– Part Three of a Series: Public Sentiment, Politics, and Government Regulations –
“Public sentiment is everything; with it nothing can fail, without it nothing can succeed.”
~ Abraham Lincoln“The pessimist complains about the wind; the optimist expects it to change;
the realist adjusts the sails.”
~ William Arthur Ward“Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.”
~ Thomas Paine in Common Sense
Author’s Note: This post will serve as the third of several related blog posts on this topic. This series is meant to look at the current realities facing land developers, acquisition agents, and investors in the energy infrastructure sector when seeking to design, develop, and operate projects which produce or generate power within the United States. Instead of studying this from the perspective of each energy sector individually, it instead looks at the common conditions, dangers, and potential headwinds faced by all such endeavors. This post is meant to examine the notion that energy infrastructure projects must exist in a world where public sentiment freely and regularly shifts, politicians run to catch up to these shifts while seeking to control them, and regulations rarely ever cut with a scalpel when a broadsword is more readily available.
Introduction:
A successful land acquisition is about so much more than a motivated seller and a motivated buyer coming together to negotiate a fair deal amongst themselves. The presence or lack of competition will affect their negotiations. Timing and market conditions will bear on their proposed transaction. A thousand seemingly trivial idiosyncrasies particular to that tract of land can determine the value of that land to the parties. The history of what has taken place on that tract and the possibilities of what could in the future occur on that tract also bear greatly on the outcome. But beyond these factors the negotiations and eventual acquisition will be influenced by larger societal and political trends far beyond the power of the parties to control.
A tract of land does not exist in a vacuum. It is (for the purposes of this blog) physically situated somewhere within the sovereign territory of the United States, in one its fifty states, within the boundaries of a particular county within that state, and part of a local community. This makes that tract of land subject not just to the whims and needs of its current owner, but also to the laws, statutes, regulations, and political currents in force at the time and place in which it is situated. Prevailing public sentiment, political will, and government regulations will all affect not only the tract of land in focus, but the associated acquisition process as well. These effects must be taken into account and planned for prior to the initiation of a land acquisition effort or else undue cost will be added to the acquisition, a proposed land use incompatible with local or political sentiment or impermissible under regulations will be acquired, or the proposed acquisition will be terminated prematurely. None of these possibilities bode well for the success of the proposed endeavor.
The considerations and special attention due these extrinsic factors and the effect they will likely have on the land acquisition process will be subject of this third part of the “Now It Gets Hard” series.
The Vagaries and Vicissitudes of Public Sentiment:
The United States has a population of 340 million residents. There are times when it seems as though each of those individuals also has their own independent opinion on a given topic, but in reality, most people fold neatly into larger groups of like-minded individuals. This is termed factionalism, and its effects and consequences directly underpin both prevailing and counter public sentiment. There were few possibilities imaginable in the murky future when the Founding Fathers assembled to debate and then draft the fledgling nation’s new Constitution in 1787 that scared them more than unchecked factionalism developing and pitting citizens and ideologies needlessly and firmly against one another. Their other great fear – an ignorant and gullible electorate (but that is a whole different blog).
If the United States Constitution is the nation’s owner’s manual, then certainly the Federalist Papers are the accompanying primer. Prior to the ratification process the Founders thought it a good idea to explain their new system of government to the citizens who would vote to ratify it and then have to live under its evolving body of laws. To accomplish this, Alexander Hamilton, John Jay, and James Madison assumed the nom de plume of “Publius” and wrote a series of eighty-five (85) essays seeking to educate and enlighten the new nation’s citizenry as to the logic underpinning the proposed Constitution. There is wisdom to be found in all of these essays, but perhaps the intellectual and emotional heart of this endeavor is Essays Nos. 9 & 10.
Essay No. 9 lays out the arguments supporting the idea of a republic as opposed to other forms of government and acknowledged the failed republics of antiquity (specifically Athens and the early Roman Republic). Hamilton cites the separation of powers, checks and balances, and representative democracy as the strengths inherent in this new proposed model that would allow success where those others had failed. The salient point of the essay was to argue for the belief that large republics could achieve stability, endure, and do not have to inevitably devolve into the tyranny of factionalism, conflict, and oppression.
Madison, following directly in Essay No. 10, knew that factions would be an essential and ever-present feature of the coming republic as the tendency to group together with other like-minded individuals is a deeply rooted part of the human condition.
“The latent causes of faction are thus sown in the nature of man; and we see them everywhere brought into different degrees of activity, according to the different circumstances of civil society. A zeal for different opinions concerning religion, concerning government, and many other points, and many other points… have, in turn, divided mankind into parties, inflamed them with mutual animosity, and rendered them much more disposed to vex and oppress each other than to cooperate for the common good.”
