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New York Times Again Misses Mark with Pruitt Hit

Like many other children who grew up in the 1980s, I watched the cartoon Transformers, about intergalactic shape-shifting robots. The tagline for the show was a little ditty that went like this: “Transformers, more than meets the eye.”

I bring this up only as a segue to the New York Times’s reporting on Environmental Protection Agency administrator Scott Pruitt, the tagline of which is the antithesis to that of the Transformers. When the Grey Lady shines a spotlight on Pruitt, there is always less than meets the eye.

In a previous post, I unpackaged a January hit piece on Pruitt by New York Times reporters Coral Davenport and Eric Lipton. Here’s the gist of that exchange:

In today’s New York Times, Eric Lipton and Coral Davenport dropped what was supposed to be a blockbuster exposé of “a series of instances in which [Environmental Protection Agency (EPA) administrator nominee Scott] Pruitt put cooperation with industry before confrontation as he sought to blunt the impact of federal environmental policies in his state—against oil, gas, agriculture and other interests.” According to Lipton and Davenport, “[Pruitt’s] antipathy to federal regulation—he sued the Environmental Protection Agency 14 times—in many ways defined his tenure as Oklahoma’s attorney general.”

[…]

However, there is a gaping hole in the New York Times story. The reporters make it seem as though Pruitt was waging a one-man war against the EPA. In fact, an unprecedented and diverse number of states have challenged the agency during the Obama administration. For example, both of the EPA’s signature regulations—the Clean Power Plan and the Waters of the United States rule—were challenged by more than half of all states. By my count, 206 states (attorneys general, governors, or state regulatory bodies) participated in 12 of the 14 lawsuits against the EPA in addition to Oklahoma Attorney General Pruitt. That’s an average of 18 states per lawsuit. Nor is it the case that only conservative states challenged the EPA. To wit, Michigan, Ohio, and even Delaware have joined Oklahoma in fighting various EPA rules.

Last weekend, the New York Times was back at it. The title of Hiroko Tabuchi and Eric Lipton’s May 20 article suggested they had a big scoop: “How Rollbacks at Scott Pruitt’s E.P.A. Are a Boon to Oil and Gas.” However, with respect to the title’s veracity: 1) there was no “rollback”; 2) Scott Pruitt hasn’t been involved; and 3) there’s been no oil and gas “boon.” An accurate title would be “Energy Company Sends Letter to E.P.A.” Another accurate title would be “E.P.A. Has No Response to Energy Company’s Letter.” The truth is a lot blander then what the journalists would have you believe.

At issue are settlement negotiations between natural gas producer Devon Energy and the EPA. In 2015, the Obama administration alleged that the company violated the Clean Air Act at its Beaver Creek processing plant in Fremont County, Wyoming. The complaint pertained to “fugitive” emissions (i.e., emissions due to gas leaks from various pipes and valves as the gas is processed) of volatile organic compounds, which are ozone precursors. Since then, the EPA and the company have engaged in settlement negotiations.

In October, 2015, the Obama administration and the company were trading drafts of a settlement agreement. Although the primary documentation is not provided, it appears that the Obama administration alleged that the company violated New Source Performance Standards for monitoring emissions leaks (eCFR Subpart KKK). For this, the EPA wanted Devon to do three things: 1) adopt New Source Performance Standards eCFR subpart OOOO; 2) pay a $100,000+ fine; and 3) install an advanced methane emissions leak detection system as a “mitigation action” (i.e., negotiating into a settlement injunctive relief the agency thought it could have obtained from the court had the case gone to trial). For its part, the company maintained that it had been following the rules as it understood them, and that its alleged violation was primarily a function of the agency’s re-interpretation of a complex rule without the company’s knowing.  

For some reason that the reporters do not identify, settlement talks stalled. A year or so later, Donald Trump won the presidential election. As a result, Devon Energy changed its posture in the ongoing settlement negotiations. This is unsurprising, given that Trump campaigned against the Obama administration’s energy policies. If you are negotiating with the Executive Branch, and the leader of the Executive Branch changes, then it stands to reason that you would change your negotiating tactic. Accordingly, Devon sent the EPA a letter on February 22, telling EPA that the company was no longer interested in signing off on the Obama-era settlement draft. In the missive, Devon reiterates its innocence, and further notes that the Beaver Creek plant is losing money and has decreased operations by 23 percent. Because the Obama-era settlement would cost about 20 percent of the plant’s value, the company argues that implementing such policies would cause the plant to close entirely. In light of these circumstances, the company proposed: 1) a lower civil penalty of ~$25,000; 2) to install less expensive controls than required by eCFR subpart OOOO; and 3) to drop the mitigation action.

