12.17.18

Senators: Pruitt Conflicts, Industry Capture of Trump Administration Renders EPA’s Proposed Methane Rule Invalid

Washington, DC – Former Environmental Protection Agency (EPA) Administrator Scott Pruitt lacked a sufficiently open mind to legally preside over changes to vital protections against the powerful greenhouse gas methane; his involvement in the proposal to tear down those protections violated federal ethics rules; and that proposal amounts to an egregious hand-over of an agency’s rulemaking authority to an industry the same agency regulates.

That is what Senators Sheldon Whitehouse (D-RI), Chris Van Hollen (D-MD), Jeff Merkley (D-OR), Cory Booker (D-NJ), Kirsten Gillibrand (D-NY), and Edward J. Markey (D-MA) write in an official comment submitted to the EPA today on a Trump proposal to water down methane pollution requirements for oil and gas companies.  The proposed rule would result in substantially higher emissions of the potent heat-trapping gas from oil and gas facilities.

The senators also document efforts by officials at the Office of Information and Regulatory Affairs (OIRA), apparently at the behest of their political leadership, to weaken further the proposed standard.  OIRA repeatedly overruled the advice of EPA technical experts.  OIRA Administrator Neomi Rao has a long history of working at institutions funded by the Koch brothers, whose company would directly benefit from the proposed rule.

The senators write, “The extreme and well-documented regulatory capture of the Trump EPA is evidence that it has effectively delegated its authority to the industries that have captured it, in particular, the fossil fuel industry.  There is no substantive difference between an agency explicitly telling a company or industry to write a rule for it, and an agency telling a company or industry that it will write whatever rule the company or industry wants.  Like Scott Pruitt’s Devon Energy letter, the substance is all industry, whatever the letterhead, and the public interest is ignored.”

Full text of the senators’ comment is below.  A PDF copy is available here.

While Pruitt resigned in disgrace in July in the wake of ethical violations and scandals related to his conduct as EPA administrator, the senators’ comment notes a lesser-noticed scandal – the major conflicts of interest flowing from his years cultivating relationships with the fossil fuel industry.  Pruitt accepted an outsized portion of his political funding from the fossil fuel industry.

Supplied with industry funding, Pruitt used his post as Oklahoma attorney general and later EPA administrator to aggressively pursue the industry’s interests.  Attorney General Pruitt sued the EPA 14 times, including a challenge to a 2016 methane rule the proposed rule seeks to weaken.  In one instance, Pruitt took a letter criticizing EPA’s work on methane emissions composed by one of his biggest donors, Devon Energy, and cut and pasted it onto official Oklahoma attorney general stationary with only a few word changes and submitted it to the EPA over his own signature.

The problems with the proposed rule extend far beyond Pruitt or even EPA.  Numerous other EPA officials are also closely tied to the fossil fuel industry.  Current Acting EPA Administrator Andrew Wheeler and Assistant Administrator for Air and Radiation William Wehrum, among others, have represented companies and trade groups with business before the EPA, many of which stand to benefit from changes like the methane rule rollback.

Improper contacts with industry, disregarding technical expertise, as well as the unexplained and unjustified regulatory U-turn, the proposed rule would represent are warning signs that demonstrate that the proposed rule is arbitrary and capricious and as such, is illegal.

Attention: Docket ID No. EPA-HQ-OAR-2017-0483

Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Reconsideration

Re: Comments on the Environmental Protection Agency’s proposed weakening of rules governing methane emissions from oil and natural gas facilities

I.       Introduction

On April 27, 2018, the Environmental Protection Agency (EPA), submitted a proposal to weaken methane emission regulations to the Office of Information and Regulatory Affairs (OIRA) for review.[1]  On September 9, 2018, OIRA completed its review of this proposed rule.[2]  On September 11, 2018, EPA announced the proposed rule.[3]  The proposed rule would water down requirements in 2016 new source performance standards (NSPS)[4] mandating oil and gas companies to monitor their facilities for fugitive methane emissions and to repair any facilities where emissions are detected.

In this comment, we lay out four arguments why the proposed rule should be withdrawn: (1) former EPA Administrator Scott Pruitt, under whom the proposal was developed, possessed an inalterably closed mind about regulations limiting methane emissions and climate change; (2) Pruitt’s involvement in the rulemaking violates federal regulations governing impartiality; (3) it is arbitrary and capricious; and (4) it is an effective delegation of agency rulemaking authority to a regulated industry.

First, the proposed rule is impermissibly tainted by Pruitt’s involvement because he possessed an inalterably closed mind with respect to limiting methane emissions from oil and gas facilities in particular, and climate change in general.  The evidence for Pruitt’s inalterably closed mind on these issues is overwhelming.  It falls into four categories: (1) his deep and wide financial ties to the fossil fuel industry, which has mounted an aggressive campaign opposing rules limiting methane emissions; (2) his history as Oklahoma Attorney General of suing EPA to block the 2016 NSPS for oil and gas facilities that the proposed rule seeks to weaken; (3) his numerous efforts as EPA Administrator to limit or delay requirements to reduce methane emissions from oil and gas facilities; and (4) his numerous statements casting doubt on methane regulations and climate science. 

