In today’s global and national economy, businesses—especially those in capital-intensive industries like energy, infrastructure, and transportation—thrive on stability, predictability, and long-term planning. Regardless of what drives federal instability, when the federal government becomes unreliable or its authority is eroded, businesses are left navigating a fractured regulatory landscape that complicates investment decisions and long-term strategy.
As leaders in the energy industry, we at ILLUME have seen firsthand the necessity of national and international standards. Policies, agreements, regulations, and treaties provide businesses— whether multinational giants or small enterprises—with a framework for decision-making, ensuring a degree of predictability in investment, product development, and operations. These guardrails create consistency, allowing businesses to align with societal expectations, market trends, and evolving technologies.
Government’s Role in Market Continuity
Even industries historically opposed to federal regulations recognize that predictability is essential. Large corporations—including major greenhouse gas emitters—understand that frameworks like the Paris Accords provide stability, investment guidance, and a roadmap for future innovation, even if the standards set by these agreements are not always in their short-term financial interests.
Similarly, in the U.S., when federal governance weakens, businesses look to states and local actors for guidance. This shift may give certain businesses more influence over policy, but it also forces them to make compliance decisions based on local politics rather than national or global strategy. The U.S. economy is no longer strong enough to act in isolation; it operates within a global ecosystem that requires coherence, long-term vision, and a framework for planning.
Challenges with Short-Term Federal Policy Thinking for Utilities
Businesses looking to invest serious capital in infrastructure and innovation cannot afford to pivot with every administration’s political agenda. When a new administration swiftly dismantles existing policies and intelligence infrastructure—especially without clear alternatives—it disrupts business continuity and increases investment risk.
In industries that require decades-long planning cycles, such as power plant siting, energy infrastructure, and large-scale transportation projects, the two- and four-year partisan swings are costly. The recent aggressive federal layoffs and dismantling of agencies have created several serious disruptions:
- A destabilization of funding for programs that businesses, states, and communities rely on.
- A breakdown in regulatory and policy consistency, making long-term decision-making more uncertain than ever.
- A destabilization of information and intelligence networks, where a distracted and downsized FBI and CIA are not tending to the critical work of monitoring threats to infrastructure, leaving individual businesses to supplement long-standing intelligence networks critical to ensuring our national security and protecting the basic fabric of our economy and daily lives.
- A breakdown of safety standards, removing OSHA reduces mechanisms for safety training and assurances across for employees working in high-risk scenarios.
- A breakdown of emergency planning capabilities, by removing and/or limiting access to weather and climate data used in preparedness for emergency planning preparation and critical resiliency investments, such as National Oceanic and Atmospheric Administration (NOAA) data.
While these long-term challenges are concerning enough, the reckless destruction of human capital, intelligence, and networked decision-making leaves many of the organizations that provide energy, water, and transportation to use precious resources to (re)build rapid response systems to ensure the stability of their businesses, continuity of service, and the safety and well-being of their employees and customers.
A Shift to Fragmented, Regional Governance
As the federal government weakens, states become the dominant policymakers, setting their own standards for industries that once relied on a cohesive national approach. This shift forces businesses to navigate a patchwork of state-by-state policies, which is far from ideal.
Consider this: If one of the largest U.S. economies—such as California or New York—establishes strict energy efficiency standards for manufacturing, companies will not create different product lines for every state. Instead, they will align with the most stringent standard and apply it nationwide. This means that, in the absence of strong federal governance, the most proactive and powerful states become the de facto regulators for the entire country. And while this might work in the favor of some policies, we can expect it to harm the objectives of others.
This is already occurring in energy policies. States like California and New York, with their progressive climate and clean energy policies, have long-shaped national industry standards simply by virtue of their market influence. Conversely, other states with weaker or more regressive policies have little say in shaping national trends—unless they align with larger coalitions. However, what will this look like practice for other critical functions like security intelligence development and dissemination and climate forecasting?
What This Means for Critical Utility Businesses
For business leaders, this shift creates three key challenges:
- Regulatory Uncertainty – Without federal consistency, companies must monitor and comply with an ever-evolving mix of state and local regulations.
- Investment and Credit Risk – Long-term projects require stable policies, not abrupt shifts based on political turnover. Businesses and investors must now hedge against regulatory changes at both state and national levels. Regulatory uncertainty can impact credit ratings, causes rating agencies to add a downgrade factor for critical public works and utility investments.
- Fragmented Market Strategies – Companies must decide which state or regional policies to follow, leading to inefficiencies and increased operational complexity.
The Path Forward
At the end of the day, businesses do not thrive in uncertainty. They need stability, clarity, and policies that enable long-term growth. No matter where one stands politically, an unstable federal government weakens America’s ability to compete globally and invest in long-term, economy-enabling critical infrastructure. Those that might argue this behavior is good for the economy are in the business of short-term gains and exploiting a destabilized market, not the careful work of building a long-thriving national economy.
To counteract this trend, the following proactive actions can be taken:
- Regional governments and interstate coalitions can drive policy. While a weakened federal government creates instability, it also highlights the power of state and regional coalitions. States that act decisively can shape national business trends and offer a more predictable environment for investment.
- Leverage market transformation models to influence markets. Companies and regional networks can work with trade associations and standard-setting organizations to develop best practices, guidelines, and governance standards to impose market standards, continuity, and conditions favorable for climate resiliency and capital-intensive investments. By collectively adopting voluntary standards, businesses can shape industry norms and influence legislation.
- Engage proactively in regulatory alignment. Regulation is a critical function for infrastructure. As states play an even stronger role in regulation, utilities and other capital- intensive projects should identify and align on long-term, customer, climate-, and market- beneficial regulatory strategies to create state and interstate stability.
Without a unified federal framework, businesses will inevitably incur costs and risks. However, states, local governments, and businesses have a role to play in shaping the market and regulatory environment in favor of climate responsive and long-term capital investments. This is the time to leverage collective influence.