The New York Times reporters got this letter. Of course, they assumed something nefarious was amiss. After all, Devon Energy is located in Oklahoma City, and it has supported Pruitt’s political campaigns. To these journos, there had to be something going on.

So they asked Devon if it had contacted Pruitt about the case. Devon said it hadn’t.

Then they asked EPA about the settlement. They were told by Andrew Mutter, a spokesman for the agency’s Colorado regional office, which covers Wyoming, that talks on the matter remained active.

The reporters also asked the Justice Department about the case. But “The Justice Department attorney in charge of the case did not return requests for comment.”

Finally, the reporters note that, “The E.P.A. has not yet made public the investigation, or its decision on a settlement.”

To recap, Devon Energy sent a letter to the EPA. The company has not contacted Pruitt. EPA has not responded to the letter. The Justice Department did not comment on the letter. The agency hasn’t even made public the investigation, much less rendered a decision on the settlement proposal.

Yet the title of the article is “How Rollbacks at Scott Pruitt’s E.P.A. Are a Boon to Oil and Gas”!

Perhaps there is a story here. It’s possible that Pruitt and Devon Energy talk every night on the phone about the settlement. The major problem is that the New York Times, by its own admission, has nothing. The Grey Lady got a letter, to which no one in the government has responded. From this, the reporters extrapolate a regulatory “rollback” that is a “boon” to oil and gas.

Absent such proof, there is no story here. But here’s the thing: There would not be a story even if the agency accepted Devon Energy’s negotiating position. To understand why, you must understand how environmental enforcement works. Allow me to explain.

For reasons that should be self-evident, intent plays a large role in legal culpability. Generally speaking, whether or not you intend to commit a crime is a major determinant of your guilt and punishment. But it’s not this way under federal environmental statutes. These statutes employ a “strict liability” regime; that is, it doesn’t matter whether or not you thought you were following the rules, or if you meant to do it. Rather, if there is pollution in excess of statutory standards, then you are responsible.

At the same time, non-compliance with environmental statutes is ubiquitous even for the most well-intentioned parties. For example, Devon Energy didn’t intend to have emissions leaks at its Beaver Creek plant—after all, gas that leaks is gas that can’t be monetized. The regulations are pervasive; on close scrutiny, virtually every emissions source is in violation of one or the other.

As a result of the interplay between strict liability and universal non-compliance, enforcement is wholly a function of prosecutorial discretion.

With this framework in mind, let’s consider why Obama’s EPA would have chosen to go after Devon Energy. Unless I’ve got the wrong location, the Beaver Creek plant is located in central Wyoming, an area that is projected to be in attainment with the 2015 National Ambient Air Quality Standards. When an area is in NAAQS attainment, it means that the ozone levels are at a level “requisite to protect public health with an adequate margin of safety.” So there was no public health crisis with respect to volatile organic compounds.

Absent a public health imperative, then why would the EPA exercise its prosecutorial discretion to target Devon? One possible answer is provided in the New York Times article. In the course of their reporting, Lipton and Tabuchi apparently interviewed Obama-era EPA assistant administrator Janet McCabe. Here’s what they learned:

Devon Energy, Ms. McCabe said, was among the most determined opponents of the agency’s work, far more so, for example, than international giants like Shell.

“In any regulated industry, there are companies that are more aggressive than others in pushing back at every turn and trying to stop the policy,” she said. “Devon was one of those.”

Inadvertently, the New York Times provided some real news in this article. McCabe’s quote suggests the agency exercised its prosecutorial discretion against Devon for some payback.

There is another big conceptual problem with the piece. The EPA is only one of two sovereigns responsible for enforcing air quality rules. Clean Air Act § 110(a)(2)(B)-(C) requires that states have an independent enforcement capacity. Moreover, section 116 of the Clean Air Act allows states to implement air quality rules that are more stringent than federal standards. The upshot is that, if Lipton and Tabuchi are right, and something is amiss, then the good people of the Wyoming government have every means at their disposal to rectify the injustice.

Above, I explained the conceptual errors of the article; below, I provide a partial list of factual errors.

