Just four days after he was inaugurated, President Donald Trump delivered a clear message that he would use his office to help industry friends and political allies. He signed a Jan. 24 executive order that assured completion of the Dakota Access pipeline, which will transport oil fracked by various companies, including one owned by Oklahoma oilman Harold Hamm, his longtime friend and energy adviser.
Since that day, the president has tapped various friends and supporters to help shape his infrastructure agenda, including CEOs who have a financial interest in the regulatory relief Trump is promising and implementing. These include Stephen Schwarzman, who heads the New York-based Blackstone equity firm, which has multibillion-dollar investments in infrastructure nationwide. They also include lesser known figures, such as Veresen CEO Don Althoff, whose Canadian company was unable to get permits during the Obama era to build a liquified natural gas export terminal in Oregon.
Trump's appointments to regulatory agencies have delivered a boost to these allies, and also to others, such as Alan S. Armstrong, CEO of Williams, an Oklahoma-based gas pipeline company. Trump has made clear he wants the federal government to clear a path for new energy projects.
"No longer can we allow these rules and regulations to tie down our economy, chain up our prosperity, and sap our great American spirit," Trump said in a June 9 speech. "That is why we will lift these restrictions and unleash the full potential of the United States of America."
As president, Trump can operate numerous levers of regulatory relief. His appointments to the U.S. Environmental Protection Agency and the Interior Department are reversing decisions of the Obama administration that tripped up energy and water projects.
At one point, Trump was considering Hamm — a major campaign donor and pioneer in extracting oil from shale rock in North Dakota — to serve as his energy secretary. When Hamm backed out, Trump appointed former Texas Gov. Rick Perry, who had to resign from the board of Energy Transfer Partners — the company developing the Dakota Access pipeline — to take the Energy Department job.
EPA, Interior and Energy all have influence over infrastructure, but possibly the most influential agency is one that many Americans have never heard of — the Federal Energy Regulatory Commission.
FERC has licensing authority over transmission lines, hydro-power projects and cross-state gas and oil pipelines. Dozens of these private projects are in the works, raising concerns about use of eminent domain to build them.
For years, energy industry CEOs have complained about FERC's slow pace, partly caused by multiple public hearings and comment periods, so affected landowners can express their concerns. That pace is expected to change when the Senate confirms Trump's two nominees to FERC, which will give the commission a quorum again. They are Neil Chatterjee, a senior energy adviser to Senate Majority Leader Mitch McConnell, and Robert Powelson, a member of the Public Utility Commission in Pennsylvania, a state friendly to the oil and gas industry.
These appointments, and Trump's public statements, have emboldened energy company CEOs, some of whom have publicly urged the president to intervene on their behalf.
One of these is Armstrong, the CEO of Williams, one of the nation's largest developers of natural gas pipelines. Last year, Williams suffered a setback when New York regulators, pressured by the state's anti-fracking activists, declined to act on a needed water quality permit for the company's Constitution Pipeline. The decision effectively stymied the 125-mile pipeline, which would ship natural gas from northeast Pennsylvania to lucrative markets in New York.
In a recent interview with Bloomberg, Williams CEO Armstrong said he has been urging the Trump administration to override the New York decision by assuming permitting authority for the project, which he says the Army Corps of Engineers could do on its own. "The issue has been purely political," he said. "That's exactly when, for interstate commerce, the federal government should use their authority."
During the Obama administration, FERC approved numerous energy pipelines, including several opposed by environmental groups and rural landowners. But it also occasionally rejected a permit, as it did in 2016 for the Jordan Cove project in southwest Oregon.
Jordan Cove is a proposed export terminal in Coos Bay, Ore., that would ship liquified natural gas to Asian markets. It would be fed by the 235-mile Pacific Connector pipeline that would deliver fracked gas from the Rocky Mountains.
Late last year, FERC denied the project a permit, citing a lack of public benefits in comparison to impacts on the environment and to property owners that would have to give up land for pipeline easements. The agency also said that the project's developer — Canada-based Veresen — failed to demonstrate there was adequate overseas demand for liquified natural gas.
Veresen's stock price slumped on that decision, but since Trump's election, it has jumped 50 percent, partly on hopes the administration will give it a green light.
The White House has fueled those hopes. First, it invited Veresen's Althoff to join other manufacturing CEOs in a Feb. 23 meeting with Trump in the State Dining Room. At the event, the president talked about bringing "many, many millions of jobs more back to the United States."
Then in April, a top Trump advisor signaled that the administration would expedite Jordan Cove's approval, after another meeting with Althoff at the White House.
"The first thing we're going to do is we're going to permit an LNG export facility in the Northwest," said Gary Cohn, director of the National Economic Council, in comments at the Institute of International Finance, first reported by The Washington Post. The White House later confirmed he was referring to Jordan Cove project.
