A Case Study in Harmful Regulatory Uncertainty
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Here’s a real-world example of a regulatory agency’s bad decision that could send a chilling effect across the country.
In March, Sheldon Richman explained a run-in between EPA and Mingo Logan Coal Company, a subsidiary of Arch Coal, over the Spruce No. 1 mine in West Virginia:
EPA took the extraordinary regulatory action of unilaterally revoking Mingo Logan Coal Company’s fill permit nearly three years after the Army Corps of Engineers had issued the permit as part of a lengthy process that included EPA review. Mingo Logan and its investors had relied on those validly issued permits, only to have EPA try to pull the rug out from under them at the eleventh hour. EPA essentially used the threat of economic uncertainty to attempt to force the company not to move forward with a lawful development plan.
A federal court ruled that EPA didn’t have the authority under the Clean Water Act.
Today before the House Energy & Minerals Resources Subcommittee, Karen Harbert, President and CEO of the Institute for 21st Century Energy testified on how EPA’s actions have increased regulatory uncertainty:
If we were to move to a system embodied by the Environmental Protection Agency’s (EPA) action in the Spruce Mine case, hundreds of projects and businesses in America today could question if they too could retroactively have their permits rejected. New projects will have to determine how to calculate risks associated with changing viewpoints at a future point from a regulatory agency. This will reduce and delay a broad range of projects, increase the cost of doing business, and reduce the number of jobs at a time when job creation is most critical.
While this specific case is about a coal mine, EPA’s behavior goes beyond this industry. “When a U.S. government agency takes unprecedented action to attempt to revoke a lawful permit issued by another agency, this action sends a message to all businesses that government approvals may not be honored,” she said.
Harbert told lawmakers that businesses want “a process that makes sense. A process that has clear time frames. A process where once a decision is made a business and its investors can trust the decision will be honored. “
A good regulatory process will reduce uncertainty and give businesses more confidence to invest and hire workers.