Gov. Murphy’s Executive Order On Regulatory Policy Raises Major New Concerns

Posted on April 3, 2019 by Bill Wolfe

Corporate economic interests at least as important as protecting public health & environment

Ask BOEING Where Regulatory “Partnerships”, “Cost-Benefit” & “Efficiency” Lead

[Updates Below]

Gov. Murphy’s EO #63 is getting high praise by environmental groups. (see Part I)

Given the rhetoric and findings of the Order and the 14 serious policy flaws I identify in Part II below, I find that hard to comprehend and seriously doubt they even read it before spouting off in the press.

This is particularly disturbing not only given the effects of the Order on State government and DEP, but by the fact that the Order actually undermines a pending bill to impose mandatory restoration of and a stricter response to block Trump federal rollbacks. (see below)

The Murphy Order is kind of like the Obama “all of the above” energy policy – more or less what one would expect from a former Goldman Sachs Wall Streeter and corporate Democrat Neoliberal (Gov. Murphy and his wife Tammy are illustrations of what Nancy Fraser calls “Progressive Neoliberalism“)..

I) What the Executive Order finds and says about regulatory policy objectives

Let’s start with the troubling title, which has not been reported by the press (from Gov.’s webpage): Establishing new regulatory principles to foster economic growth and government efficiency

Get that? The objectives are to “foster economic growth and government efficiency”.

The Order is equivocal, vague and – while not using right wing red meat rhetoric like “job killing red tape” and “soviet command and control” – it repeats myths about regulations, such as:

WHEREAS, ill-considered or ineffective regulation can deter progress, unduly burden businesses, hamper innovation and economic growth, and lead to stagnation, inefficiency, and inequity, while an informed and progressive approach to regulatory affairs can help avoid these shortcomings;

Murphy also embraces the “cost-benefit” utilitarian ideology of opponents of regulation, such as:

WHEREAS, as a general matter, an agency should not propose or adopt a regulation without first making a reasoned determination that its benefits justify its costs, with the recognition that some benefits and costs are difficult to quantify;

The Order very clearly promotes economic interests and makes it DEP’s role to promote “innovation” and “balance” economic interests against science and public health and environmental protection. In contrast, the underlying environmental laws pursuant to which DEP adopts regulations clearly do not authorize any of these objectives:

WHEREAS, regulations should foster and support innovation in New Jersey’s economy, not hinder it, and so should be written in user- friendly language as often as practicable; and

WHEREAS, it is incumbent upon State government to focus on developing innovative, job-creating strategies that attract new businesses to New Jersey while retaining and growing businesses presently located within the State; and

WHEREAS, attracting and strengthening businesses may be advanced in part through regulatory measures conceived and designed to promote such goals;

I challenge the Murphy and DEP legal eagles to provide one citation in NJ environmental or administrative law that requires DEP to consider “cumulative regulatory impacts”, or requires “the least burdensome” regulatory approach, or that requires DEP to consider technological innovation, or attraction of investment, or attraction of new business and/or retention of existing business.

Provide just one example. Come on Matt, just one. You did Stanford law school.

Yes, some federal laws do include some of these standards, but no NJ laws do.

The fact that economic concepts and federal regulatory principles were injected into Gov. Murphy’s EO reveals the ideology & background of Murphy’s Chief Counsel. It is likely that Matt’s work with Brookings was the source of the Neoliberal economic theory (e.g. distributed impacts, co-benefits, attraction of investment, technological innovation, et al all are longtime Brookings Mantras). I assume they are basic Stanford Econ. 101 and Poli-Sci courses on “public choice theory”, both examples of Neoliberal ideology they pour into your head at the elite University. And Matt’s work for NJ’s corporate Democrat US Senator Booker likely brought him into contact with “least burdensome” (see TSCA 2605) regulatory frameworks.

Too bad he missed the science and concepts of cumulative and synergistic health effects and failed to write them into EO #63. Revealing, no? Industry gets protection from cumulative regulatory impacts, but people do not get protection form cumulative corporate chemical assaults? And how more clueless, shameless and discredited can you get than for Murphy’s Chief Counsel to brag about working on the 2008 Wall Street bailout? Really!