– James Madison as “Publius” in The Federalist Number 10
But of all the subjects and possibilities that could divide individuals into separate and bitterly opposed groups, Madison knew that investment issues centered on money, property, and land would be the most aggressively contested.
“But the most common and durable source of factions has been the various and unequal distribution of property… A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, and many lesser interests grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation…”
– James Madison as “Publius” in The Federalist Number 10
The United States is not only fortunate to enjoy a large, resource-rich land mass and an equally large and stable population, but it also (for the time being) manages the world’s largest and most sophisticated economy. It is not possible for something as large as complex as the United States economy to exist without there being a multitude of competitive and at times conflicting land uses. Many energy and infrastructure projects are ideally sited on acreage possessing the same location, slope, size, and floodplain characteristics. The energy produced and used on a daily basis in the United States comes from many sources. Oil and natural gas, nuclear power, hydroelectric, biomass, and solar and wind generation facilities quite often all compete for the same acreage.
In recent times the competition between these several energy sources has gone beyond merely vying for common source funding (i.e.: the incredibly large but not infinite pool of government, public, and private energy investment dollars available) and has now become the subject of an intense factional divide. Over the past several decades some portions of the population have begun to dogmatically support certain types of energy production while opposing others. At the same time alternate portions of the populace support competing types of energy production. This has created a situation, now becoming deeply embedded in the national psyche, wherein no form of energy production enjoys broad-based support from the entirety of the population. Instead, each seeks out its own base of support and creates a sort of resonance chamber in which it is very difficult for an opposing point of view to survive and from which it becomes very difficult to reach consensus with the competing energy projects for potential shared land use strategies.
This is not to say that these endeavors can always coexist on the same tract of land. There are certain areas that while not inherently exclusive are very difficult in which to site multiple such endeavors. In certain areas of the Permian Basin and other active fossil fuel production areas in New Mexico, Texas, Colorado, and other states where oil and gas companies have persistent and ongoing operations it is very difficult to convince an operator to allow any potentially competing land use onto its leasehold. In these instances, even with the best intentions of all parties, it is often best to find an alternate project site on which such competition will not be an issue.
In most other areas of the nation where oil & gas production activity is significantly reduced in scale and volume shared land endeavors are far more plausible. Those exploring for and producing oil & gas do not need the entirety of the surface covering their leasehold. While it might be nice to have unfettered access to the surface estate such control is not needed. Field rules in force will dictate certain minimum set back distances from lease lines and structures, and each state will have minimum unit spacing guidelines, but beyond these requirements the mineral developer will have adequate leeway to site their wellbore and associated operations as needed. This, in turn, means that the operator has the ability to accommodate reasonable demands from noncompeting entities wishing to share usage of the surface for their own development and operations.
There will always be some level of reluctance on the part of the mineral leasehold to sacrifice land control. In truth, it is not entirely possible to know precisely where wells will be drilled in the secondary and tertiary recovery programs without having first drilled and logged the results of the initial or primary recovery phase. Additionally, subsequent to a successful exploration program, additional surface acreage will be required to site the tank batteries, injections wells (depending on the nature of the production and recovery program), metering and control stations, skimmer pits and other associated surface infrastructure. Attention must also be given to the ingress (suitably wide access gates and roads) and egress (oil & gas pipelines and their own associated infrastructure) requirements attendant to every exploration and production site. These are all reasonable and necessary siting requirements which must be considered by an entity determined to explore for and produce oil & gas.
Likewise, the renewable energy developer seeking to site and construct a solar or wind generation facility will require control of the surface estate, but they too are able to accept and plan for other stakeholders actively utilizing portions of the land. Adding five acre set aside locations for use as future drill pads is a reasonable inclusion in any project layout. Yes, they require some project acreage to be withheld from generation status, but this can be accounted for and mitigated during the early design phases of the project. In a best-case scenario these set aside locations allow for mineral owners and operators to explore for and produce a tract’s minerals without having to dislodge or impact the existing renewable energy infrastructure on the surface and in a worst-case scenario they greatly strengthen the renewable developer’s case during an accommodation action.
In most circumstances it is still possible for multiple end users to share the same surface acreage. In doing so when and where possible the costs are reduced for each separate developer (who are only paying for the actual rights and acreage they are utilizing), the landowner receives the best and highest value for the access, use, and diminution of their surface and mineral estate, and the community at large derives the highest economic benefit from every acre of land within their area of control.
