In an effort to relieve the economic impact associated with the response to COVID-19, President Trump recently signed an Executive Order (EO) designed to promote economic recovery by reducing regulatory burdens for businesses. Under the EO, all federal agencies are directed to (1) review regulations and rescind, modify, waive, or provide exemptions to those regulations that may impair economic growth and (2) consider whether any of the temporary modifications or waivers should be permanently adopted through formal rulemaking. While the EO is intended to provide relief during the COVID-19 pandemic, it is unclear whether it will have a tangible impact on enforcement of the federal pipeline safety or environmental laws for the oil and gas pipeline industry.
The EO also instructs agencies to consider developing guidance which may provide regulators with the discretion to decline seeking enforcement against businesses that have made a “reasonable good faith” effort to comply with relevant regulations. For enforcement actions that do occur, agencies must revise their policies and procedures to ensure that “principles of fairness” are considered throughout the process, including enforcement that is prompt, fair and where penalties are transparent and proportionate.
Although the EO grants agencies broad authority to consider eliminating barriers that may inhibit economic growth, the EO is expected to have little practical effect until agencies are able to review their regulations and identify those areas that may be modified. Some agencies, like the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Environmental Protection Agency (EPA), have already issued enforcement discretion guidance that temporarily allows regulators to exercise discretion where impacts of COVID-19 have impaired an entity’s ability to comply with certain regulations.
For pipeline facility operators, it is unclear how the EO will impact enforcement of the federal pipeline safety or environmental laws beyond the limited waivers and notices of enforcement discretion that have already been announced by several agencies. Further, EPA’s enforcement discretion policy has already been challenged and scrutinized by a variety of United States senators, environmental groups, and states. To date, at least nine state attorney generals and seven environmental groups have brought suit in opposition to the EPA’s policy. Additionally, on April 1, 2020, eleven members of the United States Senate sent a letter to the EPA raising concerns related to the apparent scope of its enforcement discretion policy. With respect to PHMSA, the agency is already working on proposed rules, one of which is currently open for public comment, that are focused on regulatory reform initiatives and it is unlikely that they will be further expanded as a result of this EO.
Despite limitations as a result of the ongoing pandemic, certain federal regulators such as PHMSA continue to inspect and issue enforcement for alleged noncompliance and proceed with rulemakings. With respect to enforcement discretion, we understand that for PHMSA and EPA, supporting documentation and a clear link to impacts of COVID-19 will be key to the exercise of enforcement discretion.