[Update: there even are NJ state laws (e.g. NJ Safe Drinking Water Act), and federal laws that do not allow consideration of costs, e.g. Clean Air Act Section 112 Hazardous Air Pollutant provisions. For an example, see another federal TSCA provision:

(f) DEFINITION.—For the purposes of subsection (a), the term ‘‘imminently hazardous chemical substance or mixture’’ means a chemical substance or mixture which presents an imminent and unreasonable risk of serious or widespread injury to health or the environment, without consideration of costs or other nonrisk factors.

[Note: and beware of magical beliefs in “innovation” and “technology” as superior to government mandates –

“But here’s the key,” he continued. “We as a country have reduced our carbon footprint by almost 20 percent from the year 2000 to 2014. You know how? Through innovation and technology, not government mandate.” ~~~ Scott Pruitt, disgraced Trump EPA Administrator

Gov. Murphy regurgitates the longtime spin of the business community, about “efficiency”, “streamlining” and “access” to government (which are code for “get government off the back of the business community” and providing even MORE backroom access and undue influence on government):

WHEREAS, even as our administration promotes policy approaches that inform the development and broaden the impact of regulatory actions, we should also strive to identify ways to maximize regulatory efficiency by simplifying and streamlining the public’s ease of access to the machinery of government and to enhance the ability of regulated communities to communicate and interact with the regulatory agencies that oversee their actions, professions, occupations, and endeavors;

These are not mere rhetorical sops to the business community, but important policy statements that reveal Gov. Murphy’s  strong pro-economic bias and anti-regulatory ideology.

They also generate expectations in the business community – consider their support: (NJ Spotlight)

[Dennis Hart of the NJ Chemistry Council] was encouraged by a commitment to look at why the regulatory process is so long and costs so much more than other states.

“If this new executive order leads to discussions and positive impacts on streamlining the regulatory and permit program and reducing the fees and costs of doing business in New Jersey, we fully support it and are ready to start working on those issues right now,’’ he said.

While regurgitating extensive pro-business anti-regulatory rhetoric, Gov. Murphy fails to note that Gov. Christie’ EO#2’s explicit policy objective was to provide “regulatory relief”:

For immediate relief from regulatory burdens, State agencies shall:

Gov. Murphy’s failure to engage, challenge and reject that Christie “regulatory relief” policy speaks volumes. [The rational for repeal of Ex. Order #2 was vague, at best. Also note that Murphy did NOT repeat Christie EO#3 (Red Tape) and EO#4 (unfunded state mandates.]

So is the failure to mention the abundant academic public policy literature about potential abuses of regulatory capture, conflicts of interest, self dealing, scientific integrity, bias, or self-certification, outsourcing and privatization. Ask Boeing about all that.

The Gov. also mischaracterizes as merely creating a “perception”  – a sham term that clearly downplays the “federal consistency” policy of Christie’s EO#2, which was based on a federal consistency policy originally announced in former Gov. Whitman’s 1994 “Open or Business” policy in Excutive Order #27. Murphy wrote:

WHEREAS, Executive Order No. 2 (2010) created the perception that going beyond federal standards is undesirable through its directive that agencies “shall . . . not exceed the requirements of federal law” unless required by state statute or where necessary to achieve a state-specific public policy goal;

Perception my ass – that federal consistency policy resulted in a tremendous rollback of NJ specific stringent standards in favor of federal minimums, including virtually the DEP’s entire clean air and clean water and hazardous waste management programs.

II)  What the Executive Order established in policy and actually does

Gov. Murphy’s EO#63 rescinds Christie’s EO#1 and EO#2.

First of all, for context, Gov. Christie issued his regulatory policy EO’s#1 (moratorium), EO#2 and EO#3 (Red Tape Commission) and EO#4 (state mandate/state pay – State should defer to local government) in the first hour of his first day in office.

In contrast, it took Gov.Murphy over 1 year and 62 prior Executive Orders to get around to correcting and rescinding this important policy matter. That delay does not reflect a priority.

Second, there was no need for Gov. Murphy to rescind EO#1 (moratorium) as that was limited to just 90 days and it expired more than 9 years ago.

