Editorial

Judge finds EPA did not conduct job loss analysis of regulations

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The Environmental Protection Agency has filed an appeal after a judge ruled the agency had failed to adequately evaluate coal industry job losses.

After two-and-a-half years of litigation, coal companies and industry groups bringing the suit cheered the January 2017 ruling requiring the EPA to develop a report detailing the economic impact of its regulations. However, the agency’s filing alleges it could take more than two years to plan the court-mandated report.

We expect the January 2017 ruling to favourably impact the coal industry, but not in a measureable way. The order only requires the EPA to conduct job loss studies, not to stop regulations because of it. There is no reason to expect regulation rollbacks based on this action alone. Any reversal will come as a result of reviews already being planned by the administration. But, in the future, the steps the EPA is likely to take will be more predictable — allowing the industry to better plan its activities.

The impact on the EPA is another story

The requirement on the EPA is a result of a federal ruling that the agency had not adequately conducted job-loss reviews for the past 10 years. In his ruling, Judge Bailey of the District Court of the Northern District of West Virginia stated, “…Congress unmistakably intended to track and monitor the effects of the Clean Air Act and its implementing regulations on employment in order to improve the legislative and regulatory processes.” According to Judge Bailey, “EPA cannot redefine statutes to avoid complying with them. Nor can EPA render them superfluous or contrary to their original purpose by simply defining them to be.”

Scott Pruitt, the new EPA administrator, has declared he will return the agency to the “rule of law”, process and federalism.  Judge Bailey’s ruling should help begin that transition – at least on the law and process fronts. The EPA will be forced to follow the law, implementing the process mandated by Congress, and complete the work it missed.

This requirement has broader implications for the EPA rolling out new regulations and enforcing others. It will increase the cost and time taken to issue new regulations — impacting EPA budgets and personnel.

It could have a larger impact if other anticipated changes to the EPA also come into effect.  Myron Ebell, Trump’s transition team lead for the EPA, has said he expects the agency’s work force to halve. We expect a similar decline in the budget.

Pruitt desires more state control over environmental regulations. By forcing the EPA to follow its processes with a smaller work force and budgets, the agency may have to turn over more control to the states and refocus its efforts. This will drive a federalist approach to environmental protection.