Acting Assistant Attorney General Jeffrey Bossert Clark delivers remarks at the U.S. Chamber of Commerce’s Institute for Legal Reform

Speech to the Institute for Legal Reform

U.S. Chamber of Commerce

                                               

Introduction

In November 2018, the Senate confirmed me as Assistant Attorney General of the US Justice Department’s Environment and Natural Resources Division.   And in September 2020, the President asked me to lead the Justice Department’s Civil Division as its Acting Assistant Attorney General, while I remain the head of the Environment Division.

I am proud to be a two-time alumnus of the Department of Justice.  I served in the Environment and Natural Resources Division from 2001 to 2005 in the Department as well.

Prior to confirmation, I was proud to have the Chamber as a client.  I know it to be an organization that promotes the rule of law.  Before law school I worked for the State of Delaware as an economics analyst in tax policy, so I am very aware of the economic issues that often affect the interests of the Chamber of Commerce and its membership.

 

Background on the DOJ Civil and Environment and Natural Resources Divisions

The Civil Division is the largest litigating division in the Department of Justice, with over a thousand lawyers spread across six different branches.  The work of these six branches is diverse and critical to the national interest– ranging from the affirmative civil enforcement of the False Claims Act and the civil and criminal enforcement of consumer protection laws, to the defense of critical federal programs, the enforcement of immigration laws, and the defense of contract and tort claims.

The Environment Division operates under statutes like the Clean Air Act, the Clean Water Act, CERCLA (or Superfund), NEPA, and numerous conservation and natural resource laws.   That Division’s docket is split roughly evenly between affirmative civil and criminal enforcement and defensive work. 

 

Civil Regulatory Reform

One subject I feel passionate about is regulatory reform and the broader effort to look holistically at the impact of regulatory processes.  The goal being efficient and effective, but limited, government. 

In my role at the Civil Division, I see our attorneys every day vigorously defending government-wide efforts at regulatory reform.  It would not surprise anyone viewing this virtual convocation to tell you that reducing federal regulation and reforming the way agencies regulate leads to just as much – indeed probably more these days – litigation as regulating in the first place.  Remarkable.

Indeed, studies estimate the aggregate total cost of federal regulations fall between $1.75 and $2 trillion per year—roughly equivalent to what the federal government in 2018 collected in individual and corporate tax receipts combined.   While the 114th Congress (2015-2016) passed 329 public laws, totaling 3,000 pages in the Statutes at Large, during that same two-year period agencies issued more than 7,000 final rules, spanning 80,000 pages in the Federal Register.

I try to do my part to avoid the over-proliferation of the law.  Back in 1981, President Reagan observed the need to “reduce the burdens of existing and future regulations, increase agency accountability for regulatory actions, provide for presidential oversight of the regulatory process, minimize duplication and conflict of regulations, and ensure well-reasoned regulations.”  The same concerns had been raised by Presidents from both parties. [Clinton EO 12,866; Obama EO 13,563].

Today, the Trump Administration has made regulatory reform a top priority not only to advance principles of good governance, but also because a better regulatory process is essential to the competitiveness of the American economy.  In an age of global economic competition, regulatory costs can affect whether businesses choose to locate or form in the United States in the first place.  I want to talk about a couple of efforts, starting on the civil side.

 

Department of Transportation Rule on Rules

First, what is known as the “rule on rules”: In December 2019, the Department of Transportation took a comprehensive look at its regulatory efforts in an attempt to clean up unnecessary regulation that often was outdated, duplicative, overly complex, and contradictory.   The Department understood that unnecessary and burdensome rules actually harm safety because they steer energy away from what really matters, and of course safety is the number one priority for an agency like the Department of Transportation. 

This is a rule that will provide a framework for regulation in a  very wide range of critical areas – airport safety, pilot training, medivac pilot training, bridge inspection standards, alcohol and drug testing, fuel efficiency standards for a range of vehicles, and pipeline and hazardous material safety, to name a few.  I want to talk about 4 things the “rule on rules” accomplished that can serve as a model for other executive agencies. 

First, the rule implemented a centerpiece of this Administration’s efforts to make regulation more effective and efficient – Executive Order 13,771 – which requires agencies to eliminate two regulations for every new regulation issued, and impose no new net regulatory costs.  By the way, my current Division successfully defended that EO in a court challenge in 2019.  And the statistics bear out a seismic shift that reflects these efforts – for example, in 2017 and 2018, the number of economically significant rules dropped to just 10 a year, compared to an average of 53 per year from 2000 to 2016.

Second, the rule sets out a core set of rulemaking reforms that can be looked at by other agencies as best practices.  It sets out very clearly a policy for rulemaking that there should be no more rules than are necessary.  It specifies that rules should not address market failures unless there is some compelling safety need or there is a statutory requirement. It provides for more robust public participation in rulemaking through enhanced procedures for economically significant rules – including more opportunities for public comment and the potential for formal hearings with regard to material issues of fact that are disputed in a rulemaking and may have a significant effect on the outcome of the rulemaking determinations. 

