FROM ISSUE NUMBER 12 ~ SUMMER 2012 GO TO TABLE OF CONTENTS
Obama's Cynical Energy Agenda
The American economy is flagging, and desperately in need of greater productivity and innovation. One presumes that President Obama understands as much; he has in fact suggested that he knows where this needed boost might come from. In this year's State of the Union Address, the president said that "nowhere is the promise of innovation greater than in American-made energy." His speech seemed to acknowledge that the American economy needs plentiful, affordable energy to thrive, and that the energy sector has a great deal of room to grow. Indeed, in his remarks, Obama touted the possibility of 600,000 new jobs over the next decade from natural-gas development alone.
But for all his talk of boosting American-made energy and breaking our dependence on hostile powers abroad, the president's policies have not matched his rhetoric. Again and again, the administration has had chances to support growth in America's energy sector — by enabling greater electricity production, drilling for fossil fuels, promoting nuclear power, or pursuing other measures. But at nearly every turn, rather than taking advantage of these opportunities, Obama and his advisors have foreclosed them. Instead, the administration has embraced an agenda of radical constraint — severely limiting the development and availability of energy resources in the misguided belief that a clean environment, or a stable climate, requires that we use less energy. The result has been harmful not only to America's energy sector, but to the nation's economy more broadly.
Worse yet, the president has impeded the energy sector not through an explicitly articulated policy pursued in the open for the public to evaluate and judge, but rather through a series of concealed and dishonest maneuvers. By applying pressure on private companies in secret, effectively shutting down projects through endless delay, refusing to consider applications for permits, and otherwise surreptitiously leveraging executive power, the administration has not merely pursued an agenda at odds with the nation's economic needs. Along the way, Obama and his advisors have also distorted the regulatory process — seriously undermining its legitimacy.
To fully appreciate President Obama's real energy agenda, we must consider the evolution of his rhetoric on energy, the people he has chosen to put in charge of energy decisions, and the ways in which he has undercut the exploration, development, and use of new sources of energy. It all adds up to a troubling story of cynical means put in the service of radical ends.
AN EMERGING AGENDA
The Obama administration's energy policy has actually been, above all, an environmental policy. The president has first set extreme environmental objectives, and then calibrated the nation's energy agenda to suit those goals.
But it was not always clear that this would be Obama's approach. During his first forays into energy issues in Washington, as a neophyte in the Senate, his public comments suggested different priorities. In September 2005 remarks — which he later characterized as his first speech on energy — then-senator Obama outlined an energy policy that included no mention of climate change, for instance, and said little about environmental concerns more generally. Instead, the freshman senator adjusted his rhetoric to exploit the two primary points of public dissatisfaction with the Bush administration in late 2005: Hurricane Katrina, which had occurred only weeks earlier, and the increasingly grim situation in Iraq.
The devastation caused by Katrina — and the spike in oil and gas prices that followed — had revealed just how much of the nation's oil infrastructure is concentrated in the Gulf of Mexico, and thus how vulnerable our oil supply is to natural disasters and acts of terrorism. Seizing on this point, Obama argued that the nation's oil-centric economy had become a fundamental national-security weakness. Even if "this short-term, hurricane-induced oil crisis will subside," he said, the "clear and present danger to our economy and our security from America's long-term dependency on oil will not subside — unless we act now." Turning to the Middle East, Obama reminded his audience that Americans' spending on oil flowed directly to "despotic regimes with nuclear intentions" and "havens for the madrassas that plant the seeds of terror in young minds."
To those national-security arguments, Obama added an economic pitch — arguing that America has an opportunity to supply the world with alternative-fuel vehicles. "The rest of the world is already moving away from oil, and the longer we wait" to promote companies manufacturing fuel-efficient and alternative-energy vehicles at home, he claimed, "the more difficult and painful it will be for our companies and our workers to catch up."
Finally, Obama attempted to soften his argument by implying that this shift away from oil was a matter of simple necessity, given the nation's limited supply of petroleum. "We could open up every square inch of America to drilling and we still wouldn't even make a dent in our oil dependency," he explained. "We could open up ANWR [the Arctic National Wildlife Refuge in Alaska] today, and at its peak, which would be more than a decade from now, it would give us enough oil to take care of our transportation needs for about a month. Clearly, this is not a solution."
