U.S. Chamber Response to Request for Information on Regulations for Reform | U.S. Chamber of Commerce

U.S. Chamber Response to Request for Information on Regulations for Reform

Thursday, May 25, 2017 - 4:30pm

 

The Honorable Raul R. Labrador
Chairman
Subcommittee on Oversight and Investigations
Committee on Natural Resources
U.S. House of Representatives
Washington, D.C. 20515

The Honorable Mike Johnson
Vice-Chairman
Subcommittee on Oversight and Investigations
Committee on Natural Resources
U.S. House of Representatives 
Washington, D.C. 20515 

Dear Chairman Labrador and Vice-Chairman Johnson:

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state
and local chambers and industry associations. The Chamber is dedicated to promoting, protecting, and defending America’s free enterprise system.

In response to your May 9, 2017, request to identify regulations or processes within the jurisdiction of the House of Representatives Committee on Natural Resources that have negatively impacted job creation or public health and safety, and for suggestions to improve or
reform such regulations, including commenting on the federal permitting processes, high regulatory compliance costs or lack of meaningful engagement with federal regulatory entities, we submit the following comments.

I. Permit Streamlining

In your request letter you specifically seek information on the federal permitting process.
On that topic it should be noted that for the last seven years the Chamber has focused, organized,
and led a national coalition to eliminate the barriers to an efficient federal permitting process.
Our voices were heard by Congress, including the House Committee on Natural Resources
which led the passage of Fixing America’s Surface Transportation Act, Pub. L. 114-94, title XLI,
(“FAST – 41”), which provides for a transparent, coordinated, and time-limited review of all
projects in the nation that exceed $200 million. It also provides a substantially reduced statute of
limitations on lawsuits to stop the projects. FAST – 41 is currently being implemented with
approximately 32 projects on its dashboard.

A. Introduction

In 2009, in the middle of the Great Recession, the Chamber initiated a study to answer
similar questions concerning barriers to permitting. In 2010 it unveiled Project No Project, an
initiative that assessed the broad range of energy projects that were being stalled, stopped, or
outright killed nationwide due to “Not In My Back Yard” (NIMBY) activism, a broken
permitting process, and a system that allowed limitless challenges by opponents of development.
Results of the assessment are compiled onto the Project No Project website
(http://www.projectnoproject.com.) This was the first-ever attempt to catalogue a wide array of
energy projects being challenged nationwide.

Through Project No Project, the Chamber found consistent and usable information for
351 distinct projects, including 22 nuclear projects, 21 transmission projects, 38 gas and platform
projects, 111 coal projects, and 140 renewable energy projects. We found that challenges to
construction permits were at every level of government. Local impediments included zoning
restrictions as well as traffic congestion and nuisance actions. The state level challenges were to
conditions in the permit and concern over the adequacy of environmental reviews. At the federal
level the challengers delayed the approval of permits by:

1. Using the citizen suit provisions in federal environmental statutes and related
provisions for the award of attorney fees combined with claims of inadequate
environmental impact statements under the National Environmental Protection
Act (“NEPA”);

2. Exploiting the absence of time limits on NEPA allowed challengers to
continually raise questions on the sufficiency of the reviews; and

3. Effectively manipulating the fact that there was little coordination between
state and federal efforts.

B. Citizen Suits Impact on Permits

Burdens and significant delays in securing permits occur well before the application for a
permit is filed. For decades environmental groups have used citizen suit provisions in twenty
environmental statutes to challenge all types of projects.(1) These advocacy groups stop many
types of activities by asserting endangered species are on or near the property; that activity is in a
Clean Air Act non-attainment zone; or that an environmental impact review is insufficient or permit conditions are not adequate for the project. These lawsuits can take years to resolve, and
the delay not only impacts the ability to apply for a permit, but long delays can also impact
financing of the project.


