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.

The Nation’s Environmental Law Firm, ENRD, Hits Reset Button
Author
Ethan Shenkman - Arnold & Porter LLP
Arnold & Porter LLP
Current Issue
Issue
2
Ethan Shenkman

Soon after President Biden took office, the Department of Justice’s Environment and Natural Resources Division rescinded nine enforcement policies issued by Trump appointees as “inconsistent with longstanding division policy and practice.” Additionally, the policies “may impede the full exercise of enforcement discretion in the division’s cases.” With the stroke of a pen, ENRD lifted the prohibition on Supplemental Environmental Projects in civil cases and jettisoned a 2020 memorandum limiting federal overfilling in state enforcement actions.

The move signaled a new chapter at ENRD. Practitioners anticipate renewed activity in three main areas: a funneling of resources to civil and criminal enforcement, particularly under the Clean Air and Clean Water acts; leveraging the division’s resources to support the administration’s efforts to combat climate change; and a refocusing on underserved and disproportionately impacted communities.

For the division’s career attorneys, the last four years have been a roller coaster. Commentators point to data indicating that enforcement activity slowed, while resources shifted to other priorities. ENRD, for example, reported collection of criminal and civil fines declining from an average of $1.7 billion per year (2015-16) to an average of $560 million per year (2018-19). And according to some analysts, during Trump’s first two years, the country witnessed a significant decrease in federal criminal prosecutions for air and water violations. Meanwhile, ENRD’s defensive docket ballooned from 466 cases in 2014 to 648 four years later. But despite this busier case load, the division’s roster of attorneys declined.

DOJ is now poised for a reset. Former Judge Merrick Garland has taken the helm as attorney general. As a widely respected jurist on the D.C. Circuit — the second most important court for environmental law — Garland has more familiarity with environmental statutes than any other AG.

Commentators have described him as a centrist among Democratic appointees, with a willingness to defer to agency legal and scientific expertise. Early in his career, for example, he joined a dissent from the denial of rehearing en banc by all the judges on the D.C. Circuit in a case invalidating Clean Air Act regulations under the non-delegation doctrine — his position was later vindicated by the Supreme Court. He later authored an opinion upholding the constitutionality of the Endangered Species Act, and joined colleagues in upholding Obama-era standards for mercury and air toxics from utilities.

While the AG typically plays a fairly limited role in environmental cases on a day-to-day basis, he is critical for refereeing interagency disputes and managing interactions with the White House. Moreover, Garland will share responsibility for implementing the Biden administration’s overarching agenda on climate and environmental justice. A key Biden executive order, for example, requires the AG to consider renaming ENRD the “Environmental Justice and Natural Resources Division”; to direct that division to develop a comprehensive EJ enforcement strategy; and to consider creating a new office (but not necessarily a new litigating division, as had originally been suggested) to coordinate EJ efforts across all DOJ components, especially the Civil Rights Division and U.S. attorneys offices.

In setting ENRD on a new course, the next assistant attorney general for the division will have a full plate. In addition to bolstering ENRD’s staff and overseeing a resurgence in enforcement activity, with initiatives expected in multiple sectors, the AAG will be busy guiding agencies in reconsidering the prior administration’s deregulatory measures, and proactively participating in the design of new agency initiatives to enhance their legal defensibility. The AAG will also be asked to lead the division’s efforts in vindicating the rights and resources of Indian tribes, which has historically been an important feature of the division’s work.

None of this will come easy. A federal judge, for example, recently denied ENRD’s request to stay a case challenging Trump’s overhaul of the National Environmental Policy Act’s implementing regulations. DOJ requested to put the case on ice until after the new administration’s key appointees, including the head of the Council on Environmental Quality, are Senate-confirmed. Environmental groups opposed the stay, and the court agreed to hold ENRD’s feet to the fire. The administration may have to make decisions on which aspects of the NEPA regulations to modify or rescind sooner than expected. The uncertainty in the rules will only complicate ENRD’s role in defending the decisions of land management agencies under NEPA, particularly as the new administration makes a major push on infrastructure.