Obama had a much different idea for how to address these challenges. Rather than imposing new laws and regulations on energy producers and consumers, reform could be achieved through a "deal" with automakers. Specifically, Obama envisioned a deal that leveraged the companies' increasingly untenable pension and health-care burdens:
Today I'd like to give you another example of a deal that Washington could make with Detroit. We'd start by raising the fuel economy standards in this country by 3% a year over the next fifteen years. But to help our auto industry make the transition — to give them the competitive edge they need against their foreign counterparts — we'd pay for part of the biggest costs they face today: retiree health care. Right now, health care costs represent $1,500 of the price of every GM car that's made. By picking up part of the tab for the health care costs of their retirees, we'd be lifting a huge burden off the auto industry so that they'll invest in the technology that will finally reduce America's dependence on foreign oil.
It was a "deal" that Senator Obama would offer time and again in subsequent speeches; he eventually came to call it "Health Care for Hybrids," and introduced legislation of the same name.
Other themes from that September '05 speech constantly resurfaced as well, albeit in increasingly refined and pointed terms. Obama continued to invoke, for instance, the war on terror — quoting Osama bin Laden's instruction to jihadists to "focus your operations on oil, especially in Iraq and the Gulf area, since this will cause [American ‘crusaders'] to die off."
He continued to vacillate between warning that Chinese oil demand would send fuel prices through the roof and that China was outpacing America in the shift to fuel-efficient and hybrid vehicles. And he continued to present his reforms as a regretful concession to inevitability: "It would be nice if we could produce our way out of this problem, but it's just not possible. We only have 3% of the world's oil reserves."
It wasn't until 2006 that Senator Obama made climate change a central theme of his energy rhetoric. The shift was well timed: In January, Al Gore unveiled An Inconvenient Truth at the Sundance Film Festival; in March, Massachusetts v. Environmental Protection Agency, a case seeking to force the EPA to regulate greenhouse-gas emissions, reached the Supreme Court. A month later, in Chicago, Obama delivered an address titled "Energy Independence and the Safety of Our Planet." He said:
All across the world, in every kind of environment and region known to man, increasingly dangerous weather patterns and devastating storms are abruptly putting an end to the long-running debate over whether or not climate change is real. Not only is it real, it's here, and its effects are giving rise to a frighteningly new global phenomenon: the man-made natural disaster.
Obama's proposed solution to this threat involved reducing our use not just of oil ("one of the biggest contributors to our climate troubles"), but also of coal. Though he promoted cap-and-trade as a "market-based strategy" and suggested that technology would enable Americans to "keep our air cleaner while still keeping our coal mines in business," at its core, his plan depended on a firm regulatory hand: There would be a cap, and businesses would need to comply with it.
Having aggressively advanced the climate-change argument, Obama closed his Chicago speech with a dramatic flourish. Invoking the Alaskan village of Shishmaref — the residents of which were forced to abandon their homes as the ocean overtook their coastal community — he asked, "Will we let this happen all over the world? Will we stand by while drought and famine, storms and floods overtake our planet? Or will we look back at today and say that this was the moment when we took a stand? That this was the moment when we began to turn things around?" It was a line that would famously re-appear in 2008, as he claimed victory in the Democratic primaries and looked ahead to future generations of children, whom we would someday tell: "This was the moment when the rise of the oceans began to slow and our planet began to heal."
This dramatic tone would infuse Obama's energy rhetoric from 2006 onward. Energy reform would be the successor to the Manhattan Project, the Apollo moon landing, FDR's arsenal of democracy, and Eisenhower's interstate highways. America would invest $150 billion in ten years to "create up to five million American jobs — good jobs, jobs that can't be outsourced." The government would create a "Clean Technologies Venture Capital Fund," investing $50 billion in five years "to get the most promising clean energy technologies off the ground." Even longstanding components of Obama's energy plan received upgrades: Where Obama promised in 2005 to increase fuel-economy standards slowly, "by 3% a year over the next fifteen years," before the end of the 2008 presidential campaign, he was promising to "double our fuel mileage standards over the next two decades."
These sweeping pledges were a far cry from his initial, limited appeals based on economic and geopolitical necessity. Yet soon enough, such grand proposals would become commonplace — revealing the ambitions behind Obama's overarching agenda. When his inaugural address reached messianic heights — promising to "harness the sun and the winds and the soil to fuel our cars and run our factories," and chastising those who would "consume the world's resources without regard to effect" — no one familiar with the new president's campaign oratory could have been surprised. By then, Obama's revolutionary agenda was well established; the time had come to translate rhetoric into action.
