Environmental And Safety Issues: Changes On The Way

Sunday, March 1, 2009 - 01:00

Editor: Now that the Obama administration has been in place for several weeks, have there been any surprises in the environment and safety areas?

Weinberg: No, the new administration has been pragmatic as we had expected but also is reversing some Bush administration policies. One important example that didn't receive much attention was an Executive Order reducing the role of the Office of Information and Regulatory Affairs in reviewing new regulations and returning it to coordinating activities among the executive agencies rather than directing policy. It is also pretty clear that the Obama administration will be more aggressive than its predecessor in the area of enforcement. At the same time several questions remain outstanding. We are awaiting many second tier appointments in the environmental and safety areas. It is not yet clear how Carol Browner, as White House Coordinator of Energy and Climate Policy, will interact with the Environmental Protection Agency or the Council on Environmental Quality, much less the Department of Interior, the Department of Energy and other key federal agencies. And, we don't know how aggressive the Consumer Product Safety Commission will be going forward.

Editor: What do you anticipate will be the new Administration's environmental and safety priorities?

Weinberg: First and foremost, of course, the stimulus package has a number of environmentally oriented components. One interesting exchange in the Senate was an effort by Senator Barrasso to put language that would have truncated environmental reviews for new projects into the stimulus bill. That was defeated, but the issue will likely come up repeatedly over time as the National Environmental Policy Act and the Endangered Species Act inevitably get invoked to try to delay certain kinds of projects. Beyond the stimulus, the number one priority in the environmental area clearly is climate change regulation. That probably translates into some rule making proposals from EPA in the short term and tightening up mileage standards as part of legislation to deal with the Detroit auto makers. Another focus of attention is accelerating energy efficiency standards. In fact, the President already issued an Executive Order directing the Secretary of Energy to accelerate the development of new energy efficiency standards even more quickly than required under some court cases. In the longer term, we will probably see attention paid to chemical regulation, with effects potentially well beyond the chemical industry itself. We will probably also will see some attention paid to "product stewardship" issues dealing with initial design as well as end-of- life handling of products, with an eye toward whether there is a need for federal legislation to replace the current patchwork of state laws that makes it very difficult for companies to do business on a national basis. Finally, I expect the Obama administration to try to combine the use of the web for disseminating information with a return to more formal rule-making processes for actual decision making activity.

Editor: Looking at climate change, how does this issue translate into challenges for particular companies?

Weinberg: Well you almost have to look at by product or product category. On the vehicular side it means continuing push for higher mileage and support for electric vehicles and hybrid vehicles. For example, there are provisions in the stimulus bill that support R&D on alternative battery chemistries here in the U.S. and ultimately the construction of some new factories in the United States. Those areas for vehicular impact are going to develop very quickly. On the manufacturing side things probably will develop more slowly because it is going to take some time for legislation to develop dealing with the emissions that contribute to climate change. I anticipate rule-making activity out of EPA, and probably the Department of Energy, targeted at specific industries known to be large emission sources intending not only to enforce existing rules but also in large part to force those industries to support legislative changes. A lot of companies that have gotten used to talking to people at the tops of these agencies who spoke their language are now going to be talking more with people who speak in policy terms and are demanding hard data and supportive positions.

Editor: Could you explain a little more about what you mean regarding the need for companies to pay attention to aspects of global warming legislation that support particular sectors?

Weinberg: The thing to keep in mind here is that the cap-and-trade legislation the administration is committed to has the potential to pick winners and losers. Cap-and-trade will increase the cost of certain kinds of business, and increasing the cost of emissions can have some unanticipated or undesirable results. For example, you don't want to increase the cost of every American heating bill at a time of great economic stress, so all the cap-and-trade proposals have mechanisms for recycling some of that money back into support for home heating subsidies. But when it comes to business there are a couple of interesting problems to be addressed. One is the effect of off-shore competition on American industries. Another is the relative energy intensity of various industries. For example, the cost of building a product in the United States is significantly increased because of energy usage. Thus, foreign competitors, who are not subject to the same limitations and costs, gain an advantage. That is not a goal of the climate change legislation. So we have to consider how to deal with those issues. It is not just a steel issue. It is an aluminum issue, a glass issue, a cement issue, a petrochemical issue and it is even a corn milling issue. In the last several years, people didn't really think the legislative process was going forward very far. But now this legislation is going to have some staying power and is going to lead to some results.

