President Trump in a new executive order (EO) has directed federal agencies to rescind, modify, waive, or provide exemptions from regulatory requirements that may inhibit economic recovery.
The Executive Order on Regulatory Relief to Support Economic Recovery, issued May 19, is sweeping and extends beyond the administration’s previous efforts to scale down regulatory mandates—including the January 2017 directive to repeal two existing regulations for each new regulation. As industry experts noted, the new EO has the potential to transform the regulatory landscape across a wide array of industries, including for the power sector.
The measure responds to the U.S. COVID-related economic fallout, which has accelerated over the past eight weeks as the nation grapples with the coronavirus pandemic. “Many businesses and non-profits have been forced to close or lay off workers, and in the last 8 weeks, the Nation has seen more than 36 million new unemployment insurance claims,” Trump wrote in the EO. Despite measures to provide relief by Congress, and the White House’s April 16 issuance of guidelines for “Opening Up America Again,” regulatory relief is necessary to “remove barriers to the greatest engine of economic prosperity the world has ever known: the innovation, initiative, and drive of the American people,” he said.
But it also follows several administrative actions by federal regulators with oversight on U.S. power matters since early March, most which seek to provide flexibility and address the agencies’ and sector’s limited workforce. Among them are the Environmental Protection Agency’s (EPA’s) March 26-issued temporary policy that gives it more “enforcement discretion,” to address COVID-related disruptions; the Nuclear Regulatory Commission’s (NRC’s) March 28 guidance on work-hour control exemptions, and April 15 enforcement guidance memorandum for the disposition of violations during the public health emergency; and the Federal Energy Regulatory Commission’s (FERC’s) April 2 policy statement to efficiently process waivers and other requests made in response to the COVID emergency, and recent accounting guidance to ease administrative burdens.
Tuesday’s EO specifically calls on federal agencies to address the “economic emergency” with the “same vigor and resourcefulness with which the fight against COVID-19 itself has been waged.” Agencies should act by “rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery.” But these efforts, it underscores, should be “consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility.”
Broad Directive for Possibly Permanent Regulatory Reform
The EO covers all agencies and independent regulatory agencies, which means it applies to the Department of Energy, and FERC, as well as the EPA and NRC. While it doesn’t set a specific timeframe for regulatory review, it implies urgency, highlighting the state of emergency.
It essentially directs all agency heads to use their “emergency authorities” invoked in response to the COVID outbreak or “otherwise available to them” to support the economic response to the pandemic. Significantly, it also encourages agency heads to “promote economic recovery through non-regulatory actions.”
It means that agencies will now work to identify regulatory standards that “inhibit economic recovery,” and propose rules as needed to temporarily or permanently rescind, modify, waive, and exempt “persons or entities” from those requirements. Agency heads will also mull “appropriate temporary enforcement discretion or appropriate temporary extensions of time as provided for in enforceable agreements with respect to those requirements, for the purpose of promoting job creation and economic growth.”
All agencies are also directed to “accelerate procedures” that could give regulated entities, including power companies, “pre-enforcement rulings”—which is a formal written agency communication in response to concerns about compliance with legal requirements—in response to COVID or legislative or executive economic stimulus actions. At the same time, the EO gives agencies leeway to formulate enforcement discretion policies and choose whether to make them public, as permitted by law.
Those policies will allow agencies to “decline enforcement against persons or entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards, including those persons and entities acting in conformity with a pre-enforcement ruling,” it says.
The results of agency actions to temporarily rescind, suspend, modify, or waive during the public health emergency, or other “regulatory flexibilities” they implement must be reported to the director of the Office of Management and Budget, the assistant of the president for Domestic Policy, and the assistant to the president for Economic Policy. Those White House offices are expected to monitor compliance with the order and “may” also provide guidance to implement the order—including by setting deadlines for the reviews and reports.
Power Sector Regulators Still Reviewing the EO
According to Helgi Walker and Michael Bopp at Washington-based law firm Gibson Dunn, the EO goes beyond previous orders that placed constraints on agencies’ ability to propose new regulations because it imposes an “affirmative mandate on agencies to root out unnecessary or unduly cumbersome regulations that inhibit economic growth for both temporary and even permanent repeal, and to improve their enforcement and adjudication procedures.”
How aggressively agencies will deregulate in response to the new EO remains to be seen, however. “It is possible that agencies will look to regulated entities and other interested parties to assist them in identifying regulations that should be rescinded or modified and revising their procedures, perhaps by commencing rulemakings to seek comment on the issues. Regulated entities could also file petitions for rulemaking to initiate the process,” the firm said. Whether this can be done before the general election in November is questionable. For now, the law firm noted, industry might benefit from its provisions for “pre-enforcement rulings.”
Industry, meanwhile, is closely watching the EPA, which in response to the Trump administration’s deregulation agenda, last year completed 24 actions, most which were deregulatory. Of specific interest is the agency’s unprecedented temporary policy to relax enforcement of noncompliance with certain environmental rules in response to the COVID-19 pandemic, which provoked an impassioned response from industry experts, environmental groups, and from the agency itself when issued in March.
An EPA spokesperson told POWER on May 21 that the agency is continuing to move forward with the regulatory reform agenda, while continuing to address COVID-19. “EPA has already taken significant actions that address the EO’s direction to consider available enforcement discretion measures, and the policy we issued in March ensures that human health and the environment continue to be protected,” the spokesperson said. “We are reviewing the final EO and will work to assess which EPA regulations might be available to streamline in order to achieve the goals outlined in the EO.”
The NRC is also reviewing the EO, though it said no timeline for action was immediately available, a commission spokesperson told POWER.
POWER has also reached out to key regulatory stakeholders in the industry and will update this article as responses are received.