a panel discussion regarding regulations and how they are impacting the oil and gas industry.
With the filing of each new rule change, including many of them pushing back on the previous administration’s regulatory zeal, the anti-business factions are most often filing lawsuits within a matter of hours of a new regulation being filed, said panelists representing various aspects of the oil and gas industry and government during the annual meeting of the Montana Petroleum Association in Billings on August 29-30.
The opposition is not going to go away, said Bill Mercer, a partner with Holland & Hart law firm, who was part of a panel discussion. “In fact they have doubled down,” said Mercer, “This is where the battle will continue to be waged, particularly on water quality… There is a lot of work to do playing defense.”
In general the panelists expressed some optimism or at least, expectations, about the possibilities of reducing regulations, given the election of Donald Trump as president. Other panelists included Dave Klemp, State Air Director for Montana; Tim Davis, Administrator of the Water Quality Division at the Montana Department of Environmental Quality, and Bret Gallo, project manager for Bison.
There is “a lot of defense to be played,” said Mercer, who went on to predict, as President Trump wages his battles against regulations – “particularly on water quality” — he will use the threat of not signing a budget to get what he wants. “It is the only true weapon he has,” said Mercer, “the question is whether he will use it or not. His only real option is to shut the government down.”
A serious impediment that department administrators are experiencing under the Trump Administration is not having the staff needed to carry out the President’s agenda. The level of staffing in the President’s administrative agencies is less than half those of Presidents Obama, Bush and Clinton at this point in their Presidencies, according to Mercer. And that includes positions that don’t have to be confirmed. “People haven’t even been nominated much less confirmed,” he said.
In explaining the strategy of Independent Petroleum Association of America (IPAA), Ullman said, “Among our priorities is to work with agencies to get things delegated to the states.”
Explaining that the industry moves fast and changes advance quickly, “state and local government are the best to regulate” because they can respond faster than the federal government – and respond to the specific and unique situations faced by each state. Ullman said that he does not believe in one- size fits –all regulation.
He agreed with Mercer’s assessment about the President having failed to have his staffing in place. “People are frustrated because they don’t have the people under them needed to carry out the mandate.”
The panel in general agreed that during the last couple years of President Obama’s administration regulations were issued at unprecedented rates, and noted Davis, they shifted focus. Rather than environmental issues they were about issues of climate change.
The “onslaught” of regulations have left industry in “regulatory limbo” because of inconsistencies and of not even knowing whether proposed regulations have been accepted – of know, if they are actually in effect. Often regulations contradict each other, and many are duplicative. And, of course, uncertainties then prevail when the regulations are challenged in the courts, a process that can take many months, slowing down and crippling the pace of industry and business.
But because of a new President and a new agenda, Mercer predicted that the future holds a “tremendous change in energy policy.”
But not without a fight. “The other side is not going to stop litigating.” Huge legal funds make that abundantly clear, he said, pointing out that the National Resources Defense Council has $94 million in its legal fund and the Environmental Defense fund has a $107 million legal budget.
And – the battles will go to the state level. “The folks out there are pushing back .. .they aren’t going to go away,” he said, “We see litigation to be a constant, a constant battle going forward.”
For example, even though the company can get permitted now, the adversaries do not view the outcome of the Keystone XL Pipeline legal battles as a loss. The fact that the company is reportedly weighing whether to even build the pipeline after ten years of litigation, is considered big win.
Often times the companies faced with the litigation cannot afford to fight a legal battle, and negotiate a settlement, which is another opportunity for financial windfalls. The situation is one which is spurring legislation, in some states, which allow courts to look at the financial status of the organizations, before awarding them legal fees in settlements. It is about having equal access to justice, said Mercer.