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Risk in Context

Less Federal Regulation Won’t Necessarily Mean Less Environmental Risk

Posted by Chris Smy January 18, 2017

With a new administration about to take office, it’s an interesting time for businesses seeking to drive growth while managing pollution legal liability, contractor’s pollution liability, and other environmental risks. A focus in Washington, DC on decreasing regulation would likely result in a more business-friendly atmosphere for some industries. But for some, corporate environmental risk could increase.

A New Regulatory Approach

The new administration and some members of Congress have made clear that they would like to reduce environmental regulation in order to allocate capital and resources to economic growth. Among other actions, Congress and the Trump Administration will likely seek to:

  • Reduce funding for the Environmental Protection Agency (EPA).
  • Revise or eliminate certain environmental regulations, such as the Waters of the United States rule and the EPA’s Clean Power Plan.
  • Issue a temporary moratorium on new regulations.

Such actions could affect businesses’ compliance requirements related to emissions and energize the debate around carbon emissions and climate change in environmental policy. The nomination of Oklahoma attorney general Scott Pruitt to lead the EPA could also have consequences for several industries, including mining, oil and gas, and utilities.

Risk Implications

While federal environmental regulation is expected to be reined in around compliance, there are other potential sources of environmental liability. The role of state regulators, for example, is pivotal — and could increase in the absence of federal intervention. Perhaps more importantly, businesses, activist groups, and private individuals will continue to pursue or accelerate legal and social remedies in situations of environmental threat and impairment.

Beyond environmental regulation, some of the new administration’s economic policies could also have risk implications. For example, pro-business tax and other policies could result in the “reshoring” of business from overseas back to the continental US, including investment in new plants, expansion of existing properties, and development of previously abandoned brownfield sites. A renewed focus on infrastructure spending — including transportation, clean water, a modern and reliable electricity grid, telecommunications, security infrastructure, and other pressing domestic infrastructure needs — will necessitate the management of environmental risks associated with those projects.

Even if the EPA’s regulatory enforcement capabilities shrink, environmental risk will not go away. Environmental insurance should remain a key component of your risk mitigation strategy. Pollution legal liability, contractor’s pollution liability, and other environmental insurance typically include broad coverage for environmental risks and liabilities, including legal defense and remediation expenses. Talk to your risk advisors about your environmental insurance coverage to ensure you’re prepared to address your environmental risk, no matter what regulatory changes may be coming.

Chris Smy