Environmental and Energy Rule-Making in the Age of Trump

January 24, 2017

Shortly after the Speaker of the House gaveled the 115th Congress to order, two pivotal regulatory reform proposals were introduced, placed on the fast track and favorably voted upon by a substantial majority of the members present.

The Regulatory Accountability Act of 2017 (H.R. 5) and the Regulations of the Executive in Need of Scrutiny Act (H.R. 26) are re-runs of previously submitted legislation. Support for both initiatives largely followed party lines, with fewer than five Democrats joining the Republican majority in each instance.

Earlier efforts to enact similar legislation fell short, largely because of promised vetoes by President Obama. With the 2016 elections having resulted in Republican command and control of Congress and the White House, it is widely expected that this year’s efforts have a fighting chance to succeed. Mr. Trump has already indicated support for the legislation and promised signature.

Senate voting rules require a supermajority of 60 votes for approval of the pending reform bills. With only 52 Republicans, Senate passage will   prove more difficult than the House. Parliamentary maneuvers are possible but speculative.

Regulatory reform is so central to the Republican agenda that continued efforts throughout the term of the 115th Congress are inevitable. Like so many other things happening in today’s political environment, change can come in 140 characters or less–or the twit of an eye.

The spectre of regulatory reform casts a wide shadow over renewables;  potentially impacting their marketplace performance in myriad ways, including: how distributed generating systems are connected to the grid; where federal generating projects may be located; the sale of corporate securities; the balance between conventional and clean generating sources; consumer protections; tax credit implementation; fuel mixes and efficiencies; and more.

Don’t be confused by the separate submissions of the proffered proposals. They are parts of a more or less integrated reform package comprised of existing laws, e.g. the Congressional Review Act (CRA), authorities, e.g. OMB review, and discretionary practices, e.g. the decision of the Department of Justice to defend or settle legal challenges.

Before addressing key issues and potential consequences, a bit more detail about the specifics contained in H.R. 5 and H.R.26/S.23 is in order.

H.R. 5: The Regulatory Accountability Act of 2017 (RAA)

This Act is intended to dramatically restrict the government’s ability to enact any significant new regulations or safety standards and potentially would hamstring the efforts of every federal agency, from financial regulators to environmental watchdogs.

In the main, the legislation requires federal agencies to:

  • Establish an achievable objective;
  • Enunciate the metrics used to measure the rule’s impact;
  • Identify the lowest-cost rulemaking alternative meeting the objective; and,
  • Publish online and in plain language summaries of the proposed rules and the cost/benefit analysis.

Included as part of the RAA is the Separation of Powers Restoration Act (H.R. 76):

  • Allowing a court to review whether an agency has completed the necessary requirements under the Act (currently, no judicial review is required); and
  • Authorizing the courts to decide de novo all relevant questions of law.

The significance of the H.R. 76 provisions is discussed below in Framing the Debate.

H.R. 26/S. 23: The Regulations of the Executive in Need of Scrutiny Act (REINS)

The keystone provision of the REINS Act is: no major rule shall take effect unless the Congress enacts a joint resolution of approval and won’t become law if Congress does not pass that resolution by 70 session or legislative days. (emphasis mine)

As defined by the Act, a major rule is determined by the Office of Management and Budget (OMB) as:

  • Having an annual effect on the economy of $100M or more;
  • Resulting in a substantial increase in costs or prices for consumers, individual industries, federal, state or local  government agencies or geographic regions; or,
  • Causing a significant adverse effect on competition, employment, investment, productivity, innovation or the ability of U.S.-based  enterprises to compete with foreign enterprises.

Section 808 of the Act requires an agency to identify a rule or rules that may be amended or repealed to completely offset any annual costs of the new rule to the United States economy. Termed the regulatory cut-go requirement this is the incarnation of The D’s promise: for every new rule two old ones must be removed.

A Bit More Context–

Both RRA and REINS are about the future. The present is covered by the Congressional Review Act (CRA/Act).  As I have written before, the Act gives Congress 60 days to prevent a final regulation from going into effect.

CRA resolutions are subject to presidential veto. Understandably, they were little used over the course of the Obama presidency. With the advent of the Trump administration, Republican majorities in Congress can have confidence their resolutions won’t be hacked by the White House.

