DC Circuit Vacates Stay of Clean Air Act Methane Rule – a Canary in EPA’s Regulatory Reform Coal Mine?

Immediate reaction to the D.C. Circuit’s July 3 ruling in Clean Air Council v. Pruitt spanned the predictable political divide.  The decision was either a major rebuke of the administration’s efforts to rethink a number of environmental regulations, or it merely represented a case-specific blip on the policy radar screen.  A close reading of the majority opinion suggests that EPA’s ongoing reconsideration of a wide range of its own rules might face close scrutiny under otherwise mundane aspects of the Administrative Procedure Act (APA).

In its 2-1 decision, the court grappled with whether Section 307(d)(7)(B) of the Clean Air Act mandated reconsideration of an Obama-era rule establishing standards for fugitive emissions of methane and other pollutants in the oil and gas sector.  Several industry groups petitioned EPA for reconsideration of the rule.  In response, the agency published notice that it would in fact begin the process to review the disputed rule, and in the meantime, would stay enforcement of the rule – just days before the new standards would have taken effect.  At first, the agency announced a 90-day stay; shortly thereafter, it extended that to two years, allowing EPA “to look broadly at the entire 2016 Rule” during its reconsideration.  A broad coalition of environmental groups filed an emergency motion for a stay of the stay (“sit, methane regulation, sit!”) or for “summary vacatur” (“bad agency order, bad!”).

After finding that it had jurisdiction to review the stay – a conclusion drawing a vigorous dissenting opinion – the D.C. Circuit rejected all of EPA’s procedural arguments and vacated the proposed stay.

First, the court held that while federal agencies have “broad discretion” to review a regulation at any time, they all must comply with the APA, including requirements for notice and comment.  Second, the court rejected EPA’s position that it had “inherent authority” to issue a “brief” stay of the final rule.  It found that the agency can act only in accordance with the authority granted to it by Congress, even if only to stay enforcement of a rule.  The court found no such authority in the Clean Air Act.  Moreover, it held that the actual text of the Clean Air Act section in question authorized the agency to issue a stay in those circumstances where EPA is mandated to convene reconsideration proceedings – circumstances found absent in this case.

The court’s first two conclusions are noteworthy.  Many of the current EPA’s actions in the environmental arena have relied generally on the agency’s discretion to revisit rules from the prior administration.  That’s fair game – elections have consequences, as they say.  However, in ways large and small, the APA constrains an agency’s ability to reverse course suddenly.  That’s what notice and comment is all about.  As we noted in this space last week, the proposed repeal of the “Waters of the United States” rule will go through that very process.

Should those rules even apply to an agency’s enforcement of existing rules?  The problem in the methane rule case perhaps lies with EPA’s express announcement of a stay.  Agencies choose not to enforce rules (or at least not to enforce aggressively) all the time.  That policy decision could draw ire from the other branches of government, but in reality, that sort of enforcement discretion goes unchallenged most of the time.  Here, however, EPA expressly stated what it intended while it conducted reconsideration of the rule, and that may have dictated the outcome.

In addition, the agency’s “inherent authority” argument only goes so far.  This proposition swings back and forth like a pendulum depending on who’s running the federal government.  Remember President Obama’s argument that he had “inherent authority” to enforce immigration laws in a particular way that would grant greater leniency to the children of undocumented immigrants?  That position was rejected for many of the same reasons articulated by the D.C. Circuit in the methane rule case.  The line between agency discretion and agency authority can certainly be fuzzy.  If a new administration doesn’t like a certain rule or policy, it can go ahead and change it – so long as it follows the APA playbook.

When the court got to the merits of the Clean Air Act argument, it really wasn’t a close call.  (Arguing that the court didn’t have jurisdiction to consider the case in the first place, the dissent did not address these issues.)  Reconsideration of the rule would have been mandated only had it been “impracticable” for parties to object to certain elements of the rule announced for reconsideration during the initial notice-and-comment period.  In each of the substantive areas identified by the agency, the court found that stakeholders had ample opportunity to comment, therefore making imposition of a stay “arbitrary and capricious.”