(1) - See 15 U.S.C. § 2619 (Toxic Substances Control Act); 16 U.S.C. § 544m(b) (National Forests, Columbia River
Gorge National Scenic Area); 16 U.S.C. § 1540(g) (Endangered Species Act); 30 U.S.C. § 1270 (Surface Mining
Control and Reclamation Act); 30 U.S.C. § 1427 (Deep Seabed Hard Mineral Resources Act); 33 U.S.C. § 1365
(Clean Water Act); 33 U.S.C. § 1415(g) (Marine Protection, Research and Sanctuary Act); 33 U.S.C. § 1515
(Deepwater Port Act); 33 U.S.C. § 1910 (Act to Prevent Pollution form Ships); 42 U.S.C. § 300j-8 (Safe Drinking
Water Act); 42 U.S.C. § 4911 (Noise Control Act); 42 U.S.C. § 6305 (Energy Conservation Program for Consumer
Products); 42 U.S.C. § 6972 (Resource Conservation and Recovery Act); 42 U.S.C. § 7604 (Clean Air Act); 42
U.S.C. § 8435 (Powerplant and Industrial Fuel Use Act); 42 U.S.C. § 9124 (Ocean Thermal Energy Conservation
Act); 42 U.S.C. § 9659 (Superfund Act); 42 U.S.C. § 11046 (Emergency Planning and Community Right-to-Know
Act); 43 U.S.C. § 1349(a) (Outer Continental Shelf Lands Act); 49 U.S.C. § 60121 (Natural Gas Pipeline Safety
Act).

Many of these concerns were addressed by Congress in December 2015 with FAST – 41
through the establishment of strict time requirements, coordination between agencies and states,
and the reduction of the statute of limitations from 6 years to 2.

The permit streamlining provisions of FAST-41 will bring greater efficiency,
transparency, and accountability to the federal permitting review process. Its coverage is very
broad, including infrastructure, energy, aviation, broadband, and manufacturing
projects. Bringing better coordination and predictability to the permitting process should
translate into job creation, economic growth, and new development. Some of the key provisions
of FAST-41 include:

 Establishing a permitting timetable, including intermediate and final completion dates for
covered projects, i.e. those over $200 million or subject to federal permitting review
requirements so they will benefit from enhanced coordination;

 Designation of a Lead Agency to coordinate responsibilities among multiple agencies
involved in project reviews to ensure that “the trains run on time”;

 Providing for concurrent reviews by agencies, rather than sequential reviews;

 Allowing state-level environmental reviews to be used where the state has done a
competent job, thereby avoiding needless duplication of state work by federal reviewers;

 Requiring that agencies involve themselves in the process early and comment early,
avoiding eleventh-hour objections that can restart the entire review timetable;

 Establishing a reasonable process for determining the scope of project alternatives, so
that the environmental review does not devolve into an endless quest to evaluate
infeasible alternatives;

 Creating a searchable, online “dashboard” to track the status of projects during the
environmental review and permitting process;

 Reducing the statute of limitations to challenge a project review from six years to two
years; and

 Requiring courts, when addressing requests for injunctions to stop covered projects, to
consider the potential negative impacts on job creation if the injunction is granted.

While there have been permit streamlining provisions for specific activities, this is the
first time there has been any type of comprehensive structure that coordinates the environmental
review process for large infrastructure projects throughout the nation, both public and private.

OMB, CEQ, and the other agencies involved have done a significant amount of quality
work in the past fifteen months getting FAST-41 up and running.

Recommended Action: Currently the position of Executive Director of the Federal
Permitting Improvement Council is vacant; it should be filled as soon as possible so the Council
can continue its work at full speed.

Another concern that should be addressed is that the permit streamlining provisions of
FAST – 41 sunset in seven years. This time restriction was inserted in negotiations with the
Senate based on a request by the House Natural Resources Committee. It should be eliminated.

II. Sue and Settle Consent Decrees

Over the past decade, the business community has expressed growing concern about
interest groups using lawsuits against federal agencies and subsequent settlements approved by a
judge as a “short cut” technique to influence agencies’ regulatory agendas. These “sue and
settle” agreements occur when an agency chooses not to defend lawsuits brought by activist
groups, and the agency agrees to legally-binding, court-approved settlements negotiated behind
closed doors—with no participation by other affected parties or the public.

