Examining Some Under-the-Radar Trump Executive Orders and How Agencies are Responding

The first month of President Donald Trump’s second term has featured no shortage of executive orders and proposals to enact sweeping changes on how the U.S. approaches energy policy. In sharp contrast to President Joe Biden’s policy of regulating energy producers and restricting their access to federal lands, Trump has set forth a policy of energy abundance through deregulation and opening up federal lands for energy production.

Besides reversing Biden’s orders — such as by removing the U.S. from the Paris Climate Agreement and ending the pause on liquified natural gas exports — Trump’s “Unleashing American Energy” executive order contains directives that could have important effects on how the U.S. approaches energy and environmental policy in the future. Three of these orders deserve particular attention: re-assessing the endangerment finding, ending the use of the Social Cost of Carbon, and revising regulations under the National Environmental Policy Act (NEPA).

• Endangerment Finding

In the section “Prioritizing Accuracy in Environmental Analyses” of Trump’s executive order, he instructed the Administrator of the Environmental Protection Agency (EPA) to re-examine the legality and relevance of the 2009 “Endangerment Finding.”

In 2017, during the first Trump administration, the Competitive Enterprise Institute and the Science and Environmental Policy Project petitioned EPA to revisit the endangerment finding. But at the time, the Trump administration didn’t have the appetite. This time could be different: a Feb. 26 Washington Post report indicates that EPA Administrator Lee Zeldin is urging the White House to strike down the endangerment finding.

For context, in 2009, the EPA found that “current and projected concentrations” of greenhouse gases “in the atmosphere threaten the public health and welfare of current and future generations.” Under Section 202(a) of the 1970 Clean Air Act, the EPA is required to regulate air pollutants from motor vehicles “which may reasonably be anticipated to endanger public health or welfare.” Previously, the EPA had not regulated greenhouse gases under the Clean Air Act because they weren’t considered pollutants. This changed after the Supreme Court’s decision in the 2008 case, Massachusetts v. EPA in which a group of states sought to force EPA to regulate greenhouse gases. In its decision, the court determined that the “EPA has statutory authority to regulate emission of such gases from new motor vehicles” because the term air pollutant “embraces all airborne compounds of whatever stripe.” The decision did not require EPA to regulate, but cleared the way for regulation if EPA determined that greenhouse gases met the statutory requirement of “endager[ing] public health and welfare,” a decision known as an endangerment finding. The Obama administration rapidly produced just such a finding in 2009 and the EPA began regulating greenhouse gas emissions as pollutants, first from vehicles and subsequently from power plants through measures like the 2015 Clean Power Plan.

Revoking the endangerment finding would enable the Trump administration to more readily reverse emissions regulations introduced during the Biden administration, many of which relied on that initial endangerment finding for vehicle greenhouse gases. With the endangerment finding in place, the Trump administration’s attempts to set emissions standards for vehicles and power plants that don’t incorporate the negative impact of carbon dioxide (CO2) could be challenged in court. For instance, attempts to repeal Biden’s tailpipe emissions standards (which were the basis for the electric vehicle mandate) could face legal challenges if they don’t discuss the effects of CO2 emissions, forcing the administration to cite studies that support regulating CO2 to a lesser extent in order to implement a new rule.

Overturning the endangerment finding could get the Supreme Court to revisit Massachusetts v. EPA. The composition of the court has changed since it was decided, and Chief Justice Roberts wrote one of the dissents. Massachusetts v. EPA was incorrectly decided because the Clean Air Act was not written to regulate greenhouse gas emissions. CO2 differs from traditional pollutants in that it is well-mixed in the atmosphere, naturally occurring, and non-toxic to humans in well-mixed air — unlike a traditional pollutant like lead, which is directly toxic to humans.

Even without overturning the case, however, the EPA isn’t forced to declare that CO2 emissions pose a danger. Through the rulemaking process, Trump’s EPA could determine that CO2 emissions don’t “threaten public health and welfare” in the sense contemplated by the Clean Air Act through the introduction of new findings and arguments that support that conclusion.

The evidence for this conclusion is strong. Although increased anthropogenic CO2 emissions create a greenhouse effect that contributes to global warming, there are also positive externalities to CO2 emissions, such as increased plant growth and greater crop yields, that are often ignored. When incorporating these positive effects of CO2 and acknowledging massive benefits of energy production from burning hydrocarbons — particularly the ability to “master” the climate — the dangers of CO2 emissions become less apparent. Without the technologies that produce CO2 emissions, we would be at much greater risk from the climate, whether it be from freezing temperatures or an inability to drive away from a hurricane’s landfall. Additionally, the projected impacts of greenhouse gases are indirect and come many decades in the future, while the Clean Air Act is designed to address present day direct harm. In contrast to this analysis, proponents of the endangerment finding primarily rely on attempting to attribute specific weather events to global temperature trends, a pursuit more in line with political advocacy than science.

Contesting the endangerment finding requires the administration to refute the notion that increased CO2 emissions “threaten public health and welfare” as defined by the Clean Air Act  and taking a cost/benefit approach to the emissions from cars and power plants provides evidence to support this point. Utilizing this evidence gives the EPA a fighting chance at overturning the finding.

• Social Cost of Greenhouse Gases

Under the same section, the executive order also disbanded the Interagency Working Group on the Social Cost of Greenhouse Gases, which was established by President Obama in 2009 “to create consistent estimates” across federal agencies on the social cost of greenhouse gases (primarily CO2) and rendered its guidance non-binding. The order also urges the EPA to eliminate the “social cost of carbon” calculation from federal decisions, citing “logical deficiencies” and a lack of legislative basis.