Are the various types energy infrastructure projects supported by differing ideological factions; more and more often the answer sadly is yes. But this does not have to end in a zero-sum resolution where one source of energy predominates the U.S. market. This is a large country backed by a massive economy that can use or sell (via export terminals into foreign markets) every molecule and electron of power it can get. True, factions not only exist, but they are bound to exist in any human system, but their presence alone should not doom a particular product, service, or project type to oblivion. What happens when one or several of these factions gains enough members or funding is another issue altogether that must be considered and dealt with when planning the nation’s next energy infrastructure projects.
The Ascendency to Political Power – The Rush to Take Advantage of Favoritism and Bias While They Last
Public sentiment and factionalism do not by themselves influence the course of investment decisions. Ideas and causes do not by themselves create movements. In order to be noticed and then empowered an idea, persona, or faction must grow to a size where through sheer force of numbers (and associated potential dollars) it can no longer be ignored. Once such a threshold is reached and then passed the faction will begin to migrate into a political force. Once it becomes a political force, politicians take notice and, if successful enough, will incorporate it into their messaging and their electoral platforms. Once an idea or faction makes it onto the main political stage, money enters the equation – money coming into the system and money emerging out of it.
The United States is a democratic republic. This means that we vote in a democratic process (an election) to select the individuals who will then go on to represent our interests at the local, state, and federal level (but not, interestingly, for the office of president). Once this initial vote has been held and certified there is very little remaining for a citizen to do. They can fund raise (always appreciated and necessary). They can communicate with their elected officials (realizing that you are one voice out of many, many other voices competing for their attention and favor). They can work to get proposals and referendums added to future election ballots (always an uphill battle). Once a politician is elected in a republic the immediate power of the ordinary voter is greatly reduced.
So, the run up to a contested election is the best time for the positions, demands, and motivations underlying a faction to make themselves known. Every election in this nation, whether it be a position on the local board of supervisors, a state legislature or assembly, a Congressional seat, or for the presidency itself, is an opportunity for a faction to take their position before the public. Individual citizens will donate their time and money to further their champions. Inevitably, and more importantly (albeit sadly), along with individual voices and dollars will come industry and lobbyist attention and funding. These latter groups bring with them much deeper pockets and afford the office seeker (and by extension the faction, associated stakeholders, and their core principles) a much larger microphone.
On the surface this seems to be a positive development. The singular voice is joined with the many and achieves a greatly amplified reach. The relatively few dollars that could be raised at the grassroots level will now be merged together and augmented to a far more impressive and sustainable level. But with this new reach and access to funding comes the evolution from mere factionalism to embedded partisanship. The views become more entrenched, and it becomes harder to find common ground.
In point of fact, this reality is not a per se bad thing. Later in life, and well beyond the period in which the Federalist Papers had been written, James Madison would once again return to the notion of factions and political parties. In a speech given on the right of suffrage in 1821 he would go on to argue, “No free country has ever been without parties, which is a natural offspring of freedom.” In essence, tolerating differing opinions is the price we pay for living in a free society. The antithesis would be to live in a totalitarian or fascist state which rooted out and crushed differing points of view. As annoying, loud, and chaotic it is at times to live in a free and factionalized nation it beats the far more oppressive alternative. And for those in power and currently enjoying the fruits of that power, it should be noted that, as the Romans were quite fond of telling their own conquering generals, “Omnis gloria est fugax” (all glory is fleeting). Nothing lasts forever and usually it is only a few years until the group or party in power finds themselves back outside looking in.
Land, unlike most other assets, is permanently tied to a specific place (obviously). This means that it will be subject to the changing winds that blow from seemingly all points on the compass as different political groups make their way into power and then eventually and inevitably fall from it again. By extension, the projects planned and sited on this affected acreage, and the land acquisition and development programs supporting those efforts, will also be affected by these shifting forces as well. Sometimes, these changes can provide a beneficial tailwind to support the intended project and sometimes they can produce headwinds so severe that the project either suffers hardship and delay or becomes financially untenable.
Once in power a politician or political party has significant control over many aspects affecting land acquisition and project development. At any level of government, they will have nominal or actual control over the various departments and agencies that report to their office and can direct them to act, enforce, and rule favorably to a given project’s interests. Likewise, they can also direct those same agencies and individuals to impede projects antagonistic to the ones they champion. The Department of Energy and the Environmental Protection Agency spent much of the Biden administration hostile to oil & gas upstream development and midstream pipeline companies found it very difficult to build new lines or even markedly expand existing ones. During that same administration companies seeking to site and develop solar, wind, or battery storage projects found a very supportive reception in Washington. Conversely, as the second Trump administration has returned to Washington the short and mid-term outlook for new pipeline projects has brightened significantly while renewable energy developers have found themselves shut out of some federal land auctions and can no longer count on the public support of the executive administration or Congress. Neither group has found either reality when in opposition to be terminal to their endeavors individually or at a core enterprise level but neither has either group been able to fully take advantage of the favorable conditions set in place by their more ideologically supportive administrations.
