Enforcement strategy likely to change under Trump
Along with gutting Obama administration regulations, President-elect Donald Trump is likely to be friendlier to regulated entities when it comes to enforcing existing environmental rules, former U.S. EPA and Department of Justice officials predict.
How that will actually play out over the next four years is still murky, as neither Trump nor his advisers have given any specifics about how the new president would approach enforcement.
Attorneys who have previously served in top spots in environmental enforcement at the Department of Justice and EPA say they expect, for one, that the Obama administration’s focus on enforcing regulations at oil and gas facilities will be on the chopping block.
“A change from Democratic to Republican or vice versa can affect the mix of an enforcement docket,” said Justin Savage, a former attorney in DOJ’s Environmental Enforcement Section and a partner at Hogan Lovells. “For example, under the second Bush administration, enforcement against coal-fired power plants was de-emphasized and considered politically sensitive. Under a Trump administration, oil and gas cases would be less prevalent and less likely to be filed.”
If Congress continues to target EPA’s budget, overall enforcement numbers could also continue their tick downward. Still, former officials — some of whom worked in the government during previous transitions of power — expect that some level of enforcement will continue at EPA despite Trump’s anti-regulatory rhetoric.
Environmentalists, meanwhile, are strategizing ways to hold the new administration’s feet to the fire.
“I think that any administration that ignores enforcement does it at their own peril,” said Doug Parker, EPA’s former top cop in the Obama administration and an attorney at the environmental firm Earth & Water Group. “Undoubtedly, something bad will happen — maybe man-made, maybe a scandal, maybe a public health crisis. Something will happen, and if you don’t have the infrastructure and resources to respond, it’s not something the American public will find to be acceptable.”
Environmental enforcement is a joint effort between EPA and the Department of Justice. EPA investigates and recommends cases for DOJ, which in turn acts as the agency’s attorney in litigation and settlement negotiations.
The Obama administration’s enforcement efforts will most likely be remembered for the massive settlements it was able to procure with BP PLC and German automaker Volkswagen.
The Obama administration secured a $20 billion settlement with BP for the 2010 explosion of the Deepwater Horizon rig in the Macondo Prospect of the Gulf of Mexico, which killed 11 people and spewed 4 million barrels of oil.
Just last month, a federal judge gave final approval to a nearly $15 billion settlement between regulators and VW for the manufacturer’s alleged installation of so-called defeat devices in cars with 2-liter diesel engines to skirt emissions limits. Regulators are currently working on a deal to address emissions violations for vehicles with 3-liter engines.
“Those are big, dramatic television news events where you have to do some kind of enforcement,” said Eric Schaeffer, who served as director of EPA’s Office of Civil Enforcement from 1997 to 2002. “And I think they were pretty strong on those.”
Schaeffer, who is now executive director of the Environmental Integrity Project, praised the settlements for more closely resembling the “biggest Wall Street cases” than prior environmental cases.
“I sort of wondered while I was at EPA, and since then, why aren’t the environmental cases in the range of the financial penalties that you see?” Schaeffer said. “The [Securities and Exchange Commission] gets criticized for being too soft, but their penalties can be over $1 billion. They’ll require you to reimburse stockholders or consumers, and they’ll take a big penalty besides. That’s a lot of money. And at EPA, if you have a $5 million penalty, that’s a big case.”
Along with the big settlements, the Obama administration also made changes to EPA’s enforcement priorities that affected what types of cases the agency was most likely to pursue.
EPA typically sets those priorities on a three-year cycle based on where the economy is going and on what states, citizens, environmental groups and tribal partners identify as needs.
Under the Obama administration, EPA both carried forward previous priorities from the George W. Bush administration — such as municipal discharges, concentrated animal feeding operations and air permitting — and established new ones, including an energy extraction initiative that initially focused on upstream oil and gas operations but has since expanded to midstream facilities.
