Current deregulation efforts often exceed what’s been requested by industry

https://www.bloomberg.com/news/articles/2019-08-30/trump-gives-businesses-deregulation-whether-they-want-it-or-not?

Trump Gives Businesses Deregulation Whether They Want It or Not

 Updated on 
  • Deregulatory zeal sometimes draws ire of regulated industries
  • Supporters say president’s moves are unleashing U.S. economy
Automakers have begged the White House to alter course in its plans to weaken fuel efficiency standards and pick a fight with California.
Automakers have begged the White House to alter course in its plans to weaken fuel efficiency standards and pick a fight with California.

Photographer: Patrick T. Fallon/Bloomberg

Donald Trump campaigned on a promise to ease the grip of environmental rules he said were throttling businesses. But time and again, his deregulatory moves as president have drawn the ire of the very companies that were expected to benefit.

In the latest instance, the Environmental Protection Agency unveiled a proposal Thursday to eliminate mandates paring methane leaks from oil wells — despite major oil companies insisting they don’t want the relief.

Similarly, automakers and the nation’s top business lobbying group are begging the White House to alter course in its plans to weaken fuel efficiency standards and pick a fight with California. And power-plant operators say an administration effort to undermine requirements for mercury pollution controls may keep them from recouping the cost of that equipment.

The willingness to defy traditional business interests extends beyond environmental regulation. Most notably, Trump has escalated a trade conflict with China, even as manufacturers and retailers complain it will increase costs and retard growth in the U.S. And some of Trump’s efforts to change immigration policy have been condemned by chief executives from Apple Inc.AT&T Inc.Coca-Cola Co., and dozens of other businesses who say they could disrupt their operations.

Related: Trump’s Ties to Carmakers Get Testy Again, This Time on Mileage

Trump’s zeal to deregulate — even when the regulated industries advise against it — runs counter to the pro-business ethos of previous Republicanpresidents, whose policies may have been more aligned with commercial priorities. Yet the approach underscores Trump’s populist streak and is another reminder this “is not a typical Republican administration,” said GOP energy strategist Mike McKenna.

“What many fail to grasp — and what may be the most important characteristic of this administration — is that it is largely indifferent to arguments driven solely by commercial interests,” McKenna said. “They believe that consumers, workers, citizens are the most important reference points in decisions.”

On the campaign trail in 2016, Trump made promises to “eliminate every unnecessary job-killing regulation” and get rid of ridiculous rules he said were “just choking companies and people,” but he generally cast the pledge as helping small businesses, consumers and the U.S. economy broadly.

Earlier: Trump Plans to End Methane Curbs That Oil Companies Want to Keep

Now in the White House, the president is unleashing the American economy while continuing to safeguard air and water, said White House spokesman Judd Deere.

“The combination of the Trump tax cuts and deregulatory actions have spurred an unprecedented period of economic growth that is benefiting American workers across the country,” Deere said by email.

Automakers, oil companies and power utilities say the administration’s moves don’t always give them the stability they need to guide capital investment decisions meant to pay off over decades.

For instance, 17 car companies told the Trump administration in June that its proposal to upend emission and fuel-economy requirements would roil their capital-intensive business plans that depend on predictability, hurting their “ability to invest and innovate.” And last month, four of them linked arms with California on a compromise to bolster fuel efficiency that amounted to a rebuke of the Trump administration’s plan.

The Chamber of Commerce, the nation’s business lobbying powerhouse, on Thursday warned that Trump’s auto plan could cause “dire consequences,” by harming the U.S. auto industry and economy.

A workable compromise is “crucial,” the Chamber said in a letter to administration and California officials. “Political leaders on both sides must recognize the importance of such a compromise, put politics aside, and deliver a practical and achievable middle ground solution that avoids the impending chaos and uncertainty.”

Trump has derided carmakers for not backing his efforts. The founders of General Motors Co. and Ford Motor Co. would be “rolling over” from the “weakness of current car company executives,” Trump said on Twitter.

Related: Murray Energy, Power Industry Divided Over Keeping EPA Mercury Rule

Ford responded that it was “proud to lead the way in taking the right actions for the environment.” The pact with California, the company said, “provides regulatory stability while reducing CO2 more than complying with two different standards.”

