What’s Missing In The Romney Energy Plan?

There is something that sounds noble, seductive and patriotic about calling for energy independence. We have heard it mostly from politicians at least as far back as Richard Nixon. The reason is that achieving true energy independence in a world of energy inter-dependence may not be the best strategic, economic or practical choice for America. But I come here mostly to praise the Romney Energy Plan not to trash it. He had the good sense to say that while he too would aspire to energy independence he recognizes it has been an elusive dream.

The Romney Agenda on energy consists of the following key elements:

• Empower states to control onshore energy development including on Federal lands;
• Open offshore areas for energy development;
• Pursue a North American Energy Partnership with Canada and Mexico;
• Ensure accurate assessment of energy resources;
• Restore transparency and fairness to permitting and regulation; and
• Facilitate private-sector-led development of new energy technologies.

So far, so good, but the devil is in the details of Governor Romney’s Energy Plan. It is a good read with lots of references to studies and the work of others to suggest a thoughtful analysis has taken place to cull out those that disagree with the Governor’s plan. But this is politics after all and we’re glad to know where the candidates stand on these important issues BEFORE we vote in November.

Governor Romney also makes his economic case for this new energy policy saying that it would help create more than three million new jobs including encouraging more than one million of them in manufacturing. Clearly, unleashing America’s domestic energy production and using it to drive down the price of oil and natural gas would be good for the economy. We are actually seeing that happen right now from the new energy production growth taking place on private lands that are beyond the regulatory reach of the Federal Government. Governor Romney’s energy plan might speed up energy induced job creation primarily by getting the Federal Government out of the way of progress.

In fact, the biggest indictment of the Obama energy strategy in place today is the fact that 96% of America’s domestic energy growth the President is trying to take credit for happened on private lands beyond the reach of his bureaucrats and regulators. Energy production growth on Federal lands, offshore and in areas in Alaska and elsewhere already designated for E&P activity have actually gone down. The President’s official energy policy of ‘all of the above’ is actually a policy of stopping or slowing down ‘all of the above’ fossil fuel development possible while stimulating and subsidizing ‘all of the above’ renewable energy possible—and take credit for the rest that happens anyway.

If Mitt Romney wins the 2012 election with any margin that can pass the laugh test as a mandate he should want his energy plan to be on record laying out what he will do to change the energy dynamics to help get us closer to that elusive energy independence goal. This Romney energy plan is a good start but it is missing a few elements that would make it truly transformational.

In addition, the Romney Energy Plan says:

• States will be empowered to establish processes to oversee the development and production of all forms of energy on federal lands within their borders, excluding only lands specially designated off-limits;
• State regulatory processes and permitting programs for all forms of energy development will be deemed to satisfy all requirements of federal law;
• Federal agencies will certify state processes as adequate, according to established criteria that are sufficiently broad, to afford the states maximum flexibility to ascertain what is most appropriate; and
• The federal government will encourage the formation of a State Energy Development Council, where states can work together along with existing organizations such as STRONGER and the IOGCC to share expertise and best management practices.

If Romney wins he has ONE CHANCE to reform the way energy development and regulation takes place in the US. Today there are two basic problems: First, the Federal Government control so much land especially in the Western states that the states are mere bystanders to most of the energy development potential in their states. The Romney plan gives states more of a voice but very little authority to do anything more except become the administrative agent of the Federal Government.

Nuts to that!

The second problem is much of our energy infrastructure is interstate but we have made a muddled mess of siting and permitting on oil and gas pipeline side and only then after endless agencies pile on with their regulatory reviews. On the electric power side we continue to allow electric transmission to be a state by state regulated business which means NIMBY rules the process and little gets built relative to our needs. This is no way to energy independence nor anything approaching a smarter, more efficiency and secure grid.

Here’s what’s missing in the Romney Energy Plan:

1. Turn Federal Lands Over to the States. Except for designated national parks and preserves, military facilities, offshore development beyond a specified distance and similar lands required for actual Federal purposes, The Romney Plan misses the best opportunity to reinforce our Federalist system by ceding ownership and control of the rest of Federal lands to the states once and for all. This dramatically reduces the mischief potential, interference and political hassles by the Federal bureaucrats and special interests groups over land use issues that are not strategic to the Federal Government. Let the states determine what to do with Federal lands based upon their own strategic interests.
2. Require Independent Cost Benefit Analysis of Environmental Law Impacts and an Equitable Balancing of Economic and Environmental Interests as the definition of the Public Interest. The Romney Plan ignores the reality of our broken Federal environmental processes and rulemaking. I recognize that is not a fight they want to pick BEFORE the election but our environmental laws are one-sided and fail to require balancing of their economic consequences against the environmental benefits. Agencies own no burden to prove the proposed environment actions are reasonable in balancing public and private interests. Federal bureaucrats are really in business for themselves because Congress ducks the hard decisions in passing legislation and leaves it to the agencies to write the rules. This must stop. The Romney plan should call on Congress to require an independent cost benefit analysis of every major Federal rulemaking, a sunset process to force periodic review of existing rules, and require that Congress approve the final rules proposed BEFORE any law passed requiring rules goes into effect. Environmental laws should be amended to require a test of equitably balancing proposed environmental benefits against their cost and impact on private property rights. The Government should be required to pay private property owners when the costs exceed the benefits measured by standardized objective criteria applied across all case. This would stop the abuse of environmental litigation and out of control rulemaking.
3. Give FERC clear authority over Interstate Energy Regulation and Permitting. The Romney Plan fails to solve the vexing problem of duplicitous regulatory reviews by states and Federal agencies. This problem must be fixed is he has any chance of achieving that elusive dream of energy independence because it is the primary reason we have not achieved it so far. The Romney Plan should fix this by making FERC the lead energy and environmental regulator for ALL interstate energy development, transportation, electric transmission, wholesale ratemaking and environmental regulation.
4. Reform Federal Rulemaking. The Romney Energy Plan wimps out completely on this essential reform. The Romney Plan should require Federal agencies to own a burden of proving that the benefits of a proposed rule outweigh the costs and that the rules are reasonable and in the public interest. This should be done in an independent review process before an independent administrative law judge. Every action that is related to interstate energy should be handled through a FERC docket. Everything else through the Administrative Law Judge system in place using the same standard criteria for cost benefit analyses. If the agencies cannot own their burden of proof and withstand cross examination by interveners in the rulemaking then the ALJ should reject the rule and tell the agency to start over. This would force all the interested parties to make their case and settle their differences before a final rule is presented to Congress for an up or down vote. It should dramatically reduce the cost of endless delays, litigation and lobbying.
5. Get Back to Basic Research and out of picking winners and losers. The Romney Plan calls for ensuring transparency in accurate energy resource assessments and facilitate private-led efforts on new technology development. This is too squishy for me and fails to address the real need for reform in the following key areas:
   1. Fund Basic Science and Technology Research at Federal Labs and agencies like DARPA and stop Federal agencies picking winners and losers or acting like venture capitalists.
   2. Force a Sunset Review of Ethanol, Renewable Fuel Standards, Boutique Fuels, CAFÉ and other similar Federal mandates and subsidies including loan guarantees, production and investment tax credits and other tax incentives that limit competition, drive up the costs to consumers or create a corporate welfare entitlement for solutions that are not sustainable in competitive markets.

There is much to be said for the Romney Energy Plan. It is a good start but it is not sufficient to make the kind of fundamental transformation changes needed in our energy and environmental laws and policies to have a reasonable chance of achieve that elusive energy independence dream.