The Nation’s Environmental Law Firm, ENRD, Hits Reset Button.

EPA at Its 50th Anniversary: Remembering the Early Days
Author
Scott Fulton - Environmental Law Institute
Environmental Law Institute
Current Issue
Issue
6
Scott Fulton

In observing the Environmental Protection Agency’s 50th anniversary, I have a few early-days reflections. I had my first brush with EPA while in law school, when I drafted South Carolina’s Resource Conservation and Recovery Act Interim Status and Part B regulations. “Drafting” is somewhat generous, as my work was primarily cutting and pasting the EPA rules that were set up to apply in the absence of state program authorization and conforming them, and their corresponding preambles, to the South Carolina context. But it was a meaningful baptism into the complexity of EPA’s work within the labyrinth that is the Federal Register. In my last year of law school, I was accepted under the honors program at the Department of Justice, and was soon off to work as a trial attorney in their Environmental Enforcement Section. My primary client? EPA.

It quickly became clear to me that the EPA beat was not for the fainthearted. Within my first six weeks of arriving in 1982, I was visited by FBI agents investigating DOJ’s refusal to turn over case materials to oversight committees on Capitol Hill concerned about backroom dealmaking in some of the early Superfund cases. They wanted to look at case files I had inherited to determine whether DOJ was conspiring with EPA political leaders to obstruct the congressional inquiry. This was the inquiry that in fairly short order took down an EPA administrator (Anne Gorsuch Burford) and landed the assistant administrator of what is now the Office of Land and Emergency Management (Rita Lavelle) in the clink on perjury charges. EPA was and remains a fairly high stakes game.

Agency historians will recall that the Burford-Lavelle meltdown led to the return of the great Bill Ruckelshaus, whose second time as leader ushered in the heyday of environmental enforcement. And, as DOJ’s EES served as EPA’s representative in court, we were at the center of that work.

While even during those days there was periodic sniping at the agency by internal whistleblowers and oversight committees for not being aggressive enough, for the most part it was pedal to the metal. The so-called Enforcement First Policy under the Superfund program sealed the deal, driving an enormous amount of work through the DOJ turnstile. Working in tandem with our EPA colleagues, we had relatively free rein in terms of whom to sue, were given license to make fairly expansive legal arguments in court on such fundamental questions as causation and strict, joint, and several liability, and experienced remarkably good success with those arguments. When the statute was updated in 1986, much of the law making done in the Superfund Amendments and Reauthorization Act was in the nature of codifying the jurisprudence that had emerged though enforcement litigation.

Behind the curtain, an empowered EPA was not the simplest client. The folks at the agency thought DOJ was too slow in getting cases filed; we thought the agency was too rigid in settling cases. This and other dynamics produced a good deal of friction. In 1987, I became an assistant chief at DOJ’s EES with responsibility for EPA Region V, which at that time made up about a third of the country’s enforcement docket. I’ll never forget my first trip to meet with the Region V leadership. Dale Bryson, head of the Water Division at the time, started my meeting with him and his team by plopping a rather large windup toy on the conference table and setting it in motion. I believe it was a gorilla on wheels with cymbals, something like that, which slowly and loudly made its way around the table. “This is how we think of DOJ,” he said. “Makes a lot of noise, but moves very slowly.”

There was a harder edge to the interagency friction, with EPA pushing through various channels for its own litigating authority, akin to what had been given to the Securities and Exchange Commission. This would have effectively cut DOJ out of the equation. We were of course not keen on that, partly out of institutional self-interest, but also because we believed in our heart of hearts that, given the atmospherics that surround EPA’s work, the agency needed the sober presence of DOJ to be successful and to stay out of trouble. Making and keeping peace between DOJ and EPA became a central feature of leadership on both sides. Thankfully, those efforts in the late 1980s managed to tamp down the passions and set the EPA-DOJ relationship on the more cooperative course that defined the decades that followed, perhaps aided somewhat by the arrival at EPA of a few DOJ transplants in the early 1990s (including me). But that’s a story for another day.

