Much of what the White House claims to have accomplished in the first 170 days 19 hour 03 minutes and 12 seconds* since Trump was sworn into office--by both supporters and opponents—is only partially correct. Not necessarily because the claims of executive action are untrue, but because many are subject to judicial review and cannot be counted as having been completed until the courts rule.
Hardly record-setting for the number issued--Presidents FDR and Truman far exceeded The Donald’s pace of papering over the federal government early in their administrations—the Trump White House leads the pack in number of executive orders struck down by the courts. The U.S. Court of Appeals for the District of Columbia Circuit recently added to the string of struck federal executive actions when it overruled an attempt by the Environmental Protection Agency to delay Obama-era methane regula-tions, rejecting claims by the EPA that the oil and gas industry wasn't allowed to comment on the rules.
The decision is important in and of itself, of course, but it also offers possible insights into what the judicial fate of other administration efforts to rollback Obama-era environmental regulations might be, including: Corporate Average Fuel Economies (CAFE), the Clean Power Plan (CPP), the Waters of the U.S. regulations (WOTUS) and a growing host of others.
Some of the rollback attempts, e.g. CPP and WOTUS, are deliberately named in one or another executive directive. Others are implied under the March 28, 2017 action headed the Energy Independence Executive Order.
This most recent judicial strike was of an 90-day suspension of an EPA methane rule Pruitt issued under the umbrella of the late-March Order. The White House announcement of the Order read in part:
The words in bold represent areas of reform, rescission or revocation left for agency leaders to define and to select. Pruitt has chosen to add methane to his to-do list—twice actually.
Although not subject to the recent EPA decision, another methane case is likely to be in the headlines again soon. The Department of Interior’s Bureau of Land Management’s (DOI/BLM) Methane and Waste Prevention Rule, drafted by the Obama administration has already been challenged in the United States District Court for the District of Wyoming.
A published Federal Register notice by DOI/BLM announcing its intention to hold the rule for at least six months will spur more rounds of legal battles. This is the same rule the Administration had hoped Congress would unburden it of by passing a House/Senate Joint Resolution under the Congressional Review Act (CRA). The resolution, however, was rebuffed in the Senate, after having passed the House.
Clean Air Council, et al v E. Scott Pruitt and EPA
The Obama administration promulgated a suite of New Source Performance Standards (NSPS) under Section 111 of the Clean Air Act to set controls on methane emissions from various sources, e.g. new or modified hydraulically fractured oil wells, pneumatic pumps, compressor stations and leak detection sites, in the crude oil and natural gas production sector and the natural gas transmission and storage sector.
The rules were promulgated on June 3, 2016, late in Obama’s presidency. It was the first-time methane emissions from these areas were federally regulated. They were a key component under the President’s “Climate Action Plan,” and that plan’s Strategy to Reduce Methane Emissions, 21 needed to set the Administration on track to achieve its goal to cut methane emissions from the oil and gas sector by 40%-45% from 2012 levels by 2025, and to reduce all domestic greenhouse gas emissions by 26%-28% from 2005 levels by 2025.
The rules were updates to NSPS designed to reduce not just methane, but volatile organic compounds and toxic air pollutants. They took effect on August 2, 2016 requiring regulated entities to conduct an initial leak monitoring survey by June 3, 2017.
In a letter dated April 18, 2017, Pruitt wrote the court stating EPA intend[ed] to exercise its authority under CAA section 307 to issue a 90-day stay of the compliance date for the fugitive emissions requirements. (emphasis added)
As stated in the D.C. Appellate Court opinion:
On June 5—just two days after the deadline for regulated parties to conduct their first emissions surveys and begin repairing leaks…EPA published a “
[n]otice of reconsideration and partial stay” in the Federal Register,
The notice explained that the stay had gone into effect on June 2, 2017—that is, three days before the notice was published in the Federal
Register. 82 Fed. Reg. at 25,731. (emphasis added)
EPA’s action prompted the Environmental Defense Fund, Natural Resources Defense Council, Environmental Integrity Project, Earthworks, Clean Air Council, and Sierra Club, to file an emergency motion for a stay or, in the alternative summary vacatur [nullification] of the EPA action.
