Updated May 14, 2018
Column / Harder Line

Industry doesn’t always fight regulations. Here’s why

Illustration: Sarah Grillo/Axios

It’s an easy political talking point to say industry opposes all regulations, but the real story is more complicated, and we’ve seen it unfold in dramatic fashion under President Trump.

Why it matters: Trump’s deregulatory push has got Washington lobbyists anxious and industries parting ways with usual Republican Party allies. Here's why companies lobby for and against certain regulations, while changing positions over time.

Fuel efficiency standards

Automakers are finding it tough to work with the Trump administration on what most of them say they want: A slower rate of still-increasing fuel efficiency standards.

Just as important to them: They don't want America’s auto market to be split into two if the Environmental Protection Agency revokes California's waiver to issue tougher standards, which a dozen other states also follow. The administration is considering freezing the standards and revoking the Golden State’s waiver.

“They see regulatory uncertainty as a greater threat to them than potentially having to meet a higher standard,” said Robbie Diamond, executive director of Securing America’s Future Energy, a nonprofit that backs the fuel standards and receives some corporate funding.

Power-plant carbon standards

Electric utility companies also want some kind of regulation cutting carbon emissions from their operations.

The industry is largely on track to meet and possibly exceed the goals of an Obama-era rule cutting carbon emissions from power plants, even though Trump’s EPA is now repealing it. That progress is thanks largely to cheap natural gas and renewables displacing dirtier coal.

For these reasons, utility companies are moving in a cleaner direction regardless of federal rules. The Edison Electric Institute, a trade group that represents all U.S. investor-owned electric companies, has urged EPA to issue a narrow replacement, as opposed to nothing at all. The agency has signaled it’s likely to do that.

Renewable fuel standard

This is a textbook example of how industry’s positioning fractures as a regulation is enforced over time, with winners and losers emerging. The mandate requires refineries to blend increasing large amounts of biofuels, mostly corn ethanol, into the nation’s gasoline supply.

While no oil executives cheered Congress for imposing a government mandate, more than a decade has passed since it was created, and a lot of companies have adjusted to comply and even profit off it. These include most major oil and gas companies and some smaller refiners. Others, due to strategic decisions or constraints like geography, find it more difficult to comply.

This mandate is among the highest energy priorities of this White House as Trump seeks to broker piecemeal changes to the policy requested by some distressed refineries.

Methane regulations

The oil and gas industry is split over what, if any, regulations it wants for emissions of methane, a potent greenhouse gas that’s also the primary component of natural gas.

Bigger, more global companies would prefer some sort of regulation, partly because it gives them a competitive advantage over smaller companies that may find it more expensive to comply. Smaller, more domestic-facing companies are mostly opposed to any regulation, largely because it’s more expensive for them.

The upshot of that industry division is a messy attempt at regulatory overhaul. Obama’s Interior Department and EPA each issued separate methane rules, and Trump’s administration is still deciding to what extent it should fully repeal or replace those rules, while also facing multiple legal setbacks.

Paris climate deal

This global accord calls on countries to cut their greenhouse gas emissions, but the reductions aren’t legally binding.

That dynamic has cut both ways: It garnered widespread support, since it couldn't really be enforced anyway, but that toothlessness also made it easy for Trump to announce he would withdraw the U.S. from it.

The world’s biggest oil and gas companies, including ExxonMobil, Shell and BP, said they support the accord. But its existence does not drive their profit gains and losses not yet, anyway. There wasn’t a big concerted, public lobbying push by these companies to change Trump’s mind.

Kigali amendment on refrigerants

Industry dynamics are markedly different here. The Kigali amendment of the 30-year-old Montreal Protocol, a legally binding environmental treaty, calls on the world to phase down refrigerants used in appliances like air conditioners.

Chemical companies, including Chemours and Honeywell, have already spent millions of dollars making new refrigerants in anticipation of this amendment. Because of that investment, they’re publicly lobbying the Trump administration to stay the course that Obama set in October 2016 when it was agreed to in Kigali, Rwanda.

So far that’s largely what’s happening, albeit at a slow, uncertain pace. To go into effect for the U.S., the Senate needs to ratify the amendment.

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