Litigation against the Department of Interior (“DOI”) under the Endangered Species Act
represents a significant barrier to reducing regulatory burdens. During the first term of the
Obama administration, environmental groups brought suit against DOI and DOI settled with the
environmental groups by agreeing to undertake the demands in their complaints; i.e. initiate a
rulemaking or consider specific species endangered or threatened. In one instance DOI agreed to
consider the status of 720 species. DOI entered 19 such agreements (see attached list of
agreements; this list, however, is only a partial list of such agreements).

While it less likely that the Trump administration will entertain sue and settle agreements
with environmental groups, our most recent data for the years 2014- 2015 find there were 209
Notices of Intent to sue DOI and 34 new complaints filed. The data for 2016 will only increase
totals.(2) The Chamber has filed a Freedom of Information Act (“FOIA”) request seeking
information on cases and settlements involving DOI with environmentalist groups.

Beginning in 2017 lawsuits filed by environmental groups may be the primary tool for
imposing regulatory barriers on projects. For example, one environmental group alone has already filed sixteen lawsuits against the current administration, including the Department of
Interior over issues such as wildlife in Idaho and pipelines. (3)

(2) - December 3, 2016, and January 23, 2017, Freedom of Information Act responses from Fish and Wildlife Service to
the U.S. Chamber of Commerce requesting information on notices of intent to sue and complaints filed under the
Endangered Species Act.

(3) - Trump Lawsuit Tracker, Center for Biological Diversity (last visited May 12, 2017 10:35 a.m.) available at
http://www.biologicaldiversity.org/campaigns/trump_lawsuits/index.html.

Agreeing to these sue and settle agreements imposes huge burdens on the agency. To
illustrate, the director of FWS testified that, in FY 2011, FWS was allocated $20.9 million for
endangered species listing and critical habitat designation; the agency spent more than 75% of
this allocation ($15.8 million) taking the substantive actions required by court orders or
settlement agreements resulting from litigation. In other words, sue and settle cases and other
lawsuits are effectively driving the regulatory agenda of the Endangered Species Act program at
FWS.

Recommended Action: DOI should defend against these lawsuits whenever the facts
justify.

Congress should also pass the Sunshine for Regulatory Decrees and Settlements Act
(H.R. 469, Sunshine for Regulations and Regulatory Decrees and Settlements Act of 2017 and S.
119, Sunshine for Regulatory Decrees and Settlements Act of 2017) to provide much needed
transparency and accountability to federal agency settlements.

III. Endangered Species Act

On December 27, 2016, the Department of Interior issued the final Endangered Species
Act Compensatory Mitigation Policy (81 Fed. Reg. 95316), which would require a shift from
“project-by-project (impact on local area of project) to landscape scale (impact on surrounding
areas) approaches to planning and implementing compensatory mitigation.” The Chamber
opposed this policy on several grounds, including U.S. Fish & Wildlife Service’s lack of
statutory authority and legal authority under the ESA to require and/or implement many of the
policy provisions. On March 29, 2017, Secretary Zinke ordered DOI to reexamine its mitigation
policies and practices. This ESA mitigation policy will be part of that reexamination.

On September 27, 2016, the Fish and Wildlife Service issued final regulations governing
petitions for endangered and threatened wildlife and plants under the ESA (81 Fed. Reg. 66461).
While some of these regulations bring needed reforms to the ESA petition process, there are still
concerns that the petition process could be misused and abused by outside groups. For example,
the proposed regulation focused only on the specific species. The final regulation changed the
focus examining all species of its classification.

On February 11, 2016, the FWS issued final regulations expanding the definitions of
“critical habitat” and “destruction or adverse modification” of critical habitat under the ESA.
The final rules, which became effective on March 14, 2016, expand critical habitat designations
to include areas in which a species no longer lives and areas in which a listed species may live in
the future. Eighteen states filed a lawsuit in November 2016 challenging these critical habitat
regulations.
 

