The Nickel Report

A year ago, the regulated community and its environmental lawyers recognized that the Trump administration would bring a new approach to the enforcement of federal environmental laws, but the nature of the specific changes remained nebulous. While it is still early to speculate on the long-term impacts to enforcement that may be implemented by the administration, events over the prior year have brought the new administration’s enforcement philosophy and priorities into greater focus. This post reviews some of the key personnel, policy, and budget announcements made during President Trump’s first year in office that will shape the future of federal environmental enforcement by the Environmental Protection Agency in the coming years.

Appointments

Confirming appointed staff to leadership positions at EPA, through the Senate, is a critical step to implementation of the administration’s environmental enforcement policy agenda. Enforcement policies and priorities are built at EPA, where nearly all of the relevant leadership positions were filled as of the end of 2017. Of highest relevance to establishing the administration’s enforcement priorities and policies, the Senate confirmed Susan Parker Bodine late in the year to head the Office of Enforcement and Compliance Assurance (OECA), EPA’s primary enforcement arm. Likewise, Matt Leopold was confirmed as EPA General Counsel in December. Both were confirmed only after a long delay following their respective nominations by President Trump. The heads of two of EPA’s program offices, which will play an important role in setting policy objectives that will influence enforcement priorities, were also filled toward the end of last year. David Ross was confirmed as Assistant Administrator of the Office of Water, and Bill Wehrum as the Assistant Administrator of the Office of Air and Radiation.

While EPA sets enforcement policy and develops cases for civil and criminal prosecution, the Justice Department’s Environment and Natural Resources Division (ENRD) is responsible for prosecuting environmental crimes and pursuing civil cases and penalties in the courts on behalf of EPA. The several hundred career trial attorneys and prosecutors who work at ENRD are overseen by a single Senate confirmed position—the ENRD Assistant Attorney General. Jeffrey Bossert Clark’s nomination to be the Assistant Attorney General was reported favorably out of the Committee on the Judiciary on January 18, 2018, and awaits action by the full Senate. In the meantime, Jeff Wood, a President Trump appointee who previously served as environmental counsel for then-Senator Jeff Sessions, is serving as Acting Assistant Attorney General for ENRD.

Select Policy Pronouncements

With Bodine having just recently assumed her role at OECA, it remains too early to see how she will lead OECA and set enforcement priorities. However, Patrick Traylor, a political appointee who is the Deputy Assistant Administrator in OECA and was the Acting Assistant Administrator before Bodine’s confirmation, shed some light on OECA’s priorities moving forward. For example, Traylor discussed in public speeches that a working group is reexamining the National Enforcement Initiatives (NEIs) adopted by the Obama administration in 2016. NEIs articulate crucial areas where EPA has observed significant noncompliance and believes that targeted enforcement efforts can lead to improvement in industry-wide compliance. NEIs are typically set every three years, although the new administration has the discretion to amend or retract the existing NEIs on its own schedule. As we noted last year, a change in the NEIs would represent a clear shift in the priorities previously articulated and provide insight on where the enforcement focus will be during this administration.

As we reported previously, in October 2017 EPA issued its draft strategic plan for 2018-2022. The draft plan, consistent with Administrator Pruitt’s public comments, emphasized cooperative federalism and an increased partnership with states in the future. In late January, this goal was furthered by Bodine’s issuance of the “Interim OECA Guidance on Enhancing Regional-State Planning and Communication on Compliance Assurance Work in Authorized States.” The guidance instructs EPA enforcement staff to “immediately begin the movement toward a more collaborative partnership between the EPA and Authorized States….” Overall, the guidance indicates a potential significant shift in how environmental enforcement is pursued, with EPA expecting that states will often take the front line. For example, for states implementing EPA authorized programs, “[w]ith respect to inspections and enforcement, the EPA will generally defer to [the States] as the primary day-to-day implementer … except in specific situations” enumerated in the guidance.

Bodine anticipates that the Interim Guidance will be further updated following the identification of additional principles and best practices for State and EPA collaboration in inspections and enforcements by a joint workgroup formed by EPA and the Environmental Council of the States in September 2017. Overall, we see an increasing trend towards the decentralization of environmental enforcement from EPA to the states. How this may impact particular industries and regions may depend heavily upon the priorities of each relevant state.

Although ENRD’s top political position remains vacant, one significant policy development for environmental enforcement last year was Attorney General Jeff Sessions’ announcement of the Justice Department’s policy prohibiting certain settlement payments to third parties. DOJ later issued a memorandum clarifying this policy’s applicability in environmental contexts, where third party payments will still be allowed under certain circumstances, including where the payments directly remedy environmental harm.

Budget

In addition to leadership’s priorities, the administration’s budget is a significant factor in evaluating how environmental enforcement may be funded and managed in the coming years. Congress has yet to pass a budget for the 2018 fiscal year, which began on October 1, 2017. In the meantime, the government has continued to operate under a series of continuing resolutions, which fund agencies at levels similar to the prior fiscal year budget. Failures to reach agreement on continuing resolutions led to two recent government shutdowns, but Congress is again working on a budget—or another continuing resolution—before the current continuing resolution expires in about six weeks.

President Trump issued a budget proposal last spring including significant cuts to EPA’s overall budget and specifically to enforcement funding. The full budget proposal closely mirrored the so-called budget “blueprint” released earlier in the year. Congress largely ignored the blueprint in its measure to fund the government through the 2017 fiscal year. Moreover, a package of spending bills passed by the House this fall included some cuts to environmental programs, but not to the degree outlined in the President’s budget proposal.

Treatment of EPA in the administration’s 2019 budget proposal, issued this month, is consistent with the proposal made last year. The more recent proposal calls for a 34 percent cut to EPA’s budget from the 2017 funding level. If enacted, EPA would receive $5.4 billion in funding, its lowest level since the early 1990s.

In the meantime, even with the passage of continuing resolutions by Congress, the ranks of EPA employees have declined in the past year as a result of staff departures, buy-outs, and hiring freezes. According to news reports, as of December 6, 2017, there were 14,188 full-time employees at EPA. This represents a moderate decrease from the 15,408 employees reported during fiscal year 2017.

With the budget in flux, it remains unclear how much funding will be made available for enforcement activities or staff. However, within OECA the number of criminal investigative agents has increased over the past year despite the numerous discussions about decreasing staff elsewhere in the agency. How many of those agents will serve as field agents to investigate violations and help bring enforcement actions, versus how many will be in support positions, remains to be seen. How EPA staff are allocated is particularly important because enforcement attorneys at both EPA and DOJ rely on the work done by OECA staff and criminal investigative agents to investigate and build cases and refer them for legal actions against potential violators. Staff funding, therefore, has direct implications on the number and types of enforcement cases that are pursued.

The administration’s 2019 budget proposal emphasizes that EPA will “continue[] to concentrate … enforcement objectives on programs that are not delegated to State, local, and tribal partners [and] … will work with partners to maintain a consistent and effective enforcement program to avoid duplication and give the regulated community an even playing field for conducting business.” These objectives are consistent with EPA’s draft strategic plan and the 2019 Interim Guidance emphasizing cooperative federalism discussed above.

Ultimately, although the details of environmental enforcement in the coming years of this administration are unclear, particularly with key personnel having so recently assumed their positions and the NEIs being somewhat up in the air, and without annual enforcement results available yet, we do know that enforcement is continuing. Enforcement for the most serious violations, such as those directly and visibly threatening or harming public health and the environment, are likely to continue. Similarly, cases against large facilities for violations of environmental laws are moving forward.

The 2017 annual enforcement results were released last week. For our analysis of those statistics, read our take in this article.