Second, given that the proposed rule seeks to accomplish essentially the same thing as the suit to block the 2016 NSPS for oil and gas facilities in which Pruitt was himself a petitioner, part 2635 of the Code of Federal Regulations, subpart E governing impartiality in performing official duties should apply.[5]  Pruitt’s involvement as Oklahoma Attorney General in litigation opposing the 2016 NSPS for oil and gas facilities means that he could not have been impartial in rulemaking seeking to weaken these standards and therefore should have recused himself. 

Pruitt’s tawdry tenure leading EPA ended when he resigned on July 6, 2018, more than two months after the proposed rule was received by the Office of Information and Regulatory Affairs (OIRA) for review.  The proposed rule was therefore necessarily developed under Pruitt’s tenure, so the fact that he was no longer Administrator when EPA announced it does not in any way lessen the taint that stems from his involvement.

Third, the proposed rule is arbitrary and capricious because both EPA and OIRA failed to engage in reasoned decision making.  The proposed rule does not provide a sufficiently detailed justification explaining why it decided to reverse course and substantially weaken the 2016 NSPS for oil and gas facilities, nor does it sufficiently account for the cost of the increased methane emissions it acknowledges will result from its implementation.  Lastly, it appears that OIRA staff overruled EPA career staff’s technical expertise resulting in an even weaker rule that would result in substantially higher methane emissions. 

Finally, we argue that the proposed rule is effectively an adoption of industry proposals to weaken the 2016 NSPS for oil and gas facilities.  As such, the proposed rule qualifies as an effective delegation of EPA rulemaking authority to the fossil fuel industry that has captured it.

II.     Facts

A. Pruitt Has Raised Significant Political Money from the Industry with a Direct Stake in the Outcome of this Rulemaking

Pruitt’s political career has been underwritten by the energy industry, the industry most affected by the proposed rule.  In his four campaigns for elected office in 2002, 2006, 2010, and 2014, Pruitt collected more than $350,000 from corporations and individuals in the energy and natural resources sector, or 13 percent of total campaign contributions he received (and 15 percent of campaign contributions that can be tied to a particular industrial or other sector).[6]  By way of comparison, campaign contributions made by the energy and natural resources industry averaged just three percent of total contributions made to state attorney general candidates across the country since 2000.[7]

In addition to contributions directly tied to the energy industry, Pruitt also received considerable financial support from industries closely linked to the energy industry: “legal services and lobbying” that advocate for the energy industry and “general business” and “construction” that service the energy sector.  Pruitt’s campaigns also received donations from political action committees (PACs) and issue advocacy groups that were at least partially funded by the energy industry.[8] 

Including all of these categories, the energy sector and industries and groups associated with it gave over $1,250,000 to Pruitt’s campaigns, 44 percent of the total and 55 percent of total donations that can be tied to a particular industrial or other sector.

Tellingly, contributions from the energy industry to Pruitt’s 2014 re-election campaign actually increased by 13 percent compared to 2010 contributions, despite the fact that in 2014, Pruitt ran unopposed in both the primary and general elections.  Contributions from almost every other sector fell in 2014, as might normally be expected when a candidate is running without opposition. 

Industry support for Pruitt went beyond direct contributions to his campaigns.[9]  In Pruitt’s 2010 campaign for attorney general, an outside group by the name of the Republican State Leadership Committee (RSLC) spent $150,000 on his behalf.[10]  The U.S. Chamber of Commerce, long a deep-pocketed foe of action on climate change[11], was RSLC’s largest donor, donating almost $4 million to the group. Devon Energy, an Oklahoma-based oil and gas company, contributed $350,000 and was a top ten donor to the RSLC in 2010.[12]

Pruitt wasn’t only on the receiving end of spending by outside groups.  He and his supporters created PACs to expand his influence and provide other avenues for him to direct fossil fuel and industry money to like-minded politicians.  Run by Pruitt, the Oklahoma Strong Leadership PAC raised roughly $400,000 during the 2016 election cycle, almost 20 percent of which came from energy interests.[13]  Liberty 2.0, a super PAC created by Pruitt’s supporters,[14] raised approximately $450,000 during the 2016 election cycle, over a third of which came from energy interests.[15]  Of its nine largest donors, four are in the energy industry including the second largest donor, Murray Energy, which gave $50,000.[16]

During this period, Pruitt also served as a chairman of the Republican Attorney Generals Association (RAGA) and was on its executive committee.  Under Pruitt’s leadership, RAGA raised an enormous amount of money for its 527 outside spending organization from the U.S. Chamber of Commerce and the energy industry.  During the 2014 and 2016 election cycles, the Chamber was by far the largest donor to RAGA’s 527, giving the organization over $4 million.  Koch Industries (almost $500,000), the American Coalition for Clean Coal Electricity (more than $300,000), Murray Energy ($250,000), the American Fuel and Petrochemical Manufacturers (almost $200,000), the American Petroleum Institute (API), and Devon Energy ($125,000) were all among the largest donors to RAGA’s 527 during this period.[17]