PERSONNEL IS POLICY
Having won the election, Obama's task shifted from rhetoric and policy formulation to implementation. The first step in that process was structuring his administration, and in particular staffing the key offices that would determine energy policy. How the new president chose to fill those positions, and to balance the decision-making process between the White House and the agencies, would say a great deal about his intentions — and about his sense of the proper role of presidential power.
Some might have expected President Obama to delegate significant authority to the executive agencies. After all, he and his fellow Democrats had persistently criticized George W. Bush's invocation of presidential authority, under the theory of the "unitary executive," to control cabinet departments. But before he took office, Obama had already signaled that his environmental program would require the centralization of regulatory authority within the White House. On the campaign trail, citing the examples of the chairman of the Joint Chiefs of Staff and the director of national intelligence, he had pledged to designate "a Director of Energy Security to oversee all of our efforts." This official, Obama had declared, would be based at the White House and given "full authority to coordinate America's energy policy across all levels of government."
The scope of this newly proposed office's power had been outlined even earlier, in the American Fuels Act of 2006, legislation that Obama co-sponsored with Republican senator Richard Lugar. The director of energy security would "serve as the head of the energy community," work with the president and the Office of Management and Budget to oversee "each major Federal budgetary decision relating to energy security," determine the "annual consolidated budget for Federal programs relating to energy security," and carry out all other responsibilities assigned by the president.
While Obama's call for a centralized energy-regulation bureaucracy attracted relatively little attention during the campaign, it became a centerpiece of the post-election transition. Specifically, it was the focus of a prominent chapter of Change for America: A Progressive Blueprint for the 44th President — a comprehensive governing roadmap released days after Obama's election by the Center for American Progress (under the leadership of John Podesta, the Obama transition team's co-chairman). According to Change for America, the next president would have to work toward "transforming the energy base of the economy" — an audacious goal even by Obama's standards — including the enactment of a "robust, mandatory" system of climate-change regulation. Because this program would entail "tricky issues of tactics and sequencing," the president would need the national energy advisor, leading a new inter-agency National Energy Council, to devote "single-minded attention" to achieving this regulatory agenda.
The authors of that blueprint, Todd Stern and David Hayes, ultimately occupied important positions in the new administration — as the State Department's special envoy for climate change and deputy secretary of the interior, respectively. But their proposal had another prominent champion: Carol Browner, who had contributed her own chapter to Change for America, endorsing the creation of the new White House energy-advisor job. And just weeks after the document's release, President-elect Obama announced that he would in fact create the "energy czar" position — to direct a new White House Office of Energy and Climate Change Policy — and that Browner would be its first occupant.
After eight years of running President Clinton's EPA, Browner's record on environmental issues was well established. Even setting aside the fact that the Socialist International once publicly listed her as a member of its Commission for a Sustainable World Society — a fact that conservative critics widely noted after her new appointment — Browner's own description of what the next administration needed to accomplish, in her chapter of Change for America, left no doubt about the aggressiveness of her agenda.
According to Browner, on "day one," the new president needed to direct the EPA to begin the process of reducing greenhouse-gas emissions, promoting energy efficiency, expanding alternative energy resources, and reconsidering California's request to impose strict new automobile-emissions standards. In the first 100 days, she argued, the administration should begin to ascertain whether greenhouse gases endanger public health (while Browner called on the EPA to "make a finding based on the science," she left no doubt as to where she stood on the question), and, if so, to then use the Clean Air Act to reduce those emissions. The new administration would also need to expand the jurisdiction of the Clean Water Act, pare back the previous administration's use of cost-benefit analysis under the Clean Air Act and Clean Water Act, and intensify use of the "New Source Review" permitting process to regulate old power plants. In sum, if Steven Chu — the well-regarded Nobel laureate nominated to lead the Energy Department — was to be the face of the Obama administration's energy policy, Carol Browner, an aggressive regulator and activist, would be its spine.
