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Long-Awaited Commerce Department Regulatory Reform Report Spotlights Priority Targets

October 13, 2017

In one of its first actions upon taking office, the Trump Administration issued a Presidential Memorandum on Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing on January 24, 2017 (see Clark Hill's previous e-alert on New Administration Orders Federal Agency Action to Reduce Regulatory Burden on Manufacturing). That Memorandum directed the Secretary of Commerce to seek comments from stakeholders on the impact of federal regulations and permitting requirements on domestic manufacturing and provide a report recommending a plan to streamline federal permitting processes and reduce regulatory burden. One hundred seventy-six comments were filed, and on October 6, 2017, the Department of Commerce published its report ("Commerce Report"). The report identifies 20 sets of regulations and permitting reforms as top priorities for immediate action. A few of these issues are already slated for change, but many more will be pushed out to other agencies, where they — along with regulations that failed to make the priority list — will have to compete for attention with regulatory reform candidates nominated through comment processes at each agency.

According to the Commerce Report, the issues identified by respondents broadly fall into two categories: (1) inadequately designed rules that are impractical, inflexible, ambiguous, duplicative, misguided, outdated, or reflect a lack of understanding of industry operations; and (2) cumbersome, inefficient, duplicative, or onerous permitting requirements. The report selected priority issues based on the volume of responses citing a particular issue, the number of in-depth responses that raised an issue, significance of the issue in terms of burden, issues discussed in detail and with accompanying solutions or recommendations, and issues that have been longstanding challenges. Using these criteria, 14 of the 20 high-priority issues — and 9 of the top 10 — were EPA rules. The table below summarizes the top 20 issues.

Waters of the United States rule, defining the scope of federal jurisdiction under the Clean Water Act ("CWA"), and CWA wetlands permits
National Emissions Standards for Hazardous Air Pollutants  ("NESHAP") and New Source Performance Standards ("NSPS")(Clean Air Act)
Clean Air Act New Source Review ("NSR") and Prevention of Significant Deterioration ("PSD") permits
CWA National Pollutant Discharge Elimination System ("NPDES") permits
Clean Air Act Greenhouse Gas Requirements
Clean Air Act National Ambient Air Quality Standards ("NAAQS")
Resource Conservation and Recovery Act ("RCRA") – inappropriate classification of certain waste streams as hazardous
Risk Management Programs – new rule postponed June 2017 to allow more time for reconsideration
Toxic Substances Control Act ("TSCA")
Occupational Safety and Health Administration ("OSHA") rule on tracking of workplace injuries and illnesses
Endangered Species Act ("ESA")
Conflict Minerals and Dodd-Frank CEO pay ratio disclosure provisions
National Environmental Policy Act ("NEPA")
EPA and others
Regional haze requirements
Crystalline silica standard
Department of Labor overtime rule
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA" or "Superfund")
Spill Prevention, Control, and Countermeasures rule
Equal Employment Opportunity Commission ("EEOC") reporting requirements
Food Safety Modernization Act

The report analyzes each of these priority issues in some detail, noting suggestions that have been put forward in some cases to address particular problems, and also indicating whether these approaches could be accomplished by guidance or regulatory changes or would require legislation. Another section of the report offers perspective on more general regulatory and permitting problems, including the need for systematized retrospective review of regulations, better collaboration between regulators and manufacturers, coordination among permitting authorities, standardization of enforcement across regions and sites, elimination of unnecessary recordkeeping requirements, improved understanding of actual manufacturing processes, and reduction of uncertainty. The report also emphasizes the importance of rule review by the Office of Information and Regulatory Affairs ("OIRA") at the Office of Management and Budget ("OMB"), particularly with regard to increasingly rigorous cost-benefit analysis, recognition of cumulative costs, avoidance of impediments to innovation, greater sensitivity to impacts on small business, increased public engagement before the issuance of significant rules, and assurance of adequate resources for review, implementation, and oversight. 
The report makes three major recommendations:

  • Each agency's Regulatory Reform Task Force ("RRTF") should develop an "Action Plan" to address all permitting and regulatory issues highlighted in the comments, with particular attention to the 20 priority issues identified in the report; these Action Plans should be delivered to the President by December 31, 2017. 
  • The Administration should establish an annual, open forum for regulators and industry stakeholders to evaluate progress in reducing regulatory burdens.
  • The Administration should rely on existing authority to extend the use of streamlined permitting procedures authorized by the FAST Act to any project that will result in a "significant, immediate economic benefit to the United States." The FAST Act approved a coordinated, streamlined environmental review process for large transportation projects, and the report's recommendations urge application of these approaches to complex, funded manufacturing projects that can qualify under the scope of the Act. The report further recommends the enactment of legislation to expand the reach of these procedures to a broader range of "covered projects."

The report, which took considerably longer than the Presidential Memorandum anticipated, covers a great deal of ground and includes extensive commentary. The near-term recommendations call for agencies to prepare action plans that presumably will be integrated with the work each agency's Regulatory Reform Task Force is already undertaking in response to Executive Orders 13771 and 13777 (see Clark Hill's previous e-alert on Regulatory Restructuring Initiatives Keep Coming), which prompted virtually all agencies to solicit from regulated entities their recommendations for rules that should be considered for rescission or modification in order to reduce burden and cost. Those proceedings resulted in thousands of comments. The sheer volume of the process inevitably raises questions as to how agencies can address the mass of requests for change, particularly as to EPA regulations. EPA has taken action on two of the highest profile rules — on Waters of the United States and the Clean Power Plan — but even as to the latter, EPA has stopped short of proposing a new rule, and both are certain to be embroiled in litigation. Regulated entities that are expecting action to occur on other issues of particular concern are likely to be disappointed and should be taking steps now to make the "case" for change, focusing on the criteria highlighted in the regulatory reform executive orders and implementing OMB guidance (see Clark Hill's previous e-alert on Regulatory Reform: A Closer Look at Opportunities and Challenges).

Clark Hill is experienced in working with interested parties to develop informed strategies and effective implementation in complex regulatory matters at all stages of the process, including appellate challenges. For more information, please contact Karen C. Bennett, Jane C. Luxton, Kenneth von Schaumburg, William J. Walsh, or another member of Clark Hill's Environment, Energy & Natural Resources or Administrative Law Practice Groups.

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