At the conclusion of its opinion, the court stressed that EPA has clear authority to reconsider the rule consistent with its Federal Register announcement.  Only the administrative stay was improper given the Clean Air Act section in question and general APA requirements.  As EPA continues to revisit or reconsider a whole panoply of environmental regulations, two things are likely:  The agency will more strictly adhere to notice-and-comment requirements, and it probably won’t announce so boldly its intent to ease enforcement of existing rules.

 

Waters of the United States: The Struggle to “Repeal and Replace” Isn’t Limited to Healthcare

The USEPA and Army Corps of Engineers finally announced what has been expected since Inauguration Day – the repeal of the 2015 “Waters of the United States” (WOTUS) rule.  Not unlike the more prominent political battle raging over the Affordable Care Act, the administration now faces the stern challenge of replacing the controversial rule.  Many of the themes of the healthcare debate are echoed in the struggle over how the government should regulate WOTUS.

For example, will any revised rule work to expand or limit the resources that qualify for protection under the Clean Water Act?

Objections to the 2015 rule focused on the apparent expansion of federal authority over particular water bodies that may not have been covered under the prior interpretation of the Act following the Supreme Court’s fractured Rapanos ruling.  Taking Justice Kennedy’s “significant nexus to navigable waters” test to its logical extremes, certain industry groups claimed, would amount to an unauthorized “land grab” by the federal government.  Indeed, many court rulings since Rapanos have concluded that determination of the status of certain water features is jurisdictional, resulting from fairly tenuous connections between the feature in question and a small stream or a larger river miles from the property.

Defining WOTUS jurisdiction to “relatively permanent” waterbodies that share “a continuous connection” to navigable waters—Justice Scalia’s and the current administration’s preferred articulation—attracts equally vociferous objections from various conservation groups.  They claim that the Scalia test would overly restrict the Act’s jurisdiction, perhaps to the exclusion of important water features they assert are crucial to the health of navigable waters or wetlands that act as natural buffers against severe storms or continued coastal erosion.

In addition, as in the healthcare discussion, any new rule will confront the role of the states versus that of the federal government.

At the heart of the administration’s repeal notice is a return of authority over regulation of waterbodies to the states.  The repeal announcement cites with equal importance the Clean Water Act’s objective to “restore and maintain” the integrity of the nation’s water and the policy to “recognize, preserve, and protect the primary responsibilities and rights of the States to prevent, reduce, and eliminate pollution.”  This leads us to ask, What if a state fails to take action to prevent or reduce pollution?  Who decides what’s enough?  Again, this feels eerily like the debate over giving states authority to decide what health benefits are “essential” for covered patients.  Given Administrator Pruitt’s repeated reliance on the role of state authority over the entire panoply of environmental regulation, this will clearly be a significant aspect of any revised WOTUS rule.

Finally, the WOTUS rule and healthcare policy share the common theme of balancing stakeholders’ need for regulatory certainty with permitting the exercise of commonsense flexibility.

Preserving the rights of states to make or influence jurisdictional determinations under the Act recognizes plain geographical and ecosystem differences across the country.  Yet, promoting a regulatory approach that “one size does not fit all” could leave many regulated industries, like residential and commercial builders, subject to the unpredictable differences between states and between Army Corps districts.  The 2015 rule attempted to answer decades-old pleas for regulatory certainty, but quickly led to certain buyer’s remorse.  Knowing with greater certainty what waterbodies would be covered by the rule across the country didn’t satisfy stakeholders who felt that the clarity offered by the rule went too far.

EPA and the Corps have set a goal of publishing a new rule by the beginning of next year.  While it’s possible they will meet that goal, in order to do so the agencies will have to consider what is sure to be another avalanche of public comment whenever they release a revised draft rule.  They will also have to defend the “repeal” step of the proposed two-step regulatory process against an inevitable legal challenge.  (Congress is said to be considering legislation to curtail any such Administrative Procedure Act challenges – a remarkable action without much precedent.)