Celebrating EPA on Reaching the Half Century Mark.

Drop in EPA Enforcement Statistics: Is Glass Half Empty or Half Full?
Author
Ethan Shenkman - Arnold & Porter
Arnold & Porter
Current Issue
Issue
3
Ethan Shenkman

Andrew Wheeler remarked during his confirmation hearing for EPA administrator that there has been “a lot of misleading information” suggesting the Trump EPA is not enforcing the nation’s environmental laws as vigorously as previous administrations. He said the agency opened more criminal cases in 2018 than it had in the previous year. He also referenced the Trump EPA’s focus on compliance rather than enforcement as an explanation for the downward trends, which he asserted does not mean that environmental laws are being ignored. “I think the more compliance assurance that we have, the fewer enforcement actions we need to take.”

Wheeler was responding to critics who have cited fewer inspections, fewer investigations and enforcement cases, lower amounts of penalties collected, and a significant number of enforcement staff who have left the agency over the last year.

For example, a recent report by the Environmental Integrity Project finds that, while EPA’s referral of 123 civil enforcement cases to the Justice Department in FY 2018 was slightly up from 2017, it was quite low compared to the past two administrations. The annual average was 211 under President Obama and 304 under President Bush. The watchdog group further found that the agency’s recovery of $69.5 million in total civil penalties in 2018 was “the lowest in both actual and inflation-adjusted dollars since at least 1994.” As for criminal prosecutions, while EPA opened 129 criminal cases in FY 2018, up from 2017, EIP claims that “the number of criminal cases opened and the number of defendants charged dropped in 2017 and 2018 to their lowest levels in nearly two decades.”

Susan Bodine, assistant administrator for the Office of Enforcement and Compliance Assurance, disputes the validity of statistics that focus only on a “narrow set of parameters” and which fail to credit efforts to ensure facilities comply with environmental laws, including cases where EPA is involved but states take the lead. “I want everyone to understand that these measures do not adequately represent the progress and the results that we are achieving in EPA’s enforcement and compliance assurance program,” she says.

Among other things, she refers to instances where EPA pressured states to force companies to address violations, noting that these successes are not captured in EPA’s statistics. She also says it is misleading to make comparisons with past years that involved unusually large settlements, such as that following the Deepwater Horizon incident. “It is not statistically valid to imply a trend by averaging an outlier value with other values.”

In the view of Cynthia Giles, who directed OECA under Obama, the data send a different message. “It tells me that they are backing away from doing the biggest, highest impact cases,” Giles told the Washington Post, “and those are the most important for protecting public health, and they’re the cases the states can’t or won’t do.”

Meanwhile, in its 2018 Year in Review, EPA says its enforcement activities have led to “almost twice” the amount of waste disposed of or treated in 2017, the report contends. “The focus on these areas has resulted in larger, more complex cases with greater reductions in pollution.” The agency also says that the number of facilities that voluntarily disclosed violations and certified a return to compliance increased 47 percent from the previous year.

Where does the truth lie? Has more enforcement activity shifted from the federal to the state level, or has there been a net decrease in enforcement? Has EPA’s shift in emphasis to compliance assistance achieved results, either in terms of reduced violations or better environmental outcomes? Or, as its critics claim, has the change in enforcement philosophy eroded deterrence? Environmental practitioners are experiencing déjà vu, harkening back to a similar debate under the George W. Bush administration.

Whatever the numbers signify, attorneys in the trenches have observed that what their clients value above all is certainty and a level playing field, where strong compliance programs are rewarded and other companies do not gain competitive advantage by cutting corners. Environmental commentators have also cautioned that large swings in enforcement trends may only be temporary, with backlashes possible from future administrations.

More analysis is soon to come. EPA’s inspector general is comparing the agency’s rates of enforcement between 2006 and 2018. The IG will be examining the key factors explaining results stemming from enforcement actions, across EPA regions and environmental statutes. And the Government Accountability Office has launched an investigation into EPA’s compliance program, analyzing how the agency’s law enforcement responsibilities are changing and whether it has adequate staff to carry them out.

