Where Are Resources to Enforce Law?
Author
Justin A. Savage - Sidley Austin LLP
Sidley Austin LLP
Current Issue
Issue
3
Parent Article

When Joe Biden came into office, he promised to make EPA enforcement a priority, particularly criminal enforcement. Over the last year, the agency and the Justice Department have made a series of high-profile announcements, ranging from a heightened focus on prosecuting individuals to “proactive” investigations in environmental justice communities to prevent crimes. This aggressive posture masks a deeper reality: the Biden EPA has yet to seek significantly more resources for criminal environmental enforcement.

The issue is important not only for the environment, but for the regulated community. Robust environmental enforcement creates a level playing field for companies that invest billions in compliance and a cleaner environment. Law enforcement protects against unfair competitive advantages captured by that small group of companies and individuals tempted to cheat and circumvent environmental laws to gain profits, customers, and market share. The role of appropriate law enforcement guardrails becomes even more important in protecting the compliance investments of companies that do the right thing.

Law enforcement oversight requires significant resources. To prosecute environmental crimes, the Justice Department generally depends on EPA for referrals. Referrals require investigations that can be time consuming and labor intensive. Agents, analysts, and staff collect and analyze documents and data, interview witnesses, and take other investigative steps. The charging theories for environmental crimes can also be quite complex under the federal environmental statutes and Title 18, creating a layer of legal analysis and review that might be unnecessary in prosecuting other federal crimes.

Despite the tough talk on enforcement, the Biden administration’s budgetary requests suggest that policy and rulemaking, rather than enforcement, are the key priorities. Consider EPA’s requested budgets for criminal enforcement staff. The agency’s FY 2022 budget request proposed an increase of 32 fulltime equivalents for criminal enforcement while requesting 121 new FTEs for the Office of Policy, which addresses significant issues including climate change and environmental justice. But is policy four times more important than prosecuting criminal violations of environmental law?

The final appropriated budgets from Congress are even more telling. EPA’s overall criminal enforcement budget remains flat. Congress appropriated $51.3 million in FY 2021 and the FY 2022 continuing resolution, an increase of just 2 percent.

One of the strategies developed for diminished resources under President Obama’s administration was to argue that more could be accomplished with less resources by using what it labeled Next Generation Compliance. That term refers to a set of principles that rely on clarity in regulations, gathering electronic compliance data, and third-party checks on compliance such as audits. While well-intended, Next Generation was not applicable to criminal enforcement. Criminal actors will violate a regulation no matter how clear. Those operating outside of the regulatory system do not gather or report compliance data. Next Generation Compliance’s focus on the civil enforcement program left criminal enforcement with no strategy and no management attention.

EPA’s case statistics thus far in the Biden administration show a marked decline in enforcement. In FY 2021, EPA-opened criminal investigations declined about 50 percent from the 247 in FY 2020. The agency’s criminal investigators remained in the field during the Covid-19 pandemic, so that cannot explain the drop. Criminal fines and restitution went down over the same period, from $46.2 million to $25.2 million.

Of course, other factors play a role in enforcement. Biden’s nominee for the agency’s Office of Enforcement and Compliance Assurance, David Uhlmann, has not yet been confirmed by the Senate, depriving EPA enforcement of political leadership and policy direction.

It is fair to ask about the alignment between ambitious rhetoric and enforcement resources. Budget is policy. To date, it is clear that the Biden administration has not made it a priority to increase the enforcement of environmental law.

Look at Resources, Not Case Numbers
Author
Steven P. Solow - Baker Botts LLP
Baker Botts LLP
Current Issue
Issue
3
Parent Article

In evaluating environmental criminal enforcement, the popular approach is to focus on numbers of cases brought and fines and other sanctions imposed. This might not be the best way to assess efforts to address criminal violations of environmental law. Here, the case numbers have long been small, making it statistically risky to attribute meaning to data variations from year to year.

Focusing on the number of cases and related information also tempts one to attribute ups and down to changes in the White House. However, investigating and prosecuting environmental crimes is largely apolitical work, carried out by career employees.

But there is one important thing the overall case numbers do reveal: for decades, the resources for federal environmental criminal enforcement have been more or less static—as well as woefully insufficient.

The number of prosecutors in the Justice Department’s Environmental Crimes Section has remained about the same since 1991. Yet the workload has expanded substantially over the years, with significant statutory areas of responsibility added in 2004 (wildlife), 2014 (animal cruelty), and 2015 (workplace safety). In 1997, when I was chief of ECS, EPA had 200 criminal investigators. Today, there are 160. In contrast, the Netherlands—a nation of roughly 17.5 million people—has some 500 investigators devoted to environmental criminal enforcement.

This situation does not serve anyone well—not enforcers, not the regulated community, and, ultimately, not the public. It means that the federal government’s very limited resources are spent reacting to whatever comes in the door. And a focus on numbers can create pressure to take what has come in and pursue it, even if resources might be better spent elsewhere.

Some in the regulated community might be concerned about increasing the federal government’s enforcement resources. But doing so could benefit regulated parties, by speeding up the resolution of investigations.

In 1997, talented paralegals could organize the review and analysis of a typical investigation’s documents. Today, an average case may involve millions of documents. The government does not have the resources to promptly review such information. This not only limits the government’s ability to handle sophisticated cases, but it also means that investigations that result in declinations can still be costly multi-year quagmires for the government and regulated entities alike.

Chronic resource constraints make it nearly impossible for the government to be anything more than a case processor. This precludes the important role of the government as a problem solver.

To be a problem solver, the government needs to identify the root causes of crime. Why are some environmental programs subject to repeated criminal violations? Are there reforms that could help reduce the susceptibility of certain environmental regulations to criminal misconduct? The government lacks the resources to unpack the impact of enforcement cases on compliance, or the lessons these cases might hold for regulators and regulated parties alike.

Doing so could illuminate how to design the government’s efforts (including laws, regulations, guidance, and inspections) to support compliance and better insulate environmental laws and rules from criminal misconduct. It could also inform regulated parties how to structure their internal compliance programs to better prevent, detect, and respond to criminal misconduct.

Unfortunately, focusing on case numbers or penalty amounts to assess the rigor or effectiveness of federal enforcement programs will remain a popular exercise. Those who care about the end goals of criminal enforcement—such as deterring intentional violations, creating a level playing field to benefit organizations that have invested in compliance, and guiding the development of sustainable compliance programs—should attempt to see past those numbers to the underlying problem: more than three decades of resource constraints continue to limit the value of this important work.

The Persistence of Vision
Author
Joshua Ozymy - University of Tennessee at Chattanooga
University of Tennessee at Chattanooga
Current Issue
Issue
3
person with long hair standing with telescope and looking at the moon

With such vitriol directed toward stricter environmental regulation and enforcement from the American Right, it may seem implausible that, at one historical juncture, the idea that the United States needed to criminally punish the worst violators of environmental laws enjoyed a bipartisan consensus—in fact, most of it during the anti-government 1980s. Back then, the jailing or fining of criminals of all sorts received first billing among many in Congress and the White House. And this trend extended to environmental law, with federal resources to police and prosecute environmental criminals institutionalized under Ronald Reagan. The new administration created EPA’s Office of Criminal Enforcement in 1981 and the next year expanded the Department of Justice’s Environment and Natural Resources Division by adding an Environmental Crimes Section. Full-time criminal investigators were hired in 1982, and sworn in as special deputy U.S. marshals from 1984 until 1988, when Congress granted them full law enforcement authority. The first felony environmental statutes came into play in 1984, with the Hazardous and Solid Waste Amendments to the Resource Conservation and Recovery Act, followed by an upgrade of misdemeanor statutes in the Clean Water Act in 1987 and the Clean Air Act in 1990. Also in 1990, Congress acted to bolster environmental law enforcement authority with the Pollution Prosecution Act, which set a goal of hiring 200 criminal investigators. Additional prosecutors and staff were hired to specialize in environmental crimes.

But then the Reinventing Government era—characterized by fears that administrative agencies were too bureaucratic, recalcitrant, and change-averse—swept up EPA during the Clinton administration. Many attempts were made to augment traditional methods of controlling environmental crime, transitioning from command-and-control and deterrence-based methods, to more incentive-based approaches. An Innovations Task Force was convened and its report, “Aiming for Excellence,” charted a new course centered on “flexible” strategies, such as incentives for pollution reduction, streamlined permitting, and performance tracks for good behavior. Despite the adoption of many of the reinventing movement’s policies, EPA continued its traditional organizational mission, improving its policing abilities, hiring more professional staff, and pursuing an increased number of criminal investigations.

Criminal provisions were also expanded in major federal environmental laws through the early 1990s, giving enforcers an enhanced tool-belt to pursue increasingly complex and high-profile corporate environmental crime prosecutions. These factors resulted in a marked increase in the volume of EPA criminal investigations and related prosecutions, and in the ability of staff lawyers to win significant penalties against high-profile corporate environmental criminals. The federal apparatus to police and prosecute environmental crimes had grown, professionalized, and institutionalized itself—but these factors helped to sour many Republicans on the value of strong criminal enforcement. There was little any agency could do, as the feeling was widespread across the party. From the Republicans’ mid-1990s takeover of the House and Senate under the Contract With America to the anti-regulatory George W. Bush administration of the 2000s, the GOP began to renounce the idea of reinventing environmental enforcement, seeking instead to hobble government by relaxing vigilance against polluters.

These moves foreshadowed the Trump era, when traditional methods to control these agencies quickly devolved into a nasty, public street fight. Trump launched a bombastic assault on key environmental regulatory agencies tasked with enforcement, particularly EPA and the Department of Justice. Guaranteeing he would reduce EPA to “little tidbits,” he handed down budget cuts, appointed a climate change denier to lead the agency, failed to fill key posts, and banished key experts from EPA advisory boards. His administration also rolled back environmental safeguards and Obama-era climate change provisions in a concerted effort to reduce the agency’s power and enforcement reach, causing some 700 staff to depart. We now have damning evidence gathered by the House Oversight and Reform Committee that the institutional dysfunction inside DOJ was so severe that Trump pressed officials, including Jeffrey Clark, then head of ENRD, to aid him in pressuring DOJ leadership to assist in Trump’s efforts to overturn the results of the 2020 election.

During his term, Trump acted to limit the enforcement capabilities of these key agencies. Trump instituted limitations on environmental permits and clean water rules, and implemented other regulatory mechanisms that hampered the agency. DOJ was stymied with restrictions on traditional prosecutorial tools, such as negotiated environmental mitigation plans, supplemental environmental projects, the ability to fine companies previously fined by state enforcement agencies, and other enforcement mechanisms that were long-standing practice within ENRD. The consequences of these actions became obvious fairly quickly, where by 2018, EPA obtained the lowest level of injunctive relief in over 15 years. In that same year, the number of DOJ environmental crime prosecutions adjudicated that stemmed from EPA criminal investigations reached its lowest level since 2002.

