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Industry Lawyers Resist Relying on Trump Environmental Rollbacks

Oct. 21, 2020, 6:47 PM

Power industry lawyers are in regulatory limbo as the Trump administration nears its four-year mark, unable to rely on several tailor-made rollbacks amid potential policy shifts.

Federal agencies’ recent rewrites of regulations for environmental reviews, water jurisdiction, and coal ash are too vulnerable to legal and political winds to steer business decision-making, attorneys said Wednesday during an American Bar Association conference.

Tennessee Valley Authority lawyer Steven Johnson pointed to recent wastewater and coal ash rules from the Environmental Protection Agency. TVA has to make related operational decisions quickly, “but it is difficult with looming uncertainty,” Johnson said.

Lawmakers could reverse both rules under the Congressional Review Act if Democrats control both chambers, or the rules could be sidelined by courts or a future Democratic administration, should former Vice President Joe Biden win the election.

TVA, a government-owned power company, has simply decided against taking advantage of some Trump-era policies designed to benefit industries.

When the Interior Department loosened liability for bird deaths under the Migratory Bird Treaty Act, for example, TVA opted to “protect migratory birds as robustly as before,” Johnson said. A district court later struck down Interior’s policy, though the agency is working on a follow-up rulemaking.

‘Long-Term Arc’

Most of the Trump administration’s biggest environmental rollbacks are still tied up in litigation, creating lingering uncertainty about their future. The potential for congressional reversals and a Democratic administration heighten the unpredictability.

Forgoing short-term advantages from regulatory rollbacks is often the safest approach, said Joel Beauvais, a former Obama-era EPA official who is now vice president and deputy general counsel at Exelon Corp. Power companies and others subject to federal regulation have to “manage around” uncertainty, often by hewing to more protective standards even if the current administration has scrapped them, he said.

The “long-term arc” of environmental regulation bends toward stricter requirements, he said, so companies can make safer planning and investment decisions by anticipating those standards, rather than chasing short-term rollbacks.

Matthew Gernand, assistant deputy general counsel for Norfolk Southern Corp., said the rail industry has learned to be cautious in the face of legal and political volatility. For example, he said, rail companies largely benefit from the Trump administration’s new rule for which wetlands and waterways fall under federal jurisdiction—but the industry isn’t banking on that “waters of the United States” interpretation sticking around.

‘You Have to Sit Back’

“I think everyone knows you have to sit back, and no one makes immediate changes because those rules are always litigated,” he said. “So these things will be litigated, and the litigation will complete just in time for a new administration to change the rules again. So that is just a game we are in right now.”

The White House’s decision to narrow and fast-track federal reviews under the National Environmental Policy Act is another example, Beauvais said, given uncertainty about the new regulation’s durability and the fact that federal courts have ordered agencies to account for climate impacts the Trump rule doesn’t address.

Johnson said TVA, which operates in a unique federal agency capacity, is still considering whether to incorporate the less stringent approach to NEPA analysis in its own reviews.

“TVA is probably likely to continue to do the robust review that it has done, primarily because it makes good sense for decision-making purposes,” he said. “But it’s going to be interesting to see to the extent that that is consistent with the new rule, and how that plays out.”

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editor responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com

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