Advocacy Alert 16-17: NACWA Transition Letter and 2017 Political Outlook

The results of the 2016 elections will bring a dramatic shift in political power to Washington, DC. While the contours of President-elect Donald Trump’s agenda are becoming more clear – including key nominations for Cabinet positions – the specific policy initiatives the new Administration will pursue on environmental, infrastructure, and water quality issues are still in flux. How the new Administration will work with the new Congress is also unclear.

But despite these unknowns, NACWA and its members are well positioned to continue advancing critical advocacy initiatives for the municipal clean water community and to elevate water as a national priority. This Advocacy Alert provides information about NACWA’s work to engage the Trump Transition team, including our recent transition letter. It also provides NACWA’s 2017 political outlook on how the elections with impact key clean water issues in the legislative, regulatory, and legal arenas, along with NACWA’s planned advocacy priorities for the New Year. Please contact Nathan Gardner-Andrews with any questions about NACWA’s transition efforts or planned advocacy initiatives for 2017.

Transition Letter Makes Key Clean Water Recommendations

NACWA’s formal transition letter was transmitted to President-elect Trump and members of his transition team on December 12. It follows an earlier communication that NACWA sent in August to both the Trump and Clinton campaigns detailing suggested issues for discussion on the campaign trail.

NACWA’s transition letter outlines a number of key clean water issues and recommendations for the new Administration’s consideration. NACWA has also met with members of President-elect Trump’s transition team in recent days to discuss these ideas and recommendations in more detail.

  • Increase Funding for Clean Water Infrastructure – NACWA highlights the significant infrastructure needs facing clean water utilities nationwide and notes the specific role the federal government can plan in helping address these needs. The Association recommends advancing a robust national infrastructure package with a significant portion dedicated to water, tripling funding for the Clean Water State Revolving Loan Fund (CWSRF) as outlined by President-elect Trump in his campaign vision, and protecting tax-exempt municipal bonds as an important source of funding.

  • Address Affordability and Low Income Challenges – Affordability issues are confronting clean water agencies nationwide, and are creating significant barriers to additional investments. NACWA’s letter outlines the nature of this problem and recommends ways to address this concern, including revising the existing affordability evaluation process used by the federal government and exploring the development of a federal low income assistance program to subsidize water bills for low income populations while also incentivizing utilities to raise rates to the levels necessary for needed investments.

  • Advance Responsible Regulatory Reform – NACWA notes in the letter several key reforms in the clean water arena that could significantly ease the regulatory burden on public clean water utilities, while at the same time providing improved environmental and public health protections at better cost. Recommendations in this area include continued advancement of Integrated Planning concepts; a focus on a “net environmental benefit” analysis for regulatory prioritization; watershed-based approaches; smarter approaches to wet weather regulation; a focus on compliance assistance instead of enforcement; and a streamlining of the SRF application and documentation process.

  • Promoting Water Sector Innovation – The Association’s letter touts the amazing innovation currently occurring in the clean water sector, especially around the Utility of the Future (UOTF) concept, and encourages the incoming Administration to help advance this new thinking. Specific recommendations include creating a regulatory structure that encourages and incentivizes innovation by public clean water agencies, as well as providing financial support to encourage adoption of UOTF innovations for widespread use.

NACWA looks forward to working with the transition team and members of the new Administration over the coming weeks and months to continue advancing the Association’s key advocacy priorities.

2017 Political Landscape to Provide Opportunities & Challenges

With Republicans in full control of the White House and Congress, the political dynamic in Washington, DC, in 2017 – and the resulting impact throughout the nation – will be significantly different than the past eight years. This will present the municipal clean water community with both opportunities and challenges.

On the one hand, President-elect Trump has made clear his desire to significantly invest in the nation’s infrastructure. This is an area where broad bipartisan support in Congress is possible and the municipal clean water community could be part of a major infrastructure bill next year. The new Administration is also likely to focus on significant regulatory reform efforts, which could allow the public clean water sector to help change some of the more onerous and less effective current regulations, as well as continue to advance and promote innovation. These are all excellent opportunities for NACWA and its members.

At the same time, exactly how the new Administration and Congress will pay for more infrastructure investment is unclear. Indications are that a significant portion of funding may come from incentives for private sector investment and tax reform, including the repatriation of corporate offshore funds back to the United States. NACWA remains concerned about scaling back or eliminating the tax-exempt status of municipal bonds. NACWA and its members will need to mount a full-throated defense of this tax exemption and advance strong advocacy for “real” federal dollars to be part of any infrastructure package. It is also likely that any regulatory reform efforts will be met with fierce opposition from the environmental activist community, leading to a rise in citizen suits and litigation. These issues will all present serious challenges to be addressed.