While Trump quickly moved to dismantle the ability of key agencies to enforce the law, his efforts ran up against the limitations of the checks and balances inherent in the U.S. political system. Presidential power, no matter how effectively wielded, is ultimately conditioned on many factors, including the inertia of cases that are already in the pipeline, the professional autonomy afforded and continually secured by prosecutors and EPA investigative staff, and the power of the courts to act on their own as an equal branch of government. Authority is also affected by the politics of the budgetary process, coalitional support afforded to environmental agencies in Congress, and the backing from interest groups and environmental organizations and the political advocacy community. These factors buffered—but did not completely blunt—the administration’s efforts. Buffering happened in myriad ways, such as lawsuits brought by environmental groups that overturned many of the Trump DOJ’s legal actions, the refusal of Congress to approve a proposed 31 percent budget cut for EPA, the courts overturning efforts by administrators Scott Pruitt and Andrew Wheeler to replace scientists on key advisory boards with industry sympathizers, and legal action by California and 22 other states to prevent the Trump administration from disallowing them from setting stricter vehicle emissions rules.

All these factors are important for explaining why a president, no matter how determined, is rarely in a position to completely torpedo environmental enforcement. But one of the most important and overlooked is the role of the conscientious civil servant. Careerists secure power and autonomy by understanding how to navigate the political system—sometimes better than presidential appointees—often biding time to carry out organizational responsibilities when propitious. Because criminal investigators and prosecutors require professional discretion to perform technically complex jobs, EPA and DOJ retain a high degree of freedom compared to other agencies, say the Social Security Administration, whose statutory obligations and path to meeting them are more straightforward. A comprehensive account of adherence to the law in all its dimensions must consider how agencies are obligated to carry out statutory commands and duties and abide by their own long-established procedures and carefully reasoned policies—practices which business depends on for regulatory certainty over time.

There have been numerous academic studies that point to civil servants conscientiously following the mission of their agencies and the mandates and restrictions of relevant statutes, regulations, and executive orders and similar instruments—while at the same time responding to agency leadership’s policies on implementing and enforcing the laws and the president’s policies. According to 5 U.S. Code Section 3331, all civil servants take an oath when sworn into duty that reads in part: “I do solemnly swear that I will support and defend the Constitution of the United States against all enemies, foreign and domestic.” The interplay of these priorities within the broader context of various political principals, such as the president, Congress, and the courts, all competing to influence agency outcomes, helps to explain how and why EPA and DOJ have maintained a commitment to criminal enforcement across administrations. In the case of the Trump-era enforcement rollbacks, long-standing agency responsibility to stringently enforce federal law came into conflict with the administration and resulted in a careful subversion of the president’s agenda on many fronts, most saliently when DOJ attorneys refused to follow Trump’s directives to overturn the presidential election. Similarly, Trump’s assault on enforcement could have been substantially worse had it not been for the professionalism of career civil servants within EPA and DOJ to uphold their respective organizational missions and statutory responsibilities, despite overwhelming pressure from the administration. Unlike in the Clinton era, it was much tougher to maintain these prerogatives, as Trump sought not a reinvention of the way these agencies work, but acted to effectively delegitimize and gut them.

Environmental crime investigations and prosecutions can take many years and span multiple presidential administrations, meaning career staff must persevere in seeing cases through, under varied levels of presidential and congressional support. In this context, perhaps the most politically challenging action EPA and DOJ can take is to pursue charges against well-resourced corporate environmental criminals. A few high-profile prosecutions that took place over a lengthy time period help to illustrate these points, including the prosecutions of United Industries, Monsanto, and Volkswagen AG, and serve well to show career staff’s persistence of vision.

On December 8, 2017, United Industries pleaded guilty to dumping parts into the Port of Long Beach to conceal fraudulent overcharges for repairs that were never undertaken. The company admitted to fraudulently replacing parts on railcars that needed no repairs, making random repairs without proper inspections, and dumping parts into the navigable waters of the United States, earning the firm at least $5 million in illegal profits. The company pleaded guilty to depositing refuse in the navigable waters of the United States in violation of the Rivers and Harbors Act and was sentenced to a $5 million criminal fine and $20 million in restitution. In this particular case, the illegal activity commenced between 2008-14 during the Obama administration, and the prosecution carried over with sentencing occurring under Trump.

During the Obama administration, the Monsanto Company was prosecuted for spraying a pesticide called Penncap-M, prohibited after 2013, to its fields in Maui in 2014. The company also put its workers at risk by illegally directing them to re-enter the affected areas seven days later, knowing they should have been prohibited from reentry for at least 30 days. The company pleaded guilty to violations of the Federal Insecticide, Fungicide, and Rodenticide Act and entered into a deferred prosecution agreement for illegally storing banned pesticides in violation of RCRA. While Trump was in his last weeks in office, the company paid a total of $10.2 million in fines and community service payments.

On March 10, 2017, Volkswagen AG pleaded guilty to conspiracy to defraud the United States, wire fraud, obstruction, importation of merchandise by means of false statements, and violations of the Clean Air Act in relation to its roughly ten-year conspiracy to import diesel vehicles into the United States with software enabled to cheat emissions-testing equipment. The company agreed to pay a $2.8 billion criminal penalty. In a related case, federal prosecutors obtained a $35 million criminal penalty against IAV GmbH, the company that designed and engineered the emissions-cheating systems. A variety of executives involved in the conspiracy remain fugitives of justice in the United States and appear on EPA’s Fugitives List.

While Volkswagen was sentenced under Trump, the investigation and prosecution reach back to 2015, when the Obama EPA issued a notice of violation of the CAA. The next year, DOJ filed a complaint against the company on behalf of EPA, and on June 28, 2016, the company entered into a settlement to partially resolve these claims, pleading guilty and paying the multi-billion-dollar penalty the following year.

The procession of these cases shows the consistent work of EPA criminal investigators and DOJ prosecutors, collaborating and working through the courts to achieve organizational goals across very different presidential administrations. It is not so much the case that a positive outcome at sentencing should automatically garner any particular president full credit for that outcome per se, as much as it shows how diligent staff work through the process to accomplish their organizational prerogatives and meet their statutory obligations and responsibilities.

Looking at outcomes in environmental investigations and prosecutions undertaken by EPA and DOJ during the Trump era, we can see environmental criminal enforcement agencies withering but not breaking under the impact of the president’s anti-environmental agenda, thereby achieving institutional goals grounded in law and long-standing practices that businesses depend on for regulatory certainty. EPA’s Summary of Criminal Prosecutions Database shows that an average of 457 environmental prosecutions per term were adjudicated while Obama was in office. Under Trump, one can see prosecutions adjudicated slide fairly rapidly, with a total of only 282 over his single term.

Looking at sentencing patterns, under Obama, prosecutors averaged 1,268 years probation assessed at sentencing per term. During Trump’s term, approximately 700 years of probation were assessed to defendants at sentencing. Under Obama, prosecutors obtained an average of 420 years of incarceration per term. Under Trump, prosecutors obtained 289 years at sentencing. The total of monetary penalties at first glance seems to show an opposite trend. While Obama was in the White House, prosecutors secured an average per term of about $256 million in monetary penalties against individual defendants and over $561 million per term against companies at sentencing. It is important to note that the prosecution of BP for the Deepwater Horizon disaster resulted in $4 billion in criminal fines. Including this in the figure raises monetary penalties under Obama significantly, in excess of $5.6 billion.

Under Trump, $2.97 billion in monetary penalties, including fines, assessments, community service payments, and restitution, were assessed at sentencing against companies, and $186 million against individuals. However, of Trump’s total monetary penalties, $2.8 billion came from the Volkswagen AG prosecution, which began under Obama—underscoring the lesson that career staff are able to carry over complex cases across presidential administrations. And outcomes may have been significantly worse had career civil servants not diligently pursued criminal investigations and prosecutions in this less-than-favorable atmosphere.

What can be gleaned from these data is that criminal prosecution hardly thrived under Trump, but it could have been much worse had career civil servants completely succumbed to the weight of the administration’s pressure. Their ability to carry out and see investigations and prosecutions to fruition shows their ability to persist and maintain important work across presidential regimes, no matter how hostile—to follow the Constitution and law and regulation duly enacted under the federal charter, as they swear upon entry into service. The vast majority of these actions flew under the radar, but we have seen other examples of open resistance, rare for current federal employees. For example, in 2017, outgoing Obama EPA head Gina McCarthy told staff to prepare and plan for the onslaught from the incoming Trump administration. Thomas Sinks, director of EPA’s Office of the Science Advisor, issued a rare and public dissenting scientific opinion. EPA staff openly prepared to fast track the undoing of many Trump-era policies and rules as soon as Biden took the oath of office. And early on, hundreds hit the streets of Chicago to protest Scott Pruitt’s confirmation, including many current EPA workers—a protest organized by the American Federation of Government Employees, which also helped create a Save the U.S. EPA campaign. Retired and former EPA employees also pitched in by creating Save EPA, an organization founded to resist Trump’s agenda.

When looking at longer-term trends of disinvestment in environmental criminal enforcement, it appears to be an achievement that these agencies remain functional at this juncture. At the same time, we can recognize that it has been some time since any president has made significant, long-term investments in criminal enforcement of environmental laws. Environmental prosecutors and enforcement staff have been conditioned for decades to work under stagnant resources and inconsistent political support, if not outright animus at times. To put it plainly, the apparatus to police and prosecute environmental crimes has been underfunded for decades, under both Democratic and Republican presidents. While the long-term support for these agencies seems demoralizing, the lack thereof has the effect of hardening career staff to political opposition, which helps them persist under duress.

Budget and staffing numbers further reveal the sad picture of structural under-investment, corroding an important governmental function. Taking inflation into account, EPA’s overall budget is significantly worse than it was in 1980. Despite growing responsibilities, the agency’s workforce has declined over the years to about the level of the late 1980s. This movement of personnel illuminates a longer-term trend of declining investment, understaffing, and low morale.

These considerations place the Trump administration’s record in a broader picture of the failure of Congress and the White House for almost three decades to consistently take the criminal enforcement of federal environmental law seriously. To do so would require updating most major statutes and tailoring them to consider new technologies. Policymakers must also look to how major statutes might be improved and implemented more systematically to address climate change and environmental justice. Felony provisions should also be revisited, in light of strong incentives for powerful corporate actors to resist and undermine regulation, both formally and through technical and practical enforcement loopholes that have become chronic and pervasive.