In a notable settlement last year, Noble Energy Inc. agreed to pay $73 million to resolve alleged air pollution violations from the company’s Colorado operations. Along with paying a civil penalty, the company was required to install infrared cameras to check for leaks in its tank systems and install next-generation pressure monitors to continuously report pressure readings.
Obama’s EPA also added industrial discharges, food processing and Clean Water Act discharges to the priority list, and it expanded a hazardous air pollution initiative to include leak detection and repair requirements.
“We saw a sustained effort on some of these older national enforcement initiatives, but we saw new ones added,” said Andrew Stewart, former acting division director at EPA’s Office of Civil Enforcement and a partner at Vinson & Elkins. “There has been an expansion, to some degree, of these national enforcement priorities.”
But while the Obama administration has added new enforcement priorities and racked up victories over the past eight years, EPA also struggled with a declining budget that left the agency with less money to do the investigating necessary to bring new criminal and civil cases against companies and individuals.
“DOJ depends on EPA to investigate cases,” Savage said. “If EPA doesn’t have the resources, there will be necessarily less cases and difficult choices.”
EPA’s top-line budget has declined from $10.3 billion in fiscal 2010 to about $8.1 billion in fiscal 2016.
A report last month by the Transactional Records Access Clearinghouse, which is affiliated with Syracuse University, found that prosecutions resulting from EPA investigations were down by half in the last five years. DOJ prosecutions resulting from EPA criminal referrals were on track to reach 88 total for the year, compared with 182 prosecutions five years ago (Greenwire, Oct. 25).
According to Vinson & Elkins, civil case initiations fell from 3,300 to 2,300 between fiscal 2010 and 2014. During that same time, inspections at EPA dropped from 21,000 to 16,000 a year. Between fiscal 2011 and 2015, the number of criminal investigations opened fell from 375 to 200.
“You have a smaller workforce here, and that absolutely has an effect on the number of new actions and some of the other enforcement metrics,” Stewart said. “So the consequence of that is that, counterintuitively, some of the enforcement metrics have actually gone down in the Obama administration.”
‘We had some people walk away’
The downward budget trends are likely to continue in the Trump administration. But former officials said they doubt Trump’s EPA and DOJ would completely stop enforcement of environmental rules, even as it attempts to overturn Obama’s marquee regulations.
“Do I think Donald Trump will simply fire all the hundreds of enforcement attorneys? No,” Savage said. “Would a Trump administration still have enforced over the Macondo spill, the VW issues or the West Virginia water spill? Absolutely. Those cases that are serious and require enforcement will continue to get them.”
The agency’s specific priorities, though, will depend in large part on whom the Trump administration taps to lead EPA’s Office of Enforcement and Compliance Assurance, or OECA. That spot is currently filled by Cynthia Giles, who formerly served as assistant U.S. attorney in Philadelphia, chief of Massachusetts’ water protection program and director of the Conservation Law Foundation’s advocacy center.
It’s unclear yet who will fill that position in Trump’s EPA. Someone affiliated with industry or someone with experience in a state that is generally hostile to EPA would have very different priorities than those set by the Obama administration, experts predicted.
But while the Trump administration may change the enforcement focus at EPA, former officials doubt the new administration would simply halt work on all hundreds of pending cases at the Justice Department. That’s largely because many of the staff members at EPA and DOJ who work on civil and criminal cases are career employees who stay on from one administration to the next.
“These are cases, in some instances, that have been around for a while, a few years,” said Stewart, who served at EPA during the transition between the Bush and Obama administrations. “Those are just going to chug along and are not likely to be directly impacted by new political leadership.”
Parker predicted it would be “months down the road” before any substantive changes are made to EPA’s enforcement priorities.
“It’s going to take any new administration a few months to land,” he said, “and I think people are generally very careful about not interfering with the enforcement process that’s run by career prosecutors and agents and attorneys.”
Schaeffer, however, is worried that companies that are currently negotiating with DOJ and EPA will abandon the process before reaching settlement agreements under the expectation that the Trump administration would be more lax with enforcement.