In land acquisition as in life, when trying to determine the odds of a given project’s successful completion you can normally follow the money to the answer. The administration in power has significant ability to control where and when public funds are distributed. While the legislative bodies at the state or federal level will be the entities to negotiate and set the funding levels, it will be the state and federal executive agencies that actually dispense, disperse, and oversee those funds. Federal and state dollars can often be the difference between a project going forward and it languishing on the shelf never officially cancelled but yet never proceeding either.
Federal and state dollars committed to a project or industry will frequently serve as the catalyst for follow-on private investment. In fact, this is often the best use for federal support and funding. In many instances the government can limit its own direct investment in an industry or project when the implied strength of its support energizes public and private capital markets to engage. Except in times of war or extreme economic duress, the public companies registered on America’s public exchanges, private equity and investment companies, and wealthy family foundations and investment groups have the ability to deploy more real capital on a far shorter time horizon than any government entity ever could. The specter of government support can often best be utilized as a sort of matchmaking service whereby industries and project developers can secure access to and backing from otherwise reluctant financial sources.
But the wind can change quickly, and anyone associated with land acquisition and development projects in the energy industry has been on the receiving end of project stand down calls when the party controlling Washington changes. Yesterday’s essential pipeline becomes an overnight pariah, and the entire renewable space held its breath as the Big Beautiful Bill was passed on July 4th. Sometimes these are temporary measures as the developer makes sure that they accurately understand the new return versus cost landscape and sometimes these can lead to permanent shutdowns as certain activities are no longer deemed profitable when measured against the new partisan and funding headwinds.
These delays and pauses can cause severe disruptions to land acquisition campaigns caught in the middle. The single most important factor determining the outcome of a land negotiation is the degree of trust built over time between the landowner and the negotiator during the negotiation process. This relationship between the parties, likely nonexistent prior to the start of negotiations, either rests on a foundation of trust or else the transaction will very likely never occur. There are few things more terminal to that foundation of trust than pausing negotiations with no clear determination available as to when, or indeed if, they can continue.
Government office holders and political realities do absolutely influence the land acquisition process. But this is not to say that they will be terminal to those aligned against them or unilaterally beneficial to those aligned with them. Land acquisition campaigns, the developers responsible for overseeing them, and the industries they serve will always have to remain educated, engaged, and sufficiently nimble to maneuver through the ever-changing political wins that have and will always exist in this Republic.
Regulations – The Inevitable Endpoint
If growing public sentiment and factionalism eventually lead to political office and power, then the inevitable endpoint is in the creation of new and potentially onerous government regulations. The single most effective method political office holders possess to influence events, reward supporters, and hobble adversaries is through the passage and enforcement of regulations. The framers of the U.S. Constitution were actually quite straightforward and committed as to this. Following the explanatory Preamble, the Constitution is written in descending order of importance. Article One of the Constitution, therefore the article that the framers placed the most significance on, describes the legislative branch of the new government, followed by the executive in Article Two and the federal judiciary in Article Three. In their minds there was no doubt that the conception, drafting, debating, and enacting of laws was the primary manner in which this republican experiment would work (small “r,” not upper case “R”).
In laying the ideological groundwork for this new form of governance, Madison again returned to the topic of utilizing and moderating factionalism in a functioning government. In Federalist Essay No. 51 he argues,
“If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.”
– James Madison as “Publius” in The Federalist Number 51
Government regulation and subsequent enforcement activity, taking a broad interpretation of those concepts, is an incredibly powerful tool. In the 1819 Supreme Court case McColluch v. Maryland, Chief Justice John Marshall stated, “the power to tax is the power to destroy.” Expand that sentiment to include “regulate” along with “tax” and you have a guiding principle as operative today as it was in 1819.
Conversely, the power to subsidize is the power to create. Often, this subsidization comes in the form of tax incentives and reductions for projects and activities deemed necessary and expedient.
The checks and balances written into our government combined with the acceptance of partisan factionalism is, within certain reasonable limits, one of the defining strengths of our system of government. Regulatory and tax policy have the potential to exert enormous control over business activity throughout the United States. Often the worst and most damaging laws in the history of our nation have been those that were conceived, negotiated, and enacted in a very short period of time when one party momentarily controlled all branches of the government thereby circumventing this at-times collaborative and at-times adversarial process. Most competent business leaders prefer both parties to have a more or less equal voice in the federal and state governments to ensure no drastic regulatory or tax policy initiatives find their way into the world before their consequences are understood and moderated.
