What EPA Did

In a decision expected and promised since the election of President Donald Trump, the United States Environmental Protection Agency proposed on October 16, 2017, to rescind the Clean Power Plan based on a revised interpretation of EPA's authority under the Clean Air Act provisions that originally were used to authorize the Clean Power Plan.

In the Clean Power Plan, and pursuant to the Agency's authority under Section 111(d) of the Clean Air Act, EPA established guidelines for carbon emission reductions at existing power plants based on the "best system of emissions reduction." The guidelines were based on the assumed ability to shift electricity generation from coal-fired units to gas-fired units and renewable generation. In its new proposal, EPA concludes that these Clean Power Plan guidelines are inconsistent with its revised interpretation of "best system of emissions reduction" which is "limited to emission reduction measures that can be applied to or at an individual stationary source."

EPA's revised legal interpretation of "best system of emission reduction" does not allow EPA to require generation shifting to units outside of an existing unit. EPA based this revised interpretation on its review of the statutory text, the legislative history, prior Agency practice, statutory context, and broader policy concerns. Considering all of these factors together, EPA decided that the prior interpretation that supported the use of generation shifting to units outside of an existing system was beyond the Agency's authority under the Clean Air Act.

What EPA Did Not

Do EPA did not propose to rescind the entire legal memo supporting the Clean Power Plan. This is important because the legal memo contains several other legal positions that were the subject of intense scrutiny in the judicial proceedings challenging the Clean Power Plan. For example, the legal memo concludes that EPA's regulation of existing generating units pursuant to Section 112 of the Clean Air Act pursuant to the Mercury and Air Toxics Standards (MATS) does not prevent the issuance of emissions guidelines for existing generating units under Section 111(d).

Similarly, the revised legal interpretation does not suggest that EPA has no legal duty to proceed with regulation of carbon emissions from existing electric generating units under Clean Air Act Section 111(d). It also does not propose to rescind the endangerment finding that undergirds the entire regulatory effort. In fact, the proposal suggests that EPA will be issuing future proposals to implement emission guidelines that are consistent with the revised legal interpretation.

Impact on Future Rules

The efficiency improvements that were part of Building Block 1 in the Clean Power Plan will likely be continued in some form in a new proposal. It is also possible that a future administration could try to find that carbon capture and storage (which can be implemented at the site of an existing unit) is an appropriate basis for the emission guideline. Alternatively, a future administration could seek to require generation shifting by returning to the legal interpretation that the Obama administration used.

Impact on Pending Clean Power Plan Litigation

EPA used the proposed rule to support a request for the United States Court of Appeals for the District of Columbia Circuit to continue to stay its decision on the petitions for review of the Clean Power Plan following the en banc argument that occurred in September 2016. Environmental groups and some states have renewed their requests for the court to issue a decision or take some other action that would have the effect of removing the February 2016 United States Supreme Court stay of the Clean Power Plan. The court proceedings will become even more complicated and unpredictable should EPA finalize its proposal to rescind the Clean Power Plan.

The deadline for commenting on the proposed rule was recently extended to January 16, 2018.