The effect of repealing EO#1 creates a false and exaggerated scope of action by Gov. Murphy, especially considering that he did not rescind Christie’s EO#3 (Red Tape) and EO#4 (local government).

That keeps both of those horrible Orders legally in effect and serves to reinforce their policies that consider regulation “excessive red tape” and defer to local government over state responsibilities.

Third, Murphy repeats the Christie slogan of “common sense”.

Consistent with applicable law, State entities shall strive to pursue the creation of a regulatory environment designed to support innovation, remove bottlenecks, and streamline interaction with the government, while supporting strong environmental, health, safety, and labor standards, by focusing on the following overarching, common sense goals

That term originated in current public policy circles not from Tom Paine, but via a right wing libertarian attack on government back in the 1980’s. (citation forthcoming).

Fourth, the Murphy EO – contrary to false favorable news reports – does not automatically reject, restore, or mandate that DEP and other NJ government agencies resist regulatory rollbacks by the Trump administration.

In fact, Murphy merely equivocally suggests that State agencies “should evaluate actions NJ might take”

When the federal government repeals or rolls back prior protections for public health, welfare, safety, or the environment, State entities should evaluate actions New Jersey might take to restore those protections at the state level and, when appropriate and authorized by law, act to fill the void left at the federal level.

This is weak language and it conflicts with and undermines pending legislation (A5033) that would force state agencies to reject Trump rollbacks. For example, see this far stronger language in the bill:

the commissioner shall, notwithstanding the provisions of  the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1  et seq.), immediately upon filing proper notice with the Office of Administrative Law, adopt rules and regulations as the commissioner deems necessary to ensure the protection of that endangered species pursuant to this act. ….

In the event of amendments or supplements to the federal Clean Air Act or the federal regulations adopted pursuant thereto that are less stringent than those in effect on January 19, 2017, the department shall, notwithstanding the provisions of the  “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et  seq.), immediately upon filing proper notice with the Office of Administrative Law, adopt such rules and regulations as the commissioner deems necessary to ensure that the rules any regulations adopted pursuant to this section in effect at the time of the federal changes are not weakened.

The bill has the same mandates for Trump rollbacks of federal Clean Water Act and Safe Drinking Water Act protections. 

Accordingly, via EO#63, Gov. Murphy has undermined and weakened and likely derailed stricter and more protective pending legislation.

Fifth, Gov. Murphy echoes Christie’s slogan about “regulatory burden” and mandates the “least burdensome” approach. This makes it harder for DEP to adopt new rules and easier for industry to challenge them:

State entities should identify and use the best, most innovative, and least burdensome tools and approaches to achieve their regulatory goals.

Sixth, the Gov. directs “partnerships” with the public and the regulated community. This misconceives of DEP’s regulatory role – just look at the Boeing disaster for where “partnerships” lead:

State entities should engage with affected communities, and provide opportunities for various groups to work in partnership with the State in crafting solutions.

Seventh, Gov. Murphy mouths the platitude of “Stakeholder” involvement, without specific restrictions such as balance, diversity, representativeness, ethics, scientific integrity and prohibitions on conflicts of interest.

This is a HUGE omission and failure given the Christie “Stakeholder” approach (and back door regulatory lobbying via the Science Advisory Board), which were dominated by industry representatives who engaged in self dealing in ways that were riddled with conflicts of interest:

The means selected should be tailored to enable the State entity to accomplish its regulatory goals. Where a proposed rule is new, or makes significant and/or expansive changes to existing rules, the benefit from extensive stakeholder outreach will be greater.

Ask DEP about how this “stakeholder outreach” worked out in their recent bear hunt secrecy proposal. Notably, the Order conveniently becomes effective on June 1, 2019, after the date of that proposal.

Eighth, Gov. Murphy leaves to the very end an endorsement of the extremely controversial, scientifically unjustified, legally suspect, and unethical practices of balancing private industry costs and public benefits.

When assessing the impacts of a rule pursuant to N.J.A.C. 1:30–5.1, including the economic impacts and the social impacts, State entities shall include a comparison of the proposed benefit to the public with the anticipated burden to the public.

Again, not only is such an approach not authorized in legislation, such a biased “principle” makes it harder for DEP to adopt new rules and easier for industry to challenge them.