Pruitt’s deep ties to the energy industry did not simply dissolve once he left Oklahoma to run the EPA.  During his nomination process, the America Rising super PAC, which has received large donations from fossil fuel interests,[18] funded a campaign in support of his confirmation.[19]  This campaign included ads targeting Democratic senators and a ConfirmPruitt.com website.[20]

B. Pruitt’s Official Actions as Oklahoma Attorney General Were in Lock-Step with his Political Donors’ Interests

As Oklahoma Attorney General and EPA Administrator, Pruitt used his official position to execute the agenda of his industry political patrons.  This was true with respect to a host of environmental issues, including for the 2016 NSPS for oil and gas facilities.  Given this history, there is no doubt that the proposed rule reflects industry’s wishes. 

As Attorney General of Oklahoma, Scott Pruitt sued the EPA 14 times.[21]  In each case, he supported an industry attack on an EPA rulemaking.  In at least one case, it would appear that Pruitt’s decision to sue was directly influenced by the energy industry.  Documents uncovered from public records requests to the Oklahoma Attorney General’s Office show that the American Fuel and Petrochemical Manufacturers, a major donor to Pruitt, gave him template language for a petition and urged him to sue the federal government over the Renewable Fuel Standard.  The trade association noted that “this argument is more credible coming from a state.”[22]  Pruitt followed the group’s suggestion and sued.[23]

With respect the 2016 NSPS for oil and gas facilities, Pruitt joined 13 other states in suing EPA to block the standards.[24]  But states were not the only parties to sue over this rule; a total of 23 oil and gas industry trade associations also sued.[25]  At least four of these associations gave political campaign contributions to Pruitt and/or to outside spending groups associated with him: API ($200,000),[26] the Ohio Oil and Gas Association ($50,000),[27] the Oklahoma Independent Petroleum Association ($6,000),[28] and the West Virginia Oil and Natural Gas Association ($5,000).[29]

Pruitt’s fealty to the energy industry on the issue of methane emissions was not limited to suing EPA.  Pulitzer Prize-winning reporting by the New York Times in 2014 uncovered that Attorney General Pruitt used official letterhead to press the case of Devon Energy, one of his biggest donors, before EPA.  Devon claimed EPA was overestimating the amount of methane emissions generated by natural gas drilling.  The company’s lawyers drafted a letter on this subject, sent it to Pruitt’s office, which then cut and pasted it onto official state government stationary with only a few word changes and sent it to Washington over Pruitt’s signature.[30] 

C. Pruitt’s Official Actions as EPA Administrator Were in Lock-Step with his Political Donors’ Interests

Once Pruitt was confirmed as EPA Administrator, his pattern of taking official actions in order to benefit his donors in the oil and gas industry continued.  This was particularly true with respect to methane regulations, where the relationships Pruitt established through his political activities as Attorney General continued to pay off for his oil and gas industry donors once he became EPA Administrator.[31]  Under Pruitt, EPA repeatedly sought to weaken, repeal, or delay initiatives and rules aimed at monitoring and reducing methane emissions from oil and gas facilities. 

Within weeks of Pruitt’s assuming control of EPA, the agency withdrew its request that oil and gas companies provide it with detailed information regarding methane emissions at facilities they operate.[32] 

On June 5, 2017, EPA announced a three-month delay of the implementation of the 2016 NSPS for oil and gas facilities as well as its intention to reconsider the standards.[33]  One week later, EPA released a proposal to stay emissions requirements in the 2016 NSPS for oil and gas facilities for two years.[34]

Environmental groups sued to block EPA’s three-month delay of the 2016 NSPS for oil and gas facilities; oil and gas industry trade associations including Pruitt donor API intervened to support EPA’s delay.  On July 3, 2017, the U.S. Court of Appeals for the District of Columbia Circuit vacated EPA’s three month stay.[35]  On July 7, 2017, EPA filed a motion asking the D.C. Circuit not to require it to immediately begin enforcing the 2016 NSPS for oil and gas facilities.[36]  On July 31, 2017, the D.C. Circuit denied EPA’s motion and ordered it to begin enforcing the rule.[37]

In March of 2018, EPA amended the 2016 NSPS for oil and gas facilities to specify that methane leaks did not have to be repaired during unscheduled or emergency shutdowns.[38]

Throughout this period, EPA also refused to develop and issue new rules for methane emissions from existing sources in the oil and gas sector, contrary to its obligation to do so under the Clean Air Act (CAA).[39]  In April of 2018, 15 states and the city of Chicago sued EPA for its failure to promulgate new rules for methane emissions from existing oil and gas facilities.[40]

Collectively, these decisions are estimated to save oil and gas companies – many of them donors to Scott Pruitt and/or outside spending groups affiliated with him – hundreds of millions of dollars.[41]