To be sure, automakers helped trigger the upheaval during Trump’s first week in office, when they told the president they needed more flexibility meeting the emissions limits. But the administration’s response has gone much further than they anticipated — and has been more closely aligned to demands from free-market advocacy groups such as the Competitive Enterprise Institute and the American Energy Alliance, rather than the auto industry’s wishes.

“The Trump administration is putting ideology and presidential whim over any realistic assessment of the needs of these industries, in light of the real-world conditions they face,” said David Doniger, senior director of the Natural Resources Defense Council’s climate program. “It’s bizarre how little respect they have for the supposedly intended beneficiaries — or how ideological everything is and how frequently it runs contrary to the stated interest of the industry involved.”

Methane Leaks

The EPA’s proposal to repeal requirements forcing oil companies to frequently identify and repair leaks of methane, a potent greenhouse gas, provoked a backlash by energy giants such as Exxon Mobil Corp.Royal Dutch Shell PlcEquinor ASA and BP Plc.

The move threatens their efforts to sell natural gas as a climate-friendly fossil fuel that should power the world for decades to come. Although natural gas produces less greenhouse gas emissions than coal when burned to generate electricity, methane leaks undermine the sales pitch.

“We believe sound environmental policies are foundational to the vital role natural gas can play in the energy transition,” Gretchen Watkins, president of Shell Oil Co., said in an emailed statement Thursday.

The EPA’s proposal would benefit smaller oil producers that are less able to absorb the costs of methane-monitoring and repair programs. The measure also pleased conservative activists who see direct methane regulation as a bureaucratic overreach.

Related: U.S. Chamber Breaks With Trump Plan to Slash Auto Mileage Rules

“Some regulatory actions impact sectors differently, proving you can’t please everyone all the time,” Christopher Guith, with the U.S. Chamber of Commerce’s Global Energy Institute, said earlier this month. “But there is no question that this administration has been committed to economic growth through regulatory reform like none before it.”

EPA spokesman Michael Abboud said the “administration will continue to produce the strongest environmental protections that will withstand legal scrutiny while reducing unnecessary regulations that burden American exceptionalism and prosperity.”

In some cases, companies have already fulfilled targeted mandates that may be scrapped. For example, the EPA has proposed that limits on mercury pollution from power plants are no longer “appropriate and necessary” — undercutting the legal foundation of the requirements after utilities spent billions of dollars complying with them.

Related: In Latest Climate Retreat, Trump Proposes Ending Methane Curbs

The EPA stopped short of rescinding the seven-year-old standards, but its proposal provides fodder to expected litigation that could result in overturning them.

Just five months earlier, American Electric Power Co. said a “disruption” in mercury requirements wasn’t welcome, especially since it had already installed expensive pollution controls.

Industry trade groups, including the Edison Electric Institute that represents Duke Energy Co.Entergy Corp.Southern Co. and other utilities also asked the EPA to leave the mercury requirements in place.

“We believe this approach can provide the regulatory and business certainty our members need as they continue to provide safe, reliable, affordable and increasingly clean energy to their customers,” the groups said in a July 10 letter.

Obama Factor

If the EPA finalizes its proposal and a court responds by tossing out the mandates, power companies could have trouble recovering the costs of that equipment. In some states, customers could ask regulators to claw back fees they were charged to pay for it already.

“Absent a legal mandate to meet the standard, the ability to recover costs for the capital expenses on pollution control equipment is severely jeopardized,” said John Walke, director of the Natural Resources Defense Council’s climate program. This opens utilities “up to hearings and appeals where consumers can demand that utilities no longer be allowed to recoup the cost for pollution-controls that they are no longer required to operate.”

There are common themes in the administration’s campaign to deregulate at any cost, Doniger said, and one is the president’s disdain for environmental rules imposed by his predecessor.

“If it had anything to do with climate or had anything to do with Obama, they’re agin’ it,” Doniger said. “And they want to reverse it.”

— With assistance by Amena Saiyid, and Ryan Beene

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