Once in office, the Biden EPA moved swiftly to dismantle many of Trump’s actions, including working to remove the limitations on environmental permitting, clean water rules, and other restrictions, while DOJ managed to reinvigorate the use of supplementary environmental projects, environmental mitigation plans, and other prosecutorial tools. Biden’s 2022 budget proposal of $11.2 billion and 15,324 staff for EPA represents the most significant increases in over a decade, while ENRD’s budget would prospectively rise over 20 percent and exceed $133 million. The rhetoric of criminal enforcement is also changing in line with the traditional organizational missions of these agencies, as evidenced by statements given by Assistant Attorney General for ENRD Todd Kim, and ECS chief Deborah Harris, who have publicly used language to describe their approach to include vigorous enforcement, more sticks and fewer carrots, and the need for criminal prosecution as a powerful deterrent to potential environmental offenders.

Congress will have to significantly enhance the meager criminal enforcement budgets at EPA and DOJ if it is to expect environmental law to have any teeth in the future. Dedicated civil servants managed to persist through the Trump administration, but years of understaffing, low budgets, and political infighting have reduced morale. How these agencies and their staff will move ahead depends on whether the Biden administration can boost confidence through budgetary and staffing increases and a strong show of political support. It does not seem realistic that Congress will ever return to enough of a consensus to find common ground and bipartisan backing for environmental law enforcement, as it did in the past, but the contra argument is these agencies have become accustomed to this political and administrative legal environment and will find ways to manage their responsibilities accordingly. TEF

LEAD FEATURE The Trump administration succeeded in reducing environmental criminal enforcement. Given decades of partisan infighting and under-investment, it could have been worse had not dedicated staff maintained organizational responsibilities and professional duties.

Performing at the Speed of Science Yields Complex Covid-19 Vaccine
Author
Sally R. K. Fisk - Pfizer Inc.
Pfizer Inc.
Current Issue
Issue
3
Sally R.K. Fisk

When the pandemic began, the challenge for Pfizer and our partner BioNTech wasn’t just developing a vaccine—we also had to make it, and by the billions. This was no small feat—especially when you consider that the companies were looking to do what would normally take five years in less than one. Until the very end of 2020, no mRNA vaccine had ever been authorized and thus, one had never been manufactured at scale by any company. Pfizer invested more than $2 billion at risk on our Covid-19 vaccine development program—with $500 million of that spent on scaling up our manufacturing capabilities, before we knew the results of our clinical trials. There were no guarantees. But, with 172 years of experience on our side, we’ve arguably developed the most efficient vaccine manufacturing machine that the pharmaceutical industry has seen.

In addition to the technical aspects of making a complex mRNA vaccine while moving at the speed of science, we focused on always prioritizing quality, safety, and compliance; keeping colleagues in our research and manufacturing plants safe; and continuing to protect the environment. That message has been consistently reinforced by our CEO and leaders and includes amplified messaging about our Open Door policy, office of the Ombuds, and anonymous Compliance Hotline, to encourage our colleagues to speak up. And when issues or concerns are raised, we listen and respond.

Our speed was driven by working on activities in parallel, being flexible, and adding extra resources and innovative thinking. For example, in 2020 our manufacturing facility in Kalamazoo, Michigan, designed two separate vaccine manufacturing lines, one in an existing production area while the second was being designed as a prefabricated modular system constructed at an off-site facility and transported and placed in existing space at the Pfizer site. That meant two separate environmental permitting scenarios, two separate safety profiles, and the need to have both designs completed and constructed more quickly than we ever had before—because that is what patients around the world needed. This generated financial risk for the company, and our teams worked incredibly hard, but it enabled Pfizer to be ready with manufacturing capability if, and immediately when, we received emergency use authorization from the FDA.

We eliminated hierarchy in internal reporting and made meetings more efficient. The right subject matter experts and decisionmakers were in daily core meetings, irrespective of titles or reporting lines, to assure that all colleagues involved in the process design, construction, and startup stayed connected. We redesigned our processes to enhance efficiencies and drive effectiveness. That does not mean we eliminated critical decisionmaking processes; in fact, it was streamlined processes that enabled us to move fast with confidence, ensuring we maintained our high standards for quality, safety, and integrity.

We established a risk management framework specific to the vaccine project to ensure that we were developing mitigation strategies for existing and emerging risks. Elevated risks were escalated to leadership to enable the rapid deployment of resources and support so identified risks could be proactively mitigated and not become roadblocks. For example, relative to process safety and environmental risks, we implemented an OSHA Process Hazard Assessment approach for all steps in the production process regardless of whether the step used flammable or hazardous materials. And we repeated the PHA at key phases of design, construction, and startup.

We established open, transparent, and cooperative lines of communication with the government, including environmental agencies. We needed new authorizations for air emissions from state agencies and for wastewater discharges from local publicly owned treatment works. Having authorizations timely issued and compliance at all stages was of paramount importance, so we developed detailed environmental data in advance to cover multiple potential operating scenarios. Our facilities established early lines of communication with their regulators, who recognized the urgency of our mission and our commitment to environmental compliance. They were flexible when we presented multiple scenarios for operation while we awaited the decision on final design. With this common purpose, the agencies were able to prioritize and expedite our applications while maintaining their rigorous and robust review processes.

These were important aspects of our ability to deliver the vaccine in unprecedented time. However, the most important factor was ultimately our colleagues and the individuals employed by our partners and government who, working collectively with shared purpose, delivered breakthroughs and innovation in record time—proving that when humanity works toward common goals with urgency and focus, we can address the world’s greatest challenges.

Performing at the Speed of Science Yields Complex Covid-19 Vaccine

ELI Report
Author
Akielly Hu - Environmental Law Institute
Environmental Law Institute
Current Issue
Issue
2

ELI at COP26 

In the face of growing climate litigation, Institute educates judges with the science needed to decide crucial cases

While ELI names Washington, DC, as its home base, the Institute’s policy analysis and educational programming spans the globe. This fall, its efforts reached Glasgow, Scotland, where staff engaged at COP26, the United Nations annual climate summit. ELI hosted and engaged in a number of events, sharing insights on how to strengthen regulation and build the law and policy toolkit for achieving climate solutions.

As part of the summit’s events, the Institute’s Climate Judiciary Program hosted a reception on November 5 to call attention to the critical role of the judiciary in climate action. Despite an increasing number of climate-related cases worldwide, many judiciaries lack a fundamental understanding of the climate science and impacts underpinning these proceedings. CJP is the only project in the world that provides the climate science information and education judges need to make reasoned and appropriate decisions in climate cases.

Held at the Merchant’s House of Glasgow, the historic site of an over 400-year old organization,
the event shared the importance of judicial education on climate science to an international audience. Over 50 attendees joined, including leading environmental judges from around the world, influential climate scientists, leaders of NGOs and foundations, and high-level officials from the government.

On the same day, ELI also hosted a roundtable on ensuring compliance with climate regimes as part of Climate Law and Governance Day, an event co-hosted by the University of Glasgow, University of Cambridge, and University of Strathclyde. The conference gathered the global climate law and governance community to discuss challenges and solutions for implementing the Paris Agreement and other climate obligations.

ELI’s roundtable was chaired by Associate Vice President of Research and Policy Sandra Nichols Thiam and Visiting Scholar Paul Hanle. Speakers included Vice President of Programs and Publications John Pendergrass and Environmental Justice Staff Attorney Arielle King, among other top scholars, judges, and scientists. The group discussed how climate science can inform questions that arise in climate litigation, and how to bridge the gap between science and justice.

On November 6, Associate Vice President Sandra Nichols Thiam also spoke on a panel as part of the half-day event, Climate Change Legislation, Litigation, and the Rule of Law, hosted at the University of Strathclyde. Nichols Thiam spoke on the importance of capacity-building for legal actors and ELI’s experience educating judges, including recent efforts with CJP.

Beyond speaking engagements, ELI staff also attended events held by C2ES, EARTHx, and the Global Judicial Institute for the Environment, and engaged with youth activists and leaders in the climate and environmental justice movements.

ELI’s mission to make law work for people, places, and the planet fills a critical niche in strengthening governance around the world. A U.S. organization with a global presence, ELI continues to collaborate internationally to advance climate and justice solutions.

Bridging governance between countries to protect wetlands

Environmental policies typically do not cross national borders, even when the need for conservation does. One example of this transboundary challenge is the Laguna Madre wetlands, which extends 400 miles from Texas to the state of Tamaulipas in Mexico.

According to the U.S. National Park Service, Laguna Madre is “perhaps one of the most overlooked natural wonders in North America.” The wetland provides critical habitat for threatened and endangered species, including migratory birds between North and South America. But adequate management of this natural wonder is uniquely complicated, in part because Laguna Madre is politically divided between the United States and Mexico.

In November, the Laguna Madre Initiative, ELI’s Ocean Program, and Texas A&M University at Galveston hosted a weeklong seminar to develop a binational agenda for the sustainable use and conservation of Laguna Madre. The project builds on ELI’s experience in restoration in the Gulf of Mexico, as well as the expertise of ELI Visiting Scholar Enrique Sanjurjo. As a former program officer for the Gulf of California at World Wildlife Fund, Sanjurjo worked with partners in the United States and Mexico to create and implement marine protected areas, strengthen small-scale fisheries governance, and protect wildlife.

By convening partners from both sides of the border, the initiative aims to develop an innovative regulatory framework for binational ecosystem governance. The seminar featured presentations from U.S. academics, NGO partners, and government employees, including staff at the National Park Service, the National Oceanic and Atmospheric Administration, and the Texas Park Service.

Representatives from NGOs and the government in Mexico also presented, including officials from Mexico’s National Institute of Fisheries, National Commission on Natural Protected Areas, and the Tamaulipas State Chamber of Industry. Attendees from both countries arrived from academia, government, NGOs, and law.

A roundtable with fishers from the Gulf of Mexico underlined the seminar’s focus on achieving connectivity between all aspects of the Laguna Madre: ecosystems, wildlife, and people. With an eye toward establishing long-term links between policymakers, scientists, and communities, the seminar accomplished important initial steps in facilitating cross-boundary environmental governance in the area.

Local government network helps address compliance needs

When local governments puzzle over a federal environmental requirement, or need help finding resources to prevent pollution, they can turn to the Local Government Environmental Assistance Network. One of EPA’s Compliance Assistance Centers, LGEAN is a “first-stop shop” for municipal government staff and elected officials who need information on environmental management, planning, funding, and federal regulations.

Since May 2020, ELI has managed the network under a cooperative agreement with EPA. The Institute revamped the official website (lgean.net), which provides updated information and resources for local governments, and launched a new podcast and webinar series.

Notable offerings include a half-day Small Community Drinking Water Financing online workshop in November. Small and very small community drinking water systems comprise 80 percent of all community water systems, yet they often face infrastructure barriers to achieving drinking water standards. The event featured EPA officials and financing experts from the Environmental Finance Center at the University of North Carolina at Chapel Hill, who presented strategies for planning, funding, and financing to reach compliance.

