EPA’s New Regulatory Front: Regional Haze and the Takeover of State Programs

Introduction

Regulatory reform is a key component of the U.S. Chamber’s 2012 Jobs Agenda. Over the last several years, an avalanche of new economically significant regulations has had an adverse impact on almost every sector of the economy. The permitting system has become so calcified that the private sector is prevented from investing billions of dollars in new projects because it cannot obtain the environmental permits needed to begin construction. The Chamber’s Project No Project study found that in March 2010, 351 proposed new power plant projects were unable to secure permits. These projects alone, if constructed, would have resulted in a direct investment in our economy of $577 billion and would have created 1.9 million jobs per year during the seven years of construction. The Chamber focused on electric power generation projects for hard data from which to make the analysis; however, we could have chosen oil and gas projects, big box stores, cell towers, pipelines, or almost any project that is in need of construction since all these types of projects are subject to the same difficulties in obtaining permits.

To address this regulatory avalanche and to make the permitting process more efficient and faster, the Chamber supported reforming the rulemaking process and streamlining the permitting process.

While researching this broken regulatory process, the Chamber discovered that many of the new rulemakings and the unreasonable delays in permitting resulted from what appear to be numerous friendly lawsuits that result in Consent Decrees in which the EPA agrees to bind itself to issue new regulations on a specific timetable; i.e., “We can now tell Congress the court made us do it.” This process has been coined “Sue and Settle Rulemaking.”

Specifically, Sue and Settle Rulemaking occurs when an organization sues a federal agency to initiate a rulemaking, only to have the agency settle the lawsuit behind closed doors, with no notice to, or input from, the parties affected by the ensuing rulemaking. The only recourse for those affected is to participate in the agency’s public comment period after the settlement has been agreed to by the agency—in essence, after the damage has been done. Then, after the rule is final, impacted parties can challenge it. This is of little value, though, since the court typically gives great deference to the agency’s decision and upholds it unless the party challenging can establish that the agency’s action was arbitrary and capricious, a very difficult standard to meet. When questioned about the scope or rationale for the rulemaking by Congress, the agency simply explains that it is bound by a court order to move forward with the regulation. What is missing from the story is the fact that the agency voluntarily agreed to the court order.

Sue and Settle Rulemaking is responsible for many of EPA’s most controversial, economically significant regulations that have plagued the business community for the past few years: regulations on power plants, refineries, mining operations, cement plants, chemical manufacturers, and a host of other industries. Nevertheless, one of the most successful Sue and Settle strategies has been on an issue few in Washington or around the nation are paying attention to: regional haze requirements under the Clean Air Act.