In poker terms, the six environmental organizations were telling Pruitt they saw his stay and raised him one. Two of the three judges in the case saw reason to nullify the 90-stay allowing the rule to go into effect—pending any further judicial decisions in the case.
Trump’s EPA was agreeing with industry claims the process followed by Obama’s EPA was flawed, because it wasn’t given an adequate opportunity to present information. Therefore, the proceedings should be re-opened to allow industry an opportunity to allege what it wasn’t allowed to before.
Afterwards, the rule could then go into effect. Note, this same reasoning worked in the case of the CAFE standards. The two cases differ, however, in several ways:
The majority of justices in this case disagreed both with EPA’s statement of the facts and its interpretation of the consequence of the requested 90-day stay. The Court found industry had ample opportunity and involvement in the prior course of rulemaking. It also held that the proposed stay was tantamount to amending or revoking the rule--not simply a momentary pause.
The Court recognized the right of EPA to change the rule, but only if it undertook a new rulemaking.
Any do-over would require starting at ground-zero, e.g. notices of intended rulemaking, publication of drafts regulations, allowing for public comments etc. Replacing the rule could easily take 12-18 months or more.
The dissenting judge in the case, Justice Brown, disagreed with the majority’s interpretation of the stay as a final decision or a backdoor amendment of the rule. Opining that it would permit a reconsideration of discrete issues rather their resolution.
Justice Brown’s interpretation raises the question of why reconsider something without the intention or at least the willingness to change it? If the intent or possibility is to change--following the majority’s reasoning--it would constitute an amendment triggering the need for a new rulemaking.
The Clean Air Council opinion addressed only 1 of the 2 intended stays. Pruitt had also meant to suspend the NSPS suite of Obama-era methane rules covering hydraulic fracturing for an additional two-year period. As recounted in the opinion:
On June 16, EPA published a notice of proposed rulemaking (NPRM) announcing its intention to extend the stay “for two years” and to “look broadly at the entire 2016 Rule” during “the reconsideration proceeding.” 82 Fed. Reg. 27,645 (June 16, 2017). Comments on that NPRM are due July 17, or if any party requests a hearing, by August 9.
The decision did not address this additional action. It undoubtedly will revisit the issue should Pruitt finalize the proposed second stay, after the Agency considers comments it receives and conducts any required hearings pursuant to the notice.
Compared to many environmental lawsuits the Clean Air Council suit is relatively straightforward. Its importance lies less in recognition of the environmental impact of methane and more in the interpretation of the stay as a final ruling or amendment requiring a new rulemaking process.
Trump’s buckshot Energy Independence directive, along with the more specific CPP, WOTUS and CAFE, orders sets up the possibility of other such actions and reactions. Although the U.S. Court of Appeals for the District of Columbia Circuit is not SCOTUS, it is the most likely venue that these cases will be tried in, given the presence of the many industry organizations, environmental NGOs and federal agencies in Capital City.
An interesting sidebar to this is the appearance of the delaying pattern cropping up elsewhere in the Trump administration. A recent suit against Secretary of Education DeVos by 18 Democratic attorneys general and the District of Columbia alleges a parallel impropriety.
The same D.C. federal court will have jurisdiction in this case as had it in the EPA case(s). Should the decision in this and other non-energy/environment proceedings be the same and a clear administration-wide pattern emerge of playing fast and loose with the regulatory process and major environmental mandates, the more predictive these decisions are likely to be.
Stepping back from the Clean Air Council, et al v E. Scott Pruitt and EPA for a look at BLM Methane Regulation for oil and gas operations on federal lands.
The decision on July 3 in the Clean Air Council case was a thin slice of the administrative and legal events surrounding methane regulation. It was discussed first as it sheds light on the possible future of the CPP discussed in a previous article.
It is appropriate now to go into some greater detail about the second of the 3 major** Obama-era methane rules.[i] The Methane and Waste Prevention Rule, was promulgated by DOI/BLM and covers operations on federal lands.