LGEAN also hosted a webinar on the use of the federal Toxic Release Inventory’s data for local and tribal governments in October. The webinar detailed responsibilities governments may have in reporting hazardous materials to the TRI, as well as opportunities to leverage TRI data to stay apprised of facilities that may release potentially toxic chemicals. LGEAN’s podcast series covers topics from lead abatement to solid waste.

The network’s offerings are guided by its Project Advisory Committee, composed of leaders from major associations of local officials. They include experts from the Institute of Tribal Environmental Professionals, National Association of Counties, International City/County Management Association, Rural Communities Assistance Partnership, and International Municipal Lawyers Association.

Also represented on the committee are the Environmental Council of States, Local Governments for Sustainability-ICLEI, Solid Waste Association of North America, National Rural Waters Association, Water Environment Federation, Association of Clean Water Administrators, American Water Works Association, Environmental Law and Policy Center, and National Association of Clean Air Agencies, as well as representatives from Yale University School of Medicine and New York University School of Law.

Local and tribal governments can use the LGEAN website, provide feedback through the survey and “Ask LGEAN” feature on the website, follow LGEAN on social media channels, and participate in programs.

ELI Points to Litigation at Glasglow Climate Conference

Achieving Biden’s EJ Agenda
Author
Paul Freeman - Crowell & Moring
Tyler O'Connor - Crowell & Moring
Lynn Phan - Crowell & Moring
Crowell & Moring
Crowell & Moring
Crowell & Moring
Current Issue
Issue
2
Achieving Biden’s EJ Agenda

One of the new administration’s most ambitious goals is to reorient federal policymaking to prioritize environmental justice. President Biden signed Executive Order 14008 on January 27 to “secure environmental justice and spur economic opportunity for disadvantaged communities that have been historically marginalized and overburdened by pollution and under investment.” Many applauded the administration’s swift and comprehensive commitment, including Robert Bullard, known as “the father of environmental justice,” who said the president’s “all in one” approach is an “advancement in accepting what environmental justice really is.” Bullard believes the order “sends a clear message that at the highest level of government, these actions will be taken seriously.” Yet he along with many other advocates of what in this article we’ll call EJ acknowledge that the road ahead will not be easy.

If the administration is to execute on EO 14008, it will have to confront data and programmatic gaps in the government’s ability to identify and map EJ communities, assess the cumulative impacts of proposed government actions, and make EJ an enforcement priority. This article addresses the key challenges to accomplishing the administration’s stated goal and identifies discrete actions that the government could take to update its EJ data collection capabilities; establish EJ as a key component of environmental enforcement strategy; and incorporate EJ criteria into siting, rulemaking, and permitting.

The Environmental Protection Agency defines environmental justice as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” In regular parlance, it refers to government policies that address disparate environmental and public health impacts of pollution on minority and economically disadvantaged communities.

The federal government first began studying EJ issues in the 1980s, after community organizers brought nationwide attention to the landfills sited in predominantly Black neighborhoods. However, EJ didn’t become an important consideration in government decisionmaking until 1994, when President Clinton signed EO 12898, requiring each federal agency to “make achieving environmental justice part of its mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations.” While the order brought attention to the EJ movement, it had little substantive force, as it did not require that EJ play a determining factor in siting, rulemaking, or permitting decisions. It left it to federal agencies to adopt and implement their own EJ policies — a task some have yet to fulfill.

In the nearly three decades since EO 12898 was signed, presidential administrations have differed in their approach to EJ. Some administrations have strengthened environmental protection laws and advanced an EJ agenda, while others have reduced funding to EJ projects. Regardless of the approach, significant progress remains to be achieved if the Biden administration is to succeed in addressing underlying concerns about the disparate environmental and public health effects of pollution on disadvantaged communities. If President Biden and his team are going to make strides where other administrations have not, they will need to prioritize EJ in a range of decisionmaking.

One of the administration’s first challenges will be figuring out how to define an EJ community. As it stands, there is no single federal directive on how to identify and prioritize vulnerable neighborhoods. Without a concrete definition — or at least guidelines — the administration will be challenged to allocate resources in a manner consistent with its objectives. The Trump administration’s Opportunity Zones provides a cautionary tale. The incentive program was created as part of the 2017 tax bill to reduce tax liability on investors who reinvest capital gains in “low-income communities,” which were defined simply as a census tract with a poverty rate of at least 20 percent and a median family income up to 80 percent of the area median. Because of the broad definition, rapidly gentrifying neighborhoods could be designated as Opportunity Zones, and resources intended to flow to low-income communities instead accrued to investors.

In order to properly define what constitutes an EJ community, the Biden administration would be well served by first improving the screening and mapping tool EPA developed in 2010, known as EJSCREEN. While the development of the tool marked an important first step, it is somewhat limited in scope and does not include well-accepted EJ factors such as local drinking water quality and indoor air quality. Nor is EJSCREEN capable of analyzing more than one pollutant or demographic data set at a time, thereby limiting its ultimate utility in examining the intersection of data involving environmental exposure and socioeconomic factors. Despite the limitations, there is currently no other federal data collection tool that identifies EJ communities.

Consistent with the direction in EO 14008 to create a “Climate and Economic Justice Screening Tool,” the administration’s efforts would be significantly enhanced by updating EJSCREEN and its mapping capabilities. The administration could develop an equity map, which demonstrates how environmental pollutants are geographically distributed and serves as a tool for analyzing how pollutants overlap and interact with other health, economic, demographic, and social vulnerabilities unique to each community.

Several states already employ sophisticated equity mapping, including California, which uses its CalEnviroScreen to identify communities for prioritized EJ investments. The federal government would be well served to emulate California’s Office of Environmental Health Hazard Assessment in creating its own mapping tool. Like CalEnviroScreen, an updated EJSCREEN should collect comprehensive data on environmental, health, and demographic factors, including groundwater contamination, housing burden, asthma, and cardiovascular disease, and then develop a cumulative-impact score based on an analysis of both environmental exposure and socioeconomic factors. By employing a comprehensive equity-mapping tool, the government can more accurately identify and prioritize the country’s most vulnerable communities for the targeted EJ policies announced by the administration. In turn, companies will have an improved resource for calculating the risks associated with their existing and planned business operations.

Given the breadth of its EJ objectives, the administration also needs to refocus its environmental enforcement efforts to prioritize scrutiny of noncompliance in EJ communities. Some studies have shown that both federal and state agencies conduct fewer inspections and impose lower penalties in low-income neighborhoods and communities of color — a phenomenon referred to as compliance bias. A 2013 study by Professors David Konisky and Christopher Reenoc revealed, for example, that Clean Air Act permit holders in Hispanic communities are not only more likely to violate their obligations, but are also less likely to be pursued through enforcement by regulatory agencies.

The administration can address such patterns of compliance bias by prioritizing the deployment of enforcement resources to align with EJ objectives. At EPA, this would mean incorporating EJ as the central, organizing theme of the next biennial list of National Compliance Initiatives. The NCIs are developed by EPA to focus the agency’s enforcement resources on activities that contribute to the cumulative impacts of pollution from various media, including air, water, and hazardous waste. The NCI currently embraces six national program priorities, which EPA has identified as the country’s “most serious environmental violations.” State environmental agencies have shown support for amending the NCI, as evidenced by a letter from the Environmental Council of the States, who in September 2020 asked EPA to better address cumulative impacts of environmental pollution under the NCI.

Close coordination with the Department of Justice’s Environmental and Natural Resource Division is required to accomplish the administration’s EJ goals, as reflected in EO 14008’s call for DOJ and EPA to develop a “comprehensive environmental justice enforcement strategy” and to create a new office within DOJ dedicated to enforcing environmental compliance in EJ communities. In addition, the new administration would be wise to reconsider ENRD’s use of Supplemental Environmental Projects as a significant component in settlement agreements resolving environmental noncompliance.

As a positive early step, the Biden administration quickly reintroduced SEPs as an enforcement mechanism after they were eliminated under the Trump administration. Since 1980, SEPs have been used extensively in civil environmental enforcement settlements to fund projects that provide tangible environmental and public health benefits to affected neighborhoods. SEPs can be particularly effective in the pursuit of EJ because they not only directly address environmental harms but often improve engagement with impacted areas. By employing SEPs to promote remedial projects in EJ communities, the administration could redirect private resources to achieve EJ objectives, thereby amplifying the reach of EPA and DOJ enforcement resources. Finally, given the central role of state agencies in administering and enforcing both federal and state environmental regimes, the Biden administration also needs to identify ways to engage state agencies to develop EJ enforcement policies. This could be accomplished through the NCI process and the leadership of the Biden EPA.

The administration is also expected to advance its EJ enforcement strategy by supporting legislation that creates a private right of action under Section 602 of the Civil Rights Act, which would allow individuals to bring environmental discrimination complaints in court. Such an action would be an especially important avenue for EJ enforcement because it would only require plaintiffs to show discriminatory effect, rather than discriminatory intent, the more difficult standard used to date. Title VI of the act contains two sections that EJ activists have historically used to mitigate pollution in minority communities. Section 601 prohibits discrimination based on race, color, or national origin by any entity or program, including state and local agencies, that receives federal funds. Section 602 gives agencies like EPA the authority to promulgate regulations to effectuate Section 601’s discrimination prohibition. However, since the Supreme Court’s decision in Alexander v. Sandoval, which held that Congress did not intend to create a private right of action under Section 602, individuals have been unable to enforce agencies’ antidiscrimination regulations in court.

EJ activists have instead focused on filing Title VI administrative complaints with EPA to stop funding recipients from engaging in practices that have disparate impacts or discriminatory effects. For years, however, EPA’s Office of Civil Rights, responsible for addressing complaints under Title VI, failed to timely review and process environmental discrimination complaints. A 2011 report commissioned by the agency revealed that only 6 percent of the 247 Title VI complaints received by OCR were addressed within the agency’s own 20-day time frame.

Although OCR resolved its complaint backlog in 2019, it has yet to implement a proactive review process to ensure successful implementation of Title VI. In the instances where OCR completed its investigation of a Title VI complaint, it often issued decisions that were harmful to EJ communities. For example, in EPA’s first Title VI civil rights decision, known as the Select Steel case, OCR found that the Michigan Department of Environmental Quality’s issuance of an air permit did not violate civil rights law because it complied with National Ambient Air Quality Standards under the Clean Air Act. In effect, OCR’s decision tied civil rights law to environmental standards and made it more difficult for individuals to enforce EJ under federal civil rights law. The Biden administration has committed to repealing the Select Steel decision and bolstering civil rights enforcement under Title VI.

