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David J. Hayes: The Federal Court's Decision to Vacate the Valuation Rule Portends Legal Trouble Ahead for the Trump Administration’s Deregulatory Agenda


April 15, 2019
Contact: Christopher Gray

Washington, D.C. — David J. Hayes, Executive Director of the State Energy & Environmental Impact Center at NYU School of Law and former Interior Deputy Secretary in the Obama and Clinton Administrations, released the following statement in response to last Friday’s decision by Judge Saundra Brown Armstrong vacating the Trump administration’s Valuation rule governing the payment of royalties for fossil fuel energy sources extracted on federal lands: 

"Judge Armstrong's ruling portends a rough road ahead for the Trump administration as it pivots from its mostly-failed attempts to delay implementing environmental protections that are on the books, to replacing them with new, less protective rules.  
"With regard to royalties owed to the government, the Trump administration essentially ignored the abuse that led to the reform rule, and instead moved forward with a 'never mind' rule that simply repealed the reform and left the prior abusive practice in place, with only a vague promise that a newly-formed advisory group would look into the situation.
"The judge slapped down the effort, citing copious court decisions, from the Supreme Court on down, that require agencies to provide 'reasoned explanations' for changes in policy direction, with a ‘more detailed justification’ needed before it can ‘disregard facts underlying the original rule.’ In the case before it, the Court called out the administration for ‘completely contradict[ing] its prior findings’ in an evidence-free, conclusory fashion. The administration provided scant evidence that the prior rule was 'unduly burdensome, difficult to apply and increase[s] costs,' especially given that such assertions were 'directly contradict[ed]' by the prior rule's administrative record.  And, to top it off, the court criticized the administration for issuing a proposal that 'lacked adequate detail to meaningfully inform the public' regarding the rationale for nixing the prior rule.
"Judge Armstrong's carefully-articulated and well-supported take down of the Valuation rule provides a potential guide for future litigants and judges alike as they challenge and review upcoming 'repeal and replace' environmental and climate rules. As explained in our recently released Special Report, six key replacement rules, implicating nearly half of all of the United States’ annual climate pollution, will be on deck for judicial review in the coming months. Given that all of them are expected to involve the replacement of rules that decreased greenhouse gas emissions with new rules that would actually increase these pollutants, without adequately distinguishing the rich legal and factual records that supported those prior rules, it appears that the replacement rules will have a tough time passing judicial muster."

The State Energy & Environmental Impact Center is a non-partisan Center at the NYU School of Law that is dedicated to working with state attorneys general to protect and advance clean energy, climate change, and environmental values and protections. It was launched in August 2017 with support from Bloomberg Philanthropies. For more information, visit our website.