Pruitt’s repeated efforts to weaken, delay, or repeal methane regulations took place against a backdrop of a seemingly endless series of meetings with the energy industry.  Although he was barred from political fundraising during his time as EPA Administrator by the Hatch Act, Pruitt maintained his close contacts with the energy industry.  In just his first few months on the job, Pruitt met with more than 40 energy interests; five of these are petitioners in litigation challenging the 2016 NSPS for oil and gas facilities and many others are members of one or more of the trade associations challenging the standards.  During this same period of time, Pruitt met with almost no environmental groups.[42] 

D. Pruitt’s Public Statements Have Been in Lock-Step with his Political Donors’ Interests

Suing to block the 2016 NSPS for oil and gas facilities is not the only way in which Pruitt, in his capacity as Oklahoma Attorney General, expressed his profound opposition to rules limiting methane emissions at oil and gas facilities.  In 2012, Pruitt wrote a piece entitled “The Methane Myth,” in which he described EPA as a “wayward federal agency arbitrarily using unsubstantiated, inaccurate, and flawed data to achieve a specific policy objective” and its efforts to regulate methane emissions from oil and gas facilities as an “attack we can’t ignore.”[43]  He also stated that he “strongly support[s] energy producers” and characterized methane emissions from leaks at oil and gas facilities as a “nonexistent” problem.[44]

In addition to specifically attacking EPA’s authority to regulate methane emissions from oil and gas facilities, Pruitt repeatedly called into question EPA’s general authority to regulate carbon emissions under the CAA.  For example, at a 2014 conference hosted by the climate denying American Legislative Exchange Council (ALEC), Pruitt stated, “We have an EPA that is engaged in rulemaking, proposed rulemaking, that seeks to exert itself in a way that the [CAA] doesn’t authorize at all.”[45]  He has also argued that the CAA was never intended to regulate carbon emissions and was instead “set up to address local and regional air pollutants.”[46]  Of course, the Supreme Court ruled otherwise in Massachusetts v. EPA,[47] holding that the EPA may regulate carbon emissions as a pollutant under the CAA.

Pruitt is also a well-known climate denier, having repeatedly questioned the accepted science of climate change.  For example, in 2016, he wrote in The National Review that “[the climate change] debate is far from settled. Scientists continue to disagree about the degree and extent of global warming and its connection to the actions of mankind.”[48]  But Pruitt’s climate denialism wasn’t limited to op-eds and quotes to the press.  He was also a frequent guest at conferences organized by climate-denying groups like the Heritage Foundation and the Texas Public Policy Foundation.  Of course, these climate-denying groups also receive much of their funding from the energy industry and those tied to it.[49]  At these conferences, Pruitt often joined guest lineups featuring prominent climate deniers and industry-funded scientists, some of whom gave presentations purporting to make “the moral case for fossil fuels.”[50]  Consistent with this affinity for climate denial, his Oklahoma Attorney General Instagram account shows him participating in a panel entitled “the War on Carbon” at the Koch-funded George Mason University School of Law (since renamed the Antonin Scalia School of Law).

Pruitt’s climate denial isn’t just a thing of the past, however.  It continued after he was confirmed as EPA Administrator.  In March 2017, Pruitt denied that carbon dioxide emissions were a primary contributor to global warming, stating “I think that measuring with precision human activity on the climate is something very challenging to do and there’s tremendous disagreement about the degree of impact, so, no, I would not agree that [carbon dioxide] is a primary contributor to the global warming that we see.”[51]  And in February 2018, Pruitt asked if climate change “necessarily is a bad thing.”[52]

E.  The Fossil Fuel Industry Capture of EPA Extends Beyond Pruitt

While Pruitt’s ties to the fossil fuel industry were perhaps the most widely reported due to his former position atop EPA, he is far from the only member of the EPA leadership team to have deep professional and/or financial ties to the industry.  Under President Trump, EPA has been stocked with officials close to the energy industry.

Bill Wehrum, the Assistant Administrator for EPA’s Office of Air and Radiation (the office in which the proposed rule was developed), is a longtime lawyer for the fossil fuel industry.  He has repeatedly sued EPA to block clean air rules, and has represented API, a petitioner against the 2016 NSPS for oil and gas facilities, as well as American Fuel and Petrochemical Manufacturers, Chevron, ExxonMobil, Koch Companies, Koch Industries, Phillips 66, the Utility Air Regulatory Group (UARG), Duke Energy, and Dominion Resources, among other energy concerns.[53]  Like Pruitt, Wehrum apparently doesn’t believe that the CAA was intended to regulate GHG emissions, Massachusetts v. EPA notwithstanding.[54] 

EPA Acting Administrator Andrew Wheeler, who replaced Pruitt atop EPA, was a longtime lobbyist for energy interests.[55]  Most notably, Wheeler represented Murray Energy, whose CEO, Bob Murray, authored an “Action Plan” advocating for the withdrawal EPA’s “endangerment finding” providing it with the authority to regulate carbon emissions under the CAA.[56]  Murray circulated his “Action Plan” to Vice President Mike Pence, Pruitt, Secretary of Energy Rick Perry, and others.  Wheeler even accompanied Murray to lobby Perry on this action plan.[57]

