On March 28, 2017, President Donald Trump issued a sweeping executive order directing the roll back of the Clean Power Plan and other Obama Administration climate policies. The Presidential Executive Order on Promoting Energy Independence and Economic Growth (the “Energy Independence Order”) directs the EPA to immediately review and, if appropriate, take steps to suspend, revise or rescind, the Clean Power Plan. The Energy Independence Order also disbands the Interagency Working Group on Social Cost of Greenhouse Gases and withdraws its guidance documents, directs the Secretary of the Interior to lift the Obama Administration’s moratorium on coal leasing on federal lands, and directs the Administrator of the EPA and the Secretary of the Interior to review other rules relating to the oil and gas sector, including rules relating to hydraulic fracturing on federal and tribal lands.

The Clean Power Plan (Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units) sets reduction requirements for greenhouse gas emissions at existing fossil fuel-fired electric generating units, with the goal of reducing emissions by 32% over 2005 levels. Final compliance with the Clean Power Plan is required by 2030, with three incremental compliance periods beginning in 2022; applicable state plan amendments were initially due by September 2016, but subsequently stayed by the Supreme Court. The Environmental Protection Agency (“EPA”) published the Clean Power Plan in October 2015, and simultaneously published new source performance standards for new, modified and reconstructed electric generating units. 80 Fed. Reg. 64,662 (Oct. 23, 2015); 80 Fed. Reg. 64,510 (Oct. 23, 2015). (For more information regarding the Clean Power Plan, see our August 4, 2015 Alert.)

The Clean Power Plan has been challenged by multiple states and state agencies as well as industry and trade groups, and, on February 9, 2016, the Supreme Court stayed the rule until various legal challenges are resolved. On March 30, 2017, at the request of the Trump Administration, the D.C. Circuit cancelled upcoming arguments over carbon dioxide limits for new, modified and reconstructed power plants. The D.C. Circuit heard argument on challenges to the portion of Clean Power Plan relating to existing power plants in September 2016, but has not yet issued its decision. The Trump Administration has requested that that litigation be held in abeyance as well, pending the EPA’s review.

The Energy Independence Order recognizes that the Clean Power Plan cannot be rescinded by the new administration, but, rather, that the EPA must proceed to seek the same result through formal notice and comment on a rulemaking. Furthermore, any rule that significantly revises or that rescinds the Clean Power Plan is likely to be subject to further litigation, with states such as California and New York already indicating that they will challenge such a rule.

At the same time, the EPA has already begun to take steps to delay and stop the implementation of the Clean Power Plan in its current form. In a March 30, 2017 letter, EPA Administrator Scott Pruitt stated that, as a result of the Supreme Court’s February 9, 2016 stay, “states and other interested parties” have been “neither required nor expected” to work towards meeting the compliance dates set in the Clean Power Plan, and that states have “no obligation to spend resources” to comply with the rule. According to the letter, to the extent any such deadlines become relevant in the future, “case law and past practice of the EPA” support day-to-day tolling. In addition, on April 3, 2017, the EPA published a notice withdrawing its proposed federal implementation plan for the Clean Power Plan, model emission trading rules, and incentive program for early emission reduction projects. 82 Fed. Reg. 16,144 (April 3, 2017).

Separately, on March 30, 2017, White House Press Secretary Sean Spicer stated that President Trump will decide by late May (when the “Group of Seven” summit meeting takes place in Italy) whether to keep the U.S. in the 2016 Paris climate agreement (COP 21 Agreement). The COP 21 Agreement establishes commitments for the reduction of greenhouse gas emissions by the 141 member countries, and the Clean Power Plan provides the primary structure for U.S. compliance with its commitments. https://www.gpo.gov/fdsys/pkg/FR-2017-04-03/pdf/2017-06518.pdf

Many States, notably California, have proceeded to implement measures that are being contemplated under the Clean Power Plan, as well as the installation of renewable energy and methane reduction technology, with sizeable commitments by power producers and their financing sources. Meanwhile, the United States energy industry continues to undergo significant transformations, including the continued development of oil and natural gas production and transportation (and even LNG and crude oil exports), as well as further development of wind and solar energy, and struggling coal and nuclear industries. It seems unlikely that the Energy Independence Order will disrupt the many measures already underway at the state level, including early compliance actions taken under the Clean Power Plan, nor is it likely to have a significant effect on the current trends in U.S. energy markets. It remains to be seen how the arguments will advance in the courts and how the current Administration will address U.S. commitments under the COP 21 Agreement.