This post is not about repeal and replacement of the Affordable Care Act, which has been botched since the Act was first passed, despite Republican control of the Presidency and both the House and Senate for the last two years. This post refers to environmental regulatory “reform.” Cleaner air, cleaner water, reduced workplace injuries, unprecedented oil production, and a booming economy aside, the Administration’s mantra is that U.S. companies are hamstrung by massive and unjustified regulatory burdens, particularly in the area of environmental protection, and those regulations must go.

To implement that mantra, the Administration has recently switched its emphasis from wholesale attempts to repeal and replace existing regulations, to a more nuanced approach. Instead, the Administration would change the rulemaking process. For example, the new approach would reform the methodology for measuring the benefits of regulations by eliminating consideration of “indirect” or “co-benefits” or refining the model for estimating relative mortality associated with different Clean Air Act programs.

Under the guise of better transparency, the EPA early on proposed restrictions on the evidence that agencies could use in carrying out a cost/benefit analysis, limiting the studies relied upon to those that were available to the public. That limitation ignored comments that many large-scale epidemiological studies addressing impacts of air and water pollution were dependent on confidentiality in order to obtain participants.

Shortly after that, the EPA issued an Advance Notice of Proposed Rulemaking (ANPR) to seek comments on methods to obtain consistency in cost/benefit approaches, noting, for example, the use of “indirect” benefits in economic analysis. The ANPR pointed to the Mercury Rule for power plants, where the indirect benefits (or co-benefits) of reducing non-mercury particulates far exceeded the direct benefits from controlling the target pollutant. Then, apparently realizing that a uniform approach was not possible given the variety of statutory mandates, on May 13, 2019, the EPA issued a memorandum that directed a more piece-meal approach. Now, the EPA will review methods of cost/benefit analysis to identify inconsistent economic methods and instances where the costs were significantly under-counted, or the benefits significantly over-counted.

What It Means

As we have discussed in earlier blogs, the Administration from the outset took a blunt instrument approach to repeal of existing environmental regulations. It has repeatedly ignored the Administrative Procedure Act (APA), its actions have inevitably faced legal challenge, and it has repeatedly lost in court, often rebuffed by the judiciary in quite harsh terms. The primary regulatory agencies, the EPA and the Department of the Interior, are now both under new management, which apparently recognize that compliance with the APA, while tedious and time-consuming, is the law. Accordingly, we’re now seeing more notice and comment, less sturm und drang. Even where notice and comment have been provided, however, the Administration has met judicial resistance when the agency simply reversed its position, without adequate explanation, on issues already raised and resolved during the initial promulgation of the regulation. Additional efforts to revise the evaluation of existing and proposed regulations, anticipated in late 2019 or early 2020 according to the latest White House progress report, may meet more success withstanding judicial scrutiny after completion of public notice and comment. The use of revised cost/benefit analysis procedures could also more effectively justify limiting or replacing Obama-era regulations. For example, it may cite revised cost/benefit assessments of differing approaches to the conditions addressed by the Clean Power Plan, and in Clean Water Act jurisdictional issues, in seeking judicial approval of its replacement regulations.

Similarly, the Council on Environmental Quality (CEQ) has indicated it will propose modifications to its National Environmental Policy Act (NEPA) regulations, unchanged since 1978. The Administration has repeatedly attempted to accelerate projects by use of time limits on agency environmental reviews. However, use of time limits alone simply raises the likelihood of a successful challenge to the adequacy of the agency review. Modification of the agency requirements for an acceptable review may be more effective in accelerating the review process and surviving judicial scrutiny.

Ultimately, however, the success of the Administration’s deregulation effort will still depend on the answers to two questions: First, can it identify new approaches and complete the rulemakings before a new Administration comes on the scene? Second, despite avoiding the rookie errors of its first two years, will it be any more successful in defending these changes on their merits than it has been in earlier efforts to defend its decision-making process?

Under existing case law on judicial deference for agency decisions, the latter should not be difficult. Ironically, with five Republican Supreme Court justices expressing hostility to Auer (deference to agency interpretation of rules) and Chevron (deference to agency interpretation of statutes), the agencies may find courts taking a harder look at their decisions.

Additionally, agencies may meet considerable blowback from the public and the courts if they attempt to justify narrow environmental regulation by “adjusting” long-accepted cost-benefit and mortality models. Those possibilities suggest the agencies should prepare strong administrative records for any new regulations. The time required for that could put the answer to the first question in doubt. With only a year and a half remaining in this term, the answers to these questions should be apparent soon.