Some 200 regulations have been identified as potential fodder for repeal. The House Freedom Caucus, an ultra-conservative subset of Congressional Republicans, has targeted 148 of those for specific action.

Passage of resolutions under the CRA requires only a simple majority. For those already in effect, rescission requires legislation to be proposed and passed—a significantly wider moat to cross.

CRA actions are not the only route to rescission. The federal government is currently operating under a Continuing Resolution due to expire near the end of April. Through a variety of parliamentary machinations, it  is possible to deny an agency the funding necessary for implementation. It is the type of legislative maneuvering being used in repeal of the Affordable Care Act.

Framing the Debate: The philosophical divide–

A remarkably complex set of consequences will be put in motion should this regulatory reform package be signed into existence. Not surprisingly opinions about both the desirability and workability of the proposed changes—procedural and substantive—differ dramatically.

The divergence of opinion is partially philosophical and partially experiential. It is important to recognize and to account for these disparities when considering the various elements of proposed reforms. They are an aid to understanding the respective points of view.

Taking a cue from the 2016 election cycle, I have chosen to frame the dialogue using OMB and the Heritage Foundation as surrogates. These institutions fairly bracket the spectrum of opinion.

Whether one leans towards the view of OMB or the Heritage Foundation, the potentially transformative nature of the proposed package of reforms is  beyond question.

The Office of Management and Budget termed the REINS Act:

a radical departure from the longstanding separation of powers between the Executive and Legislative branches…in many cases,  thwart[ing] implementation of statutory mandates and execution of duly-enacted laws…. creat[ing] business uncertainty,   undermin[ing] much-needed protections of the American public, and caus[ing] unnecessary confusion.

The Heritage Foundation agrees with OMB about the magnitude of the departure, if placing it in a significantly more positive light. The conclusion of the conservative think tank is: …the REINS Act would finally give a real bite to regulatory review by… reversing the burden of proof.   According to the Foundation, the effect of the Act(s) is to reinforce, not to upset, the constitutional balance of powers.

It is hard to imagine these surrogates are describing the same legislation. I  believe the primary source of the deep disagreements is to be found within the phrase: to reinforce, not to upset, the constitutional balance of powers.

As previously mentioned, a lynchpin of the batch of reform legislation was the Separation of Powers Act (H.R. 76). The Act authorizes courts to decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.

Having a de novo license means a court need not defer to an agency’s authority and experience. The proposed authority is a legislative mandate overturning an established judicial precedent.

Pre-emptive authority, in consort with the REINS mandate of an affirmative joint resolution of Congress, is seen as presumptive evidence of an assault on Article I of the Constitution.

Cydney S. Posner writing for Lexology explains it this way:

This bill appears to represent an effort to repeal by statute  the so-called “Chevron doctrine…a reference to the well-worn  two-step test for determining whether deference should be accorded to federal administrative agency actions interpreting a statute, …first articulated by SCOTUS in 1984 in Chevron v. Natural  Resources Defense Council…the doctrine mandates…if there is ambiguity in how  to interpret a statute, courts must accept an agency’s interpretation of a law unless it is arbitrary or manifestly contrary to the statute.

If our democratic republic had four legs—checks and balance would be  two of them; if it had only two–it would be both. The separation of power  is fundamental to the stability of the nation. Both on a philosophical and practical level, the proposed package of reforms seems to blur the lines  between the  four estates.

Is H.R. 76 a deliberate assault on the Constitutional separation of powers? I don’t know. I can understand, however, how others might think so.

In the next installment of this series I will be focusing on more of the specifics of the proposed legislation and offering some real-world examples of how they might play out.

Joel Stronberg

Joel B. Stronberg, Esq., of The JBS Group is a veteran clean energy policy analyst with over 30 years of experience, based in Washington, DC. He writes about energy and politics in his blog Civil Notion (www.civilnotion.com) and has recently published the book Earth v. TrumpThe Climate Defenders' Guide to Washington Politics based on his commentaries. He has worked extensively in the clean energy fields for public and private sector clients at all levels of government and in Latin America. His specialties include: resiliency; distributed generation and storage; utility regulation; financing mechanisms; sustainable agriculture; and human behavior. Stronberg is a frequent presenter at conferences and workshops.

Tags: energy regulation, environmental regulation, Federal regulation