December 16, 2016

Energy in Transition: Trump Announces Additional Cabinet Nominees

Holland & Knight Alert
Beth A. Viola | Isabel C. Lane

President-Elect Donald Trump announced this week three new cabinet nominees who will certainly influence U.S. energy policy at home and abroad. This alert is intended to update clients on the President-Elect's nominees and their preliminary impacts on energy policy. All of these nominees will have to be confirmed by the Senate in the next session of Congress.

Secretary of State

Trump has tapped ExxonMobil CEO Rex Tillerson to serve as Secretary of State. In announcing his selection, Trump credited Tillerson's experience in international business dealings as crucial knowledge to running a successful State Department. Tillerson's 41-year career at Exxon has kept him out of government; he has previously held neither any diplomatic positions nor elected offices.

Tillerson's selection has garnered criticism from Republicans and Democrats alike, who have expressed concerns regarding the businessman's longstanding relationship with Russian President Vladimir Putin – especially in light of the possibility of Russian interference in the U.S. election. Democrats have also expressed concerns over Tillerson's clear connections to the oil industry – though, under Tillerson's leadership, Exxon supported the Paris Climate Agreement and lobbied for a carbon tax. Tillerson also has a complicated path in front of him regarding the future of his $187 million in unvested Exxon stock awards set to vest in a decade or when he retires, which he has announced he will do effective Dec. 31, 2016. Despite these concerns, Tillerson's nomination has been endorsed by former Secretary of Defense Bob Gates and former Secretaries of State James Baker and Condoleezza Rice, who cited Tillerson's deep understanding of the global economy and broad international experience as strengths.

To block Tillerson's nomination in the Senate Foreign Relations Committee, only one Republican on the committee would need to break rank and vote with the committee's Democrats. Moving the nomination to the Senate floor in spite of a committee's rejection would be an unprecedented move for a cabinet appointment.

In addition to playing a key role in the future of the Paris Climate Agreement and the United Nations Framework Convention on Climate Change, Tillerson's portfolio at the Department of State would include oversight over trade deals and measures related to national security. Although permits for Arctic drilling are granted by the Department of the Interior, the Department of State will continue to play a role in negotiating with other Arctic countries such as Russia and Canada to determine the boundaries of the U.S. continental shelf. The approval of international pipelines, such as Keystone XL, will also be a Trump Administration priority in which the State Department will play a key role. If appointed, Tillerson would also be the top U.S. diplomat negotiating and enforcing agreements on the use of nuclear technologies by countries such as Iran.

Secretary of Energy

Former Texas Gov. Rick Perry has been nominated to head the Department of Energy (DOE). As Secretary of Energy, Perry will oversee a portfolio that includes research on emerging energy technologies, energy efficiency regulations and the safe handling of nuclear materials. DOE is likely to play a critical role in the Trump Administration's efforts to move nuclear energy forward, including the production of a nuclear waste disposal site at Yucca Mountain in Nevada. Unlike the last two energy secretaries, both physicists, Perry brings 15 years of experience holding public office at the helm of the country’s leading crude oil- and wind energy- producing state.

To many champions of renewable energy, Perry is considered an adversary for his hardline denial of climate change, his 2011 election campaign promise to abolish the DOE and his 2015 stance against extending the federal tax credit for wind. Nevertheless, his actions as governor indeed speak to a more pragmatic leader who presided over an "all of the above" energy strategy that made Texas not only an economic powerhouse and a world leader in oil and gas production but also a global leader in wind and renewable energy investment. Under Perry’s leadership, Texas wind power grew from 116 megawatts – when he took office – to 18,000 megawatts today, making Texas the nation's No. 1 wind producer. Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-Alaska) has announced her intention to quickly begin consideration of Perry in early January. For a complete forecast of Perry's expected impact on energy finance, see Holland & Knight's alert, "Forecast for the Department of Energy Finance Programs," Dec. 16, 2016.

Secretary of Interior

Freshman Congressman Ryan Zinke (R-Mont.) has been chosen to head the Department of Interior. As Secretary of the Interior, Zinke would oversee all federal public lands, including national parks, wildlife refuges and tribal lands. Zinke would also oversee the permitting and extraction of natural resources on public lands.

The Trump Administration is likely to look at Zinke to end limits on offshore drilling, lift the Interior Department's freeze on new coal leases and abandon federal fracking regulations. In addition, Zinke is likely to lead efforts to expand oil and gas development on public lands, including the rollback or enforcement mitigation of existing regulations.

Zinke has a strong track record of protecting public lands. He has opposed efforts by House Republicans to transfer federal lands to the states. He voted against the GOP's fiscal 2016 budget because it sold public lands and even resigned from the GOP platform-writing committee after the group included language to transfer federal land ownership. Zinke was also the only Republican on the House Committee on Natural Resources to support a Democratic amendment to permanently authorize the Land and Water Conservation Fund.

For additional information on other nominees or the presidential transition, please visit Holland & Knight's Presidential Transition Analysis Center.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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