Editor: Where do you see EPA heading on this issue?

Weinberg: EPA has an interesting problem. It operates under a series of different statutes but none of them is very well-oriented to dealing with climate change. Climate change is affected by emissions from all over the world. It is hard to tell what impact came from location A versus location B once it all mixes in the air. It is a real challenge for EPA. EPA will probably use existing authorities such as the Clean Air Act provisions that deal with "New Sources," but a good portion of that effort will be directed not so much to really implementing new regulations as to identifying areas where the agency's authority has to be clarified or extended or expanded. Most of the lawyers who have been paying attention to the climate change issue have tended to look at it from the financial standpoint in terms of tradable credits and market creation. Not many lawyers have really focused very hard on the regulatory programs that are going to be necessary to implement any kind of climate change regime. I think that some people now are beginning to recognize that this is going to be another area with potentially huge business impacts and a need for companies to become more involved more quickly.

Editor: Europe has developed a program called REACH, an acronym for "Registration, Evaluation, Authorization and Restriction of CHemical substances," which governs its chemical industry and may be more stringent than our own Toxic Substances Control Act. In light of industrial globalization, do you anticipate any likelihood of movement toward establishing universal standards in this area?

Weinberg: REACH is a very important program that has gone into place in Europe over the last year or so. It requires companies that manufacture chemicals and that manufacture products made from chemicals to undertake very substantial reporting and registration burdens and to initiate programs to test those products for safety. It is a huge regulatory challenge for companies that are either in Europe or are selling products into Europe and it goes much further that anything that has previously been attempted anywhere. The Europeans are just beginning to come to grips with the challenge of what to do with all the data this is going to produce and how to make sense out of it. The notion of revising our Toxic Substances Control Act to be more consistent with REACH tends to get either of two different reactions from business and industry. One is a shudder because REACH has been so burdensome, but the other is recognition of the international nature of all trade these days which provides some hope for simplifying all such regulatory schemes. The legislative debates on what the U.S. should do in imitating REACH could impact a huge number of companies and interests in the U.S., since all products that contains chemicals, as well as chemical products themselves, have been thrust into the regulatory mix of this statute.

Editor: And what did you mean about "product stewardship"?

Weinberg: Historically, individual states have developed programs like mandatory bottle recycling bills or mandatory battery recycling programs. Handling these localized issues on a statewide basis has been fairly attractive to business. But for products like batteries, whose distribution is national and manufacturers may not know where their product eventually wind up, there is a strong desire to have some national uniformity. For example, twenty years ago Congress standardized the regulation of battery recycling. The same kinds of issues are now being presented with regard to electronic waste, or "e-waste", such as used televisions and computers and so forth, where different states have different programs in place. It becomes very difficult for companies that are trying hard to comply to do so in any kind of cost effective way. I anticipate there will be some pressure from industry as well as from environmental groups to move towards some kind national standardization.

Editor: How does the shift to more aggressive regulatory policy affect corporate counsel?

Weinberg: It puts a much greater premium on the ability of counsel to anticipate problems before they develop. Corporate management structures have flattened out so much in recent years that there is rarely somebody assigned this kind of a planning or anticipatory responsibility, so it often falls on the lawyers to play that role. If they play the role right they can make informed judgments about the issues that merit the most attention. Trade associations also no longer have as much anticipatory staff as in the past. They also suffer from the broader problem of economic difficulty. When times are tough it is more difficult for the trade associations to get funding from their members and therefore more challenging to staff adequately. So companies trying to get ahead of the curve cannot rely as much on traditional information sources as they may have in the past.

Editor: How about the impact on Washington lawyers and law firms?

Weinberg: The situation is muddied by the massive mergers in the legal business and the growth of megafirms with offices around the country and around the world who have absorbed an awful lot of Washington firms. In those firms, the regulatory areas tend not to be the biggest profit setters and therefore may not get as much attention as other areas. There are obviously some law firms, and we like to think that Wiley Rein is one of them, that give Washington policy issues top priority.

Please email the interviewee at dweinberg@wileyrein.com with questions about this interview.