I’ll offer some not-so-bold predictions:  Even if EPA and the Corps publish a revised WOTUS rule in final form sometime in 2018, litigation over the rule will continue past the end of President Trump’s first term.  In the interim, uncertainty over the jurisdictional scope of WOTUS will continue.  And the search for the perfect balance of certainty and flexibility in the Section 404 program, like Don Quixote’s quest, will continue, “no matter how hopeless, no matter how far.”  Despite my exercise of poetic license (and my tendency to quote musical theater lyrics), participation in the revised rulemaking is still essential, and should not be equated with tilting at windmills.

We’ll Always Have Paris

32111053371_3660e14ee1_bCertainly nothing in President Trump’s Rose Garden announcement that the United States will withdraw from the Paris climate agreement resembled that bittersweet moment between Rick and Ilsa in Casablanca.  Despite the momentous decision, however, it remains likely that the citizens of this country and around the world “will always have Paris.”

This is not some myopic conclusion or reflection on whether the Paris accord was a good or bad deal for this country.  (By the way, the odds of 190 countries agreeing to renegotiate on Mr. Trump’s terms are about as good as those of the New York Jets again winning the Super Bowl in my lifetime.)  Rather, this view takes into account that the marketplace has long ago embraced the issues associated with climate change and efforts to reduce carbon emissions.

Don’t take my word for it – just two days before the President’s announcement, 62 percent of ExxonMobil’s shareholders voted to require the company to report on the impacts of climate change to its business.  In other words, investors want the company to assess the risk to its bottom line as countries around the world reduce fossil fuel use to live up to goals established in the Paris Agreement.  Similar shareholder resolutions obtained near-majority support in other major industry sectors.

More proof: Renewable energy continues to become more economical, even as government-supported subsidies are phased out around the globe.  A report from the World Economic Forum at the end of last year indicated that renewables, especially wind and solar, have achieved economic competitiveness and reached what it termed “grid parity.”  According to one of the report’s co-authors, renewable energy “is not only a commercially viable option, but an outright compelling investment opportunity with long-term, stable, inflation-protected returns.”  If those trends continue, Wall Street, not Pennsylvania Avenue, will likely dictate the future of the international energy mix.  If he were alive today, John D. Rockefeller might not like that prognosis, but he might very well admire how the market continues to have the power to influence basic human behavior.

Market influence goes beyond the valuation of various companies’ financial risk or individual or institutional investment decisions.  It also impacts consumer choice, ranging from electric/hybrid or zero-emission vehicles over traditional gas-combustion engines to housing preferences that tend to reduce reliance on automobile travel.  Even the rapidly evolving autonomous vehicle industry has the potential side benefit of reduced greenhouse gas emissions.  Drivers may not appreciate how greater use of currently available technology such as GPS guidance or sensors that detect available parking spots can dramatically reduce emissions.  But there is no doubt that progress to more advanced vehicle automation is unstoppable.  Once again, the market has spoken, and Fortune 100 companies in the technology and automobile sectors have listened.

Perhaps as influential as financial markets is the marketplace of ideas.  These take years to shift, but in the context of concern over climate change, attitudes have rapidly changed.  The movement in public opinion can be witnessed on a global scale.  Australians express fear over the future health of their cherished Great Barrier Reef.  Pacific islanders who exercised influence far out of proportion to their populations or economies spurred the international movement toward the Paris Agreement out of a genuine concern over losing their homeland.  African nations, having long suffered from the political and social upheaval arising from drought on that continent, rightly worry over even greater conflicts as a result of potentially more severe droughts.  The United States’ withdrawal will not and cannot change any of that.  If anything, it might have the opposite effect of further bolstering other nations’ commitment to the goals established in the Paris Agreement.