Even while centralizing much authority in the White House, the new administration recognized that many important regulatory policies are set by "independent" agencies such as the Federal Energy Regulatory Commission (FERC) and Nuclear Regulatory Commission (NRC), which are partly insulated from presidential control. But even at independent agencies, the president exerts some influence by appointing or demoting the agencies' respective chairmen. And President Obama made his choices accordingly. To chair the FERC — an agency overseeing much of the nation's natural-gas and electric-power infrastructure — he appointed (with Senator Harry Reid's endorsement) Jon Wellinghoff, a Nevadan who declared in April 2009 that the nation would eventually need no new nuclear or coal-fired electric-generation facilities, because "ultimately wind's going to be the cheapest thing to do." And to chair the NRC, which oversees civil nuclear facilities and the longstanding plan to construct a nuclear-waste repository at Yucca Mountain, Obama appointed Gregory Jaczko, a longtime staffer for Senator Reid.
The new administration also appointed prominent environmental scholars to critical positions. Jody Freeman, founder of Harvard Law School's environmental-law program, joined Browner in the White House as "counselor for energy and climate change." And Georgetown's Lisa Heinzerling, a proponent of greenhouse-gas regulation, was named the EPA's senior policy counsel on climate change. Heinzerling had been a vocal critic of the use of cost-benefit analysis, calling it "a deeply flawed device that has never been the environmentalist's friend." Heinzerling had been lead counsel for the plaintiffs in Massachusetts v. EPA; having once taken the EPA to court to force the agency to regulate greenhouse-gas emissions, she was now moving to a position inside the EPA to direct that very effort.
Throughout the upper ranks of his administration, Obama installed people who shared his view that the aim of America's energy policy should be, first and foremost, safeguarding the environment. These senior officials also shared his understanding that environmental protection necessarily requires using less energy (especially from fossil fuels), and thus demands restraints on the development of such energy sources. And once personnel friendly to this vision had been put in place, the Obama administration could begin the work of implementation.
CARS AND COAL
In her essay for the Center for American Progress, Browner had called on the new administration to move forward with climate regulation on "day one" — and her instruction was heeded. On the day after President Obama's inauguration, California regulators sent the EPA a formal request for federal permission to implement the state's strict greenhouse-gas rules for automobiles. More specifically, California asked the EPA to reconsider the agency's previous rejection of the state's original request for a "California Waiver."
As a general rule, federal regulators have exclusive power to set automobile standards: The Department of Transportation sets fuel-economy standards under the Energy Policy and Conservation Act, and the EPA sets emissions standards under the Clean Air Act. This exclusive power saves auto companies from having to comply with 50 states' differing standards. But because California's distinctive topography and climate give rise to unique environmental problems (such as smog), the Clean Air Act allows the EPA to waive its pre-emptive power, thereby freeing California to promulgate and enforce its own standards. California is the only state that enjoys this power, although other states can adopt California's standards rather than the federal ones if they choose. And while California had received many waivers in the past, this particular request broke new ground: It was the state's first attempt to use this Clean Air Act provision to regulate not traditional pollutants, but greenhouse-gas emissions.
The Bush administration's EPA had rejected California's original request, concluding that global climate change was not the type of local condition eligible for special California regulation under the Clean Air Act. But the Obama administration's EPA did not share that interpretation of the law, and soon made clear it would approve California's request.
As it happens, the auto companies faced California's imminent regulations at a particularly vulnerable moment: Two of the three U.S. automakers, Chrysler and General Motors, were collapsing into bankruptcy. As Todd Zywicki has recounted in these pages ("The Auto Bailout and the Rule of Law," Spring 2011), the Bush administration had kept Chrysler and GM afloat with an infusion of $17.4 billion from the Troubled Asset Relief Program in December 2008. Three months later, the Obama administration continued to bail out the companies (combined, they ultimately received more than $70 billion in TARP funds), but it further directed both Chrysler and GM to proceed into Chapter 11 bankruptcy, largely on terms dictated by the administration.
As noted above, Obama had long recognized that the federal government might be able to exploit the automakers' financial problems — caused as they were by burdensome pensions and health-care costs — and drive the companies to make a deal: "Health Care for Hybrids." But now, just two months into his presidency, Obama enjoyed unprecedented leverage over the auto companies. He was in a position to make not just an offer, but an offer they couldn't refuse.
On May 19, 2009, the president convened a Rose Garden press conference to announce the details of an unprecedented agreement. "For the first time in history, we have set in motion a national policy aimed at both increasing gas mileage and decreasing greenhouse-gas pollution for all new trucks and cars sold in the United States of America," he declared. California would receive its EPA waiver, but only as a prelude to a new set of stricter nationwide standards to be established through a joint effort by the EPA, California, and the automakers themselves.