The administration will also need to make EJ a determining factor in siting, permitting, and rulemaking, which would both address existing problems and prevent new ones from arising. President Biden expressed his intent to incorporate EJ into the rulemaking process in one of his early executive orders. Among the 17 orders and memoranda rolled out on the president’s first day of office, his Memorandum Modernizing Regulatory Review ordered agencies to ensure that newly promulgated rules “appropriately benefit and do not inappropriately burden disadvantaged, vulnerable, or marginalized communities.” Such language embedded in a general regulatory review memorandum, however, may face the same fate as Clinton’s EJ executive order and only be haphazardly implemented, particularly because executive orders can be withdrawn by new administrations. If President Biden wants to achieve his objectives, the administration will need to work with Congress to develop lasting, enforceable policies.

While President Biden has a unified government, he will need to press Congress to pass legislation amending the Clean Water Act and Clean Air Act to require permitting decisions to evaluate cumulative impacts on vulnerable communities. This legislation could be modeled after New Jersey’s recent EJ law, which requires the state Department of Environmental Protection to deny an environmental permit if it finds that a new facility would disproportionately impact “overburdened communities.”

As in the New Jersey law, federal legislation should only authorize environmental permits if EPA determines that a facility would serve a compelling public interest in the community where it would be sited. Most state and federal environmental policies only require facilities or projects to have a compelling interest to the general public. In these instances, the burdens are disproportionately borne by one community to benefit the general population. However, where the scope of analysis is centered around the immediate community, as in New Jersey, government actors can ensure that both the costs and benefits are paid for and reaped by the same individuals.

President Biden should anticipate delays in congressional action and execute parallel policies by executive order. For example, the president could adopt key components of then Senator Kamala Harris and Representative Alexandria Ocasio-Cortez’s Climate Equity Act and require all proposed environmental regulations to receive an equity score based on the rule’s impact on vulnerable communities. This would ensure environmental regulators take into account the needs of frontline communities. In his EO 14008, President Biden announced the Justice40 initiative, which commits 40 percent of the benefits from federal investments to disadvantaged communities. In line with this initiative, the administration would be wise to implement an equitable climate justice plan by first allocating climate resilience funds to minority and low-income communities most impacted by the climate crisis.

Until legislation mandating EJ analysis in agency decisionmaking is enacted, the administration will need to direct agency officials to consider EJ issues before they grant or renew permits under existing environmental statutes. A recent example of such analysis was made in a dissent to a Federal Energy Regulatory Commission order authorizing the Annova Liquid Nitrogen Gas export facility in Brownsville, Texas. Then Commissioner (now Chairman) Richard Glick found that the order violated both the National Environmental Policy Act and the Natural Gas Act because it failed to evaluate the project’s impact on climate change and the surrounding community, in which one third of the population lives under the poverty line and which is substantially composed of minority groups.

Glick again raised EJ concerns during a FERC meeting on January 19, just days before President Biden tapped him to become chairman of the agency. He joined two other commissioners to grant rehearing of the panel’s decision authorizing operation of the Weymouth Compressor Station located in a Massachusetts neighborhood that includes two state-designated EJ communities and has a long history of pollution. Since becoming chairman, Glick has created a senior staff position to incorporate EJ and equity concerns into the commission’s decisionmaking.

If the administration wants to empower other agency officials to consider EJ in permitting and siting decisions, it will need to restore and fortify NEPA, one of the statutes on which then Commissioner Glick based his Annova LNG dissent. NEPA is known as the backbone of environmental law and is often the only statutory authority requiring agencies such as EPA or FERC to consider the environmental and human impacts of permitting decisions. Despite NEPA’s pivotal role in environmental protection, the Trump administration made significant rollbacks to the statute in 2020, including prohibiting environmental impact analyses from considering “cumulative” or “indirect impacts.” In effect, Trump’s overhaul of NEPA prohibits evaluating EJ in significant federal decisionmaking. The Biden administration will need to not only reverse the rollback, but also strengthen NEPA by making EJ a decisive factor in decisionmaking.

While the White House has been applauded by many for its sweeping EJ agenda, it still faces significant challenges to achieve its ambitious goals. The administration will need to execute a unified, across-government plan of action to effectively address the disparate environmental and public health impacts that have historically affected vulnerable communities. TEF

COVER STORY 2 The president announced an ambitious environmental justice program on his first day in office, taking several administrative actions. But durable, lasting policy will depend on an all-of-government approach to bring equitable relief to vulnerable communities.

When the System Fosters Racial Injustice
Author
James Goodwin - Center for Progressive Reform
Center for Progressive Reform
Current Issue
Issue
2
When the System Fosters Racial Injustice

By the time the environmental justice movement began taking shape in the 1980s, communities of color had already been suffering from the disproportionate burdens of pollution for decades. Since then, evidence of racially discriminatory patterns in the distribution of environmental harms has only continued to mount.

Researchers from the universities of Michigan and Montana empirically documented in a pair of 2015 studies the phenomenon of “sacrifice zones,” finding that industrial facilities associated with high levels of pollution are disproportionately sited in low-income communities and communities of color. A 2019 study published in the Proceedings of the National Academies of Science found that while White people in the United States are disproportionately responsible for particulate matter pollution — which is linked to heart disease, permanent lung damage, and premature death — Black people and Latinos endure significantly greater exposure to this pollution.

But even as environmental justice has grown in prominence, early policy responses in its support have been lackluster, undermined by tepid commitment from political leaders, inadequate resources, and feeble accountability measures. Executive Order 12898, which was first issued in 1994, directs that “each federal agency shall make achieving environmental justice part of its mission,” but compliance has largely remained an afterthought. In 2018, a federal court held EPA in violation of Title VI of the 1964 Civil Rights Act for persistently failing to address communities’ environmental justice complaints for more than a decade. In 2019, the Government Accountability Office found a systematic failure by key federal agencies to fulfill their responsibilities under the directive. So it is unsurprising that among President Biden’s first acts in office was an executive order that includes some promising updates and reforms to EO 12898. An early mark of his administration will be how well those reforms are implemented on the ground.

The unjust events of the past year may bring long overdue change. In the wake of George Floyd’s violent alleged killing at the hands of a Minneapolis police officer and the waves of protests it spurred in cities across the country, many White Americans are now grappling with the racial demons that haunt our nation. Many who have never been the victims of racial discrimination are now starting to recognize the patterns of disparate impacts that can result from our existing institutions and other underlying structural forces. These results can occur even if those institutions and structures were not designed with racially discriminatory intent. It’s time for policymakers, advocates, and the legal profession to act.

Several systemic causes contribute to race-based disparities in environmental and public health harms. One of these causes results from the role of the regulatory system in implementing and enforcing environmental policies. Even though absent of racist intent, certain institutions and procedures within the regulatory system produce discriminatory effects. This article focuses on three such features: cost-benefit analysis; the erosion of the precautionary principle; and “information injustice,” which I’ll define later. Ultimately, advancing environmental justice requires equity-informed reforms to relevant institutions and procedures.

When it comes to institutional procedures that reinforce and perpetuate racial disparities in environmental harms, few are more influential than cost-benefit analysis. Its prominence has grown steadily over the past forty years. A series of executive orders dating back to the beginning of the Reagan administration has charged agencies with performing cost-benefit analyses on their most significant rules when submitting them for review to the White House Office of Information and Regulatory Affairs. These analyses are intended to inform agencies of the likely impacts of pending regulations and, where legal, improve the substantive “quality” of agency decisionmaking.

Cost-benefit analysis comes in many varieties: the predominant version is grounded in welfare economics theory. This version sees our nation’s aggregate wealth maximization as its ultimate goal and thus endeavors to steer regulatory decisionmaking accordingly. In practice, it tends to be hyper-technical and formalistic. This is due to its aspirations of acquiring comprehensive knowledge about a potentially infinite number of possible regulatory approaches, so as to identify the “economically optimal” one — that is, the approach that maximizes net benefits by balancing a regulation’s costs and benefits at the margin. The requirements of Executive Order 12866, which currently governs cost-benefit analysis, largely follow this approach.

The virtue of this formalistic version of cost-benefit analysis, according to its defenders, is that it promotes rational decisionmaking by insulating it from the messiness of resolving incommensurable subjective values, such as fairness and equity. But it is precisely this commitment to supposed “moral objectivity” that has left the practice vulnerable to producing racially disparate results.

This dynamic first comes into play at the very beginning of the cost-benefit process, when the analytical baseline is defined for the purposes of comparing potential policy impacts. The problem arises when the status quo conditions that make up that baseline include aspects of racial injustice and inequality. Once racism is baked into the baseline, the analytical results may become distorted in ways that reinforce preexisting race-based inequities, which can be significant in the context of environmental policymaking.

For example, decades of discriminatory land-use policies have given rise to sacrifice zones in neighborhoods near polluting industrial facilities. In these areas, people of color and low-income communities are heavily concentrated. In the standard assessment of a regulation to control toxic air pollution from such facilities, these injustices would be included as merely another part of the analytical baseline. To the extent that the analysis would then focus on incremental pollution increases beyond this baseline, it would fail to properly account for the cumulative burdens these frontline communities already suffer, thereby making it harder to justify sufficiently protective regulations.

Once the baseline is defined, the next step is to evaluate the rule’s potential impacts. Here, too, the misguided desire for objectivity can embed racial injustice in the results. Formalistic cost-benefit analysis gives rise to this problem by automatically assigning equal moral weight to the competing interests affected by a given regulation. In environmental policymaking, this happens when cost-benefit analysis treats the expenses that a corporation would incur through compliance costs as ethically commensurate with the compromised health, diminished quality of life, and premature deaths experienced by affected communities. This can produce racially discriminatory impacts when the analysis holds that a particular air pollution regulation must be rejected or weakened because the amount of money it would force a company to spend to clean up its pollution exceeds the monetary value of preventing people of color in fenceline communities from getting sick.

Similarly, the practice of monetization intrinsic to formalistic cost-benefit analysis provides another avenue for distorting regulatory decisionmaking in ways that reinforce racial injustice. To compare costs and benefits, economists conducting analyses try to convert public health, a pollution-free environment, and other nonmonetary values and benefits into dollar figures so they can be directly compared with and balanced against the costs of a regulation, which are more naturally expressed in monetary terms.

Several techniques that analysts employ to place a monetary value on nonmarket goods protected by environmental regulations can unintentionally introduce racial bias. An example is ascribing a monetary value to preventing premature deaths. The most common technique economists use is to generate a value of a statistical life derived from observed wage premiums for work that involves a slightly higher risk of death. Significantly, research from Vanderbilt University economist Kip Viscusi shows that Black workers tend to receive smaller wage premiums than White workers, which implies that preventing premature deaths among African Americans is worth less. Of course, Black workers don’t “value” their lives less than White workers, but structural racism in the labor market has left them with weaker bargaining power to demand higher wages.

While some have called to adjust the value of a statistical life to account for race in cost-benefit analyses, fortunately these calls have not yet been heeded, since they would lead to weaker protections in regulations that primarily benefit people of color. This example illustrates how monetization techniques can promote racially discriminatory results.