Legislative Outlook and Priorities

The November election did not fundamentally change the make-up of the incoming 115th Congress as Republicans are still control the House and Senate. But the shift in party control of the White House and the electoral margin of victory for President-elect Trump in key battleground states is likely to significantly alter the legislative agenda for the 115th Congress.

Republican control of the White House will impact the legislative agenda on environmental issues, including clean water. Following the election, Republican leaders immediately indicated their intention of rolling back regulatory actions taken by the Obama Administration and have specifically targeted the Clean Power Plan Rule and the Clean Water Rule for elimination. We can also expect the 115th Congress will reduce spending for the Environmental Protection Agency, particularly in the enforcement area, and potentially shift resources toward infrastructure investment.

President-elect Trump elevated the need for more investment in infrastructure during the campaign and has specifically proposed a tripling of the State Revolving Fund Programs. Spending on a large infrastructure investment initiative will likely come from savings and repatriation of off-shore corporate profits produced by comprehensive tax reform, and we can expect to see this effort get underway as soon as the incoming Administration takes power next month.

Perhaps the most interesting aspect of November’s election was the margin of victory Trump enjoyed in key battleground states that are represented by Democratic Senators facing reelection in 2018, and the impact this will have on the Senate’s legislative work. Republicans control the Senate 52 to 48, 8 votes short of the 60-vote filibuster-proof majority. Ten Democratic Senators face reelection in 2018 in states in which Trump won, six of whom are running in states that voted for the President-elect by more than 8 points.

Though many factors impact the politics involved in any given issue and no one can predict where we will be in 2018, we can expect that Senate Republics will keep the pressure on these vulnerable Democratic Senators to work with them on a bipartisan basis to advance Republican priorities. This potentially provides NACWA members with an opportunity to advance some key priorities, namely common sense reforms to the Clean Water Act to address affordability-related concerns, that we otherwise would not have been able to pursue in a different political environment.

Key NACWA legislative priorities in the new Congress will be significant inclusion of water funding in any major infrastructure bill, protection of tax-exempt municipal bonds, advancement of legislative language around affordability and integrated planning that was not included in the final 2016 Water Resources Development Act (WRDA), and laying the groundwork for some type of federal low income water assistant program to address affordability concerns for low income ratepayers.

Regulatory Outlook and Priorities

While early in his campaign President-elect Trump indicated that he would dismantle EPA, as election day approached his tone softened. Trump has more recently said that he would instead refocus the Agency on its “core mission of ensuring clean air, and clean, safe drinking water.” A planned federal government-wide hiring freeze and concerns about a Trump EPA may lead to the loss of key staff, but it is too early to tell what the true impact will be. For the moment, the incoming administration is focused on establishing a transition team to guide the handoff at EPA.

Myron Ebell, Director of the Center for Energy and Environment at the Competitive Enterprise Institute, a libertarian think tank based in Washington, D.C., is leading the EPA transition for the Trump Administration. Ebell and the rest of his team will be working on site at EPA between now and Inauguration Day to get up to speed on the Agency’s ongoing activities, as well as required or court-mandated actions that need to stay on schedule during the transition, and to ensure they are prepared to bring onboard the incoming Administration’s appointees.

The only EPA nominee announced thus far is Oklahoma Attorney General Scott Pruitt to be EPA Administrator. Pruitt is known for his strong legal opposition to the current EPA climate and air regulations, but he also has been significantly involved in legal challenges to the Agency's "Waters of the United States" rule along with dozens of other states. He was among the top candidates rumored to be in the running for the EPA Administrator position. NACWA is not clear on Pruitt’s familiarity with water issues, particularly in the regulatory context. Accordingly, it will be important to see who is nominated to head EPA’s Office of Water to get a better sense of where a Trump Administration may focus with regard to water issues.

Trump has made broad statements that he will cut regulations by 70-80 percent, in part through repealing two rules for every one issued by his Administration. Early EPA regulatory targets already identified by Trump include the controversial Clean Water Rule (Waters of the U.S.) and the Clean Power Plan. In terms of rules NACWA has been tracking with expected action in the next 6-9 months, here is what we expect:

  • Dental Amalgam Rule – Final rule expected to be signed on December 15. We have not seen the content of the final rule, but EPA has assured us that they have addressed all of our concerns.

  • Stormwater Phase II Remand Rule – Final rule signed on November 17 and published in the Federal Register on December 9. EPA addressed all of NACWA’s comments in the final rule.

  • Proposed Great Lakes CSO Notification Rule – This rule is Congressionally mandated and EPA expects to issue the proposal in January. The timing may be impacted by the change in administration, but EPA has committed to finalizing the rule in December 2017 and will try to avoid any delay. To date, EPA has listened to NACWA’s concerns about the proposal, but few details are available on what EPA plans to propose.