The IG and GAO reports could add clarity to these competing statistics.

Drop in EPA enforcement statistics: Is glass half empty or half full?

International Network for Environmental Compliance and Enforcement

INECE logoELI serves as the Secretariat for the International Network for Environmental Compliance and Enforcement (INECE). Founded in 1989, INECE is the only global organization focused exclusively on achieving compliance with environmental law through effective compliance promotion and enforcement strategies, including administrative, civil, criminal, and judicial enforcement.

Under Siege — Again
Author
Cheryl E. Wasserman - Environmental Governance Institute International
Environmental Governance Institute International
Current Issue
Issue
1
Under Siege — Again

Federal environmental enforcement is threatened under EPA Administrator Scott Pruitt, echoing the Anne Gorsuch years. But enforcement provides the force that is needed both in achieving compliance and in encouraging responsible companies to innovate and reduce costs.

Cheryl E. WassermanCheryl E. Wasserman founded the Environmental Governance Institute International following 43 years in senior positions in EPA’s policy and enforcement offices. She led the Steering Committee and developed the Policy Framework on the State-Federal Enforcement Relationship 1984-94 and co-founded the International Network for Environmental Compliance and Enforcement.

Over the 47 years of EPA’s existence, the United States has realized the benefits of both strong federal and state enforcement. The Trump administration’s proposed agency budget for 2018 signaled its intentions to drastically curtail the federal role by proposing to eliminate funds to pursue civil and criminal actions supporting air, water, and hazardous waste requirements in states implementing EPA-delegated programs — which is to say, virtually all states. This is the wrong course. It will damage the effectiveness of programs protecting public health and the environment in ways from which it will be difficult to recover.

Lessons we might have learned more than thirty years ago make the case today. During the first years of the Reagan administration, federal enforcement declined precipitously in the face of severe cutbacks, staff reorganization, and reduced priority initiated by Administrator Anne Gorsuch. The public backlash to these actions provided enough political pressure to force the president to ask for her resignation.

The agency’s first administrator, William D. Ruckelshaus, returned to that role. Strong federal environmental enforcement took center stage, as it had when Ruckelshaus shaped EPA as an institution a decade before. He knew then that a credible environmental agency was needed to earn the public’s trust in the nation’s will and ability to address their growing alarm over rivers that caught fire, dead fish washed ashore on lakesides, and urban air that was too unhealthy to breathe. The situation the nation found itself in is now difficult to imagine, unless you travel to China to see what happens when economic growth is not coupled with environmental stewardship.

The last time we relied solely on the states to address pollution was before EPA was created by President Nixon in December 1970. The spate of environmental laws enacted in the decade just before and following the first Earth Day introduced a different model, one with a strong national program and a primary state role but with continued federal enforcement and oversight. Indeed, EPA was given parallel enforcement authority and responsibility, even in states with delegated or approved programs.

Upon his return to the agency, Ruckelshaus tried to rev up the engines of federal enforcement but met with resistance. By 1984 it was clear that enforcement was not recovering. Following the Gorsuch reorganization, most enforcement staff was transferred into the program offices. I was asked to join the then skeletal office of enforcement. I was named to head a new office of Compliance Policy and Planning to coordinate policies and strategies across all the programs. To jump start enforcement we organized a national conference where Ruckelshaus challenged EPA staff to beef up enforcement, recalling how he used the tools at hand back in the day when he served as deputy attorney general in the state of Indiana — enforcement actions based on just the water samples collected from his red pickup truck.