Recommended Action: The FWS should avoid entering into settlement agreements on
ESA species petitions. FWS should ensure that all petitions comply with its April 21, 2016,
regulation concerning the information needed in the petition, while maintaining complete
transparency, allowing for meaningful input from all stakeholders, including states and business
and industry, and requiring sound science and data. Additionally, the new administration should
proceed with its reexamination of the ESA mitigation policy, as ordered by Secretary Zinke.
Finally, the new administration should take steps to withdraw the February 11, 2016, regulations
expanding the definition of “critical habitat.”

IV. Review of Mitigation Policies

On March 29, 2017, Secretary Zinke issued Secretarial Order 3349 regarding “American
Energy Independence.” In implementing President Trump’s “Promoting Energy Independence
and Economic Growth” executive order, Secretary Zinke calls for a reexamination of DOI
mitigation policies and practices, as well as an identification of regulations, guidance, and other
actions that burden or hamper development or utilization of domestic energy and natural
resources.

Under SO 3349, DOI offices that are reconsidering Department Actions from the
Mitigation Policy and Climate Change Policy reviews must submit draft or revised Department
Actions within 90 days of the order. Additionally, within 35 days of the order, the Deputy
Secretary must provide the Secretary with a plan to complete the review of all agency actions
that potentially burden energy development.

The order also directs the Bureau of Land Management (BLM) to rescind the final rule
addressing oil and gas fracking on federal lands and to review the final rule regarding methane
venting and flaring.

Recommended Action: The Chamber supports the Secretary’s order calling for a review
of all DOI mitigation policies, as well as the directives to rescind the final BLM rule on oil and
gas fracking on federal lands and to review the final BLM venting and flaring methane rule.

V. BLM Venting and Flaring Rule

Finalized by the Obama administration 10 days after the 2016 election, the Bureau of
Land Management’s venting and flaring regulation threatens to stifle energy production on
federal lands by imposing unnecessary controls and restrictions on oil and natural gas
production. Ostensibly designed to reduce methane waste from drilling activities, this rule is
fraught with numerous problems that are expected to make energy development uneconomical in
many areas. It exceeds BLM’s statutory authority, is duplicative because energy production
activities included in the rule are already regulated through state and federal rules, and fails to
recognize that the sector has successfully reduced methane emissions voluntarily, even as energy
production has grown substantially. Moreover, while the rule aims to rule aims to generate
increased royalties through increased capture of methane waste, its overly stringent approach is
likely to simply chase energy developers away, ironically reducing royalty revenues in the
process. Adding to this irony is the fact that a history of BLM delays processing pipeline permits has left many companies without viable transport options, thus forcing them to increase venting
and flaring.

Recommended Action: The Chamber commends the Committee for its swift action in
support of a Congressional Review Act legislative repeal of this regulation earlier this year, and
strongly supports the Department of Interior’s recently announced plan to undertake a
comprehensive review of this regulation and repeal or modify it as appropriate. Accordingly, we
support continued congressional oversight of and support for these executive branch efforts to
ensure relief from the venting and flaring rule’s overly burdensome requirements.

VI. Antiquities Act

Throughout its tenure, the Obama administration exercised its authority granted by the
Antiquities Act of 1906 34 times to designate or expand National Monuments. Unlike the
majority of previous designations, a significant number of the Obama administration’s National
Monument designations circumvented and/or ignored the input of stakeholders, local residents,
and tribal, state, and local officials. In taking these actions, the Obama administration made
millions of acres unavailable for ongoing commercial activities, including agricultural and
energy development.

On April 26, 2017, President Trump issued an Executive Order on the Review of
Designations under the Antiquities Act. Among other things, this order directs Secretary Zinke
to review all designations or expansions of substantial size to determine whether proper outreach
and consultation was made with state, tribal, and local officials, as well as stakeholders and the
public consistent with the original objectives of the Antiquities Act.

Recommended Action: The Chamber supports Interior’s review of monument
designation/expansion in accordance with the Executive Order. It also appreciates the
Committee’s well-established oversight effort of U.S. offshore energy policies and regulations
and encourage it to build upon the record already established to ascertain whether previous
monument designations were deficient and lacking in adequate and proper consultation with
state, tribal, and local officials or stakeholders and the public.

