FEDERAL REGULATORY READING LIST: Resources for New Leaders at EPA and FWS

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US-FishAndWildlifeService-Logo.svg*Note: This is the fourth in a series of posts compiling Washington Legal Foundation papers, briefs, regulatory comments, and blog commentaries relevant to critical legal and constitutional issues facing new senior leaders at specific federal agencies. To read posts addressing other federal agencies, click here.

Few agencies have been more active in the past eight years than the Environmental Protection Agency (EPA). With its singular, near-myopic focus on combatting climate change, EPA has issued a series of regulations that not only threaten to raise energy costs dramatically, but have already cost tens of thousands of Americans their livelihoods. Similarly, the Department of Interior’s Fish & Wildlife Service (FWS) has continued to expand the scope of the Endangered Species Act (ESA), among other federal laws, in ways that fail to strike a proper balance between safeguarding ecological health and respecting private property rights and other individual and business civil liberties.

Through its public-interest litigation, publications, and other advocacy, WLF has influenced debates over many EPA and FWS policies and actions with timely papers and blog commentaries, and weighed in directly through regulatory comments and amicus briefs. Those activities have resulted in an impressive body of reference materials that are instructive for new leadership in the two agencies. Below we provide a summary of and links to those documents to simplify access to relevant WLF work product in specific areas.

Proliferation of “Sue-and-Settle” Litigation

In recent years, both EPA and FWS have sought creative ways to circumvent the strictures of notice-and-comment rulemaking. One popular method has become known as “sue and settle,” whereby an environmental activist group files suit demanding that the agency impose new or stricter regulatory standards on a business or even an entire industry. Instead of defending against the suit, the agency accedes to the group’s demands, negotiates a private agreement, and then seeks court approval through the consent-decree process.

Such sue-and-settle agreements frequently shorten the amount of time allowed for public comment on the agency action arising from the settlement or curtail the time an agency has to review public comments before finalizing a rule. WLF has published several papers and blog posts detailing some highly problematic sue-and-settle strategies and exploring their broader implications:

The War on Carbon Emissions

Concern over climate change has been the driving force behind many recent EPA and FWS rulemakings. Although Professor Laurence H. Tribe argued in a January 2010 Working Paper that climate policy was “too hot for courts to handle” under the political question doctrine, that view did not carry the day. After the Supreme Court in Massachusetts v. EPA interpreted the Clean Air Act (CAA) as requiring EPA to set emissions standards to regulate carbon dioxide and other greenhouse gases, an explosion in climate-change-related litigation and regulation soon followed.

On the litigation front, private plaintiffs and localities began bringing public nuisance claims against energy companies for their carbon emissions. As attorney Richard Faulk explained in his January 15, 2016 Legal Backgrounder, such suits against business for federally-permitted emissions are contrary to Congress’s goal of balancing environmental protections with economic growth. Faulk had earlier co-authored with Donald W. Fowler a November 2014 Contemporary Legal Note calling on the Supreme Court to settle once and for all the matter of the CAA’s preemption of all public nuisance claims.

WLF was also involved in two major litigation victories in this area. In American Electric Power v. State of Connecticut, the Supreme Court unanimously held that the CAA displaces federal suits alleging that emitting carbon dioxide constitutes a public nuisance under federal common law. And in Kivalina v. ExxonMobil Corp., the Ninth Circuit rejected an attempt by the Alaskan Village of Kivalina to revive a $400 million lawsuit against 19 leading American oil and energy companies, alleging that climate change was destroying the village by melting Arctic Sea ice.

In 2014, when EPA proposed its Clean Power Plan to cut carbon emissions by 30% as measured against 2005 levels, WLF filed formal comments challenging the rule’s unrealistic emissions standards for existing power plants.  WLF expressed concern that EPA, by effectively requiring states to completely re-engineer their electric utility grids to satisfy EPA’s “goals,” was exceeding the scope of its statutory authority under the CAA. WLF also cited numerous studies showing that higher energy costs triggered by the proposed rule would have a devastating impact on the American economy.

EPA’s zeal for combatting carbon emissions even led it to dramatically redefine the English language. In a proposed rule for making source determinations in the oil and natural gas sectors, EPA construed the word “adjacent” as allowing the agency to aggregate emissions from oil and gas equipment separated by many miles and that may not even be located at the same facility, so long as those sources are “functionally interrelated.” WLF filed formal comments opposing the rule change. WLF explained that by aggregating emissions from sources many miles apart, the rule would make it much more likely that oil and gas operations will run afoul of federal air permitting requirements.

More recently, as detailed in a July 15, 2016 Legal Opinion Letter by attorneys Kirk Magg and Oliver Jamin, a federal judge last year ordered FWS to rely upon the speculative impact of projected climate change when assessing legal protection for species, a decision that could vastly expand the reach of the ESA.

Regulatory Takings

The ESA is often a powerful weapon in the federal arsenal against private property rights.  By forbidding the “take” of any listed species, the ESA essentially prohibits any activity that would adversely impact a single member of a species or its habitat. More often than not, that prohibition effectively deprives private property owners of their fundamental property rights.

As Alison Stuthers and William G. Myers III explained in an October 7, 2011 Legal Backgrounder, FWS developed a work plan to review more than 250 additional species for possible protection under the ESA. WLF subsequently filed formal comments with FWS, urging it to withdraw several new proposed regulations that would significantly expand restrictions on private property deemed important by FWS for protecting endangered species.