Upon hearing about his impassioned appeal for increased federal enforcement, the states were up in arms at the specter of a more aggressive federal EPA running roughshod just to increase the numbers — so called bean counting. EPA and the states were winding down a successful enforcement initiative aimed at major air and water sources. They wanted to ensure the sources installed pollution control equipment. They needed new direction to address continuing compliance concerns in a manner which would ensure a sustained effort that would not be vulnerable to any future assaults on enforcement. With the support of then Deputy Administrator Alvin Alm, we created a thirty-member Steering Committee on the State-Federal Enforcement Relationship, with representatives of each of the associations of state and local environmental officials that had been created for air, water, waste, pesticides, and toxic chemicals. We also included state environmental commissioners, EPA headquarters enforcement program directors, deputy regional administrators, and regional counsels. Within two and a half months we negotiated a unanimously applauded and until now enduring Policy Framework on the State-Federal Enforcement Relationship.

The successful formula for both strong state and federal enforcement was to respect state primacy in delegated and approved programs, avoid duplication, and provide mutual accountability. We agreed upon common principles for a successful enforcement program, aligning theory and practice. Success included four elements for creating deterrence: a credible likelihood of detection, a swift and sure response, appropriate sanctions, and the perception of the first three.

The presumption of state primacy shifts to federal action in cases where the state had failed to take “timely and appropriate” enforcement for significant violations. EPA committed to develop, cooperatively with the states, federal policies to define significant violations, appropriate timeframes, and circumstances for which penalties are needed for deterrence, not just a return to compliance after violations were detected. The agency and states also developed program-specific implementing policies. EPA committed to develop national priorities in consultation with the states and to take state priorities into account when overseeing their performance. The Policy Framework agreements established performance measures and reinforced the importance of timely and accurate facility-specific reporting on compliance status and enforcement actions, monthly coordination, and quarterly discussion of enforcement status and actions.

Federal enforcement could be expected not only when a state failed to take timely and appropriate enforcement action against significant violators, but also if a state requested assistance or when enforcing a previous federal enforcement action. The feds would be expected to step in when important to set legal or national program precedents — rare cases of first impression in law or those fundamental to establishing a basic element of the national compliance and enforcement program. Finally, EPA would play a role in circumstances of repeat violators where state action had proven unsuccessful.

Any federal enforcement would be pursued in a manner that did not undermine a strong state program, including joint press releases, opportunity for joint action, and penalty sharing where joint action was taken. Finally, federal oversight would be constructive, tailored to a state’s past performance and focused on both past accomplishments and areas needing improvement.

From 1984 to 1993, we amended the Policy Framework several times with the help of the steering committee. The amendments issued by the deputy administrator described penalty-sharing arrangements for joint enforcement. They clarified how EPA would implement multimedia enforcement, addressed the relationship when criminal enforcement action was pursued at the federal level, refined definitions of when a state penalty was sufficient to constitute “appropriate enforcement,” and clarified how the federal agency would implement nationally managed or bundled enforcement cases to enhance the impact and deterrence value of individual state and EPA cases against a specific violator or type of violation. These policies balance the unique deterrence value of federal enforcement and state primacy and avoid duplication and “federalizing” of specific types of violations and violators.

In the three decades since the Policy Framework was adopted, circumstances have changed. Without question, states now have greater capability to implement compliance and enforcement programs. New technologies to monitor and report compliance, plus advances in information access via the internet, electronic reporting, and spatial mapping, also contribute to improved accountability and oversight of state enforcement.

While the ability of states to implement and enforce federal environmental programs is not in question, this capability does not eliminate the need for a strong federal role. Federal enforcement ensures that the benefits of national environmental laws are achieved in all 50 states and territories and threats to public health and the environment are not prolonged due to inaction. A state may lack resources or expertise for individual cases, or may lack sufficient penalty authority or equivalent consequences to effectively deter violations in the first instance or to succeed in getting a repeat violator into compliance. And state programs may be subject to implicit or explicit political or economic pressure to avoid taking hard cases.

States are not monolithic; uneven state capability and will to enforce is always going to exist. These gaps are not an abstract concern when you consider the consequences. Federal enforcement prevents a race to the bottom. Lax environmental enforcement can be offered as a competitive advantage by a state in attracting industry and jobs despite competing evidence that communities with strong environmental programs gain competitive advantage derived from clean and healthy working and living conditions for employees.

