Time to prepare for the Trump wave of change in EPA regulations

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Automotive policy

Trump has referred to the Biden administration’s light-duty vehicle emissions standards as an “electric vehicle (EV) mandate.” He has vowed to reverse the policy.

Having won the support of Tesla founder Elon Musk, Trump’s stance on EVs is expected to soften. Reuters has reported Trump is expected to name Musk to a role in his administration.

“President-Elect Trump won with the support of auto manufacturing workers in the Midwest and will likely champion issues that will grow U.S. automotive manufacturing jobs by opposing Chinese manufactured vehicles and foreign manufacturing relocation to Mexico,” notes law firm Holland & Knight LLP (HK Law). “President-Elect Trump is expected to support significant tariffs on any cars made overseas that he deems to have an unfair advantage [on] American-made autos.”

To date, Trump has remained “noncommittal about his position on a tax credit for [EVs],” according to political website The Hill. “While eliminating a tax credit would require an act of Congress, if Trump decides he’d like to uphold the credit, that [will] mark a shift. During his prior administration, the White House proposed to eliminate the incentive. While Trump still wants to get rid of the Biden administration’s regulations pushing the market toward more [EVs], he has taken a softer tone on the vehicles after receiving the endorsement of Tesla’s Elon Musk.”

Climate change

Trump is widely known for referring to anything to do with climate change as a “hoax.”

“But he will be entering the White House after what will almost certainly be the hottest year on record in 2024,” reports NPR. “Greenhouse gas (GHG) emissions, which trap heat and mainly come from burning fossil fuels, reached an all-time high last year. And global temperatures are on track to rise to a level that scientists say will heighten the risk of much more dangerous climate impacts, from more destructive storms and heat waves to rising sea levels that could swamp coastal cities.”

Although it remains to be seen if Trump has changed his mind about the validity of climate change science, his vice president, JD Vance, referred to climate change as “weird science” during the vice presidential debate.

Trump’s overwhelming stance on climate change is that addressing it increases costs and restricts energy development.

However, this issue will be another political test for the Trump administration because voters in several states approved measures to fight climate change.

“‘No matter what Trump may say, the shift to clean energy is unstoppable and our country is not turning back,’ said Gina McCarthy, President Biden’s former climate adviser who now helps lead America Is All In, a coalition of elected leaders, community groups and businesses promoting climate policies. She called any attempt to overturn the [IRA] ‘a fool’s errand,’” the NYT reported (11/06/24).

“States are now likely to become a bulwark against federal efforts to undo climate policy. ‘The locus of climate action is going to shift to the states,’” said Martin Lockman, a fellow at the Sabin Center for Climate Change Law at Columbia University, according to the NYT (11/06/24). “Unless there is a complete reversal of the [IRA], this is something where climate issues, even in red states where they won’t say the word ‘climate,’ the impact on the ground is undeniable.”

Biden’s plan had U.S. emissions on track to be reduced by approximately 40% over 2005 levels by 2030.

The NYT continues, “Mr. Trump’s likely policies to encourage more drilling and burning of oil and gas would add four billion tons of greenhouse gas emissions to the atmosphere, according to a study by Carbon Brief, a climate analysis site” (11/06/24).

Deregulation

Trump views regulations as an infringement on individual freedom. In his first term in office, one of his first Executive Orders (EOs) issued was EO 13771, which stipulated that “for every new regulation issued, at least two prior regulations [must] be identified for elimination.”

It also required “a new regulatory budgeting process to control the overall cost of agency regulations,” according to the CATO Institute. “Prior to the Trump administration, there was no annual cap on the additional cost burdens an agency can impose.”

Trump is expected to take a similar stance regarding deregulation in his second term.

“President-Elect Trump has vowed to renew his aggressive deregulatory efforts, including forcing the removal of multiple existing regulations for any new regulation proposed,” notes HK Law.

However, rescinding regulations isn’t a quick process. First, a case must be made for the change to previously issued regulations, then a proposed rule is issued, and public comments are accepted. Those comments must be considered and addressed in the issuance of a final rule. Power plant rules, for example, are complex and generally take 2 to 3 years to replace.

Under Trump’s first EPA administrator, Scott Pruitt, the Agency saw several legal defeats, which meant a delay in repealing many Obama administration rules. This resulted in several Trump replacement rules not being finalized until the end of his first term in office. Approximately 80 percent of Trump administration actions were legally defeated, according to The Institute for Policy Integrity at New York University School of Law.

