Will President Obama's re-election usher in a period of aggressive regulation from U.S. EPA? During today's OnPoint, Roger Martella, former general counsel at EPA and now a partner at Sidley Austin, discusses EPA's regulatory agenda for the next four years. He also weighs in on the future of Administrator Lisa Jackson at the agency.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Roger Martella, former general counsel at the U.S. EPA, and now a partner at Sidley Austin. Roger, it's great to have you back on the show.
Roger Martella: Thanks for having me in.
Monica Trauzzi: Roger, as the dust settles from this week's elections, there will be many questions about how the Obama administration will use regulation to move its agenda forward. The anticipation, the expectation here is that regulatory, the regulatory piece will be unleashed. How far do you think EPA is actually going to go there?
Roger Martella: Well, I think there's going to be three things that are different in the next four years versus the last four years. One is the amount of time EPA is going to have to work with on regulations. You may think they had four years before, they have four years now, but if we actually look at their time of regulatory activity, it basically started in January of 2010 with the enactment of the greenhouse gas regulations. I would argue it came to a close nine months later, when the President told them to shut down the Ozone NAAQS Proposal. So there was only a limited window in which they really promulgated a lot of regulations. It's going to be different now. They can hit the ground running today or tomorrow, and they have basically four years to work with, so we're going to see that level of intensity over a much longer period of time. The second different is they're going to be more unhinged from politics. I think the mid-year elections was something of a setback. There was this constant tension back and forth between what EPA wanted to do and what the White House was going to allow them to do. My guess is that's going to be lifted for a while, and so they're going to be a little more unfettered than they were before from the politics of the situation. And the third is the agenda is going to expand. Where it's been largely climate change, utility, transportation focused, we're going to see more attention to water, to pesticides, to toxics, probably on hydraulic fracturing. So with four years to go, hitting the ground running today, I think we're going to see a broader, more intense, lengthier agenda.
Monica Trauzzi: What are the biggest risks, though, to moving forward too aggressively?
Roger Martella: Well, there's three risks that we've seen before. One is Congress. Congress hasn't fundamentally changed. I think they'll continue to try to be a thorn in the side a bit, but EPA seemed to have been managing that pretty well the past few years. The second is the economy. Despite the election being behind us, that's going to continue to be an issue, and people all over the country are going to be worried about the extent to which environmental regulations are impacting the economy, and whether EPA is doing enough to take that into account. The biggest risk in my mind are the courts. The courts have always been deferential to EPA as a general proposition, but we've seen in the last year that when EPA tends to get a bit greedy, like in the CSAPR decision, the courts are going to draw a line. And I think there is a risk, if EPA is coming and it's perceiving it has a new mandate because of the election, it can perhaps be more aggressive than it had in the past, it creates a temptation to be greedy, and I think the courts are going to monitor that very carefully.
Monica Trauzzi: What have you heard from your sources inside EPA about the future of Lisa Jackson and whether she'll stick around to see some of the regulations that she started fully implemented?
Roger Martella: Well, I think as someone who was there almost four years myself, I can only generalize. She hasn't called me this morning to announce her resignation or anything, but I think it's fair to say sitting in any one of those jobs for four years is a very difficult thing, as much as you might believe in the agency, as much as you might like to work with the people there. So it wouldn't be surprising to see transitions at the highest level of the agency, and whether it's Lisa Jackson or other folks, I think we can expect that. I do think the agency is looking forward to something of a fresh slate in terms of the regulatory agenda. They have a backlog. They have a pipeline of things that are sitting on the shelf they want to get done. But I think the four years are going to be fundamentally different in their mind than the last four years. And so while there's some things to finish, I think there's also opportunities to kind of create a new agenda and a new approach moving forward.
Monica Trauzzi: Are you expecting a discussion on a carbon tax, and how might that affect the future regulation coming out of EPA?
Roger Martella: I think absolutely there's no doubt that there's going to be a discussion on carbon tax. Even prior to Hurricane Sandy, there was already rumblings about a carbon tax, whether it was Obama or Romney. with Mayor Bloomberg calling out climate change as in his mind, at least, as the cause of Hurricane Sandy, and President Obama acknowledging climate change as a part of his agenda in the, in his acceptance speech, I think it's inevitable there's going to be discussion. I think both sides will be participating, and the question is going to be what are the Republicans going to ask for, such as preemption of EPA regulations, preemption perhaps of state regulations, versus what the other side's going to want.
Monica Trauzzi: And House Republicans have previously fought to derail air regulations. Come January, are you expecting more of the same, or will there be a shift in tone?
Roger Martella: I think we're going to see more of the same. I think unless truly there's going to be bipartisan concern over a specific set of regulations, we might see, again, being a thorn in EPA's side, but lacking the ability to really do much about it substantively. As we get closer to the mid-year elections, and if some Democrats start to worry about where they're sitting in their campaigns, things could change pretty quickly, but I think at this point EPA's going to have a little bit of some free rein to get some things out pretty quickly here.
Monica Trauzzi: What's the view coming from inside industry, your clients, on the reelection of the President and what it means for industry moving forward?
Roger Martella: Sure. Well, even for industry, there's always winners and losers, so it's a bit hard to generalize. But for those who have been concerned about the past four years, they're probably more concerned about the next four years. They look at things like the NAAQS proposals, the imposition of greenhouse gas standards that have shut down new coal-fired power plants, and some of the other rulemakings like that, and they're worried, is this going to be expanded to addressing emissions from manufacturing? Is hydraulic fracturing going to be regulated now, and shut down, interfere with the manufacturing renaissance? So ...
Monica Trauzzi: Aren't they going to get the certainty that they've been asking for all along?
Roger Martella: I think they have the certainty in knowing how the election's come out, but I think they're concerned about where things are going to go from here in terms of new areas that EPA is going to expand to and how that's going to impact, does this become the line drawing exercise that causes manufacturing in particular to move to other countries because of the increased burden on environmental regulations here?
Monica Trauzzi: What do you think the President wants his legacy to be on environmental regulation?
Roger Martella: I would like to think that he would like to find himself in the position of saying, "I was an aggressive protector of the environment. I had the best team in place," in his mind, to protect the environment. But if he would, if I had the chance to share one thing with him, my advice would be in the next four years to protect the environment, to do what you're doing, but perhaps be more accountable for some of the economic impacts than I think we've seen in the last four years, to be sensitive to the cost, to be accurate in stating the benefits, and being conscious of the economic consequences of environmental decisions. Not that you shouldn't be making environmentally protective decisions, but taking more into account the economic consequences of them.
Monica Trauzzi: And that of course is an ongoing debate here in Washington.
Roger Martella: Yes.
Monica Trauzzi: It will continue. We're going to end it right there. Thank you for coming on the show.
Roger Martella: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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