If formalistic cost-benefit analysis represents an approach to environmental policymaking that is excessively biased against strong regulations, then the precautionary principle repre-
sents its polar opposite. This principle is expressly biased in favor of strong regulation. Legal scholars such as David Driesen have sought to reconcile the theoretical underpinnings of these philosophies, but in practice they appear to be mutually exclusive. Indeed, the rise of formalistic cost-benefit analysis has, as if by hydraulic force, displaced the precautionary principle’s influence in regulatory decisionmaking.

As with cost-benefit analysis, the precautionary principle is not a monolithic concept but rather encapsulates a range of variations. For simplicity’s sake, legal scholars distinguish between weak and strong versions. Broadly speaking, the weak version holds that lack of evidence alone is not sufficient grounds for failing to take protective action to prevent serious harm to health or the environment. In other words, this version dictates how precaution should bear on the threshold decision of whether to take regulatory action in the face of uncertainty. In contrast, the strong version generally calls for some form of robust regulatory action, even if costly, whenever a significant threat to health or the environment emerges. This version thus focuses more on what kind of regulatory action to take; what makes it strong is its default to robust responses against threats that are significant enough even if we lack complete certainty.

The weak version has long been recognized as an animating principle of modern U.S. environmental law. Landmark court decisions such as Reserve Mining Co. v. EPA in 1975 and Ethyl Corp. v. EPA in 1976 held that neither the Clean Water Act nor the Clean Air Act requires conclusive proof that a particular polluting activity significantly harms public health before EPA can take regulatory action to limit that activity.

Both versions of the precautionary principle have been enshrined in various provisions across our major environmental statutes. The Clean Air Act embraces the weak version when it authorizes the agency to limit hazardous air pollutants from fossil-fueled power plants if it finds that such regulations would be “appropriate and necessary” based on a “study of the hazards to public health reasonably anticipated to occur as a result of” those pollutants. The strong version is consistent with various technology-based standards common to U.S. environmental law. The trigger for applying these standards does not require certainty about the environmental or public health risks to be addressed, and the default regulatory response, while sensitive to cost considerations, is not strictly dictated by them.

Perhaps the clearest statement of the strong version is the Clean Air Act’s call for EPA to set National Ambient Air Quality Standards at a level “allowing for an adequate margin of safety.” As Justice Antonin Scalia explained in Whitman v. American Trucking, the act directs EPA to account for this margin by first determining “the maximum airborne concentration of a pollutant that the public health can tolerate” based on its research on the pollutant’s health effects, then “decreas[ing] the concentration” below that level. As important, he further concluded that “nowhere are the costs of achieving such a standard made part of that initial calculation.”

Despite this sure legal footing, the precautionary principle’s influence on environmental regulation has withered considerably in recent decades, and especially during the Trump administration. This is true even of the weak version, which is generally viewed as noncontroversial.

During the Obama administration, EPA’s rigid adherence to formalistic cost-benefit analysis at times trumped application of the precautionary principle. For example, in determining the “best technology available” for preventing harm to aquatic species caused by the cooling water intake structures at power plants, the agency rejected the more protective option of closed-cycle cooling technology in favor of a weak facility-based permitting program. The driving factor for this determination was a highly flawed cost-benefit analysis that failed to account for the vast majority of the rule’s potential benefits because the agency’s economists could not put a dollar figure on them. Minimizing costs on industry took priority over the intrinsic precautionary nature of the Clean Water Act.

The Trump EPA was much more aggressive in rejecting the precautionary principle. One of the first formal actions Trump’s first EPA administrator, Scott Pruitt, took was to reject a proposed ban on the neurotoxic pesticide chlorpyrifos under the Federal Insecticide, Fungicide, and Rodenticide Act. Chlorpyrifos is suspected of causing brain damage in children and other harms. But Pruitt claimed that “despite several years of study, the science addressing neurodevelopmental effects remains unresolved and . . . further evaluation of the science . . . is warranted.”

Trump’s second EPA administrator, Andrew Wheeler, rejected the advice of career scientists to strengthen the NAAQS for particulate matter, citing “important uncertainties in the evidence for adverse health effects below the current standards and in the potential for additional public health improvements from reducing ambient [particulate matter] concentrations below those standards.” It is hard to reconcile that conclusion with the weak form of the precautionary principle, let alone the Clean Air Act’s requirement that EPA build in an “adequate margin of safety” when setting NAAQS.

In short, the precautionary principle is gradually being hollowed out by an ever-increasing demand for certainty before regulatory action can be taken to address environmental and public health threats; when action is taken, that same uncertainty is used to block all but the most modest of protections. This trend is at odds with the principle, which aims to shift the costs of uncertainty to those who desire to undertake actions that present a risk of harm. Basic fairness considerations dictate that these parties bear the costs because they ultimately profit from the actions and because the information advantages they enjoy regarding their actions better position them to resolve the uncertainties of potential harms. Indeed, this cost-shifting scheme can be seen as a variation on the “polluter pays” principle in American environmental law, which holds that the party that causes pollution (i.e., through its profit-making activities) should shoulder the cost of remedying any resulting damage to the environment.

As the precautionary principle continues to decay, the practical upshot is that the costs of uncertainty are shifting to victims of pollution. Risks these individuals face — to their health, well-being, and property — increasingly go unaddressed because EPA must dedicate more time and resources to gathering evidence to support regulatory action to address them. In perhaps its grimmest form, these evidence-gathering activities include “counting the bodies” of victims of premature death from particular environmental or public health threats. Due to structural causes of inequity, these bodies are — or will be — disproportionately Black or Brown.

All too often, racial injustice emerges as a natural consequence from such rejections of precautionary approaches to environmental regulation, as the examples from the Trump administration discussed above illustrate. Farm workers most at risk of harmful exposures to chlorpyrifos are overwhelmingly Latinos. Similarly, research demonstrates that people of color are exposed to particulate matter at far greater levels than White people.

The agency is more likely to regulate environmental and public health risks it is aware of than those it isn’t. As Mustafa Santiago Ali, the former top environmental justice official at EPA, has noted, “Data drives policy, and the lack of data drives policy.” This dichotomy makes the issue of how information is gathered and used in the rulemaking process vitally important. The erosion of the precautionary principle, in which uncertainty can be weaponized to torpedo regulatory actions, only amplifies the stakes in these fights.

Uncertainty is an inescapable feature of environmental regulation, and its management is one of its central challenges. If the precautionary principle is ultimately about how to fairly allocate the costs of uncertainty through regulatory decisionmaking, then a related question involves how to fairly allocate the benefits of reducing uncertainty regarding environmental and public health risks. For the purposes of this article, I refer to this distributional concern as one of information injustice.

The general tendency of the environmental regulatory apparatus has been to “choose ignorance” (to borrow a phrase from University of Texas Professor Wendy Wagner) when it comes to harms that disproportionately affect historically marginalized communities. In contrast, environmental regulators are likely to place greater emphasis on understanding harms that affect elites. Because they reflect and reinforce broader power disparities in our society, these patterns of information injustice tend to produce racially inequitable results.

Once set, the pattern of information injustice self-perpetuates. That’s because regulation begets new information, which is then used to support additional regulation. The classic example is when EPA used the precautionary principle as a foothold to begin regulating the use of lead in gasoline despite uncertainty about the degree of harm it posed. Thanks to that initial regulation, the agency learned a great deal about the link between leaded gas and public health harms through subsequent epidemiological research, which later supplied the evidence for a full ban. The far more typical case, however, is characterized by a catch-22 that preserves the status quo: without regulation, a particular environmental risk is unlikely to be researched, but without research, an environmental risk is unlikely to be regulated in the first place.

Several norms and institutions within environmental law promote information injustice and contribute to its influence throughout the regulation development process. Common features like reliance on self-monitoring regimes for tracking emissions and strong confidential business information protections for regulated entities can undermine EPA’s efforts to gather essential exposure data for pollutants and toxic chemicals. A similar result arises from the agency’s use of census data to identify populations potentially exposed to certain pollutants or hazards to inform its regulatory decisionmaking. Such data can lead EPA to underestimate exposures for marginalized populations, especially people of color and individuals with insecure immigration status, since the census tends to systematically under count these populations.

A recent Associated Press investigation found that a combination of inadequate resources and poor implementation has contributed to huge gaps in air pollution monitoring systems overseen by EPA. According to the investigation, monitors routinely failed to capture even large pollution events such as major refinery explosions. These events likely resulted in acute exposures in neighboring fenceline communities in which historically marginalized populations disproportionately reside.

Information injustice’s pathologies likewise extend to EPA’s ability to study the dose-response relationships of many chemicals and pollutants that are essential for establishing adequate regulatory protections. For instance, the original Toxic Substances Control Act essentially conceded defeat on understanding the human health consequences of most of the existing chemicals in use at the time the law was enacted. The law grandfathered them into its regulatory program by allowing their continued sale without any up-front testing. The old TSCA’s approach to new chemicals was not much better, establishing only minimal testing requirements and providing the agency with little authority to demand additional information about chemicals’ potential harms. The 2016 updates to TSCA aim to rectify these errors, but the damage is already done: few of the more than 86,000 chemicals currently available for production have been subjected to any toxicity testing.

A similar dearth of dose-response information is evident in EPA’s pollution control regulations. For instance, the agency lacks such information for dozens of the toxic air pollutants it is supposed to control through the strict National Emission Standards for Hazardous Air Pollutants program. What little toxicity information it does have on those air pollutants is often decades old. The agency’s cost-benefit analyses further confirm its persistent failures in acquiring reliable dose-response information to support its pollution regulations. A recent empirical study of 45 analyses EPA conducted for major rules between 2002 and 2015 found that 80 percent excluded entire categories of benefits that the agency itself described as “important,” “significant,” or “substantial.” It excluded them because benefits were not quantifiable due to data limitations, including those characterizing dose-response relationships.

Finally, on those rare occasions when information does exist regarding particular environmental and public health hazards, significant obstacles remain before it can actually be used by EPA to inform its regulatory decisionmaking. Most notably, stakeholders opposed to stringent environmental regulations — including regulated industries and political conservatives — have created several institutional mechanisms within the rulemaking process for manufacturing doubt about the accuracy or quality of this information. The ultimate aim is persuading EPA to disregard it altogether. The 2001 Data Quality Act establishes a process for industry and special interest groups to challenge information that agencies use to support their regulations.

