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Aggressive Regulatory Agenda Poses Significant Challenges for Metalcasting Operations

Jeff Hannapel

The Biden administration has been promulgating new regulations at an unprecedented pace. Overall, the number of significant regulations has increased by more than 40% over the past five years. Economically significant regulations are those rules that are likely to “have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, territorial, or tribal governments or communities.” In addition, the Biden administration has issued nearly 150 new proposed and final environmental regulations over the past year, many of which impact small businesses and the metalcasting industry.

It is not only the volume of new regulations that is concerning to the regulated community, but also the scope of many of these regulations are far-reaching. The regulations have introduced novel policy changes for regulated industries, developed new approaches for never before regulated pollutants, reversed policies of previous administrations, and set extremely stringent regulatory limits (some by orders of magnitude) that threaten the economic productivity and viability of many industries. This aggressive regulatory agenda has prompted federal courts to overturn regulations on the grounds that the agency exceeded its statutory or constitutional authority in promulgating the regulations. The overturn of EPA’s greenhouse gas emissions standard for power plants and the definition of waters of the U.S. (WOTUS) are prominent examples.

Two issues that have been featured in this regulatory and policy overhaul are climate change (particularly the reduction of greenhouse gas emissions) and environmental justice. Such focus has not been limited to the actions of EPA, but have been intertwined into the actions of all federal agencies.  The White House recently made revisions to how benefits and costs of regulations should be analyzed to promote efforts to address climate change and environmental justice.

On November 9, the White House issued a revised final guidance on how federal agencies should conduct costs and benefits analysis of regulations, and the changes are expected to boost the benefits of rules to reduce greenhouse gas emissions and address environmental justice concerns. Specifically, the White House issued a statement that claimed the new guidance can result in “better regulations, which, in turn, means lower costs for consumers; cleaner food, air, and water; less fraud and exploitation; increased workplace safety; more innovation; and a stronger economy.”

The guidance, referred to as “OMB Circular A-4” has not been revised since 2003. The revised guidance instructs federal agencies to give greater weight to actions with impacts on the future. The prior guidance tended to undervalue the long-term benefits and costs of taking actions to address climate change. Accordingly, federal agencies will now emphasize the benefits of mitigating climate change or the risks of not doing so. In addition, the revised guidance also advises federal agencies to consider the potential benefits and costs of a rule that could occur outside the boundaries of the U.S. Critics of the expanded global analysis claim that such consideration is unwarranted because those stakeholders outside of the U.S. may accrue benefits while bearing little, if any, of the costs or burdens of the regulatory action.

Finally, the revised regulatory guidance puts a greater emphasis on weighing the “distributional” effects of regulations on different populations, thereby elevating environmental justice concerns. For example, a regulation that addresses a substance that may have a disproportionate impact on low-income and minority communities needs to assess the benefit and cost impacts on environmental justice. Furthermore, the revised guidance encourages federal agencies to consider qualitative and non-monetized benefits and costs of a regulation. While it is often difficult to assess these qualitative and non-monetized benefits and costs, it does provide federal agencies additional flexibility to assess the potential impacts of climate change and environmental justice.

The Biden administration’s aggressive regulatory agenda will continue to pose significant challenges for the metalcasting industry, including increased regulatory costs, uncertain energy and resource supplies, and restrictions on expanding existing operations or building new facilities. In addition, revisions to existing broad federal policy through guidance and Executive Orders will continue to help promote two of the administration’s key issues: climate change and environmental justice. The metalcasting industry remains committed to making critical investments to effectively improve environmental quality and promote a sustainable future. As a result, the AFS environmental committees will continue to keep members informed on critical developments in these areas (as well as others) that could impact metalcasting operations.