When Rick urged Ilsa to hold on to the memory of their brief but enduring love affair, he knew that their relationship was not to be.  For the 194 other signatory countries left to ponder the repercussions of President Trump’s decision, however, they may look to another famous line from Casablanca:  “I think this is the beginning of a beautiful friendship.”

 

The Litigation Flight of the Bumblebee

This post follows up on our previous analysis of the Illinois highway project that had been enjoined as a result of allegations that the project proponent may not have adequately assessed potential impacts on the recently listed rusty patched bumblebee, which has habitat in the project area.

At the time of our first post, we predicted that the temporary restraining order that halted project construction could be short-lived. The government had proffered several serious procedural defenses against the plaintiffs’ ESA claims surrounding impact to the bumblebee. The court scheduled an expedited hearing on a preliminary injunction to allow the parties to present arguments on those defenses, as well as any additional substantive evidence regarding alleged harm to the species.

At the appointed date, the parties and their counsel appeared for argument – with one major exception. The plaintiffs’ expert, who had submitted a declaration in support of the proposition that the highway would have an adverse impact on the bumblebee, failed to show up. That’s right. Didn’t show up. In light of the government’s inability to cross-examine plaintiffs’ key witness at the PI hearing, and rejecting the testimony of another citizen lacking bee expertise, the court dissolved the injunction.

While the project is back on track and the Illinois injunction motions practice over the bumblebee has been resolved, this incident proves the old saying attributed to Woody Allen: “80 percent of success is showing up.”

When Does $1,000,000,000,000 ≠ $1,000,000,000,000?

White_House_DC

The long-anticipated Trump infrastructure plan is almost ready, but the preview of that plan as reflected in the administration’s proposed FY 2018 budget has already prompted strong reactions.  Two things are clear: the promised $1 trillion dollar investment in infrastructure may be illusory, at best, and the plan’s outline represents a fundamental shift in the federal government’s role in planning and developing infrastructure.

The President’s closest infrastructure advisors have deep background and expertise with public-private partnerships (P3), the most traditional vehicle for inserting private assets into public facilities.  These same advisors also likely harbor the frustration felt by many in the infrastructure sector that the U.S. has lagged behind other developed nations in the use of P3s to finance infrastructure development.

It is no surprise then that the proposed budget contains a line item of $200 billion over the next decade to incentivize private and state spending.  At the same time, it cuts $96 billion from the Highway Trust Fund over 10 years, almost $1 billion from the FTA’s capital transit program in the next year alone, and (as predicted) slashes $500 million for the locally based TIGER grant program.

The administration argues that the $200 billion in federal spending will encourage additional private and state-level investments, which would add up over time to the overall goal of $1 trillion.  While there is little disagreement that P3 activity in the U.S. is a fraction of what it could be, history suggests that the investment seed proposed by the administration may not grow the magical infrastructure beanstalk.

According to the Harvard Kennedy School of Government, from 2005 to 2014, a total of 40 P3 transactions were completed (covering roads, airports, ports, parking, water utilities, and others), with a value of $39 billion.  Not bad, but this represents a fraction of the total federal investment in public facilities, and is less than one full year of just the average annual highway spending during that time frame.  As my former USDOT colleagues have said repeatedly, P3 can be an effective tool in our country’s infrastructure spending toolbox, but it is only one tool.

Could the proposed bolstering of already successful federal loan programs like TIFIA and financing instruments like Private Activity Bonds create greater private investment activity?  Absolutely.  Will it create a level of investment equivalent to the $1 trillion talking point?  Highly doubtful.

Even with the welcome additional line item for federal loan programs, the proposed budget’s greater significance perhaps lies in the how the spending plan reflects a seismic shift in the federal government’s role in building infrastructure.  The administration asserts that federal rules, mostly in the environmental arena, bog down important projects in red tape and permitting delays.  Readers of this blog know that I have advocated consistently for reforms in how agencies assess and permit major projects.  Yet, blaming the country’s woeful recent record in infrastructure investment on environmental requirements is somewhat misleading.