The automakers could not plausibly have contested the new federal rules even if they wanted to, given the government's financial leverage over several of them and the EPA's clear willingness to approve California's standards. So they not only accepted the new federal standards, promising not to challenge them in court, but also agreed to drop their then-pending lawsuits challenging California's proposed regulations.
In the Rose Garden ceremony, President Obama thanked several people — everyone from California's governor Arnold Schwarzenegger and senator Barbara Boxer to the United Auto Workers union — but he singled out one official for special praise: Carol Browner, "who helped to make this all happen today."
Browner really was indispensible in sealing the auto deal, but President Obama's Rose Garden audience could not have known why. In fact, while the president suggested that the car deal was struck in good faith, by parties "willing to set aside the past for the sake of the future," subsequent reports revealed quite a different story. As Mary Nichols, head of California's Air Resources Board (the state agency that sets emissions standards), later told reporters, Browner enforced a gag rule among the regulators and the auto companies. "We put nothing in writing, ever," Nichols said. "That was one of the ways we made sure that everyone's ability to talk freely was protected." In a refreshing moment of candor, Nichols added that it was "an astonishing thing that on something of this magnitude there were no leaks."
California's role in this arrangement was key, especially when it came to putting pressure on the automakers not receiving federal bailouts, including foreign automakers. Browner knew that the threat of allowing California (and thus other states that chose to follow its rules) to have stricter standards, with a different set of requirements than those established by federal rules, would be an enormous problem for the auto industry: It would force the car companies to either produce two sets of vehicles for the American market (causing countless practical headaches) or abide by the stricter standards nationally. And this threat, combined with the government's direct leverage over two of the largest automakers, would bring the car companies to the table. Jeremy Anwyl — the CEO of Edmunds.com, a popular auto web site — later testified before a congressional subcommittee that the auto companies' consent to the deal was secured by something more than the usual give-and-take with regulators. "I meet with the car companies on a regular basis," Anwyl explained, and "[t]he expression that I hear repeatedly is that they felt they had a gun to their head, and by that I think they are referring to the threat of a California opt-out, the California waiver."
Documents subsequently obtained by the House Oversight Committee revealed still more details of the administration's negotiation process. According to the committee's February 2012 oversight letter to the White House counsel, the White House's climate team drafted "commitment letters" for the automakers to sign without modification, promising to support not just the first round of federal greenhouse-gas emissions standards (for model years 2012-2016) but also the subsequent round of standards developed in the talks, which would apply through the year 2025.
Jody Freeman, the Harvard law professor then serving as Carol Browner's counselor, e-mailed the White House's final demands to auto officials, setting a 24-hour "hard deadline" for the companies to comply with the administration's 15-year regulatory program. This revelation was particularly noteworthy given that Freeman, after leaving the White House and returning to Harvard, penned a law-review article celebrating the White House's "car deal" as a laudable innovation in transparent, cooperative rulemaking. "As part of a negotiated agreement to support this program, all the major foreign and domestic auto companies signed letters of commitment promising not to challenge the new standards in court," Freeman wrote, neglecting to note that the White House had written those letters and demanded that they be signed within 24 hours.
The White House's "car deal" was the administration's first major success in regulating greenhouse-gas emissions, but not the last. Indeed, the federal standards imposed on automakers in the "car deal," in conjunction with the EPA's subsequent "endangerment finding" (its conclusion that greenhouse gases endanger public health or welfare), triggered a succession of greenhouse-gas regulations, including new standards proposed by the EPA in March 2012 to govern electric utilities.
The EPA's regulation of power companies, moreover, was not limited to the new greenhouse-gas regulations. The agency issued other significant air-quality rules — such as the Mercury and Air Toxics Standards (commonly known as the "Utility MACT") and the Cross-State Air Pollution Rule — intended primarily to constrain the operation of coal-fired power plants. The cumulative effects of those and other rules could significantly undermine the reliability of the nation's power grid: In an August 2011 letter to Senator Lisa Murkowski of the Senate Energy and Natural Resources Committee, FERC chairman Wellinghoff reported his staff's preliminary conclusion that the EPA's rules could force the retirement of 81 gigawatts of coal-fired generating capacity — nearly 8% of the nation's installed electric-generation capacity.
