How Quickly Can President Trump Unwind Environmental Regulations?

President Elect Trump has vowed to unwind regulations which he believes are dramatically constraining economic growth.  The Obama Administration's environmental regulations are specifically being targeted, including:  the Clean Power Plan, the Waters of the U.S. Rule and ozone regulations. His transition web-page even touts that for every one new regulation enacted his Administration will remove two old regulations.  

Billionaire investor Carl Ichan was given the position of Special Adviser on Regulatory Issues.  As reported on CNBC, Mr. Ichan said this about government regulation when his new position was announced:

"Under President Obama, America's business owners have been crippled by over $1 trillion in new regulations....It's time to break free of excessive regulation and let our entrepreneurs do what they do best: create jobs and support communities."

But just how quickly can the Trump Administration unwind environmental regulations?  What tools does the Administration have at its disposal to reduce or eliminate environmental regulation?

Federal Rulemaking Process

The rulemaking procedures for federal agencies, including U.S. EPA, are governed by the Administrative Procedures Act (APA).  While the APA imposes a formal process for adoption of new rules that naturally slows the pace of federal rulemaking, it also imposes restrictions on the ability to either remove existing regulations as well as stop regulations once they are in process.

The APA (5 U.S.C. Section 553) requires a four step rulemaking process:

  1. Issue a notice of proposed rulemaking;
  2. Receiving comments on the proposed rule;
  3. Issue a final rule; and
  4. Setting an effective date at least 30 days after publication of the final rule n the Federal Register.

Once a rule has completed this four step process, it becomes much more difficult to remove or prevent the rule from going into effect.  Below are some of the administrative, legislative and legal strategies the Trump Administration may employ to reduce and/or eliminate environmental regulation.

Executive Order to Stop Regulations in Process

On the first day of office, President Trump can have a memorandum issued directing all federal agencies, including the U.S. EPA, to freeze current rule making efforts.  Similar memorandums were issued on the first day by Bush and the Obama Administrations.  But the APA has limits on the authority to derail current rulemaking efforts.

A similar memorandum was issued on January 20, 2001, by Andrew Card, President Bush's Chief of Staff.  See, 66 Fed. Reg. 7702 (Jan. 24, 2001) The memo directed executive agencies to withdraw rules not yet published and to postpone the effective dates of public regulations. However, prior Court precedent forced agencies to go through proper APA procedures prior to withdrawing or delaying rules. 

In Natural Resources Defense Council, Inc. v. EPA, 683 F.3d 752 (3d Cir. 1982) the Court specifically addressed whether indefinite postponement of an EPA rule would violate the APA.  At issue was an EPA rule that had completed the four-step APA process with an effective date.  An Executive Order was issued to suspend the effective date of certain rules to reconsider the costs and benefits of the new rule.  The Court held that such a postponement was tantamount to rulemaking itself and the four step APA process would need to be completed to delay the effective date of the rule.

A GAO study showed that the Card memorandum resulted in the delay of the effective date of 90 rules and 15 rules still had not gone effective after one year from the date of issuance of the memorandum.  See, U.S. General Accounting Office, GAO-02-370R, Feb. 15, 2002.

While the Trump Administration can delay rules in process, past precedent shows that executive authority to stop a rule in process is does have constraints.

Slow the Pace of New EPA Regulations

The Trump Administration can also direct U.S. EPA to be cautious in adopting any new regulations. Certainly the new Administration can reduce the number of newly adopted regulations.  A similar action was taken by President Reagan through his Executive Order 12291.  The Order enacted on February 17, 1981, required all agencies perform a "Regulatory Impact Analysis" to determine if the "potential benefits to society for the regulation outweigh the potential costs to society" and the rule with the "least net cost to society" shall be enacted.

President Reagan order did reduce the number of new regulations adopted during his Presidency. However, such an Executive Order cannot prevent all new rulemaking, in particular with regard to U.S. EPA that is statutorily required to adopt certain regulations.