The administration famously rolled out a complex flowchart of how a typical highway project gets permitted, and the chart quickly went viral.  For those of us who have spent a career in the infrastructure arena, it was worth a good chuckle.  But even those involved with this effort would likely admit that the graphic bears little resemblance to the permitting of a typical highway project.

John Porcari, the former U.S. DOT Deputy Secretary, recently testified before the Senate Environment and Public Works Committee.  He explained what has been understood for a long time: that only 4 percent of all transportation projects require a full environmental impact statement.  Almost 90 percent of all projects are approved with the simplest and quickest NEPA approval, a categorical exclusion.  Mr. Porcari also detailed the many reforms already in place through recent authorization bills that have successfully streamlined environmental reviews, and other best practices that have led to tremendous successes on projects of regional and national significance.  More could be done, he said, but let’s not shift focus away from the more common causes of delay, growing out of local project-specific factors (political and otherwise) which understandably arise during complex project development.

Congress and the administration will soon engage in a heated political philosophical debate in the context of the upcoming budget battle, as well as negotiations over expected infrastructure legislation.  Questions on the table include the following:

  • What is the most appropriate role of the federal government in infrastructure development?
  • Is public financing democratic (little d) when it is implemented through a gas tax or a vehicle mile charge, or does a reliance on federal financing promote unacceptable inefficiencies?
  • How much incentivizing is necessary to unlock greater private or state investment, or is it too uncertain to rely on state governments to choose to spend more on infrastructure?
  • Can government make environmental streamlining “business as usual,” or are more drastic measures required to reduce the project approval process?

Transportation Secretary Chao is 100 percent correct when she says, “This is a democracy; they’re not easy questions.”  How our current political leaders choose to answer these questions will have ripple effects across America, perhaps for generations to come.

What’s the Buzz? Tell Me What’s A-Happening

When the U.S. Fish & Wildlife Service placed the rusty patched bumblebee on the endangered species list back on March 21, many observers wondered how this action could impact a wide variety of infrastructure development proposals.  Unlike some of the recent controversial species management actions that implicated areas of the American west more accustomed to Endangered Species Act (ESA) issues, the bumblebee’s habitat stretches across over a dozen heavily populated eastern and midwestern states.  Based on litigation challenging a highway project in Illinois, we may have our first answer.

A District Court judge in Illinois granted a temporary restraining order delaying construction of a proposed new 5.6-mile stretch of highway called the Longmeadow Parkway Fox River Bridge Corridor.  The ruling was based, in large part, on a local environmental group’s allegation that the project’s NEPA review did not adequately take into account the presence of the bumblebee on property in the project area.  Emergency relief was warranted to prevent harm to the species, the court ruled, finding that the traditional balance of harms weighed in favor of short-term relief over the planned beginning of construction.

Plaintiffs still face a number of substantial procedural hurdles (did they give the government adequate notice of their claims under the ESA, for example).  As a result, the injunction may not persist long after an April 28 deadline for the plaintiffs to provide additional information to the court and argument on preliminary injunctive relief.  But the very fact that a federal judge was persuaded that the protections afforded the bumblebee as a result of the ESA listing should delay project construction is noteworthy.  Moreover, it is possible that the project proponent could be compelled to make additional engineering modifications and/or to take further mitigation measures to protect the bee.  Any such concessions of course mean additional time and money.

Some of the project opponents’ comments as reported by local media demonstrate precisely the potential for confusion and uncertainty for development interests.  One person suggested:  “There are bumblebees pretty much all over the state of Illinois.  I don’t know if it’s significant to this area.  No one really does, because it has not been studied.”  Another advocate added:  “It’s a little keystone in the ecosystem, that if they go who knows what else is going?”

These fundamental questions, combined with an observed 95 percent decline in the species’ presence across the U.S. and Canada, led to the listing, despite a brief delay by the new administration in taking that final action.  Native pollinators contribute to the growth of many important and popular crops, but have been adversely impacted by modern farming trends, urban sprawl, and possibly by the use of certain insecticides.