Even the most committed states will admit they depend upon the “Gorilla in the Closet” — the threat of federal enforcement — to help garner the cooperation of their violators to come to the table and more quickly resolve their non-compliance and penalties. Today, the gorilla is being locked in the closet.

Federal environmental statutes encourage citizens to play a role in holding both state and federal enforcers to account by empowering direct action against a violator. Without the threat and reality of federal enforcement, this burden unduly falls on citizens, who clearly lack the resources and expertise of the federal government. Citizen suits seeking to force EPA to implement mandatory enforcement language in the statutes must also overcome longstanding court deference to the practical need for case-by-case prosecutorial discretion. It also is unclear what significant reductions in EPA’s enforcement budget will mean for citizen access to facility-specific compliance and performance data upon which they rely. Finally, citizen enforcement crucially depends upon access to the courts. Supreme Court decisions largely written over the last decade by the late Antonin Scalia have steadily narrowed standing and limited the ability of citizens to lay claim to penalties in such actions, thus reducing their resources for pursuing enforcement.

This brings us to the important role of EPA’s criminal enforcement program to secure the integrity of the entire national environmental enterprise, but which is also inexplicably subject to proposed budget cuts and elimination in delegated states. With its powerful threat of incarceration and fines, criminal enforcement focuses on illegal activities outside the framework of the program’s requirements. It uniquely deters fraudulent reporting and recordkeeping, supporting what is the backbone of the national compliance-monitoring system. The threat of jail time can be particularly persuasive in preventing corporate officials from turning a blind eye to the actions of their employees or from sending mixed signals that expediency trumps caution — as happened in the Deepwater Horizon disaster.

EPA has unique criminal enforcement authorities and capabilities that the states lack. In the 1990s, following terrible incidents related to improper handling of hazardous waste, toxins, and pesticides, including notorious incidents of indiscriminate “midnight dumping” in local rivers and streams, environmental statutes were amended to upgrade EPA’s criminal enforcement authorities to include felonies. A separate statute mandated a staff level of at least 200 skilled investigators with experience and training in both traditional law enforcement and environmental investigation, reporting to headquarters but housed across the country. EPA has a world class forensics laboratory at the National Enforcement Investigations Center in Denver, Colorado.

Criminal enforcement lies outside the purview of traditional state and tribal environmental program operations. Successful coordination among federal, state, and local prosecutors is both complex and critical. EPA and the Department of Justice have played an essential role, creating regional cooperative mechanisms focused on illegal hazardous waste shipments and disposal that crosses state boundaries.

Both federal civil and criminal prosecutions offer a more powerful deterrent for the very reason that they set a national precedent, an essential federal enforcement role. Consider the attention now paid to Flint, Michigan, where contaminated drinking water poisoned its citizens and fraudulent testing and reporting delayed enforcement action.

Predictably, when federal enforcement is removed from the equation not only will states disinvest in compliance and enforcement but so will businesses, putting even more pressure on state enforcement programs. Perception plays a big role in making limited enforcement actions broadly effective in deterring violators. Redirecting EPA enforcement away from states with delegated or approved programs will have a significant impact for the very signals it sends. Even a hint that EPA enforcement may be weakened has a cascading reduction in efforts to comply with and enforce the law.

This happened both with a deliberate effort to diminish federal enforcement during the Gorsuch days and surprisingly when EPA began to invest more heavily in pollution prevention and compliance incentives. Even with a balanced program with strategic use of both carrots and sticks — to add compliance promotion to monitoring and enforcement — it became apparent that any talk about compliance-oriented programs was often misconstrued as a weakening of enforcement.

Enforcement rewards companies that comply by leveling the playing field. Business risk increases in times of uncertainty — and these are such times. The delay and overturning of key regulations is very disruptive of business decisions. A sort of paralysis may set in even in the most responsible companies with the uncertain future of EPA regulations and their impact on state actions.

