
President Trump’s top priorities include closing the border and restoring “energy dominance.” Readers know he ran on “drill baby, drill” and ending wind generation and electric vehicle subsidies, but what are some of the finer points? His day-one “Unleashing American Energy” executive order (EO) provides some insights. Although it would be a massive undertaking to drill down on all of it, I will describe some iceberg tips that I see.
The Hit List
I see four targets of the EO and one dragnet as follows.
Access to Federal Lands
The EO encourages “energy exploration and production on Federal lands and waters.” Trump has already opened Alaska’s National Wildlife Refuge to energy development and is promoting a massive liquified natural gas pipeline project sourced from the North Slope. Japan is particularly interested in the project.
Interestingly, a Wall Street Journal reader noted that in March 2023, President Biden approved an $8 billion, 600-million-barrel drilling project. The New York Times reports, “The drilling project would take place inside the petroleum reserve, which is located about 200 miles north of the Arctic Circle. The reserve, which has no roads, is the country’s largest single expanse of pristine land.”
Non-Fuel Minerals
The EO states that the country shall become a “leading producer and processor of non-fuel minerals, including rare earth minerals.” This reminded me of something interesting published by the American Energy Society. They write, “There are 735 toxic coal ash waste sites in the US; in these 735 landfills, about 11 million tons of rare earth elements are mixed in with the coal ash — nearly eight times the amount of rare earths that the US has in reserves.” It is richly ironic that the “toxic” remains of burned coal include a concentrated trove of rare earth minerals. For more, check out this University of Texas analysis.
Electric Vehicle “Mandates”
The EO would terminate “state emissions waivers that function to limit sales of gasoline-powered automobiles; and by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies.” Uh, other technologies would be the internal combustion engine (ICE). It seems “emission waivers” would support ICE-propelled vehicles. They might want to check on that one.
Appliance Standards and Lightbulbs
The EO promotes consumer choice for “appliances, including but not limited to lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads.”
Since my home has been adorned with LED lightbulbs for the last seven-plus years, I haven’t had to shop for lightbulbs for eons. However, my discussions with a utility program/portfolio planner at the Midwest Energy Solutions Conference last week revealed that virtually no incandescent lightbulbs are in stock at big-box home improvement stores. It would seem innovation won out here.
Also, Jeff Genzer with Duncan, Weinberg, Genzer, and Pembroke, (a DC law firm with expertise in the intersection of utilities, the Inflation Reduction Act (IRA), and the Infrastructure Investment and Jobs Act (IIJA)), noted in a Beneficial Electrification League webinar last week that the appliance standards horse has already left the barn. Manufacturers have swung into gear to catch up.
Pausing IRA & IIJA Disbursements
Section 7 of the EO states all agencies shall pause the disbursement of funds appropriated through the IRA and IIJA, especially “funds for electric vehicle charging stations made available through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program.”
Basics of Federal Spending and Funding Pauses
A week after the White House issued the above EO, the Office of Management and Budget (OMB) intervened and froze certain spending. It is worthwhile to describe the process by which the leviathan spends money. There are five basic steps[1].
- Congress, with the president’s approval, appropriates spending
- The treasury finds and allocates the dollars
- The OMB appropriates dollars to federal agencies
- The agencies obligate the funds (the point of no return)
- Awards are spent from the automated standard application for payment (ASAP)
The OMB, soon to be led by Russell Vought, is where the spending pauses and impoundments (where have I read that word before?) are happening. The Wall Street Journal writes the OMB is the “powerful office [that] acts as the budgetary and regulatory nerve center helping to implement the president’s agenda.”
Russ Vought and Elon Musk will be the leading gangsters in the fight to take down the “administrative state.” As part of that process, on January 27, the OMB issued an 850-page memo with an assignment to the agencies to explain why their programs should be restarted. The memo caused human meltdowns among certain congresspersons and was later rescinded, but not really rescinded.
Venable, another DC law firm, provides an analysis that schmendricks like me can mostly follow. Corroborating what I heard from Mr. Genzer, impoundments are more likely to stand if they are not for “policy reasons.” Here is the gist from Venable: “[The] OMB might argue that the deferral is authorized under the [Impoundment] Act because it is intended ‘to achieve savings made possible by changes in requirements or greater efficiency of operations’ and not merely for ‘policy reasons.'”
What does “policy reasons” mean? It means the administration disagrees with the policy. Citing “DEI, woke gender ideology, and the Green New Deal,” the OMB showed its cards—policy reasons. That will likely go down in the courts, requiring congressional action. Venable adds that the OMB claims, “this pause is necessary … to ensure that [federal programs] are being executed in accordance with the law and the new President’s policies.” Well, the new president doesn’t get to change the law without congressional action.
Comments and Conclusions
My simpleton findings and analysis are as follows.
- The pause only affects spending, not tax credits and deductions, which require an act of Congress to change.
- Impoundments based on policy differences will not stand (eventually) – again until Congress changes the law.
What’s more? Tune in next week.
[1] Jeff Genzer, partner and attorney with Duncan, Weinberg, Genzer, and Pembroke