How Will Environmental Regulation Change Under Pruitt’s EPA?

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Wharton's Eric Orts and UNC's Victor B. Flatt discuss Scott Pruitt's confirmation as head of the EPA.

Former Oklahoma attorney general Scott Pruitt’s confirmation last Friday as the new administrator of the U.S. Environmental Protection Agency has revived concerns over how he may steer environmental regulation in the wrong direction. Environmental groups and public policy watchdogs had vehemently opposed his nomination because of his consistent attacks on the regulatory work of the very agency he sought to lead.

On Tuesday, their worst fears seemed to be confirmed when a court-ordered release of emails running to more than 7,500 pages from his time as Oklahoma attorney general revealed close relationships he had with the fossil fuel industry. According to reports, more emails will be released on February 27.

Meanwhile, President Donald Trump is expected to sign executive orders in coming days to roll back some of the previous administration’s policies on climate change, but with tempered language, according to a Wall Street Journal report.

Wharton legal studies and business ethics professor Eric Orts and Victor B. Flatt, professor of environmental law at the University of North Carolina School of Law, discussed what Pruitt’s appointment to the EPA will mean for environmental regulation on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. Orts is also faculty director of the Initiative for Global Environmental Leadership, while Flatt is co-director of both the Center for Climate, Energy, Environment & Economics (CE3), and the North Carolina Coastal Resources Law, Planning and Policy Center.

Here are key takeaways from their discussion (listen to the full podcast at the top of this page):

The Most Anti-regulatory EPA?

“This is the most anti-regulatory EPA that we have had probably in history,” said Orts. The emails confirmed what many people already knew about Pruitt, he noted — that “there was a lot of back and forth and cozy deals between lobbyists and what Attorney General Pruitt was doing.”

Despite science showing a clear connection between human activity and global warming, “[Trump] is following through on his campaign promises to cut back environmental regulation extremely, severely, to get out of the business at the federal level of greenhouse gas regulation, and to make it easier on fracking to push through the pipelines — so it’s a very pro-fossil fuel agenda,” said Orts. “President Trump has declared war on the environment.”

For example, in two executive orders on January 24, Trump cleared the way for two controversial projects in the face of stiff opposition from environmental groups and native American tribes – the Dakota Access pipeline being built by Dallas-based Energy Transfer Partners and the fourth phase of the Keystone XL pipeline system that brings Canadian oil to the U.S.

Orts said Pruitt’s future actions could directly impact air and water quality. “Why do we have relatively clean water and air compared to many other countries in the world?” he asked. “It is [because of] the environmental regulatory system that we have.”

Flatt described Pruitt as “a classic anti-regulation person” and “a true believer” in an anti-regulatory agenda. He noted that Pruitt led most of the major fights against EPA rules in recent years. “He has a very aggressive stance against the EPA, saying that the EPA is interfering with states’ rights and that regulation should be left to the states, and essentially opposing anything that the fossil fuel industry opposed,” he added.

Low EPA Morale Will Halt Regulations

“The biggest impact [of Pruitt’s appointment] may be on the morale of the career staff at the agency, which was already very low and already very distrustful of [him],” said Flatt. Orts noted that 773 of the EPA’s 15,000 employees had signed a statement opposing his nomination; he said such protests are rare.

The distrust between Pruitt and the EPA staff could have severe effects, warned Orts. “You can’t do a lot without the EPA administrators signing off [on rules], so you are going to have a halting of regulations,” he said. However, Pruitt will have the authority to withdraw from commitments the Obama administration had made, he noted.

If the Trump administration’s plan is for the federal EPA to step back and leave more decisions on regulations to states, an important priority will be resolving interstate issues. Orts pointed to interstate conflicts impacting projects, such as one to control pollution in the Chesapeake Bay in Pennsylvania. Flatt said that scenario could extend to other issues that call for national-level action, such as the Cross-State Air Pollution Rule and regulation of air pollution in national parks. “If you care about the environment, you have to start stepping up at the state level,” said Orts. “You will see states taking the lead where the EPA is not taking the lead.”

Rollbacks Fraught with Hurdles

Unwinding the EPA’s regulations isn’t going to be easy. “The EPA can ignore [regulations] or not enforce them, but they can’t just sign them away,” said Flatt. He pointed to two EPA actions that have already gone through the rule-making process: the Clean Power Plan and the Clean Water Rule, both of which are facing court challenges. “To get rid of those, they have to go through the rule-making process again unless the courts get rid of it for them,” said Flatt. “You do need some cooperation from staff to make that work.”

Orts said that while the executive branch’s role is to execute the laws Congress sets, there will be attempts not to enforce the regulations. That could trigger lawsuits from environmental groups and maybe coalitions of states, he added. It would be difficult to make the case to roll back regulations also because their cost-benefit analyses have shown that they are beneficial economically and are good for the environment. “You can’t just say, ‘I hate regulation and my fossil fuel buddies want me to withdraw it,’” he said. “The system is not going to work as easily that way.”

“President Trump has declared war on the environment.” –Eric Orts

Lead for Fossil Fuels over Renewables

Pruitt has rejected criticism against his views, saying that it is possible to be pro-energy and pro-environment at the same time, and create jobs as well. According to Flatt, that could be true only if renewable energy sources are developed, and it would not be true with policies favoring the fossil fuel industry. But Orts said he doesn’t expect to see a continuation of policy in favor of renewable energy. “The fossil fuel industry is now driving environmental policy at the national level,” he added.

Orts noted that reduced EPA regulation may have some limited benefits in the short term. “You do take off some costs; it may be easier to frack and less expensive and easier to [build] pipelines and you take off some of the limits on oil and maybe coal production,” he said. The resulting boom in energy production will lift stock prices of companies and give a boost to the economy, he added. “The problem is, [in the] long term, that will not work. There will be clean water and clean air outcomes which will have economic effects.” Flatt added that while some interest groups may be lured by short-term profits, the job of the government is to think about the long term. “This is not just about protecting the environment, but protecting our economy long term.”

Amid the Gloom, Some Positive Signs

The costs of generating solar and wind power have dropped, and individual states will have “a lot of say about the mix of fuels” used in electricity generation, for example, said Orts. “Just because the White House has been captured by a particular interest group, that doesn’t mean that other businesses can’t move forward and be competitive,” he added. “It also doesn’t mean that consumers can’t take a perspective on this and also have an influence.”

Flatt said that consumer action provides a ray of hope. “The economics of energy is moving in the direction of renewables, and consumer pressure has played a lot in this, too,” he said. For example, Google, Amazon, Facebook and Microsoft “are adamant are about setting up data centers that use a lot of energy using only renewable energy,” he added. “The world is moving in one direction, so, whatever the EPA does, hopefully the world can keep moving that way.”

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