While there is no guarantee of improved performance, well-managed companies tend to have better compliance records because they have the environmental management systems, data management systems, auditing, performance incentives, and training fully integrated into their business practices. Management awareness of what is happening in the trenches has an enormous impact on worker safety and health. The U.S. sentencing guidelines for environmental crimes recognizes these efforts as an affirmative defense. Compliance brings with it diligence, and an attitude that all rules, not only environmental rules, but also company rules and practices, are followed. Introduce a lax attitude toward compliance, and these systems start to fray.

Inertia is not just a physical property, it is also a factor in human behavior. The second law of motion states that a body at rest stays at rest and a body in motion maintains its motion — in the absence of an outside force. Enforcement provides the force that is needed to overcome the status quo, both to achieve compliance and to innovate and improve performance while reducing costs.

As such, enforcement is a force for innovation and economic stimulus. An example from the chemical industry is the speedy adoption of infrared cameras. EPA inspectors began to use the cameras to detect leaks. The industry quickly adopted the technology because it saved product and reduced waste, both essential in an industry known for having small profit margins and stiff competition.

Internationally, disengagement of EPA in enforcement of our major statutes will undermine U.S. efforts to ensure fair trade through commitments by trading partners to enforce their own environmental laws, to curb transboundary pollution affecting our citizens, and to ensure that imports and exports comply with U.S. environmental laws and treaty obligations. The G-8 environment ministers have concluded that a national-level enforcement component is necessary to effectively coordinate and address illegal trade under international agreements.

In the 1990s, the United States exported the example set by strong cooperative federal and state enforcement. EPA co-founded with the Netherlands the International Network for Environmental Compliance and Enforcement. INECE is a global partnership of hundreds of countries and international organizations for which ELI now serves as secretariat. INECE is based on the idea that strong enforcement of environmental laws is critical to public health and ecosystem vitality, and that countries can share their best practices to mutual advantage.

Today, the principles in the EPA Policy Framework are accepted as the basis for international exchange and in formal UN agreements for sustainable development. How will other countries respond when the United States significantly cuts the federal environmental enforcement budget and role?

The Trump administration appears to be making a cynical calculation that the backlash the Reagan administration experienced in the 1980s will not be repeated. Despite compelling arguments for federal enforcement — that it ensures parity in protections across the country and equity for those who comply, undergirds a credible state enforcement program, drives compliance and innovation, pays for itself, saves lives, ensures health and prosperity, and creates jobs — enforcement has already been significantly eroded.

What we need is strong national leadership in favor of enforcement of environmental laws by states, tribes, and the federal government where needed, including in states and tribes with delegated or approved programs. The Policy Framework provides a model for state and federal enforcement working together within delegated states without the duplication that is falsely blamed as the rationale for its elimination. Let us not be fooled by calls for a partnership relationship with the states and less adversarial relationship with the regulated community, which while important, echo such calls from the past. History tells us that partnership is all well and good but cannot mean polluters do not need to know that if a state is not willing or able to enforce that the federal government will be there to do so, particularly when the violations are significant. Further, history tells us that an emphasis on compliance will not be effective unless coupled with firm and fair enforcement.

In closing, recall the example set by twice-Administrator Ruckelshaus, whose integrity and commitment to the mission was coupled with the wise recognition that without a visible federal enforcement role, promised protections, public trust, and opportunities for innovation will be lost and difficult to restore. Déjà vu. TEF

CENTERPIECE ❧ Federal environmental enforcement is threatened under EPA Administrator Scott Pruitt, echoing the Anne Gorsuch years. But enforcement provides the force that is needed both in achieving compliance and in encouraging responsible companies to innovate and reduce costs.

Environmental Liability

Liability for environmental harm is designed to compensate affected parties, with a particular focus on restoring or replacing injured resources and/or providing compensation for lost value. By increasing the costs for those who harm the environment, liability provisions can serve an important deterrent role, promoting compliance with laws and regulations. Liability provisions can also serve as gap-fillers, covering activities not specifically identified as illegal but nevertheless resulting in harm to the environment, livelihoods, and public health.