Experts say the officials who are likely to run Trump’s second EPA have probably learned from that experience. One tactic that’s expected is for the administration to request that courts hold certain rules in abeyance while new replacement rules are prepared.

Domestic energy technology production

Trump is known for supporting U.S. industry. Analysts expect him to pursue policies that will increase domestic energy technology manufacturing. HK Law says he’s also expected to “further discourage reliance on Chinese and foreign manufacturing by offering incentives that encourage companies to relocate to the U.S.”

Domestic oil and gas production

Trump has been very vocal about his plans to increase domestic oil and gas production. He also plans to refill the Strategic Petroleum Reserve, the world's largest supply of emergency crude oil, which was established to reduce the impact of disruptions in supplies of petroleum products.

“He wants to reduce the amount of time it would take to approve drilling permits on public lands by half and increase permit applications to drill on federal land. President-Elect Trump also seeks to make the U.S. the dominant energy producer globally and independent of foreign fuel,” HK Law adds.

Domestic oil and gas production is subject to the market laws of supply and demand, just like every other industry.

Companies drill more when prices are high and less when they’re low. These metrics determine fuel prices, and U.S. presidents have very little say in these corporate decisions.

Ironically, the United States became “the world’s top producer of oil and gas during Biden’s tenure, and his agencies have been approving projects at a more rapid pace than under [Trump’s previous administration]. Even so, Biden passed legislation through Congress and issued regulations that aim to speed the transition to cleaner energy,” utility and energy new site Utility Dive says.

Environmental justice

Trump’s deregulatory agenda doesn’t bode well for environmental justice efforts.

“A shift back to deregulation may increase pollution impacts, especially in low-income and minority communities,” reported The Daily Climate.

Analysts predict the Trump administration will aggressively work to roll back environmental justice efforts, which were a priority for the Biden administration.

EPA structure

“A second Trump Administration likely will significantly target the EPA through smaller budgets and efforts to decrease the size and reach of the agency. Additionally, a Trump EPA could focus on cooperative federalism while adopting a more permissive approach to environmental regulation of interstate commerce. Expect to see a rollback of the EPA's interregional enforcement initiatives and its Environmental Justice programming, particularly its grant funding to environmental organizations, which may be subject to investigations for misuse of such funding alleged by House Republications,” HK Law says.

The Agency was overwhelmingly understaffed during Trump’s previous administration and is expected to be severely scrutinized in his second term. Structural changes are a certainty for the EPA.

The Hill notes Trump recently announced he has selected former Rep. Lee Zeldin, R-N.Y., to lead the EPA instead of his former EPA administrator, Andrew Wheeler.

Trump said Zeldin will “ensure fair and swift deregulatory decisions that will be enacted in a way to unleash the power of American businesses, while at the same time maintaining the highest environmental standards.”

“We will restore US energy dominance, revitalize our auto industry to bring back American jobs, and make the US the global leader of AI. We will do so while protecting access to clean air and water,” Zeldin said.

Obviously, Trump’s appointees must be confirmed by the Senate, meaning unforeseen challenges could arise.

ESG investments

In a 2023 campaign video, Trump said:

“When I’m back in the White House, I will sign an executive order and, with Congress’ support, a law to keep politics away from America’s retirement accounts forever. I will demand that funds invest money to help you, not them. But to help you, not to help the radical left communists because that’s exactly what they are. I will once again protect our seniors just like I did before from the woke left.”

This quote refers to ESG investments. In these types of investments, funds consider additional factors beyond profits, such as GHG emissions and sustainability for decisions as to which companies will be included in investment portfolios.

In 2023, the Department of Labor (DOL) rule Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights went into effect. This rule “allows pension fund managers to consider ESG factors when making investment decisions, but only as a tiebreaker when two or more investments ‘equally serve the financial interests of the plan,’” reports sustainability site ESG Dive.

The DOL rule is already under fire in the court system. The Trump administration is expected to decline to defend it. Additionally, a Trump appointee to head the Securities and Exchange Commission (SEC) could also result in moves to remove scrutiny of ESG factors in SEC reporting.

Republicans have also taken control of the U.S. House of Representatives, which means Congress could pass a bill outlawing ESG considerations altogether.

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