Whether construction of this one particular highway is further delayed or if the project is modified in some way to address potential impacts to the bumblebee, there is little doubt that developers working in states with remaining bumblebee populations and habitat must take these concerns into account.  The practical effect of the bumblebee listing may also finally free up the potential for mitigation banks specializing in habitat in the species’ current range.  While this market has been fairly robust in the wetlands/stream context, it has been slow to advance in the ESA context.  Now that ESA obligations for the bumblebee may complicate infrastructure development in states like Pennsylvania, Maryland, Illinois, and Ohio, perhaps habitat conservation banking will be more readily accepted by the Fish & Wildlife Service.

Cases like those attacking the Longmeadow project are sure to provide more fuel to those seeking reform of the ESA, something gathering momentum on Capitol Hill. In the interim, however, the real “buzz” should be focused on research, compliance, and mitigation, so that other development projects can avoid the same litigation fate.

Buy American/Hire American Policies Previewed in Latest Executive Order

Made in the USA

 

When clients ask about “Buy American” restrictions, which apply to direct purchases by the federal government, they don’t always realize that they are referring to a shifting body of legislation that has been around for more than 80 years, since the Buy American Act of 1933 was passed. Since then, Buy American legislation has grown considerably, to include the often-confused, so-called Buy America Act, which was enacted in 1983 and applies only to mass-transit-related procurements.

On Tuesday, the general body of information on Buy American restrictions grew even larger after President Trump signed an executive order ushering in a “new, more muscular Buy American policy based on the twin pillars of maximizing Made in America content and minimizing waivers and exceptions to Buy American laws.”

The executive order directs every federal agency to “scrupulously monitor, enforce and comply with Buy American laws,” and further tasks Secretary Commerce Wilbur Ross with reviewing all agency findings and submitting a report to President Trump within 220 days. The new order seeks to minimize grants of waivers, and in particular will “more narrowly” construe public-interest waivers, which are already rarely granted. The order also requires agency heads to consider whether the cost advantage of a foreign-sourced product is the result of the use of dumped or subsidized goods.

Additionally, the order focuses on the role of Buy American laws in free trade agreements and, specifically, on whether the United States is getting its “fair share” of global government procurement when it treats foreign suppliers like American companies. The executive order does not actually rescind any trade agreements or call for their renegotiation, but it does call for more information to determine which deals are working for America and which ones are not.

Finally, the order strongly reaffirms the “melted and poured” standard for U.S. steel production, without which semi-finished steel would be imported from countries like China and Russia.

As indicated above, the executive order does not contemplate any immediate action; instead, it is an information-gathering exercise that may or may not result in changes in enforcement, legislation, or trade agreements. It is also a signal to other countries that the United States wants a larger piece of the global government procurement pie. While we await the eventual outcome of the executive order, the various and often complicated compliance issues associated with Buy American laws remain intact, and should be broached with legal counsel, since—even with a greater articulation from the Trump administration about the government’s approach to buying American—there is still no “one size fits all” Buy American test.

Regulatory Reform: Be Careful What You Wish For

Scissors cutting red silk ribbon on white background

A constant refrain from clients over the years, in both the public and private sectors, is that certainty may be the most valuable characteristic of any regulatory program.  The “Waters of the United States” controversy perfectly illustrates this perspective.  One could argue whether the Army Corps of Engineers’ reach over jurisdictional waters governed by Section 404 of the Clean Water Act has expanded or contracted over the years.  But there can be no dispute, thanks to a series of confusing Supreme Court decisions and regulatory inertia, that a property owner still doesn’t know precisely whether all or part of her land qualifies as “waters of the U.S.”  This reality leads to the legitimate complaint from the regulated community that its cost of proposed development rises dramatically because of regulatory uncertainty.