  • The reporters seem to misidentify the complaint at issue. According to the New York Times, the purpose of the consent decree is “to settle claims by the Obama administration that it was illegally emitting 80 tons each year of hazardous chemicals, like benzene, a known carcinogen.” Hazardous air pollutants are regulated under Clean Air Act § 112. Yet the Devon energy letter only references alleged violations under the New Source Performance Standards § 111.
  • The reporters misconstrue Obama’s posture on global warming during 2012. According to the fairy tale spun by Tabuchi and Lipton, the relationship between Devon and Pruitt was hatched in June of 2012, because—supposedly—Obama was dropping all sorts of hints that he intended to use his “phone and pen” to fight climate change. Here’s what they write:

There was just one complication threatening Devon’s ascent. President Barack Obama, unable to move many of his environmental goals through Congress, had adopted a new slogan: “We Can’t Wait,” a blunt statement that he intended to start using his executive powers to combat climate change.

In fact, Obama wouldn’t touch global warming with a 10-foot pole during the 2012 reelection campaign, as I explain here. Indeed, had Devon Energy listened to Obama’s second debate with Mitt Romney in Denver, they’d have heard a candidate that bragged about being pro-oil, pro-gas, and even pro-coal. If Devon paid attention to Obama in 2012, they’d have thought: “we can work with this guy!” Of course, they may also have suspected that Obama did what he did—i.e., pivot hard to climate change as a legacy issue when he no longer faced electoral accountability. The point here is only that there was no indication from Obama in 2012 that he was going to start speaking about climate change as among the gravest national security threats facing the nation.

  • They suggest that Devon ramped up its federal lobbying only because of Obama’s election. Here’s what they write: “Devon, historically, had been a minor player in Washington. But that changed in the first year of the Obama presidency, when Devon’s spending on lobbying jumped nearly 350 percent to $2.5 million.” The problem here is one of confounding variables. The first year of Obama’s presidency was about the time that the “fracking” revolution, which was led by Devon, gained steam. There is a logic to an innovative industry hitting critical mass and then feeling that it needs a lobbying presence in D.C.
  • They twice misidentify the Senator that sponsored the “Fracturing Regulations Are Effective in State Hands Act,” the sponsor of which was Sen. James Inhofe (R-OK), and not Sen. James Lankford (R-OK), according to the Thomas link provided by the reporters. Also, the original article compounded this mistake, by identifying James Lankford as a senator from Utah. He is a senator from Oklahoma. This particular error has since been corrected.
  • The authors make a silly attempt to make it seem that the Executive Branch—with its “phone and pen”—is David and Devon energy is Goliath. After noting Devon’s support for Sen. Inhofe’s bill and also its political giving to GOP lawmakers, the reporters write: “Each of the pieces of this campaign fell into place as planned. But Mr. Obama and his aides were hardly about to fold.”  Regulations have the force of law, and EPA gets to write them. What’s more, EPA gets to enforce these same regulations. The agency has all of the cards. By indicating otherwise, these journalists demonstrate a disconcerting ignorance of government.
  • They report baseless insinuations. According to Lipton and Tabuchi, “Senator Sheldon Whitehouse, Democrat of Rhode Island, and three other Senate Democrats pressed Mr. Pruitt to explain why he canceled the data-collection effort on methane — suggesting it might be a favor to industry friends.” Did you see how the reporters doubled down on weasel words? They report that the odious Sen. Whitehouse “suggests” a pause on an information collection request “might” be a “favor to industry friends.”
  • They make the absurd claim that Devon’s regulatory strategy changed in the week from February 15, 2017 to February 22, 2017, based only on the Senate confirmation of Scott Pruitt. They report:

Devon disclosed in a filing with the Securities and Exchange Commission, on Feb. 15, that negotiations with the E.P.A. “may result in a fine or penalty in excess of $100,000.”

But two days after that disclosure, Mr. Pruitt was confirmed as E.P.A. administrator, and by the next week, Devon was changing its tune [by sending the February 22 letter].”

At the time, there was zero expectation that the Senate would reject Pruitt. As such, it is ridiculous to think that on February 15th, a week before Pruitt was confirmed, that Devon intended to accept the Obama-era settlement, but that a week later, the company suddenly did an about-face, because they were caught off guard by Pruitt’s confirmation. Rather, this is story-weaving. These days, alas, such fantasies are considered to be among all the news that’s fit for print.