Ninth, Gov. Murphy pays lip service to environmental justice.

The EJ provisions of the Order are not mandatory, but voluntary.

Worse, there are no criteria or standards or remedies included to allow implementation and enforcement of this purely voluntary, vague, and aspirational “principle”:

State entities should give due consideration to “Environmental Justice,” meaning that in conceiving and fashioning proposed regulations, State entities should identify and address, as appropriate and practicable, disproportionately high and adverse human health or environmental effects of the program, policy, or activity on minority and low-income populations

Just like the Trump rollback legislation, “should” in the EO is voluntary while “shall” in the bill is mandatory.

Tenth, Gov. Murphy invents an entirely new “principle” – one that has long been sought by business and industry who complain of over-regulation by DEP.

The principle is “cumulative impact”.

But the “cumulative impact” has nothing to do with the cumulate environmental and public health impacts, a concept that is in current law but not enforced (e.g. CAFRA Section 10, Highlands Act, CWA TMDL, et al) and long sought by environmental groups. For example, here is the TSCA standard:

The health and environmental effects for which standards for the development of test data may be prescribed include carcinogenesis, mutagenesis, teratogenesis, behavioral disorders, cumulative or synergistic effects, and any other effect which may present an unreasonable risk of injury to health or the environment. The characteristics of chemical substances and mixtures for which such standards may be prescribed include persistence, acute toxicity, subacute toxicity, chornic toxicity, and any other characteristic which may present such a risk.

The Order has nothing to do with the cumulative impact risks of multiple toxic pollutants and multiple exposure pathways.

The cumulative impact DEP must consider is the cumulative impact of REGULATIONS on business, not the cumulative impacts of development or pollution on people’s health!

State entities should take into account the cumulative impact of their regulations. Each State entity should determine how best to identify and evaluate such impacts in the context of its particular work.

Eleventh, Gov. Murphy echoes Gov. Christie’s EO#2s anti-regulatory slogan about the need to minimize “regulatory burden”

To carry out the goals set forth in Section 2, State entities should consider how best to foster innovation in the economy and to minimize regulatory burdens, which may include but is not limited to:

Finally, Gov. Murphy misconstrues DEP’s role as assisting regulated industry and undermines traditional DEP regulatory enforcement policy by stressing the need for “compliance assistance”.

This revives and borders on the controversial, failed, and discredited policy known as self disclosure immunity:

When possible and appropriate, State entities should provide education about the rules and means of compliance, and should establish channels to enable members of the affected and regulated communities to make compliance inquiries without increasing their exposure to enforcement. A State entity’s response to regulatory noncompliance should be proportional to the circumstances

Given these major flaws, my conclusion is that Gov.  Murphy’s EO#63 is as bad or worse than the Christie EO’s it rescinded.

[Update – oops, I missed this one on page 8

It creates an affirmative requirement to consider “alternatives to direct regulation”. This can only discourage and erect additional barriers to necessary regulation.

Just ask Boeing about that, e.g. self-certification and outsourcing are alternatives to direct regulation!

Considering practicable and beneficial alternatives to direct regulation, through means such as targeted incentives encouraging desired activity, to the extent permitted by law.

And this one, which benefits the regulated community and not the public regarding assistance in enforcing complex DEP regulations. This says NOTHING about providing this same information to the PUBLIC!

To the extent permitted by law and to the extent practicable and beneficial, State entities should work together to eliminate conflicting rules and coordinate efforts into a unified response, which could include agreeing on one State entity to serve as lead agency so that regulated entities and applicants can receive timely, consistent, and informed answers to inquiries.

[Update: 8/18/19 – Gov. Murphy’s Executive Order incorporates several radical right wing policy recommendations from ALEC’s model “administrative procedures act”, including mandates that regulations:

  • shall not impose unnecessary burdens on the economy;
  • agencies should assess all costs and benefits of available alternatives,
  • qualitative assess measures of costs and benefits that are difficult to quantify
  • assure that opportunity exists for early participation and comment
  • compliance costs, paperwork and other burdens are minimized

In addition, NJ law already authorizes the legislature to veto agency regulations, another key ALEC policy to bock regulations.  ~~~ end update]

More Updates below]

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