In fact, environmental groups often sue U.S. EPA to force adoption of new regulations.  Such suits were common during the Bush Administration.  Environmental statutes, such as the Clean Air Act and Clean Water Act, contain citizen suit provisions that authorize third parties to compel an agency to perform a mandatory act under those statutes.  See, Clean Air Act, 42 U.S.C. Section 7604(a)(2) and Clean Water Act, 33 U.S.C. Section 1365(a)(2).

However, litigation takes time.  Even if Courts agree and order the U.S. EPA to adopt statutorily mandated regulations, the Trump Administration will have the power to slow pace of newly adopted EPA regulations.

Legislative Options

The Congressional Review Act (CRA- 5 U.S.C. Section 801-808) requires federal agencies to submit rules to Congress for review.  Under the CRA, Congress has the ability to revoke rules through a special joint resolution during the 60 day period following the rules submission to Congress.

While the CRA could be used to revoke rules enacted at the end of the Obama Administration, the process to adopt a special joint resolution is required for each rule to be rescinded.  Therefore, the process is time consuming.  

As discussed in Forbes, another option is to pass legislation such as the RED Tap Act (S. 1944), which would require elimination of one rule for every new rule enacted.  

Current Litigation Involving Obama Administration EPA Rules

Challenges to two of the Obama Administration's signature environmental rules- the Clean Power Plan and the Waters of U.S..- are still pending in the Courts.  The Trump Administration could simply not put on a strong defense to rules currently being challenged.  If the Court invalidates a rule, then the Trump Administration could simply choose not to enact the rule.

Authority to Repeal Existing EPA Regulations

While the ability to delay or revoke rules in process is important, what authority does the Administration have to revoke rules that are currently in place.  Previous Administrations have learned, typically through the courts, that Presidential powers to revoke existing rules is limited.  An existing regulation can only be amended or repealed if the four step APA rulemaking process is followed.  Furthermore, the APA requires the Administration to not act "arbitrary" or "capricious" in revoking or amending a rule.  In other words, the Agency must justify its change in position.  See, FCC V. Fox Television Stations, Inc., 556 U.S. 502 (2009).

A good example of the limits on the ability to revoke prior enacted rules is the Tongass National forest exemption to the U.S. Department of Agriculture's "Roadless Rule" which limited road construction and timber harvesting in national forests.  The Roadless Rule was promulgated under President Clinton.  President Bush created an exemption to the rule that was challenged in Court as arbitrary and capricious under the APA.  After years' of litigation, the Ninth Circuit Court of Appeal overturned the exemption stating the Agency provided insufficient justification for its change in policy.  See, Organized Village of Kake v. USDA, 795 F.3d 956 (9th Cir. 2015)

Conclusion

Clearly, the Trump Administration can slow down the regulatory rulemaking process.  It can also choose not to defend rules currently being challenged in the Courts.  However, under the APA, the Administration cannot simply revoke existing rules without sufficient technical and legal justification.  

Sackett Case Could Be a "Game Changer" on EPA Enforcement

Back in June, the Supreme Court agreed to hear the case of Sackett v. EPA which could forever change the way EPA enforcement actions are defended.  While the case involves an EPA administrative enforcement order for unauthorized filling of a wetland, the ruling potentially impacts EPA enforcement under all its major statutes- RCRA (hazardous waste), Clean Air Act (CAA), Clean Water Act (CAA), and even CERCLA.

What is at issue?

When EPA believes a violation of its regulations has occurred it has the power to issue an administrative order compelling the alleged violator to remedy the issue.  EPA takes the position that the person/entity subject to that order cannot challenge the Order's validity prior to EPA taking a formal enforcement action in Court (referred to as "pre-enforcement review"). 

EPA's position leaves the person or company subject to the order with a Hobson's choice- either comply and incur the costs upfront or defy the order and face penalties for its noncompliance.

The courts have almost universally upheld EPA's position that its compliance orders cannot be challenged until it takes an enforcement action.  However, the Supreme Court has agreed to take a fresh look at this issue in the Sackett case.