The social cost of carbon is a tool to quantify the “extra costs associated with carbon emissions that are not automatically reflected in market prices,” providing policymakers with the ability to justify costly regulations by citing the money saved through fewer CO2 emissions. It also provides an estimate that could be used as the basis for a carbon tax or cap and trade system.

The Institute for Energy Research (IER) has a long history of criticizing the social cost of carbon (and other greenhouse gases). For example, as former IER economist Robert Murphy explained to Congress:

[The] calculation of the social cost of carbon is malleable and arbitrary and therefore not appropriate for the federal government to use to justify regulation. A large fraction of the alleged benefits from reducing carbon dioxide emissions are incredibly speculative—as they occur in 50, 100, or even 250 years in the future. As I will explain, the estimated size of the social cost of carbon is heavily dependent on the discount rate used in the analysis, and the administration has ignored [Office of Management and Budget’s] guidance on the subject. In fact, the concept is so open-ended that we can generate social costs of carbon that are very high, or close to zero, or even negative, just by adjusting some key parameters. This means that the economist can produce just about any estimate of the social cost of carbon desired.

In 2009, the Obama administration set the social cost of carbon at $43 per ton globally. The first Trump administration only considered the cost of carbon to the U.S., lowering the estimate to between $3 and $5 per ton. President Biden raised that number to $51 a ton and took international impact into account upon taking office, but then recommended that the cost be raised to $190 per ton in 2022. This estimate arose from the EPA lowering the discount rate from 3% to 2% (thereby placing more value on future cost estimates) and using a different set of damage functions that involve increased deaths from climate change.

Utilizing the social cost of carbon to affect policy decisions places a substantial degree of dependence on models that cannot reliably predict future damages from higher temperatures on gross domestic product. The reality is that the social cost of carbon (and other greenhouse gases) is impossible to calculate with any precision, and allowing the federal government to rely on the social cost of carbon gives it leeway to regulate however it chooses. Thus, reorienting federal policy away from the social cost of carbon is a much-needed transition towards eliminating political bias and speculation on costs hundreds of years into the future from present-day decisions.

• National Environmental Policy Act

The executive order discusses the National Environmental Policy Act (NEPA) multiple times, most prominently under the section titled “Unleashing Energy Dominance through Efficient Permitting.” Under this section, the order calls on the Chairman of the Council on Environmental Quality (CEQ) to “provide guidance on implementing the National Environmental Policy Act… and propose rescinding CEQ’s NEPA regulations” while also “streamlining the judicial review of the application of NEPA.”

NEPA is a 1969 law that requires every action taken by a federal agency to include an environmental analysis — which could be a less intensive environmental assessment (EA) or a lengthy and comprehensive environmental impact statement (EIS) depending on whether the activity is “determined to significantly affect the quality of the human environment” — unless that activity is granted a categorical exclusion. The regulations guiding how NEPA reviews are conducted are based on oversight and guidance from the CEQ.

Instead of simply providing guidance, President Jimmy Carter’s CEQ wrote binding guidance that all agencies had to follow. Under Biden, the CEQ enacted rules that streamlined permitting for green energy projects by setting deadlines and page limits for environmental reviews and required that federal agencies consider climate and environmental justice impacts within their analyses.

In response to the executive order, on Feb. 19, the Trump administration unveiled an interim final rule that repealed all regulations issued by the CEQ since 1977, the year that an executive order from Carter directed the CEQ to issue binding regulation on how federal agencies comply with NEPA. As an interim final rule, the directive takes effect immediately, bypassing the usual public notice and comment process of rulemaking while beginning a 30-day public comment period. The repeal of the CEQ’s regulations aligns with the recent determination by the U.S. Court of Appeals for DC in Marin Audubon Society v. Federal Aviation Administration that the CEQ lacks the statutory authority to issue binding rules on federal agencies because it violates the separation of powers.

While the long-term outcome of this case on how NEPA reviews are conducted is not yet clear, it lends credence to the view that NEPA has extended beyond the original intent of Congress. Much of the complications from NEPA have arisen because of litigation over CEQ’s guidance, not the statute itself. For instance, consideration of “cumulative impacts” does not appear in the law; it exists in CEQ’s regulations. This term has generated substantial litigation and has led to the dramatic increase in the length of NEPA analyses and the time required to put together the analyses.

The Supreme Court is currently reviewing another NEPA case, Seven County Infrastructure Coalition v. Eagle County, which could limit the scope of what “reasonably foreseeable future actions” related to projects agencies have to incorporate into their reviews. Depending on the court’s decision, the extent to which agencies could face legal consequences for failing to incorporate analysis of a wide range of potential environmental impacts in their reviews could be diminished — which could help streamline how the law is applied to all projects, not just politically-favored ones.

Limiting the scope of NEPA analyses would give agencies some relief from litigation risk, but fully relieving federal agencies and producers from the delays and costs associated with NEPA requires Congressional action. According to a 2018 report by the Federalist Society, the average time it takes to complete an EIS increased from 2.9 years in 1998 to 5.1 years in 2016 and the median page length grew from 650 pages from 1994-1999 to 1,600 pages from 2011-2016. Instead of encouraging environmental stewardship, the requirement of extensive environmental reviews gives ammunition to opponents of projects to increase costs and delays, making projects unprofitable to build.

Canceling CEQ’s NEPA guidance is a great first step. Although it does not change NEPA’s statutory requirements, it should relieve reviews from having to focus on the case law that has built up surrounding CEQ rules.

Conclusion

President Trump’s “Unleashing American Energy” executive order includes numerous directives that signal his intent to fundamentally change federal policy towards prioritizing energy production. Some of these directives have already been implemented, but more time is required to determine their full impact. However, all of the regulations targeted by Trump have had a substantial role in increasing energy costs, whether it be through enabling regulations or creating production delays, indicating that Trump’s actions could play a large role in lowering these costs in the long-term.