EPA Regulatory Review Floodgates Open, Leaving Pruitt to Mop Up

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By Andrew Childers

When asked which EPA regulations stifle economic growth and should be reconsidered or rescinded, industry groups responded, “All of them.”

High-profile Obama-era regulations limiting carbon dioxide from power plants or establishing the reach of the Clean Water Act, which Environmental Protection Agency Administrator Scott Pruitt had opposed, will certainly be targeted. However, businesses are left wondering whether the agency, which so far lacks political appointees to run the EPA’s water, chemicals and air pollution offices, will have bandwidth to tackle a host of other, less splashy regulatory fixes that could reduce costs or ease burdens.

“We’re in new territory. It’s a process that has no clear precedent within the federal system,” Randall Lutter, a professor of public policy at the University of Virginia and a former senior economist at White House Office of Management and Budget under President Barack Obama, told Bloomberg BNA.

Open the Floodgates

The EPA has received a barrage of requests from regulated industries to open and reconsider regulations from every sector the agency touches. The requests range from drastic changes to the way the agency regulates air pollution—Ameren suggested replacing the agency’s ambient air standards with pollution trading programs—to the more targeted—the American Water Works Association recommended that the EPA streamline its application process for loans to improve drinking water systems.

While a host of industries are looking ease their regulatory burdens, chemical manufacturer Chemours Co. actually went to bat for Obama-era rules that approved new chemicals to replace ozone depleting substances and clamped down on leaks from refrigeration equipment. The chemical company recommended that Pruitt retain those rules.

Environmental and public health groups, of course, vow to fight any attempt to weaken EPA protections, with Earthjustice, the Sierra Club, and Clean Air Task Force calling the regulatory review process “an illegal and arbitrary sham.”

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg, founder of Bloomberg L.P.Bloomberg BNA is an affiliate of Bloomberg L.P.

The Waterkeeper Alliance also dismissed the process as rushed and opaque, calling on the EPA to provide more details about how it will manage the review process and decide which regulations will be reevaluated.

Who’s Driving the Process?

Every new administration takes office vowing to streamline the regulatory process, but Trump has taken that further than ever before, requiring agencies to repeal two regulations for every new directive issued and capping costs that can be imposed on industries. It’s an ambitious plan to transform the regulatory state, but seeing that process through will require coordination and planning. Right now the EPA is short of the political appointees necessary to make those decisions.

“In any one of these big rulemakings, there are dozens of intermediate decisions made along the way,” Jeffrey Holmstead, a partner at Bracewell LLP in Washington, D.C., who previously served as the EPA’s assistant administrator for air pollution in the George W. Bush administration, told Bloomberg BNA. “If you have the administrator sign off on every one, you can only do two or three.”

Trump lags behind his predecessors in staffing the EPA, according to data provided by the Center for Presidential Transition. So far only Pruitt has been confirmed, and Susan Parker Bodine, Trump’s pick for the agency’s enforcement office, is awaiting confirmation. The Trump EPA lacks nominees to head the water, air and chemicals offices who will be central to the regulatory review process.

Unlike past administrations, though, Trump has made easing burdens on businesses central to his domestic priorities.

“The biggest single difference is that Trump has appointed someone to be EPA administrator whose primary focus is on reducing the regulatory burden,” Holmstead said.

When President George W. Bush took office, his EPA preferred legislative rather than regulatory approaches, Holmstead said. But when bills such as the Clear Skies Act faltered in Congress, that’s when the Bush administration attempted to regulate pollutants such as mercury emissions from power plants.

“In the air office, we were not as ambitious as the Trump administration when it comes to regulatory reform,” Holmstead said.

What’s unknown is how the EPA will make decisions on which regulations it will target and when that process will get started. An EPA spokesman could not be reached for comment.

Without assistant administrators to guide the process, Pruitt has appointed a regulatory reform task force of Ryan Jackson, the chief of staff; Byron Brown, the deputy chief of staff for policy; and Brittany Bolen, deputy associate administrator of the Office of Policy, to oversee the effort. All three previously served on the Senate Environment and Public Works Committee with past Chairman James Inhofe (R-Okla.), who was a vocal critic of the Obama EPA’s regulations.

“They are certainly knowledgeable enough to be looking for more regulations to be going after,” Inhofe told Bloomberg BNA. “And they are doing the job pretty well.”

While agencies are tasked with implementing the regulatory reform efforts, the White House will still play a significant role in reducing compliance costs through the Office of Information and Regulatory Affairs, which reviews regulations, said Tracy Mehan, executive director of the American Water Works Association’s government affairs office.

“No doubt in a Republican administration, OIRA is very much empowered—not that they were pushovers in the Obama administration, but it’s fair to say they’re going to be more empowered,” Mehan, who previously served as the EPA assistant administrator for water under President George W. Bush, told Bloomberg BNA.

However, Neomi Rao, Trump’s pick to head that office, also hasn’t been confirmed.

Smaller Fixes Have Big Benefits

While rolling back the Clean Power Plan and replacing the Waters of the U.S. rule are top priorities for Pruitt, more modest updates to the EPA’s various regulations could provide the biggest long-term boons for businesses. Many industry groups in their comments are targeting smaller adjustments to existing regulations that they say can be quickly updated to reduce costs and make them more efficient.

For example, the Class of ’85 Regulatory Response Group, a coalition of 30 utility companies, suggested the agency eliminate unnecessary air pollution monitoring requirements. The Association of Air Pollution Control Agencies recommended streamlining a variety of air pollution permitting provisions to ease burdens on both businesses and state permitting officials.

“Those [smaller fixes] would be valuable investments of time,” Megan Berge, a partner at Baker Botts LLP who represents utilities and other industries, told Bloomberg BNA. “Those are the investments that have the possibility of having a lasting good in terms of making these programs efficient.”

Taking on the EPA’s largest regulations will spark an inevitable battle with environmental groups, which could bog down the entire effort. But tackling some of the smaller changes sought by businesses could be a way for the Trump administration to claim some quick victories.

“The good news is that, at least from EPA and the administration’s perspective, these slight deregulatory acts are somewhat quicker than the big rules,” Sam Batkins, director of regulatory policy at the American Action Forum, which has argued many EPA regulations have costs that exceed benefits, told Bloomberg BNA. “Maybe to some extent they can prioritize the small, minor tweaks to the rules and generate some savings.”

—With assistance from Dean Scott in Washington.

To contact the reporter on this story: Andrew Childers in Washington at AChilders@bna.com

To contact the editor responsible for this story: Paul Connolly at PConnolly@bna.com

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