Is Pruitt’s 2014 Plan a Blueprint for Carbon Rule Replacement?

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By Andrew Childers

A plan that Scott Pruitt floated when he was Oklahoma’s attorney general would provide only one-tenth of the carbon dioxide reductions envisioned in the EPA’s power plant rule—but it could form the basis of the Trump administration’s replacement as it dismantles Obama-era regulations.

The 2014 plan, which focuses on efficiency improvements at individual power plants, could sidestep thornier legal issues opponents of the Environmental Protection Agency’s Clean Power Plan—including Pruitt himself—raised in lawsuits over the rule, attorneys said. Pruitt’s plan would merely require utilities to operate at peak efficiency. In keeping with his pledge to restore cooperative federalism, it envisions a more “ministerial” role for the EPA while states take the regulatory lead.

“That basically means allowing the plants to do what they’re doing anyway especially if they’re in a competitive energy market,” Marlo Lewis, senior fellow at the free market-oriented Competitive Enterprise Institute, told Bloomberg BNA. “They’d always be looking to improve efficiency by a point or two from year to year.”

An executive order signed by President Donald Trump March 28 calls for “suspending, revising, or rescinding” the Clean Power Plan (RIN:2060-AR33) and similar carbon dioxide standards for newly built power plants.

Under Section 111(d) of the Clean Air Act, which is the foundation of the agency’s Clean Power Plan, the federal government sets emissions guidelines that are implemented by state regulators who can take into account the costs imposed on utilities for the remaining useful life of any individual power plant. Critics of the rule had argued the agency had overstepped its lawful authority by incorporating emissions reductions from beyond the fence line of the power plants themselves, such as shifting generation from coal-fired power plants to natural gas or investing in renewable energy.

Pruitt offered the alternative before the rule was completed. His narrower focus on what power plants can do internally to reduce emissions is in keeping with how the agency has implemented the Clean Air Act in the past and could pass legal muster, attorneys said.

“It’s a narrower path,” Ethan Shenkman, a partner at Arnold & Porter Kaye Scholer LLP who served as EPA’s deputy general counsel during the Obama administration, told Bloomberg BNA. “It’s less ambitious than one that would seek to revisit some of the fundamental legal underpinnings of the Clean Power Plan.”

Further Reductions Needed

However, environmental advocates say that efficiency measures alone won’t reduce emissions by the amount necessary required to address climate change.

“The way the power industry has wanted to be regulated for 30 years, they want to be connected through a system of emissions trading so they have flexibility to decide where to make the reductions to meet any given target,” David Doniger, director of the climate and clean air program at the Natural Resources Defense Council, told Bloomberg BNA. “Those are the principles underlying the Clean Power Plan.”

The EPA had estimated that its Clean Power Plan could reduce carbon dioxide emissions from utilities by more than 30 percent from 2005 levels by 2030. But heat rate improvements at individual power plants would only improve performance between 2.1 percent and 4.3 percent across the country, the agency had said.

The Obama EPA had also worried that improving efficiency at individual units could actually increase emissions by making older coal units more competitive, allowing them to operate more often.

New Endangerment Finding Needed?

Repealing the EPA’s carbon dioxide standards will be a lengthy and fraught process guaranteed to spark lawsuits from environmental groups and states supportive of acting on climate change, but replacing the Clean Power Plan could be an even lengthier process if the Trump administration decides the agency must first determine whether regulating power plants is warranted. That decision, known as an endangerment finding, would be the first step before the EPA even proposed a replacement for the carbon dioxide rules and could draw out the process for setting new standards.

“I think requiring a new endangerment finding is a delaying tactic,” Michael Gerrard, director of the Sabin Center for Climate Change Law at Columbia Law School, told Bloomberg BNA.

The Obama EPA had issued an endangerment finding for emissions of six greenhouse gases from motor vehicles when it embarked on its climate change regulations, but it never issued a comparable finding specifically for power plants, something opponents of the power plant rules had argued was necessary.

The endangerment finding for vehicles has already been upheld in court and it would be nearly impossible for the EPA to fail to conclude that regulating power plants is unwarranted given that prior determination, attorneys said. However, undertaking the finding would postpone setting any new limits on utilities.

Review Racing the Court

Pruitt was one of leading critics of the carbon dioxide standards as Oklahoma attorney general, joining lawsuits targeting the regulations. Though he seeks to roll the rules back, the courts may yet have a say in how the EPA regulates carbon dioxide.

Despite the executive order, the EPA has not yet told the U.S. Court of Appeals for the District of Columbia Circuit that it intends to repeal and revise the regulations. A 10-judge panel of the court heard a full day of argument on the Clean Power Plan in September, and a three-judge panel is scheduled April 17 to hear challenges to the new power plant requirements. A decision on the Clean Power Plan has been expected anytime now, and the court may choose to issue its ruling despite what the EPA chooses to do about the rule.

“I don’t think the court is going to grant them a voluntary remand just because they said they’re going to propose a rule,” Victor Flatt, an environmental law professor at the the University of North Carolina School of Law, told Bloomberg BNA.

To contact the reporter on this story: Andrew Childers in Washington at AChilders@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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