Yesterday the White House released its highly anticipated Energy Independence Executive Order (EO). The EO signals the White House’s fulfillment of a campaign promise—to roll back the various elements of the Climate Action Plan implemented under the Obama Administration. Eversheds Sutherland attorneys are closely reviewing the EO, and provide a briefing on the main points for regulated entities to consider:

Clean Power Plan. The Clean Power Plan rule was developed to regulate carbon emissions from existing fossil fuel-fired power plants under the Clean Air Act, but was stayed in early 2016 pending the outcome of ongoing litigation. Complementary rulemakings were developed to guide state implementation of the Clean Power Plan and to establish carbon emissions performance standards to regulate new power plants. Following yesterday's EO allows the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) asked the Court of Appeals for the D.C. Circuit to seek a freeze of current litigation over these rules while the EPA decides whether and how to revise or rescind the Clean Power Plan. It is highly likely the court will grant the requests.

In the short term, actions taken in furtherance of the EO should be expected to continue to preserve the status quo, thereby permitting regulated businesses to continue operations without the additional costs of complying with the Clean Power Plan and its associated rules for the foreseeable future.

Looking longer term, the EPA is expected to take formal regulatory action to either revise or rescind the Clean Power Plan within the next year. Those actions will most certainly be challenged by proponents of the CPP and stricter regulation of power plants.

Social Cost of Carbon. The social cost of carbon is a metric adopted by the Obama Administration and subsequently used by the EPA and other federal agencies to quantify climate change impacts when assessing the costs and benefits of proposed rules. The metric is not mandated by law or regulation, and the EPA can discontinue using the metric at its discretion and is expected to do so. As directed by yesterday’s EO, the Interagency Working Group on Social Cost of Greenhouse Gases will be disbanded and policy documents associated with the social cost of carbon metric are withdrawn. This will return the EPA and other agencies to calculating costs and benefits of proposed rules based on more traditional factors, such as compliance costs to regulated entities.

Federal Lands. The EO directs the Department of the Interior (Interior) to lift the moratorium on coal leasing on federal lands. As with the issuance of the initial moratorium issued during the Obama administration, the lifting of the moratorium is likely to be considered an exercise of that agency’s discretion and, as a result, may not be subject to legitimate challenge in court.

In contrast, the direction set forth in the EO to Interior to suspend, revise or rescind rules limiting hydraulic fracturing and regulating oil and gas operations on federal lands will require a full rulemaking process. As with the Clean Power Plan, the rulemaking process could take the better part of a year, likely followed by several years of litigation.