Another more recent example is the Trump EPA’s rule on Strengthening Transparency in Pivotal Science Underlying Significant Regulatory Actions and Influential Scientific Information, which required the agency to give less weight to dose-response studies for which all of the underlying data are not publicly available. (A federal district court has since struck down the rule.) The practical and intended effect of this rule was to subordinate the use of epidemiological public health research, such as the landmark Harvard Six Cities Study. By demonstrating the relationship between elevated levels of particulates and the increased incidence of premature deaths in affected populations, this study and subsequent research provides the scientific foundation for strengthened particulate matter NAAQS and other air pollution regulations opposed by powerful industry interests. Performing these studies, however, entails departing from standard transparency practices in science, since the patient data that researchers gather are governed by strict privacy agreements.

It is important to understand how these three features of the regulatory system can contribute to racially inequitable results in environmental policymaking so that we can take the next step of designing a reform agenda. One critical element will be recalibrating the relative influence of cost-benefit analysis and the precautionary principle such that the latter predominates. On his first day in office, President Biden issued a memorandum on “Modernizing Regulatory Review” that offers one possible vehicle for pursuing this reform. Congress, too, can contribute, either through surgical amendments to the Administrative Procedure Act or through standalone legislation. To address the problem of information injustice, policymakers should explore options for encouraging research targeted at understanding pollutants and toxic chemicals that disproportionately impact historically marginalized communities. These options should include rescinding unnecessary obstacles to the use of that information.

No doubt there are other structural features of the rulemaking system that contribute to racially inequitable results in environmental policymaking beyond the three discussed here. Work must continue to identify them as part of a broader process of rebuilding the regulatory system so that it affirmatively promotes racial justice. TEF

COVER STORY 1 Several causes contribute to race-based disparities in environmental and public health harms. One of these is the role of the regulatory system in implementing and enforcing environmental policies with discriminatory effects.

Incentives Should Align With Compliance
Author
James C. Kenney - New Mexico Environment Department
New Mexico Environment Department
Current Issue
Issue
2
Parent Article
New Mexico Environment Department Secretary James C. Kenney

In crafting a regulatory framework to protect public health and the environment, two equally important aspects must be considered. The rules must be clear, concise, and simple. And the regulator must be able to assure compliance. Environmental agencies often spend years crafting rules, constantly balancing the best available science, feasibility, stakeholder input, and the cost of compliance. The notion of assuring compliance is often an afterthought, and solely placed on the inspector.

In our state, there are over 60,000 active oil and natural gas wells. Yet, the New Mexico Environment Department has seven air inspectors — one for every 8,500 wells. There is no way to meaningfully assure compliance with permits and regulations unless we rethink how we write such rules. Meanwhile, our ozone levels are rising quickly. Ozone often disproportionately impacts environmental justice communities. Non-attainment with National Ambient Air Quality Standards could soon be a reality for our state.

Last July, following over a year of unprecedented public outreach and stakeholder collaboration, NMED released a draft version of the state’s oil and natural gas rules for public review and comment. The draft regulations are focused on limiting volatile organic compound and nitrous oxide emissions, the chemical ingredients of ozone. And in May, NMED is releasing an updated version and will be petitioning its rulemaking board to adopt the measures.

In rethinking how we regulate the industry, NMED considered a number of innovative ideas to solve our growing ozone problem while ensuring the department can assure compliance — and that industry can achieve it.

Our first goal is to incent the desired outcome. A significant source of emissions from oil and natural gas operations occurs from equipment leaks. When it comes to identifying them, we are embracing technology. Real-time and remote monitoring should have the least regulatory burden in environmental rules. Conversely, periodic monitoring for leaks should have a greater regulatory burden.

Second, incent game-changing ideas. Flares are the traditional means of destroying emissions from oil and natural gas operations. While simple in design, flares can be unreliable, resulting in incomplete combustion or uncontrolled emissions when the pilot light or auto-igniter fails. NMED’s rules propose the use of fuel cells in lieu of flares as a control device. Fuel cells chemically convert hydrocarbons (i.e., methane and VOCs) to electricity, which can then be used to power equipment at the well.

Third, require monitoring. It would take more than four years for one NMED inspector at five sites per day to visit their share of 60,000 wells. As proposed, our rules require an owner or operator to visit each regulated piece of equipment on a monthly basis. Again, real-time and remote monitoring can assist industry efforts to ensure any compliance issue is mitigated in less than 30 days.

Fourth, require audits. In the oil and natural gas industry, history tells us that mergers and acquisitions are common and likely remain so in the future. The draft rule provides that, prior to transferring the ownership of any equipment, the current owner-operator must conduct and document a full compliance evaluation of all equipment subject to the rule. This ensures one more safeguard to prevent undiscovered leaks.

Finally, shift the burden. The draft regulations state that failing to comply with any provision of the rule is a violation for the duration of the performance period. It is up to industry to present the regulator with credible evidence to the contrary, as opposed to requiring NMED to establish when the violation started or stopped.

Without considering compliance assurance, environmental regulations will not achieve the desired outcome of protecting public health and the environment. When environmental regulations and compliance assurance efforts are developed in tandem, it can result in a more level playing field between industry and government.

With Compliance Built In
Author
Cynthia Giles - Harvard Environmental and Energy Law Program
Harvard Environmental and Energy Law Program
Current Issue
Issue
2
With Compliance Built In

Nearly everyone involved in environmental regulations believes that compliance with environmental rules is pretty good and that it is enforcement’s job to take care of the rest. You hear this all the time — from regulators, companies, legislators, academics, and environmental advocates.

Both assumptions, that compliance overall is strong, and the work of ensuring compliance should be left to enforcement, are wrong. The data reveal that the rate of serious noncompliance — not just any noncompliance, but violations EPA defines as the most important — is typically 25 percent or more, according to the agency’s data of self-reported and government-identified violations. For many important rules with big health consequences, the serious noncompliance rates for large facilities are 50 percent to 70 percent or even higher. And those are just the ones we know about; for many rules EPA has no idea what the rates of noncompliance are because the regulations don’t include any way to figure that out.

We have also learned that the most important driver of compliance isn’t enforcement, but the design of the regulation. If a rule is structured to set compliance as the default, it can get impressive on-the-ground results without the need for much enforcement. Rules that instead include many opportunities to evade, obfuscate, or ignore will have dismal performance records that no amount of enforcement will ever fix. Robust enforcement is absolutely necessary for any strong compliance program, but enforcement alone will never close the compliance gap created by a poorly designed rule.

Next Generation Compliance, which I launched at EPA during the Obama administration, is a new paradigm for environmental rules. It argues that rules need to be tightly structured to make compliance the path of least resistance. Next Gen rule design acknowledges that in the messy real world where we actually live, equipment fails, people make mistakes, multiple priorities compete for attention and funding, and companies make close — and sometimes nowhere near close — calls in their own favor. And sometimes they just cheat. There is a mountain of evidence that rules only work if they find a way to align private incentives with the public good. These essential truths are the difference between a rule that is great in theory — and one that delivers in real life.

One common misconception about Next Gen is that it is about making rules enforceable. It isn’t. Yes, rules should be enforceable, because that’s a baseline condition that differentiates a rule from good advice. But Next Gen goes way beyond that. It is about creating a structure where the default setting is good compliance — where implementation is strong even if enforcement never comes knocking.

Compliance isn’t a nice-to-have regulatory extra. It’s the part that matters. That’s true for every rule. Standards are fine, but we only get public health benefits from regulations when the regulated companies do what the rules require. When they take steps to control pollution, or conduct the required monitoring, or implement process controls to reduce the risk of catastrophic releases, the standards in the rules translate to real protection. If facilities are doing what they are supposed to do, we have a good chance of achieving clean air and water and reducing our risk of exposure. If they aren’t, we don’t.

Rampant violations have consequences: millions of people living in areas of the country that are not achieving air pollution standards, impaired water quality for half of the nation’s rivers and streams, contaminated drinking water, public exposure to dangerous chemicals, and avoidable environmental catastrophes with health, ecological, and economic damages.

Serious violations aren’t limited to some rules or sectors or company sizes. Widespread noncompliance is the norm across the board: just about every large city has been in consistent and serious violation of Clean Water Act limits on discharge of raw sewage and contaminated stormwater, companies responsible for over 95 percent of the nation’s petroleum refining capacity and almost 50 percent of ethylene oxide manufacturers violated Clean Air Act pollution requirements, over 70 percent of the largest coal-fired power companies violated the obligation to upgrade pollution controls, and over 60 percent of phosphoric acid manufacturing sites were in serious violation of hazardous waste handling requirements.

For many other sectors, the full extent of violation isn’t known, but it doesn’t look good: oil and gas wells with excess emissions of benzene and volatile organic compounds, animal agriculture operations’ compliance with clean water limits on the handling of animal feces that is more than three times the sewage produced by the entire U.S. human population, widespread contamination of surface waters from stormwater runoff, agricultural workers exposed to pesticides through violations of the Worker Protection Standard, noncompliance by small-quantity generators of hazardous waste, and cars and trucks spewing pollution from aftermarket defeat devices. Some of the claimed-to-be-better compliance rates — like drinking water standards and stationary sources of air pollution — are based on data that are demonstrably wrong. For millions of facilities covered by rules about chemical safety, oil spill prevention, asbestos remediation, PCBs, or lead paint handling requirements, EPA has no idea how widespread serious violations are.

The harm from pervasive violations isn’t equally shared. It falls most heavily on already overburdened communities. Contrary to popular myth, it is almost never feasible to remedy through enforcement the ubiquitous violations that result from bad regulatory design. And, as we have recently observed to our dismay, some governments aren’t interested in enforcement anyway. Incorporating compliance drivers in environmental rules is one of the most important things we can do to protect environmental justice communities; it shields them from the harm caused by high rates of violation and is less dependent on the unreliable commitment of regulators.

There is no one-size-fits-all Next Gen strategy for regulations that ensure strong compliance. What works for sophisticated power plant operators isn’t likely to be effective for small and dispersed sources of stormwater runoff. Problems that are measurable and discrete, like emissions from stacks and discharges from pipes, are completely different from tough-to-spot violations of regulations to assure approved chemicals are safe, drinking water is clean, or pesticides are properly applied.

But there are some things we know. Exemptions and exceptions create confusion and off ramps that lead to more violations. Things that aren’t measured produce worse outcomes. The less visible violations are, the more there will be. Standards that require lots of fact-specific determinations or have a big gray zone of applicability provide lots of places to hide, and experience shows companies will use them.

In contrast, simple and clear rules — possible even when the underlying situation is complex — are more likely to be effective. Automatic consequences can work better than requiring government to ferret out problems and impose penalties. Monitoring, measurement, and targeted transparency are the single largest drivers of strong implementation. Innovative use of modern technologies and data analytics hold promise for leap-ahead compliance advances. The standard model in wide use today — creating complex requirements with multiple fact-specific exemptions and exceptions, allowing estimates rather than actual measurement or skipping measurement altogether, relying on trust rather than verification, and requiring government to find the violators and track them down one at a time — is why serious violations are widespread.