BLM estimates that the rule would avoid an estimated 175,000-180,000 tons of methane emissions per year. It pegs the value of total benefits at between $209 million to $403 million per year at an annual cost of $110-$275 million.
Industry disputes BLM cost estimates. It grounds its challenge of the numbers on a study by National Economic Research.
While the rules resemble those proposed by the Environmental Protection Agency last year, there are differences. Table 1 identifies the major similarities and differences between the two. Refer to it often as the distinctions are not always obvious. (see Table below)
The EPA rules are likely to have a bigger impact in the oil and gas fields of the West and only affect new and modified facilities. BLM’s regulations apply to some 100,000 operations throughout the nation on federal and tribal lands. Once in effect, these regulations will reduce emissions of methane by some 166,000 tons per year and of volatile organic compounds by 400,000 tons per year, according to BLM estimates.
The limits will be phased in over three years--reducing caps on the amount of gas that may be flared from wells, beginning with a limit of 7,200 thousand cubic feet per well per month for the first year. The limits would be halved in the second year and again in the third.
BLM has tried to be flexible in applying the rule. To the chagrin of the environmental community, industry will have a great deal of opportunity to request and defend exemptions. Still, BLM estimates the rule will reduce flaring by around 75 percent.
Note although the Wyoming federal court initially denied the petitioners’ request for injunctive relief, the Rule is nevertheless suspended per BLM’s June 15 Federal Register notice pending the outcome of court cases and a subsequent DOI/BLM review. Or, in the alternative, a denial issued by the U.S. Court of Appeals for the District of Columbia District or other federal court.
The lower federal court, however, did express a degree of confidence in the arguments put forth by industry. It’s denial of a stay was based on procedural grounds. Reading between the lines of the opinion, it would not be entirely surprising if the Wyoming court found in favor of the plaintiff industries and states.
The following paragraphs focus on the consolidated cases filed in the Wyoming federal court. These will be reported on in due course at www.civilnotionblog.weebly.com. The cases in all instances—no matter the decisions of lower courts of original and appellate jurisdiction—will undoubtedly be appealed through to the U.S. Supreme Court (SCOTUS) and around for some months to come.
The federal and tribal lands rule requires oil and gas producers to cut their emissions by almost half by 2025. Methane differs from CO2 in two very distinct ways:
Interestingly, the reason for the BLM capture rule was not the environmental harm caused by gasses escaping into the atmosphere but the lost lucre from leaking pipes and voluntary venting and flaring.
The lower court judge in fact ruled BLM has the authority to make rules that have air quality benefits only if they are independently justified as waste prevention measures.
Beyond the loss of enough gas to meet the annual heating and cooking needs of 1.5 million homes and or the equivalent of the emissions from 5.6 million, oil and gas operations on federal lands generates revenue to the federal government comes from the 12.5 percent royalty charge levied on oil and gas companies.
Leakage, over the last decade, has resulted in an estimated loss to the U.S. treasury of $400 million. A more than equal amount is lost industry-wide. [i]
Forgone royalty revenues may also be responsible for another key distinction between BLM rule and other of the methane proposed regulations. Efforts were made to unburden the Trump administration of having to deal with this at all through passage of a House/Senate Joint Resolution to rescind the rule under the Congressional Revue Act (CRA).
The Senate defeated the Joint Resolution after the House passed it. Two reasons are most often cited for the failed measure. First, the Senate’s somewhat more environmentally-friendly conservatives understand the significance of methane’s being a more intense, if shorter-lived, emission than CO2.
Second, are the lost revenues. Republicans need new sources of revenues if they are to have any real luck passing Trump’s tax, infrastructure and healthcare agendas. Not a huge cash cow, the additional revenues generated from the methane regulation are not to be dismissed and the optics would be good.
Future royalty receipts could also be on an uptrend. Secretary of the Interior Zinke recently announced the Department’s commitment to expedite the award of oil and gas drilling permits on federal lands. There are currently 2,802 applications awaiting approval.