Wellinghoff later attempted to downplay the staff's conclusions as an "informal, preliminary assessment," a "first iteration" that was followed by less dramatic estimates based on newer data. Unfortunately, the White House has made no effort to formalize an inter-agency process that would ascertain such crucial information prior to imposing new rules. Regulating without clear, rigorous, corroborated information is less than ideal under any circumstances — but it is particularly ominous given President Obama's comment to the San Francisco Chronicle in 2008 that he intended to seek cap-and-trade policies that would cripple traditional coal-fired power plants. "If somebody wants to build a coal-powered plant, they can," the president warned, "it's just that it will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted." As for what the broader effects on America's economy and energy security might be, the Obama administration still has no way to reliably tell.
In regulating coal-fired power plants, the administration demonstrated its willingness to impose costly burdens on energy producers; in its "car deal," it demonstrated its willingness to resort to blunt regulatory force, applied in secret, to achieve its aims. And these two trends combined in another major component of the administration's energy policy: its treatment of offshore oil and gas drillers after the 2010 BP oil spill in the Gulf of Mexico.
On the campaign trail, Obama had expressed skepticism of President Bush's and Senator John McCain's support for offshore drilling, calling it an election-year "gimmick" that would poll well but would "not make a real dent in current gas prices or meet the long-term challenge of energy independence." Still, the public desire for greater domestic oil production persisted, so as president, Obama initially took little action to further restrict offshore drilling. If anything, he aroused worry on the political left by indicating an increased willingness to open coastal waters to drilling.
That changed dramatically in April 2010, however, when an explosion on the Deepwater Horizon oil rig led to the spilling of nearly 5 million barrels of oil from the Macondo well into the Gulf of Mexico. Interior Secretary Ken Salazar, whose department oversees offshore drilling, swiftly imposed a six-month moratorium on all drilling in water deeper than 500 feet.
That move was at first glance understandable, given the magnitude of the Macondo spill. But it soon became evident that the administration's haste had resulted in a prohibition that simply was not justified by the evidence at hand. For that reason, a federal judge agreed with affected drillers and ruled that the administration's action was unsustainable under the governing legal standards. "The Deepwater Horizon oil spill is an unprecedented, sad, ugly and inhuman disaster," the judge wrote. Nevertheless, he opined, the government had failed to cogently support "the decision to issue a blanket, generic, indeed punitive, moratorium" with actual evidence.
After the court struck down the moratorium, the administration responded not by reconsidering its decision and improving the quality of its analysis, but rather by simply re-imposing the same substantive prohibition in a new document, which drillers immediately appealed. As efforts to defend its reactionary moratorium faced increasingly bleak prospects, the administration publicly rescinded the policy in October 2010, yet quietly pursued a very similar course of action by other means. Rather than formally announcing a moratorium and transparently enforcing it, the administration simply stopped entertaining applications for drilling permits.
Under this "permitorium," according to the House Oversight Committee, "drilling activity remained at a standstill not by operation of law — but because of inaction on the part of" federal regulators. IHS CERA, an energy-research firm, later concluded that the administration's slow pace of reviewing drilling-permit applications would cost the Gulf of Mexico region tens of thousands of jobs and cost the nation billions of dollars through 2013.
The administration eventually relaxed the permitorium in 2011, increasing the pace of drilling-permit approvals. Sensitive to the increasing political salience of higher oil costs, the White House has recently begun to argue that it has not just ended the de facto moratorium but has affirmatively increased the nation's production of oil. In a March 2012 report, the White House claimed that, "since we put in place new safety standards in the wake of the Gulf oil spill, we have approved more than 400 drilling permits. In fact, we are now permitting at levels seen before the spill, all while meeting these important new standards."
But because each well often requires multiple permits, such statistics substantially inflate the actual number of wells approved by the administration. According to the Interior Department's own data, as of June 2012, only 102 new deepwater wells have been approved since the formal drilling moratorium ended. In late 2011, IHS CERA concluded that the administration's pace of approving deepwater-drilling permit applications was still far below pre-moratorium levels.
Tacit rejection by inaction has turned out to be a prominent feature of the administration's energy policy. By late 2011, public attention began to shift away from the offshore-drilling permitorium and toward another controversial energy project: TransCanada's application for President Obama's approval of the international Keystone XL oil pipeline, which would carry crude from the Canadian oil sands to refineries in the United States.