Sometimes Next Gen ideas can greatly improve outcomes without changing the overall regulatory approach. But sometimes a Next Gen analysis will make it obvious that the preferred regulatory strategy cannot work. In these cases, there is no plug-in solution; the near certainty of implementation collapse means that regulators have to find another way.

Both roles of Next Gen are illustrated in the following two examples for climate change: methane regulation of oil and gas, where Next Gen ideas could help fix big implementation problems, and energy efficiency as part of a clean energy standard, which Next Gen shows is likely to end up undermining the push for carbon reductions.

Methane released from oil and gas production is a huge source of climate-forcing emissions. Methane in the atmosphere traps over 80 times as much heat as carbon dioxide over its first 20 years, so it packs a big climate punch in the near term. The largest source of anthropogenic methane in the United States is fossil fuel production and its transportation, so any climate strategy needs to control those releases. The Obama EPA promulgated methane rules, the Trump EPA repealed them, and the Biden EPA is now set to move out quickly to address this troublesome problem.

Methane, the main component of natural gas, is brought to the surface during oil and gas production. The gas can vent into the air at the wellhead. It can be released by malfunctioning flares. It can leak from storage tanks, valves, and hatches left open. And it does; the amount of wasted methane released from oil and gas production is depressingly large.

The good news is that we know what to do to dramatically reduce methane releases and cut back wasteful flaring. The technology is available and in use today. The costs are reasonable. As climate challenges go, this is one of the easier ones.

While the technological solutions are comparatively simple, the compliance challenges are not. Oil and gas has all the indicia of a sector where compliance with rules to limit emissions is likely to be bad. There are over a million wells in the country, often in out of the way places. Once a well is completed there are no people routinely on site to keep an eye on failing or leaking equipment. Methane is invisible, so leaks can’t be spotted without specialized equipment. By far the biggest share of leaking methane comes from a comparatively small number of sites: at any given moment 90 percent of the emissions come from just 10 percent of emitters. That concentration of super emitters might normally make the compliance job easier, but not in this case ­— the worst emitters vary over time and are unpredictable. That’s the Next Gen nightmare scenario: huge numbers of sources in out of the way places, with violations that are unpredictable and hard to find. Violations are already common at oil and gas wells. That will get much worse as requirements for methane control are ramped up.

The mismatch between the scope and scale of the compliance problem and government’s ability to either find or fix violations is all too obvious. A handful of regulators for the millions of potentially violating locations makes the standard assumptions that most will comply, and enforcers can take care of the rest, self-evidently untenable here. In this situation — a gigantic number of potential sources at which emissions are collectively huge but individually sporadic, unpredictable, and hard to spot — how can we ensure robust adoption of important strategies for cutting emissions?

One under-appreciated compliance powerhouse in the regulatory toolbox is simplicity. The more special conditions and fact-specific nuance the rule allows, the greater the opportunity to avoid or delay implementation. Repeated experience shows that compliance is less likely for rules with a wide band of compliance gray. Exempting low-producing wells from methane rules, as the owners of those wells propose, risks the same thing. Apart from the reality that low-producing wells are not for that reason less likely to be serious emitters, regulatory exemptions motivate companies to claim to be on the exempt side of the line. If determining the accuracy of such claims requires effort and investigation, a lot of violations — and their accompanying emissions — will slide under the bar.

Innovation is part of the answer for many complex compliance problems. Robust alternative monitoring strategies for oil and gas are being developed at a fast pace and could well be the answer in the long term. A rule can encourage that by motivating everyone to use them. One strategy that might provide an incentive is shifting the burden of proof. If government — or academic experts or NGOs — can provide credible evidence through remote monitoring that a site is a significant emitter, why shouldn’t the company now have to prove it isn’t? And take immediate action if it is? Nothing will motivate leak control more than knowing that an army of experts are looking.

The more automatic things are, the more likely it is that the desired action will happen. Hatches accidently left open are a big source of emissions; why not require hatches that automatically close? The same idea can work to motivate reliable emissions reporting. If the monitoring equipment is not working or a site visit is missed, how about requiring companies to assume that the results were bad, so firms, not the public, bear the burden of misfires? Penalties can likewise be automatic for key violations. The better job rule writers do of making the rule reliably self-implementing, the better the compliance record will be.

There are a host of other promising and low-cost ways to improve methane rule implementation in the real world. All of these ideas come to the fore once we abandon the fiction that compliance magically occurs because standards are written in a rule, or that rule writers can ignore obvious implementation disasters waiting to happen because compliance is someone else’s job.

The second example, a Next Gen analysis of energy efficiency as a part of a clean energy standard, is on one level discouraging, because it reveals that a popular idea for funding needed energy efficiency investments will lead to greater carbon emissions. But the good news is because we know that in advance, we can make another choice. Next Gen isn’t about saying no, it’s about understanding the strategies that won’t work, so we can design ones that will.

Electricity generation is one of the largest sources of climate-forcing pollution in the United States. Every strategy for tackling climate change depends on converting large portions of the economy to electric power, while reducing emissions from power generation. States have shown the way; renewable portfolio standards have been the motivating force behind a big share of the increase in clean generation. A national standard that pushes in the same direction can be the foundation for achieving President Biden’s drive toward 100 percent clean electricity by 2035.

The great news from a Next Gen perspective is that widespread compliance with the national equivalent of a renewable portfolio standard is readily achievable. We already accurately measure the amount of power generated by every source, there are a discrete and limited number of regulated entities, and they are all sophisticated in measurement and data. This situation presents close to ideal circumstances for regulations that achieve near universal compliance.

But here’s the rub: what else counts as “clean,” and will those alternatives actually achieve the promised emissions reductions? Next Gen doesn’t focus on the ideological sides in these debates. It asks just one question: will it work?

One of the most popular entrants in the clean energy sweepstakes is energy efficiency. It promises reduced demand for power by accomplishing the same thing with less power. It creates clean energy jobs. The issue isn’t the importance of energy efficiency. That’s clear. Energy efficiency is an essential part of our work to cut carbon emissions. We need as much of it as possible as fast as we can get it.

The Next Gen issue is the impact on power generation’s carbon emissions if energy efficiency is included in a clean energy standard or in any other regulatory program intended to reduce carbon in electricity generation. Design features can vary but the basic idea of such programs is limiting fossil-fired power generation to a fixed and declining amount of carbon emissions per unit of power. Utilities are allowed to comply with that limit by purchasing qualifying credits. When those credits are from solar or wind power, for example, we know exactly how much electricity utilities are buying and can be 100 percent confident that it is zero carbon.

If they buy an energy efficiency credit, on the other hand, we actually don’t know how much electricity savings, and therefore carbon reduction, utilities are getting. That’s because the nature of energy efficiency and the structural incentives of efficiency programs make determining how much energy is saved extremely difficult. What we do know is that far less energy is being saved than current estimates predict. That’s why including energy efficiency credits in a clean energy standard results in more carbon. The fossil-fuel-fired power plant emits more actual we-know-it-is-happening carbon — in exchange for the hoped for but most likely far smaller carbon savings promised by energy efficiency. Why is energy efficiency such a wild card in carbon accounting?

First is that the impact of energy efficiency is inherently uncertain. The theory of energy efficiency is that the same activity, like heating or lighting a home, is accomplished using less power. How much energy was saved? That’s calculated by comparing what actually happens to the hypothetical world of what would have happened without the efficiency project. If a utility pays me to add two inches of insulation to my attic, what’s the energy savings benefit? The answer isn’t as simple as my energy use before and after. There are hosts of variables that make the comparison highly uncertain: the weather is different; I might turn up the heat because I have more insulation; maybe I also bought an electric car or an energy sucking TV; maybe I would have put that insulation in anyway, without the incentive payment. Actual energy use can be measured, but the hypothetical alternative universe cannot. Even with unlimited measurement resources and the best of intentions, this is irreducibly complex, and it isn’t possible to be certain.

Second, the evidence suggests that the estimates we use to calculate energy efficiency savings are way off the mark. Just about everyone today uses estimates of the benefits of energy efficiency called deemed savings. Such metrics provide a guide for estimating how much energy is saved from installing, say, weatherization measures. Rigorously designed studies have found that actual energy savings fall substantially short of the deemed estimate, in some cases possibly delivering only 25 percent of the promised savings. As is true in so many programs, careful measurement reveals the sometimes gross error of estimates.

Third is another problem that is ubiquitous in Next Gen analysis: the incentive structure for energy efficiency encourages overclaiming of benefits while making it nearly impossible to figure out the truth. Utilities that get more money for programs with greater energy reductions have a built-in motivation to overstate the value of efficiency projects. And they do; a 2012 in-depth study of California utilities found that actual savings were 30 percent to 40 percent less than had been projected and that utilities were systematically overstating the savings. Nearly every participant in energy efficiency has an incentive to overclaim benefits.

And that’s before we even get to the fraud that is inevitable when implementation occurs at millions of locations, companies can make money by cutting corners, and government has virtually no visibility into what’s actually happening.

All of these factors combine to tell us that an energy efficiency credit is both highly uncertain and very likely to greatly overstate its value. So what? Energy efficiency is good, right? Who cares if we can’t be certain about exactly how much energy it saves? We care because by including efficiency credits in a program to cut carbon from electricity generation we set ourselves up for more carbon. We allow a ton of real we-are-certain carbon from a fossil fuel utility in exchange for less than a ton — possibly a lot less — of efficiency offsets. And the more energy efficiency credits utilities buy, the greater their actual net carbon emissions will be. That’s not what we are trying to do.

Lots of market-type ideas for climate suffer from the same implementation shortcoming: by allowing shaky offset credits that will not achieve the desired results in the real world, they undermine the integrity of the emissions-reduction goal. That doesn’t mean we shouldn’t do these projects; it means that we shouldn’t fund them through offset credits that will end up increasing carbon emissions. Other strategies — like an energy efficiency resource standard to prompt investment — can promote the desired funding without undermining carbon reduction.

Regulations must be designed to produce better results in the real world, which is the only place that counts. Next Gen is particularly essential for climate rules, where we cannot afford to fall substantially short of the goal because of widespread, and entirely predictable, implementation fails. For climate, that can make the difference between we have a chance, or we don’t. There are many exceedingly difficult problems to tackle in climate change; we can’t be fumbling on the comparatively simple ones like cutting climate-forcing emissions from oil and gas operations and electric-power generation. We know there are ways to get to a far better outcome. We just have to decide to use them. TEF

The ideas in this article are drawn from the author’s in-depth series “Next Generation Compliance: Environmental Regulation for the Modern Era” posted on the Harvard EELP website — C.G.

LEAD FEATURE Widespread, serious violations are the norm for most environmental rules. A Next Generation Compliance approach to regulations can help deliver promised benefits — especially for climate rules, where we cannot afford implementation collapse.