VII. Offshore Energy Development

The Outer Continental Shelf (OCS) continues to provide a cornerstone of U.S. energy
production. However, at the conclusion of the Obama administration, some 94% of all federal
OCS acreage was restricted from energy development. Not only was the recently finalized OCS
Offshore Leasing Program covering 2017-2022 woefully inadequate for securing America’s
energy future, but several other regulatory actions also jeopardize energy security.

On April 8, 2017, President Trump Issued an Executive Order on Implementing an
America-First Offshore Energy Strategy. Among other things, the EO directs Secretary Zinke to
revisit the currently operating OCS Offshore Leasing Program with an eye towards adding new
lease sales in the Atlantic, Arctic, and Gulf of Mexico, while not disrupting already-scheduled
lease sales.

Additionally, the Executive Order directs the Secretary to reconsider the Financial
Assurance Regulatory Review, the Well Control Rule, the Offshore Air Rule, the Arctic Drilling
Rule, and barriers preventing geologic and geophysical seismic testing. These reviews are under
way, and the business community eagerly anticipates positive changes this new direction in
offshore energy production represents for the economy and energy security.

In July of 2010, President Obama issued an Executive Order establishing the National
Ocean Policy. In spite of lacking congressional authorization for this regulatory encroachment,
several agencies have taken steps to implement the order in subsequent years. This policy should
be rescinded as it is neither warranted nor authorized and has the potential to cause significant
harm to the economy and energy security.

Recommended Action: The Chamber strongly supports implementation of the Executive
Order at the Departments of Interior and Commerce. It also commends the Committee for
establishing an oversight record that demonstrates the inadequacies of previous offshore energy
policy, which the Executive Order will remedy. We encourage the Committee to report
legislation that expands revenue sharing to all states adjacent to federal energy production. We
also encourage the Committee to allow current moratoria to expire, including for the Eastern
Gulf of Mexico planning area. Finally, we encourage the Committee to report legislation that
would remove the unnecessary burdens created by President Obama’s Executive Order
establishing the National Ocean Policy.

VIII. ONRR Valuation Rule

In July 2016, DOI’s Office of Natural Resources Revenue (ONRR) imposed complex
new requirements for calculating royalties on energy resources extracted from federal lands.
Known as the Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Rule, the
new requirements introduced significant uncertainty into royalty calculation processes. Perhaps
most importantly, the rulemaking sets new limits on deductions and authorizes ONRR to
challenge and unilaterally revaluate royalties in disputed instances. This legally questionable
construct presents a significant compliance burden on all energy producers, particularly small
businesses, and threatens to render many oil, gas, and coal energy projects uneconomical.

Recommended Action: The Chamber supports the Department of Interior’s recently
announced review of this regulation, as well as associated congressional oversight, to ensure it is
appropriately modified to allow restoration of a royalty calculation system that is clear, simple,
and fair.

IX. Navajo Generating Station

One of the largest coal plants in the country, Arizona’s Navajo Generating Station (NGS)
faces possible closure due to a combination of market and regulatory forces. The plant is unique
because the Department of Interior is a 26% owner as a result of an historic agreement to provide
water to Arizona’s population centers, and also because local tribal economies are
overwhelmingly dependent on the plant. While the challenges facing NGS are complex and
numerous, burdensome requirements such as EPA “regional haze” regulations have imposed several hundred million dollars of highly questionable compliance costs and contributed to a
recent decision by project owners to slate the plant for retirement. However, efforts are underway
to explore remedies that could result in reduced regulatory burdens and allow the plant—and the
native populations highly dependent upon it—to remain open.

Recommended Action: Given the plant’s unique circumstances and the federal
government’s partial ownership position, the Chamber encourages the Committee to support
Department of Interior efforts to explore possible ways to extend the NGS lease and allow the
plant and mine to remain in operation.

Thank you for the opportunity to provide information to your Subcommittee.

Sincerely,

Neil L. Bradley