Legal & Regulatory

EPA Will Issue Final Carbon Rules for Power Plants in June

The Environmental Protection Agency (EPA) plans to take final action to repeal the Clean Power Plan in June 2019, a federal court filing shows.

The agency told the D.C. Circuit—in a May 6 status report—review of the Obama-era rule that sets the first carbon dioxide limits for existing power plants “continues to be a high priority.” 

Since the EPA filed its last status report with the court on April 26, it sent a draft of a replacement final rule to the White House Office of Management and Budget (OMB), it said. Like the Clean Power Plan, the August–2018 proposed replacement, known as the Affordable Clean Energy (ACE) rule, proposes to regulate greenhouse gases (GHGs), which is founded firmly on the agency’s 2009 Endangerment Finding. 

However, the ACE rule focuses on the nation’s 600 coal-fired units and gives states leeway on deciding how they will meet “emission guidelines” stipulated in the rule. The ACE rule also defines the “best system of emission reduction” (BSER) for GHG emissions from existing power plants as on-site, heat-rate efficiency improvements. In the Clean Power Plan, the EPA determined that BSER should be comprised of three building blocks: increasing operational efficiency of coal plants; shifting power generation from coal to natural gas; and increasing power generation from renewables.

On Monday, the agency also urged the court to keep a set of consolidated cases, West Virginia, et. al. v. EPA (No. 15-1363), in abeyance until it can complete rulemaking. At least 17 states have claimed the EPA has taken “undue advantage” of the now two-year-long abeyance granted to the agency by the federal court to allow it to review the rule. The states have urged the court to decide merits of the case, which it heard in the fall of 2016.

The states point out that the EPA has held only one public hearing on the rule (in October 2018), and that the public comment period closed on Oct. 31, 2018. The EPA noted in its filing on Monday that it reviewed comments from Dec. 28 through Jan. 25, but work to complete final rulemaking was delayed due to the lapse in appropriations during the record-long government shutdown earlier this year. 

West Virginia v. Environmental Protection Agency, which was docketed in October 2015, just after the EPA promulgated the Clean Power Plan, involves numerous petitions for review of the final rule. It originally pitted a coalition of 27 states and several energy producers, utilities, and trade organizations against the Obama-era EPA, 18 states, and a host of environmental groups.

The Supreme Court granted an unprecedented stay of the rule pending judicial review in February 2016, and the D.C. Circuit heard oral arguments en banc in September 2016. 

In March 2017, however, President Trump issued an executive order for executive departments and agencies to review, revise, or rescind rules that “burden domestically produced energy resources,” prompting former EPA Administrator Scott Pruitt to announce that the EPA would review the Clean Power Plan.

In April 2017, the D.C. Circuit held the consolidated cases in abeyance for 60 days, and ordered the EPA to file status reports every 30 days on its review of the rule. In June 2018, however, Judges David Tatel, Patricia Millet, and Robert Wilkins issued concurring statements that expressed reluctance to continue holding the case in abeyance indefinitely, warning that they would disapprove future abeyance requests. In August 2018, North Dakota, a principal challenger, told the court that it would suffer unique harms if the court removed abeyance as a major lignite-producing coal state. 

However, several states have also withdrawn their challenges to the Clean Power Plan. In January 2018, New Jersey filed a motion to withdraw as a petitioner in the challenge, following the inauguration of Democrat Phil Murphy as governor. And in January 2019, Michigan and Colorado withdrew from the challenge after newly elected attorney generals took office. 

Despite uncertainties surrounding federal GHG regulations, decarbonization is becoming firmly entrenched in utility business strategies to address risks and opportunities posed by climate change, driven in part by investor activism.

As Dan Bakal, senior director for Electric Power at sustainability leadership advocacy group Ceres, told POWER in April, many of the largest power companies and biggest emitters of carbon dioxide in the sector have issued “more robust climate risk reports and made deeper commitments to medium- and long-range GHG reductions.” Many U.S. power companies have also undertaken climate scenario analyses. Companies issuing reports based on such analyses include AES, PPL, Duke Energy, Southern Company, Dominion Energy and CMS Energy.

Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)

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