The former EPA official said he faced a similar situation during the transition between the Clinton and the George W. Bush administrations: “We had some people walk away,” he said.
Schaeffer, who was working on a set of refinery cases at the time, said the agency’s strategy between the November 2000 election and the January 2001 inauguration was to “lock down whatever we had that was really far down the pipeline.”
The goal was to create “a bit of momentum” for other refineries to reduce air pollution in the Bush administration, Schaeffer said.
“We had a long, year-and-a-half-long, negotiation with BP,” Schaeffer said. “We made damn sure to close it, in fact, the day of the inauguration. It was lodged and in the Federal Register.”
Another area that may suffer under the Trump administration, Schaeffer predicted, is oversight of state programs for issuing Clean Water Act permits and Clean Air Act operating permits. Oversight of those programs, which EPA has delegated to many states under the law, has already been “tepid” of late due to budget cuts, he said.
“I think that’s going to suffer a lot — in other words, having EPA look over the shoulder of the Texas Commission on Environmental Quality to make sure that the federal requirements are being implemented, deadlines are being met,” Schaeffer said.
A big question is how the new administration will handle the scientific information that Obama’s EPA has built up on various environmental impacts stemming from industry. Stewart highlighted the record on alleged groundwater impacts tied to hydraulic fracturing.
“You have a body of information that’s been amassed over the past eight years,” he said, “and so part of the question that everyone’s trying to grapple with — the new set of political appointees, what are they going to do with that?”
Savage predicted the Trump administration may be more responsive to concerns raised by industries that EPA has attempted to regulate via enforcement under the Obama administration.
Coal-fired power plants, for example, have complained that EPA has used consent decrees to effectively set more stringent air pollution limits than would be typically required. There’s also concern that the next-generation monitoring technology required in some decrees goes beyond the scope of the law.
“At a political level, there will be much more scrutiny over whether DOJ is enforcing the law or using its authority to essentially set a regulatory standard,” Savage said. “The political appointees in a Trump administration would be more likely to scrutinize an attempt to award injunctive relief in a consent decree or litigated case that goes beyond the four corners.”
There would also likely be more scrutiny over money that’s required as part of settlement agreements for projects to mitigate environmental damage. Savage noted that the Competitive Enterprise Institute, whose Center for Energy and Environment is headed by Myron Ebell, Trump’s pick to oversee the EPA transition, protested that the Volkswagen settlement wasn’t transparent enough.
Republicans have already been hammering DOJ for allegedly directing funds to activist groups via settlements. Republicans on the House Judiciary Committee say that, according to their investigation, DOJ has directed up to $880 million to third parties outside of congressional authority.
A bill passed in September by the House along mostly party lines would block DOJ from requiring donations to third-party groups as part of settlements (Greenwire, Sept. 8).
‘Some level of cop’
Environmentalists have pledged to push back on the Trump administration’s environmental policies. But, unlike in the case of regulations, it will be hard to use the courts in the area of enforcement because agencies have prosecutorial discretion.
“To force EPA to undertake particular enforcement activities is extremely difficult,” said Emily Hammond, a professor of environmental law at George Washington University. “Judicial review of agency enforcement decisions is presumed to be unavailable.”
Stewart said he expects Trump’s opponents to use the Freedom of Information Act and to call for Inspector General and Government Accountability Office investigations of EPA’s actions.
Schaeffer said environmentalists “don’t want to litigate and just run into a blank wall.” But they have other tools besides the courts, he said, including monitoring tools for air and water pollution that have become available in the last 15 years.
“That’s not just enforcement. It’s about rallying the public. It’s about making the invisible visible and building the record that something needs to be done,” he said.
Parker said there’s a lot of uncertainty among enforcement officials since last week’s election.
“I’ve heard from folks in the enforcement world who are just unsure of what’s next,” he said. “My view is that if companies look at this from an enforcement standpoint as ‘the cop is no longer on the beat’ — I think that’s the wrong takeaway. I think the cop — some level of cop — will absolutely remain on the beat.”