Beyond Wehrum and Wheeler, who will oversee methane-related rulemakings now that Pruitt is gone, EPA leadership is stocked with officials closely tied to the fossil fuel industry.  For example, EPA Office of Enforcement and Compliance Assurance (OECA) Deputy Assistant Administrator Patrick Traylor is a former lobbyist and lawyer for energy interests Dominion Energy, Koch Industries, and TransCanada,[58] while the head of EPA’s Office of Research and Development, David Dunlap is a former executive at Koch Industries.[59]  In fact, Pruitt reached out to the fossil fuel industry to help staff EPA.  Weeks after becoming EPA Administrator, he reportedly made a “plea” to top executives at API to help him identify oil industry leaders he could hire as regional EPA Administrators.[60]

Pruitt also sought to fill EPA’s Science Advisory Board (SAB) with individuals recommended by fossil fuel interests; among the many industry-connected people he chose for the SAB were Merlin Lindstrom of Phillips 66 and Larry Monroe, a retired executive at Southern Company.[61]

The oil and gas industry also repeated lobbied EPA political appointees on methane regulations.  For example, on July 18, 2017, representatives from API, Chevron, Anadarko Petroleum, and Hess met with Mandy Gunasekara, Wehrum’s senior policy advisor, and others.[62]  On March 2, 2018, representatives from Conoco Phillips met with David Harlow, a senior counsel to Wehrum, who previously represented many energy interests as a lawyer at Hunton & Williams.[63]

F. OIRA Ignored EPA Career Staff Expertise in Order to Tilt the Proposed Rule Even Further Towards Industry 

On April 27, 2018, EPA submitted a draft of the proposed rule to OIRA for review.  Almost from the start, it appears that OIRA pushed EPA career staffers to make changes to the draft proposal that would make it even more favorable to industry.  These changes primarily focused on making the draft proposal’s methane leak inspection requirements even less frequent, which would thereby result in increased methane emissions.  EPA’s original draft proposal would have resulted in 220,000 additional short tons of methane emissions;[64] the proposed rule issued after OIRA review sees this number almost double to 380,000 short tons, reflecting the relaxed monitoring requirements sought by OIRA.[65]

OIRA’s campaign to even further weaken an already weak proposal and to override agency expertise is well-documented in the docket for this rulemaking.  For example, on May 23, 2018, EPA career staff disagreed with OIRA’s recommendations to further reduce the frequency of monitoring requirements and to redefine what it means to modify existing well sites so that modifications would not trigger emissions monitoring requirements for new and modified facilities.[66]  OIRA also urged EPA to select the monitoring scheme that provided what OIRA characterized as the “highest net benefits.”  EPA career staff responded by noting that this option also resulted in the highest costs in the form of the “highest amount of foregone emission reductions.”[67]^{, [68]}

On June 7, 2018, EPA career staff again disagreed with OIRA’s recommendations to further reduce the frequency of monitoring requirements.  This time, OIRA proposed that EPA add an option for annual inspections at compressor stations, in addition to options envisaging quarterly inspections and semiannual (twice yearly) inspections.  OIRA also recommended that the regulatory impact analysis accompanying the proposal consider the costs and benefits of even less frequent monitoring.[69]  Career staff at EPA noted that there was no evidence to suggest that less frequent monitoring than it was proposing would qualify as the best system of emission reduction (BSER) as required under the CAA.[70]

A July 18, 2018 email exchange between EPA career staff and the OIRA analyst reviewing the draft proposal suggests that OIRA “management,” presumably OIRA Administrator Neomi Rao and/or other political hires, was behind the push for less frequent monitoring.  In these emails, an EPA career staffer wrote, “I gave you a rundown on our proposed lead option and the monitoring frequencies. You said you needed to discuss that with your management. Did you get a chance to do that before you left?”  To which the OIRA analyst replied, “We still feel that annual monitoring for compressors and the other option 3 monitoring frequencies are the best option due to the reasons we explained on our call.”[71]  An August 14, 2018 email from EPA career staff to OIRA shows OIRA still pushing to reduce the monitoring frequency for compressor stations.  This email also shows EPA career staff sending over memos, apparently at OIRA’s request, dealing with data provided by API and GPA Midstream, another oil and gas industry trade association.[72]

An August 17, 2018 memo from OIRA to EPA career staff shows OIRA still pushing EPA career staff to relax monitoring frequency requirements, this time on the basis of a study from the Interstate Natural Gas Association of America (INGAA) purporting to show that more frequent inspections do not significantly reduce methane emissions.  EPA career staff noted their disagreement with the INGAA study and provided a memo to OIRA explaining the technical problems with the INGAA study.  OIRA ignored EPA career staff and continued to push for an annual monitoring option in the proposed rule.[73]  When the proposed rule was finally announced, it included an option for annual monitoring for compressors as well as less frequent monitoring at other facilities, all as OIRA had repeatedly demanded.