Third, the “rule on rules” addresses guidance documents in furtherance of the President’s executive order, called “Promoting the Rule of Law Through Improved Agency Guidance Documents.”  The Justice Department has done a lot of important work on this front as well.  The key reforms on guidance documents are that they be published and known to all interested and affected parties; that they do not impose new legal obligations in their own right that go beyond existing statutory obligations or regulations; and that they not be used in an enforcement action as an independent basis to impose a penalty.

Fourth, the “rule on rules” reformed enforcement policies in furtherance of the President’s Executive Order called “Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication.”  The key issues DoT addressed with regard to enforcement actions is being transparent about legal requirements before doing inspections or enforcement actions; not using Chevron type principles to expand enforcement authorities; and providing a Brady type of procedure to provide the regulated entity the material evidence on both sides of the issue.  The rule also reforms the adjudication process by codifying various procedural protections for parties subject to administrative enforcement actions.

 

HHS Regulation Review

The other thing I wanted to mention on the Civil side is work by the Department of Health and Human Services with regard to wrangling its massive set of codified regulations.  The Department of Health and Human Services has undertaken significant regulatory reform efforts, including overhauling a suite of regulations to improve coordination of patient care and implementing a pioneering use of artificial intelligence to rationalize the agency’s regulations. HHS reforms have already produced billions of dollars in regulatory savings.  I understand there have been positive results at HHS – which in fiscal year ’18 accounted for over half the deregulatory savings for the entire federal government of $12 billion.  

One effort has involved looking to the 1980 Regulatory Flexibility Act, which was one of the earliest attempts to balance social goals and federal regulation with the needs and capabilities of small business.  The Act has saved small businesses hundreds of billions of dollars over the decades by seeking to ensure that the federal government regulates at a scale that’s appropriate to the size of smaller businesses.  In 2019, HHS issued a proposed rule that informed the public that certain regulatory provisions in the Uniform Administrative Requirements Cost Principles and Audit Requirements for HHS Awards will not be enforced because of serious concerns regarding implementation under the Regulatory Flexibility Act. 

One impressive thing I learned is that HHS has put their massive set of regulations through an artificial intelligence process that utilized machine learning to identify inefficiencies.  In a first pass, HHS found broken cross references, and regulations addressing laws that no longer exist, orphaned regulations that no component was implementing, and overly burdensome paperwork requirements.  The first pass found 1,200 of these kinds of problems.  And the task of efficiently fixing such a high number of problems across a variety of different rules now falls to HHS.

 

Key Environment and Natural Resources Division Reforms

I will now turn to three significant reform efforts I have led as the Assistant Attorney General for the Environment and Natural Resources Division (or ENRD).  They relate to Supplemental Environmental Projects (or SEPs), citizen suit litigation, and revision of the foundational National Environmental Policy Act (or NEPA) regulations.

 

Reforming Supplemental Environmental Projects

On March 12, 2020, I issued the latest in a series of memoranda to ensure all environmental enforcement cases I authorize comport with the law.  Through this action, ENRD will no longer enter into civil environmental settlements with private defendants that include SEPs.

SEPs are projects or activities that go beyond what could legally be required to return the defendant to compliance, and secure environmental and/or public health benefits beyond those achieved by compliance with applicable laws.  By definition, SEPs are not:  (1) penalties payable to the Treasury; (2) restitution to a harmed party; or (3) some form of action (or refraining from action) intended to undo or directly remediate the demonstrable harm from a violation.

Let me provide a little more background:  most federal actions for failure to comply with the nation’s environmental laws are resolved through settlement.  Violations of federal environmental laws often result in the assessment of penalties against the violator.  Settlements usually stipulate the amount of the penalty.  EPA and the Department determine a settlement amount by considering several factors, including, starting roughly in the Clinton Administration, whether the alleged violator has voluntarily agreed to perform a SEP.  Since 1984, EPA has had some type of policy allowing the consideration of SEPs in settling cases; its current policy was issued in 2015.

The fundamental problem with SEPs is that an alleged violator will (all other things being equal) pay a lower civil penalty by voluntarily agreeing, as part of a settlement, to undertake a SEP.  This diversion of funds away from the Treasury (and away from Congressional control) to support special projects that EPA (with Department input) and the alleged violator favor patently contradicts core principles of our constitutional government and violates the law.

To protect its power of the purse, Congress has enacted statutes such as the Miscellaneous Receipts Act and the Anti-Deficiency Act.  The point of these statutes is that the accounts receivable of the United States are to be paid into the Treasury and must go out only as Congress directs. 

Congress has not spoken with the clear intent to give the Executive Branch the authority to settle for SEPs—except in rare cases.  Of course, in situations where Congress has spoken, we obey and implement.

 

Reform of Citizens Litigation

Citizen suit provisions are found in many environmental statutes and generally allow a private citizen to enforce federal law.  The early environmental citizen suit provisions were inspired by and modeled after provisions in the Civil Rights Acts. 

Sometimes these suits live up to the goals set by Congress.  With the right of enforcement, however, comes the responsibility to enforce in a manner that is consistent with Congressional intent. Citizen suit claims are not to be used for personal enrichment.