The White House is sensitive to the perception it is hand picking infrastructure winners. In February, the White House attempted to disassociate itself from a list of 50 public-private projects the Trump transition team had circulated to the National Governor's Association, first reported upon by McClatchy.
According to the National Governor's Association, the list of "Emergency and National Security Projects" came from the transition team, a claim later confirmed by Dan Slain, an Ohio businessman who was part of the transition.
In March, the White House asked construction worker unions to prepare their own list of priority infrastructure projects, which McClatchy also obtained. That list included two of the Williams Co. pipelines, the Jordan Cove project and the Cadiz water project in California, which was on the White House's original list.
Cadiz, which wants to draw water from the Mojave Desert to sell to Southern California, has seen its stock price rise following Trump's election. In April it received an extra boost when Trump's Interior Department reversed a decision of the Obama administration that had tripped up the project.
Trump's election has also improved the fortunes of Blackstone, one of the world's largest private equity firms and a major investor in infrastructure. The company is headed by Schwarzman, a Trump confidant known for throwing lavish parties that have included Trump, his family and his cabinet members.
Schwarzman has emerged as one of Trump's most influential outside advisers, a status that allows him to avoid rules governing government employees that guard against conflict of interest. Just before Trump made his May visit to Saudi Arabia, Blackstone announced that the Saudis had pledged $20 billion to an infrastructure investment fund that the company was creating.
Blackstone officials reject claims that Schwarzman has used his relationship with Trump to enhance the company's investments. But in an April 20 earnings call, the company's president, Tony James, made clear to reporters that the "slate of policies that Trump has articulated" would be beneficial to Blackstone.
"The investment in infrastructure would be very good for us," James said. He added that the company had enjoyed "a little post-election bump" since Trump was elected. Since Nov. 8, Blackstone's stock price has jumped 38 percent, more than twice the increase of the Dow Jones average.
Blackstone has a direct interest in a $2.2 billion electrical transmission project in New York state that has caught the White House's attention but faces an uncertain path. The Champlain Hudson Power Express would deliver hydroelectric power from Quebec to New York through a transmission line that would run mostly underground, including under Lake Champlain and the river bed of the Hudson River.
Transmission Developers Inc., a Blackstone subsidiary, has pitched the project as a way to replace power for the Indian Point Nuclear Power Plant, which New York Gov. Andrew Cuomo wants to close by 2021. TDI claims it has already invested eight years and $60 million in the transmission line, which is supported by some environmental groups and unions. Last December, the project received a key presidential permit from the Obama administration, seemingly clearing its final hurdle.
Champlain-Hudson, however, continues to face opposition from affected landowners in New York, tugboat captains and other mariners. The latter are pressing the U.S. Coast Guard to address potential safety hazards to boats that could anchor near the buried transmission line, once it is constructed.
The project is also opposed by many New York power generators, who say it could displace in-state wind power and natural gas plants to benefit a Canadian hydro power producer.
Gavin J. Donohue, president and CEO of the Independent Power Producers of New York, said the Champlain-Hudson project was conceived at a time when natural gas prices were much higher than now. Now that those prices have dropped, long-distance transmission of hydropower has become much less competitive, he said.
Donohue also questions the company's claim it can build a 300-mile transmission line, largely underwater, for a mere $2.2 billion. "There is a major ongoing debate about economics of the line, and what it would cost ratepayers to go 300 miles," said Donohue, whose group represents energy producers that would compete with the transmission project.
Donald Jessome, CEO of Transmission Developers Inc., disputed claims his project is no longer viable. Quebec hydro producers have a surplus of power, he said, and can only sell it at low prices because of a lack of transmission to New York, which has some of the country's highest electricity costs.
"A new transmission line that gets them (Quebec power generations) into the highest priced-market in the Northeast is very advantageous to them," he said.
Yet TDI has yet to find a buyer for its power. In January, the New York Independent System Operator, which operates the state's electricity grid, revealed that the Champlain Hudson project had chosen not to put down a security deposit required for projects joining the grid. Jessome said the security charge would have cost the company $150 million. He said TDI is prepared to do it when the company finds a customer, and is planning to bid soon on a power-request proposal by the New York Power Authority.
Three years ago, the company sought FERC assistance in exempting the project from regulations that govern New York's energy markets, including mitigation rules aimed at protecting ratepayers from having to subsidize energy projects. FERC declined that request in 2015, when Obama was in office.
In January, Champlain-Hudson turned up on the top of the list of 50 infrastructure projects that were "shovel ready" and worthy of White House attention. Jessome said he was surprised to see it on the list.
Slain, who helped put the list together, said Champlain-Hudson was added because "it faces some permit and financing issues."
About the Author