Against this backdrop of OIRA pushing to weaken an already weak proposal to regulate the oil and gas industry, it is important to note that fossil fuel industry influence in the Trump Administration also extends to OIRA.  Neomi Rao, the OIRA Administrator, spent much of her professional academic career as a professor at the George Mason University School of Law (now the Antonin Scalia School of Law), where she was the founder of the Center for the Study of the Administrative State.  Both George Mason and the Center for the Study of the Administrative State have received multi-million dollar grants from entities associated with the Koch brothers.[74]  The Koch brothers in turn own Koch Minerals and its subsidiary Koch Exploration, which as oil and gas producers, would financially benefit from weakening the 2016 NSPS for oil and gas facilities.

III.      Legal Argument

The proposed rule is illegal for four reasons.  First, it is irreparably tainted due to the fact that it was developed under the tenure of former EPA Administrator Pruitt, who possessed an inalterably closed mind with respect to regulating methane emissions at oil and gas facilities.  Second, it is tainted by the fact that Pruitt’s involvement in its development violated his duty of impartiality under the Ethics in Government Act.  Third, it is arbitrary and capricious as it is not the product of reasoned decision-making.  And fourth, it constitutes an illegal delegation of regulatory authority to private interests, in this case the oil and gas industry.

1. The Proposed Rule Is Tainted by Pruitt’s Inalterably Closed Mind 

Pruitt may no longer be running EPA, but the proposed rule was developed under his tenure.  Indeed, it was received by OIRA more than two months before Pruitt left EPA.[75]  Any analysis of the legality of the proposed rule must therefore consider Pruitt’s role in developing it.

Those interested in a rulemaking “have a right to a fair and open proceeding; that right includes access to an impartial decisionmaker.” [76]  A regulator should be disqualified from a rulemaking “when there has been a clear and convincing showing that the [regulator] has an unalterably closed mind on matters critical to the disposition of the proceeding.”[77]   

Pruitt’s years long, industry-funded campaign against regulations limiting methane emissions from the oil and gas sector is clear and convincing evidence of an inalterably closed mind.  His deep industry ties and history of doing industry’s bidding combined with his own legal combat against the 2016 NSPS for oil and gas facilities and his rich record of making highly critical statements about efforts to study, measure, and regulate methane emissions from oil and gas facilities as well as about the CAA’s statutory authority to regulate carbon emissions make a clear and convincing showing of his inalterably closed mind on these subjects.

Pruitt’s history of engaging in climate denial and consorting with people and groups that promote climate denial also demonstrates his mind was closed during the rulemaking process.  The purpose of the proposed rule is to reduce carbon emissions in order to help combat climate change, so if Pruitt didn’t accept the overwhelming scientific consensus that human-caused carbon emissions are driving climate change, then he could not approach the instant rulemaking process with anything but an inalterably closed mind, incapable of reasonably interpreting the overwhelming scientific expertise on this subject. 

The public has “a right to a fair and open proceeding; that right includes access to an impartial decisionmaker.”[78]  Allowing the regulatory process to be guided by those who are incapable of adjusting their positions in the face of evidence and arguments amassed during the rulemaking process would make that statutory process irrelevant.  Regulators must be able to look at the evidence and arguments objectively if they are to issue regulations that serve our nation’s best interests.  It is abundantly clear that as EPA Administrator, Pruitt was incapable of doing this.  Rather than adjust his position in the face of overwhelming scientific, technological, and economic evidence, Pruitt clung to his position that the 2016 NSPS for oil and gas facilities needed to be replaced with a de minimis regulatory scheme that would result in substantially increased methane emissions.  His involvement in the instant rulemaking process makes a mockery of the regulatory process and any methane-related rulemaking in which he was involved should be withdrawn.  

B. Pruitt’s Participation in the Instant Rulemaking Violated His Duty of Impartiality under the Ethics in Government Act

Pruitt’s participation in the instant rulemaking also violates part 2635 of the Code of Federal Regulations, subpart E[79] governing impartiality in performing official duties.[80]  These rules apply to official duties a government official may undertake regarding a “particular matter.”[81]  According to the Office of Government Ethics, a rulemaking is not generally considered a “particular matter” and therefore normally falls outside the purview of these rules.[82]   However, this is an extreme case that warrants an exception to the general rule. 

Pruitt has already acknowledged the ethical problems associated with his continued involvement in court cases to which he was a party as Oklahoma Attorney General.  Pruitt’s ethics memo states that he will not participate in any active cases in which Oklahoma is involved in order “to avoid even the appearance of any impropriety under federal ethics or professional responsibility obligations.”[83]  That included being recused from litigation to block the 2016 NSPS for oil and gas facilities. 

Pruitt’s participation in this rulemaking creates the same appearance of impropriety that necessitated his recusal from that litigation.  The rulemaking covers the same subject matter, raises the same legal issues, and involves the same parties as the litigation.   No reasonable person could conclude from Pruitt’s previous work as Oklahoma Attorney General against the rule that he would approach his rulemaking responsibilities as EPA Administrator with any degree of impartiality.    

Consider the parties involved.  Four of the industry petitioners in the litigation challenging the 2016 NSPS for oil and gas facilities donated more than $250,000 to Pruitt and his affiliated political action committees.  Five of the industry petitioners in the litigation challenging the 2016 NSPS for oil and gas facilities met with Pruitt in just his first several weeks as EPA Administrator.  Industry petitioners and their member companies met with Pruitt’s political hires and submitted documents and data to career staff urging a de minimis rule with watered-down monitoring requirements.