Synopsis of Sackett Case

The Sacketts were building a residential home on their property.  EPA alleges that, during construction of the home, the Sacketts filled a 1/2 wetland without a permit. Filling a wetland without a permit is a violation of Section 404 of the Clean Water Act.   EPA issued an administrative order requiring the Sacketts to remove the fill and restore their property to its original condition.

Sacketts could either spend the money to remove the fill and restore the property or they faced penalties for non-compliance with EPA's order of up to $37,500 per day.  To give an idea of the risk the Sacketts must take if they did not comply, one month's worth of penalties could equal $750,000.

Sacketts petitioned EPA for a hearing to challenge EPA conclusion that their property had a jurisdictional wetland.  EPA did not grant the hearing, so the Sacketts filed suit making the following challenges:

  1. No Bar to Pre-Enforcement Review of EPA's Order-  The Sacketts argue that the Clean Water Act ("CWA"), unlike CERCLA (Superfund), contains no express statutory bar to pre-enforcement review of administrative orders.  Therefore, the should be able to challenge the validity of EPA's order without risking being subject to civil penalties for non-compliance with the Order.
  2. If there is a Bar to Pre-Enforcement Review it Violates Due Process under the Constitution-  In the alternative, if the Court finds that the CWA does contain an implied bar against pre-enforcement review, such a bar violates the U.S. Constitutional guarantee of Due Process.

 Game Changer?

If the Supreme Court agrees with the Sacketts, companies and individuals would be provided much better options when facing an EPA order.  Rather than immediately complying or risking penalties, they could challenge the EPA's order in Court.  Importantly, the challenge could be made before EPA has the legal authority to assert civil penalties for failure to comply with the Order.

This case involves EPA's enforcement authority under all its major statutes (CWA, RCRA, CAA and CERCLA).  This means EPA efforts to immediately compel action under any of these statutes through administrative orders would be practically be eliminated.  It would likely mean that EPA would, in many cases, skip the administrative order step and immediately sue in Court.

Legal Arguments

Implied Bar Against Pre-Enforcement Review

Only CERCLA contains an express bar in the statute against pre-enforcement review of administrative orders issued under the Act.  While the other environmental statutes (CWA, RCRA and CAA) don't contain such an express bar, the Administrative Procedures Act (APA) states that a bar exists if the "the congressional intent to preclude judicial review is fairly discernible in the statutory scheme."

The Ninth Circuit in Sackett said the bar was implied in the CWA because Congress intended EPA to have the authority to remedy violations quickly.  Similar arguments have been successful in other cases challenging EPA's authority involving other statutes.

The Supreme Court will review the Ninth Circuit's determination that an implied bar exists.

Bar Against Pre-Enforcement Review Violates Due Process

Even if the Court finds the implied bar exists, it could still say such a bar violates the Constitution.  At issue will be whether the negative ramifications of receiving a Unilateral Administrative Order constitute property deprivations protected by the Due Process Clause

General Electric ("GE") challenged EPA's Administrative Order authority when it received an CERCLA Order requiring clean up.  GE argued that its stock price could suffer, its brand would take a hit and it could face higher financing costs.  GE said all of these negative ramifications were enough a property deprivation to require due process (i.e. the ability to challenge the Order pre-enforcement).

The D.C. Circuit rejected GE's arguments.  It said GE could always challenge any penalties for noncompliance once EPA brought an enforcement action in Court.  It also found the consequential impacts on GE from receiving the Order were not significant enough to merit due process protection.

Conclusion

The odd thing is that the Supreme Court agreed to hear the Sackett case.  Only three weeks earlier it rejected GE's petition on the Due Process issue.  Also, regarding the existence of an implied bar, there appears to be no split among Circuits on the issue that typically is a basis for the Supreme Court to review an issue. 

The fact that the Court agreed to hear the case suggests some on the Court are uncomfortable with the current state of the law.