As it happens, international oil pipelines are particularly susceptible to presidential discretion. No statute governs the approval of such pipelines; in the absence of a controlling statute, presidents have for more than 50 years simply asserted control over this form of international commerce, pursuant to a series of executive orders. Those orders, in turn, delegate primary review authority to the secretary of state, although the president could revoke that delegation at will.
Within that legal framework, TransCanada filed its application for a "Presidential Permit" in September 2008. If approved, the Keystone XL pipeline would transport up to 830,000 barrels of Canadian crude oil every day — roughly 4% of America's daily oil consumption — across the Canadian border, through Montana and other states, to Oklahoma and the Gulf coast of Texas. In time, it could transport more than a million barrels per day, and be used to move domestic as well as Canadian oil to refining facilities. After three years of environmental study, in conjunction with nearly a dozen other federal agencies, as well as state agencies, Indian tribes, and Canadian officials, the State Department issued its "final environmental impact statement," finding that the Keystone XL pipeline would have no undue effects on the environment. All that remained was for President Obama to approve the pipeline.
But the State Department's endorsement of the pipeline sparked outrage among climate activists, who opposed the Keystone XL project less because of the environmental impacts of the pipeline itself than because of what the pipeline would carry: petroleum derived from Canada's oil sands. Keystone XL's critics, most prominently environmentalist Bill McKibben, argued that the techniques used in the extraction of crude from the oil sands — a combination of clay, sand, water, and bitumen — would exacerbate the problem of global climate change. In one public letter, for example, McKibben and others claimed that "the Keystone Pipeline would also be a 1,500-mile fuse to the biggest carbon bomb on the continent, a way to make it easier and faster to trigger the final overheating of our planet." Quoting NASA climate scientist James Hansen, they concluded that, "if we have any chance of getting back to a stable climate, ‘unconventional fossil fuels, such as tar sands, must be left in the ground.' " The State Department's own conclusion — that the project would result in no more than an additional 3 million to 21 million metric tons of annual carbon-dioxide emissions (roughly one third of one percent of annual U.S. carbon emissions) — did not satisfy the pipeline's opponents.
Reacting to heightened pressure from the political left, which culminated in a 12,000-person protest outside the White House in November 2011, President Obama took action — or, more accurately, inaction. The White House announced that it would neither approve nor disapprove the pipeline, and instead would hold the application in abeyance until after the 2012 elections. The president attempted to justify this delay by invoking concerns over the pipeline's effects on Nebraska's Ogallala Aquifer, even though the State Department had already thoroughly vetted that concern and all other environmental issues for three years and recorded its findings in the environmental impact statement.
Dissatisfied with Obama's inaction, the House and Senate passed a bill requiring the president to issue a final decision not after Election Day but by February 21, 2012. The president signed that law, but ultimately rejected the Keystone XL pipeline, blaming Congress for giving him insufficient time to analyze the project and inviting TransCanada to submit a new application. The company accepted his offer and filed a new application. The State Department accepted the application, but announced that it would not issue a decision until after the 2012 election. Once again, the president got his way — not by plainly stating his intentions and subjecting them to open debate, but through misdirection and delay.
The administration did not limit its defeat-by-delay strategy to fossil fuels. In addition to offshore drilling and the Keystone XL pipeline, President Obama also employed this strategy to terminate the longstanding federal plan to build a nuclear-waste repository at Yucca Mountain, Nevada.
Throughout his presidential campaign, then-senator Obama was an outspoken critic of Yucca Mountain. His position may well have been a matter of political necessity: The Yucca Mountain project is overwhelmingly unpopular in Nevada, and Nevada was an important early state in the Democratic primaries. Accordingly, after the Las Vegas Review-Journal published an unfavorable article in May 2007 questioning his campaign's ties to the nuclear-power industry, Obama wrote a letter to the paper reiterating his opposition to the project. "I want every Nevadan to know that I have always opposed using Yucca Mountain as a nuclear waste repository," he wrote, and "all spending on Yucca Mountain should be redirected to other uses."
After the election, the administration began to work against Yucca Mountain, using yet another delay tactic to exploit the project's unique legal framework. The Nuclear Waste Policy Act specified Yucca Mountain exclusively as the site for the nation's nuclear-waste repository, but that statute is not self-executing. Rather, the 1987 law further directed the Energy Department to formulate a full plan for the project at the Yucca site, and to submit that proposal to the Nuclear Regulatory Commission for review and approval. The Energy Department filed that application, after more than two decades of delay, in 2008.