The Pruitt-initiated rulemaking to weaken the 2016 NSPS for oil and gas facilities exists to accomplish what Pruitt’s litigation challenging the 2016 NSPS for oil and gas facilities had not, and what his industry patrons desire: replacement of the serious methane leak monitoring and repair requirements embodied in the 2016 NSPS for oil and gas facilities replaced with a fig leaf regulatory scheme that would allow all parties to pay lip service to the imperative of reducing methane leaks all while continuing to allow large amounts of leaked methane emissions to enter the atmosphere.

C. The Proposed Rule Is Arbitrary and Capricious 

The Administrative Procedure Act[84] permits courts to set aside agency actions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.”[85]  In determining whether an agency action was “arbitrary and capricious, the courts look to several factors, whether:  “(1) the agency ‘relied on factors which Congress has not intended it to consider,’ (2) the agency ‘failed to consider an important aspect of the problem,’ (3) the agency explained its decision in a way ‘that runs counter to the evidence,’ or (4) the action ‘is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.’”[86] 

Courts have also held that a rule is arbitrary and capricious if the promulgating agency did not “genuinely engage in reasoned decision making”[87] or if it did not “articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’”[88]

While judicial review of agency actions is usually “exceedingly deferential,”[89] when, given the totality of the circumstances, the agency appears not to have engaged in reasoned decision-making, a rule should be invalidated. 

“The scope of review under the “arbitrary and capricious” standard is narrow and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a “rational connection between the facts found and the choice made.” In reviewing that explanation, we must “consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.”[90]

This heightened level of scrutiny calls on a court to “intervene not merely in case of procedural inadequacies, or bypassing of the mandate in the legislative charter, but more broadly if the court becomes aware, especially from a combination of danger signals, that the agency has not really taken a ‘hard look’ at the salient problems, and has not genuinely engaged in reasoned decision-making.”[91]  These concerns are epidemic for the proposed rule.

Additionally, courts have found that it is appropriate to more closely scrutinize regulatory decisions that constitute an abrupt change in course.  If an agency makes such a regulatory U-turn, it must “provide a more detailed justification than would suffice for a new policy […] when, for example, its new policy rests upon factual findings that contradict those which underlay its prior policy. […]  It would be arbitrary and capricious to ignore such matters.”[92]  “An agency cannot simply disregard contrary or inconvenient factual determinations that it made in the past.”[93]  

Recently, the United State District Court for the District of Montana rejected a Trump administration regulatory U-turn for exactly these reasons.[94]  That case is instructive here. 

In 2015, the Obama administration denied a permit for the construction of the Keystone XL pipeline.  That decision detailed how the pipeline was not consistent with climate change-related foreign policy considerations, and explained why 2015 was a critical time for climate action given rising carbon emissions and international movement towards limiting emissions.  The Trump administration reversed that decision in 2017 without addressing either of these issues.  The Montana court held this was arbitrary and capricious, writing, “[t]he [State] Department’s 2017 conclusory analysis that climate-related impacts from Keystone subsequently would prove inconsequential and its corresponding reliance on this conclusion as a centerpiece of its policy change required the Department to provide a ‘reasoned explanation.’  The Department instead simply discarded prior factual findings related to climate change to support its course reversal.”[95]

This rulemaking is similarly based on conclusory statements about climate change.  The 2016 NSPS for oil and gas facilities predicated its existence on reducing the methane emissions that are one of the main drivers of climate change.  The rule features an extensive discussion of how it is an integral part of the government’s strategy to combat climate change, including its connection to EPA’s determination that methane emissions endanger public health and welfare, how it builds on existing regulations for oil and gas facilities, how it fits into the government’s climate action plan, methane strategy, and methane reduction targets.[96]  The rule also includes a detailed discussion of the negative effects of climate change and how methane emissions play a role in climate change.[97] 

The proposed rule makes no effort to rebut any of these findings.  Indeed, it features almost no mention of climate at all.[98]  Quite simply, EPA provides no explanation for the regulatory U-turn the proposed rule embodies, nor does it attempt to explain why its prior conclusions about climate change and methane emissions were incorrect.  As such, the proposed rule is arbitrary and capricious under both the Fox Television Stations and Indigenous Environmental Network decisions.

A full review of the technical deficiencies of the proposed rule is beyond the scope of this comment.  But even a basic review shows that in an effort to achieve a result sought by the oil and gas industry, EPA engaged in a sham decision-making process lacking any rational connection between the facts and the choices made.  In this process, it was ably aided by OIRA, which demanded an even weaker rule more favorable to the oil and gas industry.

