(October 10, 2017) – Today, as promised, the U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt issued a Notice of Proposed Rulemaking (NPRM), proposing to repeal the so-called “Clean Power Plan (CPP).” After reviewing the CPP, EPA has proposed to determine that the Obama-era regulation exceeds the Agency’s statutory authority.

Today’s EPA action follows a historic action by the Supreme Court in February 2016 when it issued a historic stay of the CPP rule. EPA’s press release states that “We are committed to righting the wrongs of the Obama administration by cleaning the regulatory slate. Any replacement rule will be done carefully, properly, and with humility, by listening to all those affected by the rule.”

The Agency can now “assess whether further regulatory action is warranted; and, if so, what is the most appropriate path forward, consistent with the Clean Air Act and principles of cooperative federalism,” said Administrator Pruitt.

According to EPA, CPP was issued pursuant to a novel and expansive view of authority under Section 111 of the Clean Air Act (CAA). The CPP required regulated entities to take actions “outside the fence line.” Traditionally, EPA Section 111 rules were based on measures that could be applied to, for, and at a particular facility, also referred to as “inside the fence line” measures. Prior to the CPP being issued, every single Section 111 rule on the books, including a handful of existing source rules and around 100 new-source rules, obeyed this limit.

With Pruitt’s signing the action, EPA will now send the NPRM to the Federal Register for publication. Upon publication, the public will have 60 days to submit comments. EPA addressed many of the points where it believes that EPA overextended it authority in issuing CPP. Those points are highlighted below:

Domestic versus global climate benefits: CPP rules justification “compared U.S. costs to an estimate of supposed global benefits, and failed to follow well-established economic procedures in estimating those benefits.” While the US would bear the costs of global improvements, the rest of the globe is continuing to build new coal fired generation capacity at a record pace. The US is no longer the largest emitter of CO2, falling behind China. The US has been leading the world in CO2 emissions reduction. Even within the US, power plant emissions are not the largest emitter of CO2 with auto emissions exceeding those of coal fueled power plants. Indeed the US is making great strides in CO2 reduction resulting from economic market competition with gas fueled plants.  Renewable generation has also played a role in reducing CO2 emissions thanks to tax payer subsidies for wind and solar. While the subsidies served a crucial role in kick starting solar and wind technology advancement, the renewable energy technology is now competitive and well beyond the transition phase to commercialization. As stated by many developers in the renewable space, solar and wind will now move forward regardless of whether tax incentives and subsidies are present.

“Co-benefits” from non-greenhouse-gas pollutants: The rules justification also relied heavily on reductions in other pollutants emitted by power plants, essentially hiding the true net cost of the CPP by claiming benefits from reducing pollutants that had nothing to do with the rule’s stated purpose.

Energy cost and savings accounting: In the prior agency, they counted “energy efficiency” results of the CPP rule as an avoided cost, resulting in a cost estimate being considerably lower than it would have been if they used the appropriate practice of considering these effects as benefits, rather than subtracting them from costs. Had the prior administration used the Office of Management and Budget’s longstanding requirements and accounted cost and savings accordingly, it would have presented a more accurate accounting of the total cost of the CPP.

In this proposed repeal, Pruitt commits that this administration will, in a robust, open, and transparent way, present a wide range of analysis scenarios to the public. Forthcoming is an Advanced Notice of Proposed Rulemaking (ANPRM) that will be reflective of a thoughtful and responsible approach to regulatory action grounded within the authority provided by the statute.

At issue in the ongoing litigation over CPP, the Agency relied heavily on claims that Carbon Capture and Sequestration technology was well demonstrated and offered coal plants a viable option for meeting the CO2 limits imposed by the rules. With the demise of Kemper and failure of CO2 storage projects, this economic viability assumption has been proven to be incorrect. With all the current research that is ongoing related to CO2 capture utilization and storage, it is clear that we are a long way from demonstrating commercial CCUS projects to meet the economic test. Energy experts and research teams all recognize the difficulty of injecting CO2 and ensuring releases do not occur. While advances are being made on all fronts of CO2 utilization, the funding has not been adequate to drive the process. Likewise, the advances underway by manufacturers of boilers at plants outside the US are making coal fueled electricity cleaner and more efficient. Shifting the subsidies away from solar and wind and into CO2 utilization and coal plant energy efficiency could be the policy move that will help avoid grid stability problems, higher electricity prices to ratepayers and at the same time continue to make the US the long term leader in CO2 emissions reduction. 

Please click here for the complete EPA press release.