After last month’s issue of the long-awaited Executive Order (EO) on “Promoting Energy Independence” (see March Newsletter), the Environmental Protection Agency (EPA) headed by Administrator Scott Pruitt is in full force to undo some of the regulations supporting the “War on Coal.”
As part of his EO issued last month, President Trump requested that the Administrator of the EPA “review all existing regulations, orders, guidance documents, policies, and any other similar agency actions that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources” and “as soon as practicable, suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules.”
The new EPA Administrator Scott Pruitt, who has spearheaded countless legal battles against the EPA in the past, is doing exactly that.
On March 24, 2017, the Utility Water Act Group (UWAG) asked EPA Administrator Scott Pruitt to reconsider the Effluent Limitation Guidelines (ELG) Rule that limits wastewater discharges from processes at coal-fired power plants. Some of the main issues UWAG raised in its Petition for Reconsideration are: (1) EPA “grossly” underestimated real compliance costs of the Rule, (2) EPA failed to consider the cumulative impact of other recently finalized rules, and most importantly (3) the Rule “violated fundamental principles of public participation in rulemakings – transparency and reproducibility” by shielding vast amounts of the Rule from review under the concept of Confidential Business Information (CBI).
Just two weeks after the issuance of the E.O. and UWAG’s Petition, the EPA announced that it would review and reconsider the final ELG Rule, effectively imposing an administrative stay of the Rule and therefore freezing any compliance deadlines. The EPA also asked the U.S. Court of Appeals for the Fifth Circuit to hold in abeyance litigation over the Rule’s validity during the review process, which would delay EPA’s response in the case until September 12, 2017.
While it is one of the most prominent and impactful recent environmental regulations imposed on the U.S. power sector, the ELG Rule is not the only one being eyed by Trump’s EPA for reconsideration. Here are some of the other rules the EPA is considering to take action on:
- Clean Power Plan (CPP). On the same day President Trump issued the EO, the EPA filed a request to put the CPP litigation, which currently resides with the D.C. Circuit Court of Appeals, on hold while it reconsiders the rule. On April 28, the Court of Appeals granted EPA’s request and put the CPP litigation on hold for 60 days. The appeals court asked the EPA for an update in 30 days on the status of the rule. The also directed the parties to submit arguments by May 15, addressing whether the case should remain on hold or if the CPP should be sent back to the EPA, which could then revise it or undertake its repeal.
- Water of the United States (WOTUS) Rule. On April 19, the EPA announced its plan for revising the WOTUS Rule, a.k.a. the Clean Water Rule, consistent with a different Executive Order signed by President Trump March 1. The EPA intends to (1) recodify the regulation currently in place since the stay of the Rule earlier this year, and (2) issue a revised rulemaking. The Clean Water Rule redefines the “waters of the United States” and thereby expand the waterbodies that are regulated under the Clean Water Act.
- The Oil and Gas New Source Performance Standards for New, Reconstructed, and Modified Sources Rule. In its current form, the rule imposes limits on methane, volatile organic compounds, and toxic air emissions from new, modified and reconstructed sources in the oil and natural gas industry. The current June 3 compliance date has been stayed for 90 days as the EPA takes public comments.
- Mercury and Air Toxics Standard (MATS) Rule. On April 18, 2017, the EPA asked the D.C. Circuit Court of Appeals to delay oral arguments scheduled for May 18 as it reviews the supplemental findings under litigation for possible modification. In a June 2015 ruling, the U.S. Supreme Court decided that EPA did not appropriately consider the cost of the regulation in its rulemaking process. EPA’s supplemental finding (as ordered by the U.S. Court of Appeals following the SCOTUS decision) deemed the MATS Rule appropriate and necessary, even after considering cost.
- Startup, Shutdown, and Malfunction (SSM) Rule. Likewise, the EPA is seeking to postpone May 8 oral arguments in litigation of the 2015 EPA SSM Rule as it aims to review the SSM actions for possible modification or repeal. The SSM Rule imposes air emission limitations on electric generators during periods of startup, shutdown, and malfunction.
- Arkansas Regional Haze Federal Implementation Plan (FIP). On April 24, the EPA announced it would order its Region 6 offices to review and possibly revise the FIP imposed on Arkansas power generators last year. The Arkansas Regional Haze FIP calls for high-cost air emission control retrofits on the majority of Arkansas coal plants, with compliance deadlines as early as May 2018.
Some of these reconsiderations and potential revisions will have more impact on fossil fuel-fired power generators than others. Reconsidering and staying the ELG Rule has immediate effects on the industry as utilities are provided more time to consider the full cost impact and achievability of the existing effluent limitations. This in turn will allow utilities to provide further comment to the EPA and aid in adjusting those limits to realistically achievable levels. On the other hand, revisiting the supplemental findings under the MATS Rule will have little to no impact on the industry, as most power plants are already either compliant with the standards, have already retired, or converted to natural gas.