EPA concedes that the proposed rule would result in considerably higher methane emissions.  It has also intentionally underestimated the costs associated with the additional carbon pollution that would be generated by the proposed rule by using a social cost of methane approximately eight times lower than the one used in the 2016 NSPS for oil and gas facilities.  And the social cost of methane used in the 2016 rule was already a low estimate.  A recent survey of experts in the field yielded a mean social cost of carbon (SCC) approximately six times greater than the one used in the 2016 rule.[99]  And recent peer-reviewed research has yielded SCC estimates even higher still.[100]  What’s more, the proposed rule does not in any way address the conclusions of the recently released National Climate Assessment, which finds that climate change will have devastating effects on the U.S. economy.[101]

Courts have also held that while they “must defer to an agency's expertise, [they] must do so only to the extent that the agency utilizes, rather than ignores, the analysis of its experts.”[102]  In cases where agency expertise is ignored, the rule will be arbitrary and capricious.  In the instant case, the docket is ripe with examples of OIRA ignoring and overruling EPA career staff with respect to the appropriate frequency of inspections that should qualify as BSER.[103]  This is precisely the situation that led the Defenders of Wildlife court to strike down the rulemaking at issue in that case as arbitrary and capricious.

The obvious conclusion to the above record is that EPA and OIRA did not in fact care about the facts or expert analysis.  They cared about the results that the oil and gas industry wanted: the replacement of the 2016 NSPS for oil and gas facilities with a rule requiring only infrequent inspections.  The factual record laid out in this comment details precisely the sort of “danger signals” the courts have found to warrant “hard look” review.  Potentially improper contacts between regulators and regulated industries,[104] “abrupt shifts in policy,”[105] and “undue bias towards particular private interests”[106] are all present in this tawdry tale of industry capture.  Based on this record, no court could plausibly conclude that EPA “genuinely engaged in reasoned decision making”[107] nor conclude that EPA could “articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’”[108]  The proposed rule is therefore arbitrary and capricious and should be withdrawn.

D. The Proposed Rule and Accompanying Regulations are an Illegal Delegation of EPA Rulemaking Authority to a Regulated Industry

Just as an agency rulemaking will be set aside if a court determines that it was arbitrary and capricious, an agency rulemaking should be invalidated if a court finds that the agency delegated its rulemaking authority to one or more private interests, because Congress “cannot delegate regulatory authority to a private entity.”[109]  “Although objections to delegations are “typically presented in the context of a transfer of legislative authority from the Congress to agencies, […] the difficulties sparked by such allocations are even more prevalent in the context of agency delegations to private individuals.”[110]

While it is clear that an agency may not explicitly delegate its rulemaking authority to private interests, an agency that implicitly delegates its rulemaking authority to private interests raises the same concerns.  An agency is effectively captured by the private interests it regulates when its “‘regulation is . . . directed away from the public interest and toward the interest of the regulated industry’ by ‘intent and action’ of industries and their allies.”[111]

As described above, the proposed rule was the product of a process that was effectively delegated to industry.  EPA and OIRA ultimately acquiesced to industry’s repeated demands for infrequent monitoring and repair requirements.

In addition to the fact that the proposed rule adopts industry’s position while ignoring the public interest and minimizing the benefits of reduced GHG emissions, there is also abundant evidence that EPA political staff essentially took direction from the fossil fuel industry with respect to this rulemaking.  The fossil fuel industry had open access to EPA and senior EPA officials overseeing this rulemaking were consulting with them on it.  Senior EPA and OIRA officials were closely tied to the fossil fuel industry and had a long history of hostility towards rules designed to reduce greenhouse gas emissions including rules designed to limit methane emissions from the oil and gas sector, particularly on behalf of industry donors who bankrolled their political careers or industry clients they represented as lawyers or lobbyists prior to joining the Trump administration. 

We are not the only ones to conclude that the Trump EPA has been captured by industry.  A recently published article in the American Journal of Public Health finds that EPA is exhibiting many signs of regulatory capture.[112]  The authors of this article examined EPA actions from December 2016 through June 2017 and they interviewed 45 current and retired EPA employees.  Among their findings pointing to regulatory capture:

• “Appointees have deep ties with industries.”
• “Significant policy changes at the EPA favor businesses and industry, while probably incurring considerable health and environmental consequences.”
• “Pruitt has regularly championed the interests of regulated industries, while rarely affirming environmental and health protections.”
• “Pruitt dismissed many members of the EPA’s Science Advisory Board and its Board of Scientific Counselors, created a new rule preventing EPA-funded scientists from serving on those boards, and—for the first time in agency history—allowed lobbyists on scientific advisory boards.”
• “Pruitt’s own meetings and schedule… are almost exclusively with company and trade organizations and rarely with environmental, public health, or citizen groups.”[113]

The extreme and well-documented regulatory capture of the Trump EPA is evidence that it has effectively delegated its authority to the industries that have captured it, in particular, the fossil fuel industry.  There is no substantive difference between an agency explicitly telling a company or industry to write a rule for it, and an agency telling a company or industry that it will write whatever rule the company or industry wants.  Like Scott Pruitt’s Devon Energy letter, the substance is all industry, whatever the letterhead, and the public interest is ignored.  That is not lawful under well-established principles of administrative law.

For the foregoing reasons, we, the undersigned United States Senators, respectfully urge EPA to withdraw this proposed rule.

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