New EPA Chief Scott Pruitt Sets Out to Restrain Agency

The Environmental Protection Agency's (EPA's) administrative priorities will be reined in to focus on process, rule of law, and cooperation with states, the agency's new head Scott Pruitt told attendees at CERAweek by IHS Markit on March 9.

Since the former Oklahoma Attorney General was sworn in as EPA administrator in late February, the agency has also moved to rewrite at least one environment rule and issued a directive seeking to halt rulemaking via sue-and-settle environmental consent decrees, he said.

"Pro-growth, Pro-jobs, Pro-Environment"

The EPA can, and will be, "pro-growth, pro-jobs, and pro-environment," Pruitt told attendees during a luncheon keynote speech at the event that is taking place this week in Houston.

"In fact as a nation, we've been that way for many years. Many folks don't recognize or celebrate this, but since 1980, under the National Ambient Air Quality Standards Program . . . we've seen a 63% reduction in criteria pollutants," he said (Figure 1).

The EPA's air quality trends report released in September 2016, under the prior administration, shows that between 1970 and 2015, the combined emissions of six criteria pollutants (particulate matter [PM]2.5, PM10, sulfur dioxide, nitrogen oxide, volatile organic compounds, carbon monoxide, and lead) dropped 71% as the U.S. economy continued to grow. Source: EPA, "Nation's Air: Status and Trends Through 2015"

Pruitt said that policies fostered by the last administration were harmful to power generators, which crave flexibility, stability, and low costs. "Regulators ought not to use their power to pick winners and losers," he said. "There shouldn't be a war on any sector of our economy."

That's one reason the EPA would veer towards setting "healthy" standards that are in line with utility investment, taking into account, "time, certainty, common sense" to allow companies to make sound decisions.

Among the first things the agency will do is "dealing with" regulations that are an example of regulatory overreach, Pruitt said. "The Clean Power Plan will be a focal point." It will also address issues to allow the agency to provide "better outcomes," keeping itself in check with "metrics."

A Focus on Process

The agency's foremost priority will be to recognize that "process matters," Pruitt said. "I think over the last several years, the way the agencies of the federal level have conducted themselves, there's been a disregard a lot of commitment to process."

During the Obama administration, litigation drove the regulatory agenda, he claimed. Pruitt, a former Oklahoma attorney general, sued the EPA more than a dozen times, challenging its authority to promulgate rules regulating power plant emissions of mercury, ozone, and carbon, as well as contesting a number of rules concerning the quality of wetlands and other waters.

But his complaint on Thursday was centered on the so-called "sue and settle" tactic used by the Obama administration to settle lawsuits with environmental organizations, including Greenpeace, Defenders of Wildlife, WildEarth Guardians, and the Sierra Club, without allowing state involvement. Oklahoma led a coalition of 12 states suing the agency to request for access to documents related to the practice in 2013.

On Thursday, Pruitt said that EPA leadership had already "issued a directive" on how to stop the process of rulemaking via litigation, but he didn't provide details.

"There's a reason why Congress set up the Administrative Procedure Act," Pruitt said on Thursday. "And the reason is because as rules are adopted in the executive branch, it's important that we hear from the people on how it impacts them, at the lower level and the state level." That process he said, has been "abused" over the last several years.

"It will change under our administration," he said. "We're going to respect and have commitment to process so that voices are heard across the spectrum and informed decisions can be made . . . as rules are adopted."

"Rule of Law" Matters

The Senate confirmed Pruitt as the EPA's head in a 52-46 vote, mostly along party lines, on February 17 after a contentious nomination hearing that examined his alleged ties to industry. Emails obtained after the Center for Media and Democracy sued the Oklahoma attorney general's office-but which were not considered by voting Senators-showed that Pruitt regularly corresponded with fossil fuel firms and power companies about how to thwart federal environmental rules, as well as with conservative political groups concerning government "overreach."

On Thursday, the morning before Pruitt spoke at CERAweek, the EPA's head told CNBC's Squawk Box that he disagreed that carbon dioxide is a primary contributor to climate change. "I think that measuring with precision human activity on the climate is something very challenging to do and there's tremendous disagreement about the degree of impact," he said. "So no, I would not agree that it's a primary contributor to the global warming that we see."

Environmental group the Sierra Club was quick to point out that Pruitt's statement directly contradicted statements he made "clearly to the Senate in at least three instances." Pruitt wasn't available for press questions, nor did Daniel Yergin, CERAweek chair, ask Pruitt to elaborate in the brief interview that followed Pruitt's speech.

One of Pruitt's only mentions of carbon dioxide (CO₂) was to note that there are issues that may be more important. "Ask the family in New York about water quality, if that's more important than CO₂; the superfund site in Portland, Ore., or the lead crisis in East Chicago or in Montana, is that somehow less important?"

In his speech, however, Pruitt emphasized a change in the direction of the EPA's administrative policy towards "rule of law." Pruitt's legal challenges to the EPA's rules were initiated "largely because decisions were being made at the agency and other agencies at the federal government that didn't respect the statutory framework that Congress passed," he said in his speech.

Among the ways the rule of law was abused was the EPA's Waters of the U.S. Rule. Trump on March 1 signed an executive order directing the EPA to rewrite the rule. On Thursday, Pruitt said that "within eight minutes of that executive order being signed . . . we started the rulemaking process to do just that. At the end of the process, we're going to have a rule that promotes clarity and the objective criteria, so we know where federal and state jurisdiction starts and ends because we're following the rule of the law."

The greatest "impediment" to economic growth posed over the last several years, he said, is regulatory uncertainty. "When those [who] are regulated don't know what to expect from them, they don't know how to allocate resources, and when they start the process to allocate resources to comply with the rule. Sometimes those rules change or they're overturned through other action. That needs to change."

Beyond WOTUS, Pruitt took issue with the Clean Power Plan, the Obama administration's legacy rule to force new and existing power plants to slash their carbon dioxide emissions through "building blocks." "You don't get a standard enforcement of a rule unless there's likely success on the outcome of it at the end."

EPA Administrator Scott Pruitt.

Cooperation with States

Under Obama, the EPA also issued 56 federal implementation plans (FIPs), Pruitt claimed. That compares to five issued by the Bush, Clinton, and W. Bush administrations put together. "That represents an attitude. It represents an attitude of displacement. It represents an attitude of true disregard for the very statutory framework of a partnership with the states. That's going to change under our administration," he said.

Already, the EPA has held private meetings to kick off remediation of 1,300 superfund sites-land that is contaminated by oil spills and other natural disasters and may pose a risk to human health or the environment, Pruitt said. There's a "tangible benefit we can provide citizens as far as our marginal outcomes where jobs can be created and communities can be restored with respect to those sites," he said.

Pruitt also noted that attainment of air quality standards were lacking owing to stringent limits. "Right now in this country, we're at 40% nonattainment roughly 122 million people are in nonattainment areas in ozone alone," he said. "We need to do more to assist the states and counties to assure better outcomes in air quality under existing standards before we try to ratchet down standards even farther."

-Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)

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