Another important ESA case highlighted by WLF, People for the Ethical Treatment of Property Owners (PETPO) v. U.S. Fish & Wildlife Service, is still pending before the Tenth Circuit. PETPO involves a challenge to FWS’s rule prohibiting any take of the Utah Prairie Dog, a species of prairie dog that resides only in southwestern Utah, on the basis that the intrastate species has no substantial effect on interstate commerce. As the case continues, the new administration will likely need to reevaluate whether to continue defending the regulation.

WLF also filed formal comments opposing FWS’s attempt to assert regulatory jurisdiction over activities that have, at most, only an incidental effect on migratory birds. WLF argued that the Migratory Bird Treaty Act (MBTA) does not authorize federal restrictions on an “incidental take”—FWS’s term for actions that, while not directed at migratory birds, may cause them incidental or indirect harm. If FWS believes that threats to migratory birds require a stronger government response, WLF urged the agency  to bring its case to Congress and ask for new legislative authority.

Earlier this week, WLF’s Legal Pulse drew attention to a vigorous dissent from the Fifth Circuit’s denial of rehearing in an important ESA frog-habitat case, Markle Interests, LLC v. U.S. Fish & Wildlife Service, which now has a faster and better chance of obtaining Supreme Court review.  WLF had been watching that case for some time.

The ESA is not the only federal statute implicated in regulatory takings. Indeed, the broader EPA’s jurisdiction is under the Clean Water Act (CWA), the greater the risk that heavy-handed EPA regulation will deprive private property owners of their rights. That’s why EPA’s effort to drastically expand what constitutes “Waters of the United States” under the CWA raised serious concerns at WLF. Not only did WLF file formal comments opposing the rule, which WLF warned would exceed the bounds of Congress’s power under the Commerce Clause, but WLF participated in litigation challenging the rule as well. In its amicus brief in Murray Energy Corp. v. EPA, WLF argued that EPA’s final rule violated the Administrative Procedure Act.

Hydraulic Fracturing

Hydraulic fracturing or “fracking” is not a new process; the oil and gas industry has successfully employed fracking techniques for more than 70 years as a successful means of unlocking oil and natural gas reserves found in shale and other tight-rock formations. Yet as fracking has become a contentious social, economic, and political issue, EPA has increasingly sought to regulate the fracking process.

Because fracking is already heavily regulated at the state level, as WLF’s comments to EPA demonstrated, most additional federal regulations are unnecessary and duplicative. WLF closely followed the Department of Interior’s unsuccessful attempt to impose additional drilling and construction requirements on federal and Indian lands. WLF also filed formal comments with New York State urging it to lift its state-wide moratorium on fracking within the state.

In the past several years, numerous cities and counties have enacted local restrictions or bans on oil and natural gas extraction from shale plays within their borders. Such interference with private property rights and the free market is not only bad policy, but it is generally preempted under state law. Through timely papers and blog posts, WLF has highlighted several important case studies:

As WLF Legal Pulse’s expert contributor Sam Boxerman has shown, many of these local fracking bans also face significant constitutional challenges as uncompensated takings.

One of the chief complaints leveled against fracking is a concern that it pollutes or otherwise contaminates drinking water. Congress requested EPA to undertake a study to evaluate what danger, if any, fracking poses to drinking water, but EPA’s own study uncovered no evidence of such a threat. WLF filed comments with EPA urging it to make more explicit its own findings that fracking poses no threat to drinking water. As WLF later showed, this was not the first time that EPA ignored key studies to embrace inconclusive results.

Agency Overreach

Two important WLF litigation efforts highlight examples of EPA regulatory overreach by twisting or ignoring statutory language. In Mingo Logan Coal Co. v. EPA, EPA purported to revoke a CWA permit years after it was issued, putting at risk billions of dollars’ worth of investment.  The case arose from a discharge permit the U.S. Army Corps of Engineers issued to Mingo Logan Coal Company under Section 404 of the CWA.  Years later, EPA sought to revoke the permit—even though the CWA expressly gives the Corps the sole authority to issue and revoke such permits (and the Corps declined to do so).  In its brief urging the Supreme Court to review the case, WLF argued that allowing regulatory agencies to abruptly adopt new, expansive interpretations of statutes significantly undercuts the interests of predictability and finality—two chief goals of administrative law. The Supreme Court ultimately denied review.

In American Farm Bureau Federation v. EPA, WLF filed a brief on behalf of 39 members of Congress in a CWA case.  The case centered on the proper scope of EPA’s authority under the CWA to establish a “total maximum daily load” (TMDL) for pollution.  In its brief, WLF argued that nothing in the CWA grants sweeping authority to EPA to “micromanage” implementation of a TMDL.  The Third Circuit ultimately disagreed, holding that the “total” for a TMDL can mean “a sum of parts,” which interpretation gives greater guidance to states in cleaning their waters, provides greater transparency to the public who may comment on a TMDL, and furthers the CWA’s requirement that the TMDL account for both point and nonpoint sources.

Conclusion

Both EPA Administrator Scott Pruitt and Interior Secretary Ryan Zinke have made clear their intentions to steer federal regulatory policy in a new direction. The need for sensible reforms to meaningfully balance ecological and environmental concerns with the free-market rights of private property owners has never been greater. WLF invites all new leadership at EPA, Interior, and FWS to read WLF’s work in this area as they contemplate the best path forward.

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