Because the department's application was still pending before the NRC, the Obama administration saw an opportunity to unilaterally end the project. In an October 2009 draft memorandum later leaked to the press, the department's chief financial officer stated that the department would simply stop advancing its Yucca Mountain application. "All license defense activities will be terminated in December 2009," the document noted.
When the press confronted the Energy Department with the leaked memo, the department declined to comment on whether the administration would actually follow through on the plan it described. But the answer came soon enough: In March 2010, the department filed an extraordinary motion before the NRC, asking the agency to terminate the department's Yucca Mountain application. Furthermore, the department asked the NRC to dismiss the application "with prejudice" — that is, permanently prohibiting the department, under future presidents, from re-submitting a new Yucca Mountain application. The administration was claiming, in effect, the unilateral power to permanently end the Yucca Mountain project, binding all future presidents.
Three months later, the NRC's internal licensing board rejected the Energy Department's motion. But this victory for the repository's proponents was purely pyrrhic: The Energy Department's motion was promptly brought before the full Nuclear Regulatory Commission, where the NRC's Chairman Jaczko — selected by President Obama, and a former staffer in Senator Reid's office — simply ground the NRC's own process to a halt.
The NRC's secretary set a date of August 25, 2010, for the commissioners to vote on the Energy Department's motion. Jaczko initially cast a timely vote, but five days later — before the remaining votes were cast — he withdrew his initial vote, and withheld it for two more months. Once he finally cast his belated ballot, the NRC's commissioners deadlocked, two votes to two (the NRC is a five-member commission, but commissioner George Apostolakis recused himself from the vote because he had been tangentially involved in the Yucca project as a consultant to the Energy Department before he was appointed to the commission). In the intervening period, Jaczko, exercising his power as NRC chairman, had unilaterally ordered the NRC staff to commence the "orderly closure" of the Yucca Mountain application review.
Jaczko had, in effect, single-handedly delivered the Energy Department a win on the motion to terminate Yucca Mountain, even when he lacked the voting majority of NRC commissioners needed to formally approve the department's motion. In September 2011, three other commissioners nodded to practical reality; with Jaczko, they announced that they were deadlocked and that the NRC staff would place the Yucca Mountain application in abeyance. Jaczko would eventually announce his resignation from the NRC in May 2012, amid a storm of controversy regarding his management of the commission. But by then the former Reid staffer had already secured his legacy with respect to Yucca Mountain, delivering President Obama success on yet another policy objective. The White House, in turn, thanked Jaczko for his "service and efforts to further the mission of the Nuclear Regulatory Commission."
THE COSTS OF CYNICISM
In each of these matters, President Obama's actions drew criticism on points of substance, as the public debated whether each of the given regulatory objectives — decreasing automobile emissions, restricting the use of coal to generate electricity, drilling for oil and gas offshore, importing Canadian oil, and promoting nuclear power — was sound policy. And the president drew still more criticism for the administration's deluge of spending on green-energy projects that were either implausible (for instance, putting a million electric cars on the road by 2015) or perhaps even corrupted by political interests (like Solyndra's receipt of Department of Energy loan guarantees).
But regardless of whether the president's policy goals were justifiable, the means that his administration employed in pursuing them were not. Traditionally, executive decisions on matters of vast economic importance involve a great deal of transparency: Regulators take action based on publicly available evidence, and justify them in public statements. The Obama administration, by contrast, sought to avoid public scrutiny and judicial review by simply refusing to act on applications for pipelines or drilling permits. And when it did take public action — as in promulgating unprecedented regulations for vehicle greenhouse-gas emissions — it did so with great cynicism, publicly applauding a "deal" that had been brokered only through private strong-arming.
Having come to office with the clear ideological goal of paring back the energy infrastructure that undergirds America's economy, and with the inchoate goal of a future in which we would "harness the sun and the winds and the soil to fuel our cars and run our factories," President Obama undermined his own stated commitment to transparency and science. Along the way, his energy agenda has exacted enormous costs for the nation — in jobs, in private prosperity and public funds, and in the lost credibility of the regulatory process itself.
Adam J. White is a lawyer in Washington, D.C. He works on regulatory law and policy, including environmental and energy issues. He helped to represent parties that unsuccessfully challenged the EPA's California-waiver decision.