Let me provide an example.  Congress’s purpose in enacting the Clean Water Act was eventually to prohibit “the discharge of any pollutant by any person” except as provided in the Act.  An unpermitted discharge can form the basis for a citizen suit enforcement claim.

A citizen cannot use the leverage created by that claim, however, for personal enrichment.  A Clean Water Act penalty subjects a polluter to significant penalties.  In many instances, those penalties are compounded per violation and per day, subjecting defendants in some cases to millions, or hundreds of millions, of dollars in penalties.  A citizen suit cannot be used to turn that potential liability into a settlement that directs funds towards a pet project.

Where Congress directs penalties to be disbursed in a certain matter, its intent controls.  While I applaud appropriate citizen suit enforcement, I am concerned that these tools can be, and have been, abused.

Another example of the potential for abuse can be seen in the increasingly frequent use of SEPs in citizen suits.  ENRD has been recently grappling with this issue in a Clean Air Act enforcement action in Michigan.  The case, United States v. DTE Energy Corporation, was litigated for over a decade.  After two appeals and an unsuccessful attempt by DTE to obtain a petition for a writ of certiorari, the United States, DTE, and Intervenor Sierra Club negotiated a proposed consent decree. 

Sierra Club, however, wanted more (and different) relief, including a requirement that DTE undertake two completely open-ended “mitigation” projects.  One of those projects would require DTE to spend at least $2 million on unspecified environmental projects in southwest Detroit to be proposed by a five-member committee comprised of a representative of DTE, an academic, and three members of the community selected with input from Sierra Club, a process that is alien to proper federal enforcement.  The second project would require DTE to perform an unspecified energy efficiency project or projects at a Detroit community center.

The fundamental point that I would like to stress in the DTE case is that a private attorney general may not seek relief that the United States choses to forgo.  Otherwise, our ability to settle cases is undermined. 

In the consent decree, the United States negotiated deadlines to limit pollution emissions from multiple DTE facilities, payment of a $1.8 million dollar penalty, performance of a $5.5 million dollar mitigation project, and other relief.  A citizen group should not be able to hold enforcement proceedings hostage to promote its own narrow interests.

 

Reform of the NEPA Regulations 

The Administration has pioneered several groundbreaking regulatory reforms.  I want to spend my remaining time focusing on one—the recent amendments to regulations implementing the National Environmental Policy Act.  The Act or “NEPA” was signed into law in 1970.  NEPA also created the Council on Environmental Quality or “CEQ,” which promulgated regulations implementing the statute in 1978. 

The purpose of NEPA is to ensure informed decision making by federal agencies. Under NEPA and the CEQ regulations, federal agencies assess the environmental impacts of tens of thousands of federal actions each year. 

As many of you have experienced, NEPA compliance has resulted in unintended and unexpected consequences for the agriculture sector, small businesses, energy development, and infrastructure projects.  These consequences include – but by no means are limited to – increased delays, costs, and other burdens for project proponents and stakeholders that rely on federal agency approvals, all resulting in reduced and deferred public benefit.  For example, environmental impact statements or “EISs” for federal highway projects average over 7 years to complete.  Across the federal government, reviews average 4 and a half years.  EISs also average over 600 pages.  These unintended consequences have persisted despite the actions of Presidents and Congress to address the quagmire of impacts. The process continues to be mired in delays, regulatory uncertainty, and lawsuits.  

These burdens have also persisted despite several pragmatic interpretations of the Act from the Supreme Court.  For example, in Department of Transportation v. Public Citizen, 541 U.S. 752 (2004), the Court held that inherent in NEPA and CEQ’s regulations is a “rule of reason” that ensures that agencies determine whether and to what extent to prepare an EIS based on the usefulness of potential information to the decision-making process.  Notwithstanding Public Citizen, other precedents, and executive and legislative interventions, even projects with no significant environmental impacts can take months, or years, to complete the process before receiving approval.  After the review process is complete, litigation often follows, further delaying projects important to communities across the nation.

Recognizing that its 1978 NEPA regulations were outdated, CEQ finalized amendments in July that comprehensively modernize the regulations for the first time in over 40 years.  The amendments contain a number of changes intended to simplify and accelerate NEPA analyses to limit delays, costs, and other burdens.  For example, the new regulations: Establish presumptive time limits of two years for completion of EISs; Specify presumptive page limits.

The new regulations explain that agencies only need to consider effects that are reasonably foreseeable and have a reasonably close causation relationship to the proposed action.  Similarly, under the amended regulations, federal agencies do not need to prepare EISs in connection with non-discretionary decisions or for non-federal projects with only minimal federal funding or involvement.  The amendments likewise clarify the meaning of regulations that have not been interpreted in a consistent manner by the courts.  These long overdue regulatory reforms will benefit our environment and our economy by accelerating environmental reviews and modernizing the NEPA process for the 21st century.

In closing, I’d like to note that DOJ’s Environment and Natural Resources Division is now defending CEQ’s amended regulations against five challenges spread across several district courts.  We look forward to continuing to defend these vital amendments on behalf of the American people.