President Donald Trump and the U.S. Environmental Protection Agency Administrator Scott Pruitt, with traditional anti-regulatory rhetoric, have essentially declared a desire to rescind the vast bulk of EPA regulations. The political premise that the president and EPA administrator express is that federal environmental regulations adopted and enforced by the EPA are overreaching and bad for business. Leave it to the states to regulate their environments and businesses, they say, and all will be better. And, so they say, cutting EPA staff and rescinding EPA regulations will be good for business. But how would the regulated community be affected if they were to succeed? Would they be leaping for joy, or would they come to regret the consequences?
Law and Regulation Before bashing EPA and the regulations it promulgates, remember that it was Congress who expressly passed the baton to the EPA to pass regulations to flesh out the details that Congress either couldn’t grasp or couldn’t gain the votes to enact. Congressional acts in the world of environmental protection are typically in the nature of broad objectives, directives and programmatic structures.
Consider that Congress acts on the basis of speeches, deals, relationships, town hall meetings and polls, while the EPA acts to follow Congressional directives and delegation under the auspices of the rule-making process established by those directives and the Administrative Procedure Act, which includes public comment on draft rules. Many of the details of environmental protection and management covered in the regulations developed by EPA involved detailed study of chemicals, cancer and noncancer risk, cause and effect, actions and reactions, which is the subject of scientific peer review. That is simply beyond the capacity of Congress as the country’s “board of directors” to address effectively. That is why Congress delegated the responsibility for developing the details to the EPA through the regulatory process.
The Business World Without Federal Environmental Regulation Business typically prefers certainty or something close to it as it goes about developing business strategies, budgets, capital improvement plans and operating plans. Business in the modern world also typically prefers a level playing field across the country when it comes to doing business and dealing with the law. If federal environmental regulations were abolished, then federal environmental laws would remain. But, since the federal regulations provide the details that the federal environmental laws didn’t, the business community and the state regulators tasked with adopting and enforcing most federal environmental laws at the state level would be left in a quandary of vagueness and uncertainty. Each state and its environmental regulatory agency, board and staff would be tasked with drafting and adopting its own regulations instead of adopting (sometimes with modifications more restrictive than federal regulation) the national level playing field regulations developed by EPA under the directive of federal environmental laws. This would leave businesses with a greater degree of state-to-state differences and uncertainties that their compliance staff and executives would need to address.
State-to-state development of regulations without federal EPA regulations to start from would also lead to a “race to the bottom,” as some states would attempt to minimize the degree of environmental protection mandated by regulation. Races to the bottom often have unanticipated adverse consequences to businesses and the employees they wish to recruit and retain, the areas in which they operate and the customers who they need to attract and serve.
Business Environmental Litigation Risks Without Environmental Regulation If federal environmental regulations were abolished, the environmental litigation risks faced by business would increase. Without regulations to help define and implement the often vague terms of the laws that are passed in contemplation of agency development of regulations, that vagueness would breed the risk of and need for more litigation to develop case law to resolve the disputes and uncertainties that arise from such vague legislative terms. Under the “Chevron doctrine” established by the U.S. Supreme Court, the federal courts defer to reasonable agency interpretations of the laws that they are tasked with implementing through regulation. Absent of such regulatory guidance, the courts would be left much greater latitude, with an accompanying divergence and inconsistency of decisions, to interpret the laws on a case-by-case basis.
Federal environmental regulations also serve to protect businesses in many instances from common law-based suits. Without those regulations, the courts are more amenable to accept common law claims that diverge from and sometimes overreach the standards set by regulations.
How Clean Is Clean? Speaking of common law suits, one of the things that the EPA does through its scientific research arm is establish standards for acceptable levels of pollutants in a variety of contexts. Without such standards, the business community is unable to know what concentration of what chemical in what context is deemed safe and what concentration is deemed hazardous. Without those federal regulatory standards, each state would need to use its own resources to engage in its own research and development of standards. Without these standards, the litigation risk for business mounts as claimants argue that even trace concentrations of chemicals are too much, and juries are left to decide between warring experts and lawyers on the subject.
What’s the Answer? Are all of the regulations EPA has adopted close to perfect? Of course not. Could they be improved and made more flexible and understandable and easier to implement? Of course they can. Many are overly complex, poorly worded, or overweight in their command and control approach. Some degree of flexibility should be carefully considered in the development, revision, and enforcement of environmental regulations. Greater use of performance-based standards should be considered. So, political rhetoric aside, let EPA, the scientific community, the environmental community, and the regulated community work together to improve, not abolish, the regulations we have and need.
Craig K. Pendergrast is a partner at Taylor English, where he helps his clients understand the complex world of environmental regulation, risk, consulting and liability, and structure deals or resolve disputes in a way that makes sense and allocates risks and expenses appropriately.