  • EPA Survey on Nutrient Performance – NACWA submitted comments on the survey on November 18, raising concerns with the use of Section 308 authority. EPA has now changed course and will not use Section 308. Now that the survey is voluntary, it may meet less resistance from the incoming administration. But it is not clear if the new Administration will continue to support the effort. If they decide to proceed, the survey is expected to go out in the first half of 2017.

  • NPDES Rule – A final rule is still expected in August 2017, but the incoming Administration may change course on the inclusion of a provision that would allow EPA regions to take over administratively continued permits they deem environmentally significant.

  • Clean Water Act Methods Update Rule – Final rule expected in December 2016.

  • Coliphage, nutrients, other water quality criteria issues – We expect no immediate change in EPA’s approach, but NACWA will be actively engaging with the new Administration to express our concerns in these areas.

Overall, NACWA anticipates the nature and pace of EPA regulations to change somewhat under the new Administration, but for the most part EPA will continue to operate as it always has. Aggressive regulatory advocacy at both the national and local level will still be necessary. EPA was quite active during the George W. Bush Administration and at least for the near-term, major changes by the Trump Administration are not expected, especially since it will take most of 2017 to work through all of the necessary staff appointments and bring new staff up to speed. The nature of the Clean Water Act, with most of the program being implemented by the states, also means that “on the ground” regulatory conditions for most NACWA members are not expected to change dramatically in the short term.

Legal Outlook and Priorities

Although the new administration has indicated it will be less aggressive in pursuing Clean Water Act (CWA) violations, NACWA at this time does not expect widespread changes with enforcement for existing cases. While Trump’s political appointees will head EPA and the U.S. Department of Justice (DOJ), the majority of enforcement personnel are non-political. Existing caseloads and judicial and bureaucratic processes will prevent significant immediate or near-term changes in enforcement. However, with regard to existing and upcoming wet weather consent decrees, it is possible that once more political appointments are made at EPA and DOJ, clean water agencies may be on better footing to negotiate or renegotiate favorable terms – especially around community affordability.

There are hundreds of civil and criminal cases and environmental violation investigations pending, which will not be dismissed outright. But there will be heightened Executive attention on high profile cases such as the challenge to the Clean Water Rule in the Sixth Circuit, and it is highly possible the new Administration will decline to continue defending the rule.

If the Trump Administration does begin to decrease enforcement and rulemaking, there will likely be a significant rise in CWA citizen suits filed against the Agency and individual NPDES dischargers. Environmental NGOs will undoubtedly encounter roadblocks in attempts to advance their agendas with EPA and Congress and will, therefore, focus more resources on citizen suit litigation.

For example, the Environmental Law and Policy Center held a post-election briefing where the organization launched a High Impact Environmental Litigation Program that envisions a platoon of pro-bono attorneys bringing civil suits against polluters to compensate for the expected reduction in federal environmental enforcement. Progressive states will likely also join forces with NGOs on key cases and attempt to fill any enforcement and regulatory gaps if not restricted by state law (e.g., “no more stringent than federal law” restrictions on state regulation).

The Trump Administration’s appointment of at least one Supreme Court Justice, as well as conservative judges to fill judicial vacancies in the federal district and appellate courts, will also have a major influence on the interpretation and viability of environmental laws and rules, as well as the success of citizen suits. With more conservative benches, legal theories or doctrines such as Chevron deference could be reinterpreted to afford less deference to federal agencies like EPA and “regulation by guidance” would receive greater scrutiny.

NACWA’s legal advocacy will be vital in the new Administration as we track the anticipated flood of litigation and determine when and how to participate to most effectively protect our members. NACWA’s legal programming, seminars, and resources will provide key analyses and strategies to fortify the clean water sector’s ability to manage the shifting legal landscape.

Conclusion

While there are still many unknowns about how things will unfold in 2017 from a political and regulatory perspective, one this is clear – aggressive advocacy by the public clean water sector to advance key priorities will be a necessity. The national political environment next year will be fundamentally different from anything we have seen in recent memory, and constant advocacy engagement on a bipartisan basis is the only way for NACWA and its members to ensure our perspective is heard.

Along these lines, all NACWA members are encouraged to make plans now to travel to Washington in March and participate in Water Week 2017 and the National Water Policy Fly-In & Expo, March 21-22. With a new Administration and a new Congress taking the reins of power, it is more important than ever that policy makers hear directly from you about the challenges facing your utility and your community. More information will be available about this event early in the New Year, but mark your calendars now and plan to attend.

NACWA looks forward to working with all its members in 2017 to continue advancing our shared advocacy initiatives. Together, we can elevate water as a national priority.