Had the resolution to block succeeded, DOI/BLM would have been precluded from promulgating a similar rule without new Congressional authority. A task, in the current political environment, difficult to accomplish.
As it stands now, whatever the final court and agency decisions, the rule can be revised and re-issued. It would, of course, be subject to a de novo rulemaking, but under the circumstances this is not considered a significant impediment.
In January 2017, the federal court in Wyoming consolidated three groups of lawsuits challenging the BLM rule, making the API case the lead. The other two were Independent Petroleum Association of America (IPAA) et al v. EPA et al, No. 15-1040, and State of North Dakota v. EPA et al, No. 16-1242. Both of those lawsuits also had additional cases consolidated with them.
States joining the industry petitioners include-- Alabama, Arizona, Kansas, Kentucky, Louisiana, Michigan, Montana, Ohio, Oklahoma, South Carolina, West Virginia and Wisconsin -- plus the North Carolina Department of Environmental Quality, are petitioners that oppose the new rules. API, IPAA, the Western Energy Alliance and several state oil and gas, drilling contractor and royalty owner associations are also opposed.
Nine states -- California, Connecticut, Illinois, Massachusetts, New Mexico, New York, Oregon, Rhode Island and Vermont--joined a coalition of environmental groups in support of the rules. The coalition includes the Natural Resources Defense Council, the Environmental Defense Fund, the Sierra Club, the Clean Air Council, Earthworks and the Environmental Integrity Project.
The oil and gas industry argues the rule is duplicative of existing state standards and claims the industry supplements those rules with regulations and practices of its own.
Kathleen Sgamma, vice president of government and public affairs at Western Energy Alliance states:
We support the goal of capturing greater quantities of methane and reducing waste gas, but a command-and-control regulatory approach
is not the most effective way to meet that goal, particularly one that exceeds BLM’s jurisdiction….
Ms. Sgamma evidences the industry’s past accomplishments as a get-out-of-more regulation card:
Since 1990, oil and natural gas producers have decreased methane emissions by 21 percent even as natural gas production has climbed 47 percent–
all without federal regulation
In fact, the oil and natural gas industry has delivered more greenhouse gas reductions than any other industry or government climate
The question of costs and benefits is still an unsettled area of environmental regulatory law. However, unlike the Michigan v. EPA, the cost of compliance is not exorbitant by most standards and unlikely to be considered a major impediment to federal regulation.
The future of the methane regulations, like those of CPP, WOTUS, CAFE and others flowing from the Clean Air and Water Acts, promise a long march to a final decision. Environmental regulation in and of itself is complex. Blending physical and societal science into a rational, fair and effective protections framework is not easy and lately involves trying to resolve what seems unresolvable.
Trump administration efforts to side-step the requirements of the Acts on philosophical grounds adds a whole new series of complications to the legal questions. Whether the Obama-era regulations are optimal, excessive or not stringent enough in terms of the challenge of global warming is one thing. Simply trying to duck the responsibility the underlying legislation has placed upon the federal government because Trump and company doesn’t like them is quite another.
The principles and questions currently awaiting final answers will be raised and asked again in other circumstances before Trump’s reign is over. As long as Congress is unwilling or unable to amend the Acts, the courts will continue to be the major domestic policy-setting body in the environmental and climate fields.
That there is a body still able to function is reassuring. The judiciary, however, was never intended to play this role nor is it able to do so in an efficient and timely manner. It is--after all—a reactive and not proactive policymaker.
*As of the time of this posting.
**There are generally references made to the trilogy of Obama-era methane rules. The third pertain to hydraulic fracturing. The D.C. Appellate Court did not address the proposed 2-year stay pending the conclusion of the comment period and hearings.
For additional information see: https://www.everycrsreport.com/reports/R44615.html
[i] Estimates are based upon fluctuating market prices and production activity and is only the value of the gas lost on federal and tribal lands.
Joel B. Stronberg
Joel Stronberg, Esq., of The JBS Group is a veteran clean energy policy analyst with over 30 years’ experience, based in Washington, DC.