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A Second Chance at Environmental Regulation

By Alexander Gordon of Aon Risk Solutions

Even before President Obama begins his second term in office later this month, politicians, business executives, and risk managers have already begun to weigh in on what Obama’s reelection might mean for the future of environmental regulation in the United States. Which is to say, what kind of regulatory actions can we expect from the Environmental Protection Agency (EPA) over the next four years? Is the EPA endeavoring down on a new course of unprecedented regulatory reach? Or has the agency finally, under Obama’s direction, begun to address pollution issues only recently brought to light by advancements in technology and scientific knowledge? Looking back at Obama’s first term, the EPA has been both praised and derided for a range of new regulatory actions that have, in ways small and large, reshaped how the agency implements the 11 major statutes Congress has charged it to administer. But what exactly will the future entail?

As the White House website suggests: “The Obama administration is committed to protecting the air we breathe, water we drink and land that supports and sustains us. From restoring ecosystems in the Chesapeake Bay and the Everglades, to reducing mercury pollution from power plants, we are bringing together federal agencies to tackle America’s greatest environmental challenges.” Yet what do these broad promises to protect the air, water, and land actually look like on the ground? As Romney famously jabbed, “President Obama [has] promised to begin to slow the rise of the oceans and to heal the planet. My promise is to help you and your family”. For many conservatives sympathetic to Romney’s famous punch line, the White House’s position perhaps signals a new round of quixotic rule-making and unnecessary back-door mandating vis-à-vis the environment. Yet to understand the business impacts and changing environmental liabilities attached to today’s nascent environmental policy —both positive and negative— requires a cooler and more impartial starting point.

First, it is important to remember that many of the impending rules that will likely unfold over the next four years began their development under the Bush Administration, particular those coming under the Clean Air Act; for example the impending Cross-State Air Pollution Rule and forthcoming emission limits affecting boilers and certain incinerators. Moreover, much of the EPA’s recently proposed rules will take years to be enacted, and as history has indicated, the EPA’s own estimates and timeframes for regulatory enforcement are rarely met, even when court-ordered deadlines are in place. Still, after new standards are promulgated nearly all regulatory actions are the subject of lengthy legal challenges, such that actions coming into effect today are in many cases the result of courts finally remanding or vacating rules issued by earlier presidential administrations. Cutting through these details is crucial to getting a grasp on the impending impacts of environmental regulation and the ways different legislative efforts can be expected to play out in state and federal contexts.

Thus in the lead up to Obama’s inauguration on January 21 and through the first few weeks of his second term, here at Aon Environmental we will be examining how President Obama’s second term is set to shape the future of environmental policy over the next four years. This will mean taking a closer look at changes to environmental liability in relation to issues like climate change, indoor air quality, water runoff, and a host of other topics affected by rules currently being developed under the regulatory authority of major pieces of environmental legislation like the Clean Water Act, the Clean Air Act, the Toxic Substance Control Act, and the Resource Conservation and Recovery Act. Further, in the coming articles we will consider various initiatives proposed by the Obama administration that fall outside more traditional legislative and rule-making activity, from funding investments for ecological restoration projects, new strategies for promoting the use of green infrastructure and disaster adaptation, to the implications of coming cabinet appointments. With Obama’s final election past, how, if at all, will his political capital be directed towards bringing a renewed environmental agenda to the center of his presidential legacy? How will responsibility for environmental damages be negotiated against the backdrop of an ongoing economic recovery? In exploring these pressing questions and more, it is our hope at Aon Environmental to offer guidance and suggestions to help businesses mitigate and transfer risk at a moment when uncertainty continues to break over the bow of the coming era in environmental liability.