The American Energy Bureaucracy Act

This week the Senate will hastily begin consideration of a broad energy package compiled by Senators Murkowski and Manchin, with language included in the bill compiled from around 50 existing pieces of legislation, according to the sponsors.  While claiming to be about promoting “innovation” the bill is more accurately seen as promoting bureaucracy. The completed package weighs in at more than 550 pages and mostly consists of shuffling bureaucrats and paper within already bloated federal agencies, with over $20 billion in spending authorizations sprinkled in for good measure (based on our count, since there is no actual score for the bill).  The measure confuses bureaucratic activity for innovation and ignores one of the most basic lessons of history: people innovate, government regulates. Innovation springs from reduced government interference and micromanaging, not from sprinkling billions of dollars at new research offices within various cabinet departments.

In Murkowski and Manchin’s world, bureaucracy apparently can cure everything

As far as content, the draft bill is not particularly exciting.  The bill tosses billions of dollars in new money towards the creation of new offices for wind research, solar research, battery research, carbon capture research, nuclear research, vehicle research, and energy efficiency.  While research funding generally is not necessarily harmful, the federal government already spends billions of dollars a year on these exact fields. It is not clear why even more is needed.

The larger problem, though, is that this bill seeks to expand the government’s purview from basic research to promoting the deployment of various technologies.  One section of the bill seeks to reduce our “reliance on petroleum-based fuels.” It is these types of provisions where the bill bends into harmful. When the government gets into the business of choosing candidates for development and deployment of specific projects, it usually ends up supporting outdated technologies long after the market has moved on.  Worse, the taxpayer foots the bill for companies and projects that fail in the marketplace. This is already a problem at the Department of Energy, yet at its heart, this bill would amount to a massive expansion of that same department.

Additionally, a pernicious trend is growing where the billions in research money being shoveled to the Department of Energy has become a vehicle for a hidden revival of earmarks.  Year over year, despite President Trump’s budget requests to shrink numerous bloated agencies at the Energy Department, Senate and House appropriators have increased funding at the department.  The Office of Energy Efficiency and Renewable Energy alone has enjoyed a 25% increase in its budget since President Trump took office. Flush with new cash, Members of Congress then pressure the Department of Energy to fund specific projects for their state or district.  This has all the corruption aspects that let to a ban on explicit earmarks in legislation, but just with less transparency as the decisions are obscured by a screen of bureaucracy.

The bill isn’t entirely negative. There are a few worthwhile provisions seeking to address our overwhelming reliance on foreign sources (especially China) for certain minerals that are important inputs to modern manufacturing.  It also includes needed permit streamlining for small volumes of LNG exports (though it does not address the problems of the permitting process itself). But why stop there? Why not include all LNG exports? The sections addressing cybersecurity and grid security are fine as well, but these few reasonable provisions hardly justify the massive and unnecessary bureaucratic expansion baked into this bill.

There they go again!

The real problem with this bureaucracy building bill, though, is tactical.  The sponsors went to great effort to exclude controversial provisions, and hence nothing truly impactful is included in the bill.  And yet, as reports about potential amendments trickles out, numerous senators are already lining up to inject various energy hobbyhorse provisions in the legislation.  This means we will likely be revisiting the fight on the expansion of tax giveaways for wind (PTC), solar (ITC), and electric vehicles. Look also for amendments to enact federal building codes and provide permanent funding of the Land and Water Conservation Fund (LWCF), among other Green New Deal type policies. 

Even worse, this bill provides a vehicle for the House, in thrall to radical environmental activists, to saddle the bill with even more goodies when it heads over to that chamber.  You can be sure the House Democrats won’t be able to resist passing their own expensive, command and control, anti-growth energy bill. The two bills will then have to be sent to a conference committee, where the potential for mischief is practically unlimited.  Whatever comes out of that process will bear no resemblance to the generally benign bill offered by Senators Murkowski and Manchin.

There is nothing urgent in this legislation.  Indeed, it is not clear why energy legislation is needed at all given low energy prices, booming energy exports, and accelerating private sector innovation everywhere from natural gas to renewables. Many of the parts of this bill that are truly noncontroversial and consensus policy could and should be passed individually.  The Senate would be better off simply pulling the plug on this “low-energy” energy bill. The United States has enough bureaucracy in our energy sector as it is.