The Trump administration has promised (and is acting on that promise) to address regulatory burdens facing a variety of industries.  Some members of the administration take a broad philosophical view of such actions (“deconstructing the administrative state”), while others have a far more practical aim of promoting greater economic activity by reducing the built-in costs of regulatory compliance.  Whether the goal is job creation or encouraging a more fundamental shift of power away from federal agencies, this effort isn’t new.

In fact, one of the first tasks assigned to me as Chief Counsel at the Federal Highway Administration was implementation of a directive from the Office of Management & Budget to identify out-of-date or redundant regulations for repeal.  Cass Sunstein, then the head of OMB’s Office of Information and Regulatory Affairs, issued a directive to all agencies to find and cut unnecessary rules from the Code of Regulations.  Sounds familiar, right?  Together with my program office colleagues, I researched and found at least a dozen major rules that had been superseded by subsequent law and served no good purpose.

Think back even further, and I have a distinct recollection of Vice-President Al Gore appearing on a late night show to push the Clinton Administration’s effort to reduce silly regulations.  The Vice President demonstrated the testing procedure set forth in federal purchasing regulations to determine whether ash trays meet quality standards.  I’m not sure if those regulations were ultimately repealed, but it made for good TV.

Fast forward to last week, when I addressed the National Ocean Industries Association Annual Meeting, giving attendees an overview of regulatory activity impacting the offshore energy sector.  While the overall theme of the meeting was one of optimism over the potential for reduced regulatory burdens affecting offshore energy development, my message was somewhat more sobering.

The unprecedented use of the Congressional Review Act has already led to the rescission of a couple of major rules involving oil and gas development, and there are at least a couple of others that could be on the President’s desk before the CRA deadline in early May.  (Eleven regulations have been repealed in total, after a grand total of one rule had been overturned by Congress in over 20 years since the CRA was passed.)

Beyond that, Administration Executive Orders and internal Department of the Interior Secretarial Orders will impact energy exploration regulations from top to bottom.  So many questions persist.  How will the agencies implement the directive to repeal two rules for every new one proposed?  How will they attempt to estimate the costs vs. benefits of safety rules governing offshore drilling, for example, against the cost of implementing new Blow-Out Preventer rules put in place after Deepwater Horizon?  What rules will be determined to impede energy production and why?  Once the agencies identify these regulations, how will they address the legal requirements of the Administrative Procedure Act to attempt to roll back those regulations?  Besides those procedural issues, the manner in which the DOI will enforce remaining rules is far from clear.

All those unanswered questions add up to one thing: uncertainty.  The Blow-Out Preventer rules, for example, were written largely to adopt and codify existing best practices, many of which were supported by the industry!  Would it really make sense for offshore operators to turn back those standards, having spent millions of dollars investing in safety equipment and technology?  Not all action involves the repeal of regulations.  A proposed rule out of the Department of Homeland Security/Custom and Border Protection could advance the administration’s “America First” policy by prohibiting the use of foreign-flagged vessels for a wide variety of offshore oil and gas activities.  If finalized, some industry experts estimate that this new interpretation of the Jones Act could result in tremendous delays in planned offshore drilling activities.

Many regulations on the books clearly deserve close inspection.  But in advancing the cause of reform, the administration should keep in mind that by drastically changing the regulatory landscape, it may also be increasing uncertainty for major industries that had already adapted to major public health and safety rules.  Fewer regulations may indeed be a laudable goal, but knowing the rules of the road creates certainty that all businesses crave.

Poof! Administration Makes CEQ Greenhouse Gas NEPA Guidance Disappear. Or Did It?

wagner postThe duo of Penn & Teller is one of my favorite acts. I appreciate not only their irreverent sense of humor, but their unabashed respect for their audiences.  Their tricks are designed to amaze, but they just as quickly reveal exactly how they performed the illusion.  Somehow, knowing how their magic works in no way diminishes their appeal.