Energy and infrastructure projects are usually expensive and of long duration. Interstate pipelines can take years to plan, permit, acquire rights-of-way, and construct. Utility-scale solar and wind generation facilities routinely take five to seven years to complete the acquisition, interconnection, and construction phases. Oil & gas field development can take decades to complete when one considers that the secondary and tertiary recovery programs cannot even be planned until then results of the primary recovery efforts are completed and analyzed. Under the best of circumstances these types of projects require some degree of relative economic certainty to proceed from concept to construction. Some minimal level of continuity of competent regulatory policy at the state and federal levels is required to afford this opportunity.
Tax subsidies, deductions, and credits are utilized by energy infrastructure projects in all energy sectors. While renewable energy developers take advantage of Investment Tax Credits and Production Tax Credits when their projects reach certain construction or generation milestones, oil & gas producers routinely utilize Tangible and Intangible Drilling Cost Deductions and Reservoir Depletion Deductions (among others) to offset both costs and income from drilling programs. It might be reasonable and interesting to debate whether such tax incentives are necessary to support mature industries, but their continued existence is factored into the economic calculations that underpin these current projects. When these are prematurely and suddenly stripped away (or, in some cases only threatened), projects are routinely cancelled as a matter of course. These cancellations can come after, in some cases, years of preparatory work and planning. Future projects could be prematurely reduced in size and cost to avoid a similar fate. These cancellations and artificially induced output contractions have the effect of diminishing the energy available to the developers, their investors, and to the nation as a whole.
Beyond issues related to tax policy and subsidies, no project of any size or scale can proceed without surviving long and fraught environmental and regulatory permitting processes. Without first securing the necessary permits no project can advance to construction or any later economically profitable stage. The list of projects prevented, cancelled, or significantly delayed due to a failed permitting process is impressive. Even projects that in the end successfully enter their operations phase endure a long, costly, and onerous review and permitting process. Since becoming commercially operational in 2017, the Dakota Access Pipeline carries approximately 750,000 bopd out of the Bakken and to an oil terminal in Illinois (and from there other pipelines take the oil down to Texas for refining). During the four years that pipeline was in the planning and construction phases it had to apply for and be granted permits from the state utility boards of the several states it would pass through, the U.S. Army Corps of Engineers, the U.S. Fish & Wildlife Service, several tribal councils, and the U.S. Departments of Justice, Army, and Interior all had to conduct and review lengthy environmental impact statements with associated public comment periods. All three branches of the federal government were involved with the permitted and regulatory process and multiple follow-on civil suits both during construction and operations. All this time, effort, cost, and procedural uncertainty to allow an energy infrastructure project with a legitimate business purpose and clear economic benefits to proceed. A project, it was estimated, to have created 42,000 jobs during the four years of its planning and construction phases with an associated $2 billion in wages paid out during that period.
Not all projects are so fortunate as to eventually survive the permitting review process. After enduring much of the same costly and onerous process the Keystone XL Pipeline (an extension of the existing Keystone Pipeline network) had its presidential border crossing permit revoked by the Biden Administration in 2021. The scales were balanced when in October of 2025 the Trump administration cancelled the Esmerlda 7 Solar Generation Project. This was to be a 6.2 GW solar generation facility located on federal lands in Nevada owned and operated by NextEra Energy, Invenergy, Arevia Power, and Leeward Renewable Energy – four large, U.S.-based renewable energy developers who have already built many similar but smaller facilities. For reference, the largest currently generating solar facility in the United States generates approximately 802 MW of electricity (Copper Mountain Solar Facility, Nevada) while the largest in China generates 15.6 GW (Talatan Solar Park).
The power to tax, the power to regulate, the power to control, truly is the power destroy – or, if so inclined, to create.
Concluding thoughts
Humans are by nature tribal and have been so since prehistoric times. Today this is less about blood relationships or community ties but rather shared intellectual perspectives or economic endeavors. This inevitably creates a pathway leading from public factionalism, to political power when one or several of those factions acquire sufficient numbers to win and control local, state, and federal offices, and then to the inexorable regulations created, enacted, and enforced by those political office holders once in power. Energy and infrastructure projects and the land acquisition efforts that support them must live in a world governed by these seemingly supernatural laws. Understanding and adapting to that reality is key to their successful genesis and eventual completion.
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