On March 28, the Trump administration did Penn & Teller one better. At an elaborate ceremony at the U.S. Environmental Protection Agency, the President made a comprehensive group of Obama-era climate guidance and policies disappear.  This post won’t attempt to review the entire collection of actions targeted by the administration.  Most experts agree that the primary focus of the executive actions, the Clean Power Plan, won’t be undone by executive order.  Administrative procedures and pending (and future) litigation will make any change in policy a protracted effort that may not conclude by the end of the President’s first term.

The focus here is the CEQ’s Greenhouse Gas (GHG) NEPA Guidance, issued last August. The White House rescinded this guidance, effective immediately.  As it was not a regulation (although it did go through extensive public notice and comment), this administrative action will have immediate effect.  The more pertinent question is, will the President’s action simply be an elaborate illusion?

It should be remembered that the Guidance’s stated goal was to make the federal government’s consideration of climate change impacts in NEPA documents for the entire spectrum of federal actions as consistent as possible. Agencies and courts reviewing agency actions struggle with precisely how to address climate impacts.  Some agencies include quantitative calculations (the number of tons of carbon associated with an action); some provide only qualitative analysis as a general rule; others still decline to include any analysis on a project-level basis, on the assumption that no one action can produce measureable impacts on a global phenomenon.  The issue becomes even more complicated when projects incorporate climate resilience features in the alternatives analysis (“should we re-build this bridge with 10-foot or 20-foot clearance over the river?”).

Critics of the Guidance argued that the policy would make NEPA analyses even more complex and take even more time to address this over-arching issue. They also asserted that mandating any quantitative analysis on a project-specific basis made no sense, as the potential climate impact of any additional carbon produced by the project was the quintessential “cumulative effect,” and shouldn’t be charged to any single action.  Moreover, they worried that agencies would have to chase potential carbon emissions “upstream” from more general land-use planning actions in a manner that would be amorphous at best, and inaccurate at worst (for example, opening federal lands to energy exploration, and having to calculate the carbon emissions from potential future use of the resources that could be extracted).

Now all these challenges have magically disappeared, right? Well, not so fast.

Earlier this week I attended the Annual Meeting of the National Association of Environmental Professionals, the organization of consultants and engineers largely responsible for most of the major NEPA work in the U.S.  I had the opportunity there to discuss the Guidance with a number of veteran environmental officials from past administrations, as the EPA announcement literally took place during sessions on “how to assess climate change impacts in NEPA documents.”  Their conclusion, with which I agree, was that regardless of the intent behind rescission of the Guidance, NEPA practice will remain largely unchanged.

Plaintiffs challenging agency NEPA analysis will still pursue claims that analysis of climate impacts was not done in sufficient detail, or not at all. Federal courts will be confronted with this issue in any number of contexts, from broad-based land-use planning decisions to project-specific action.  Agencies won’t be able to avoid the issue.  They will be compelled to respond to public comments on the topic of climate and resilience.  In many instances, the nature of the project itself will demand attention to how or if rising sea levels (as one example) will impact construction of a project.  Will the project proponent be required to commit to additional mitigation measures to protect the infrastructure or development at issue?  Will engineering alternatives need to be considered to address resiliency?  In short, analysis of climate impacts will still be part and parcel of many (if not most) federal environmental reviews.

Therein lies the uneasiness about the absence of CEQ guidance on the issue that I heard expressed at the conference. Professional consultants fear a case-by-case, court-by-court standard on how to address climate, which is certainly not conducive to efficient reviews.  They similarly worry about different federal agencies taking very different approaches, which is likely to occur.  Projects being analyzed in the same geographic region could see widely divergent approaches to climate impacts and resilience.  Once courts have more opportunities to chime in, we may also witness different standards in different parts of the country.

That was what the Guidance attempted to avoid, all under the framework of current regulatory requirements that give agencies great flexibility depending on the well-understood NEPA concepts of “context and intensity.” Now that the Guidance is gone, the goal of greater consistency may also be illusory.

The CEQ GHG NEPA Guidance has disappeared. But the challenge of how to address climate issues under NEPA has not.

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