On October 10, 2017, EPA Administrator Scott Pruitt signed a notice of proposed rulemaking repealing the Clean Power Plan (CPP). Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units. The proposed rule outlines EPA’s position under the Trump Administration that the CPP was an unlawful extension of the agency’s statutory authority under the Clean Air Act (CAA). Additionally, it revokes certain supporting legal memoranda in the CPP docket (specifically, the “Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units” and “Legal Memorandum Accompanying Clean Power Plan for Certain Issues”) to the extent those memoranda are inconsistent with EPA’s interpretation in the proposed rule. EPA was required to review and reevaluate the CPP by Executive Order 13783, issued March 28, 2017.

Changing the Interpretation of Section 111(d)

 In the proposed rule, EPA changes its legal interpretation of the “best system of emissions reduction” (BSER) under Section 111(d) of the CAA. EPA proposes to read the clause to only include measures “applied to, or at an individual stationary source,” as opposed to the Obama-era EPA’s broader reading of the statute that imposed requirements “beyond the fenceline” of the source. Thus, in addition to on-site energy efficiency measures, the CPP would have effectively required electricity providers to switch to increase natural gas generation and/or renewable energy sources to meet the emission reductions targets (so-called Building Blocks 2 and 3). A narrower interpretation of BSER restricting it to “inside the fenceline,” or constrained to reducing emissions from the individual power plant, would invalidate these building blocks and thus repeal the CPP. EPA argues that the proposed rule is a more accurate reading of the statutory text when considering the purpose, structure, context, legislative history, and historical agency practice under Section 111(d).

The rule does not address EPA’s 2009 finding that greenhouse gases endanger public health (the “Endangerment Finding”), nor does it propose a replacement rule that EPA believes is within the scope of its authority.

What Does this Mean for West Virginia v. EPA?

The CPP has been the subject of ongoing litigation and the consolidated case, West Virginia v. EPA, is currently pending en banc before the Court of Appeals for the District of Columbia Circuit (D.C. Circuit) following briefing and oral argument. Granting a request by EPA, the D.C. Circuit has held the case in abeyance since April 28, 2017, while EPA reviewed the CPP and worked to issue a new rule. See West Virginia v. EPA, Order, Docket Entry No. 1673071; West Virginia v. EPA, Order, Docket Entry No. 1687838. Implementation of the CPP has stayed since February 2016, when the U.S. Supreme Court issued a stay of the final CPP rule pending judicial review. See West Virginia v. EPA, No. 15A773 (U.S. Feb. 9, 2016). Now that EPA has proposed a new rule, this will likely moot the pending case.

Next Steps in the Rulemaking Process

EPA will accept public comments on the proposed rule for sixty days after its publication in the Federal Register. A public hearing has not been announced but will be held if requested within fifteen days of the Federal Register publication date. Additionally, the proposed rule states that “EPA has not determined the scope of any potential rule under CAA section 111(d) to regulate greenhouse gas (GHG) emissions from existing EGUs” but notes that EPA will issue an Advanced Notice of Proposed Rulemaking in the near future to solicit information on systems of emission reduction consistent with the legal interpretation set forth in the proposed rule.” Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units at 6. There is ongoing debate as to EPA’s obligation to issue a replacement for the CPP in light of the 2009 Endangerment Finding and the U.S. Supreme Court’s holding in Massachusetts v. EPA, which held that under the language of the CAA, EPA has authority to regulate greenhouse gases as “air pollutants.” Mass. v. EPA, 549 U.S. 497 (2007).

EPA’s proposed rule, assuming it is finalized, will undoubtedly be subject to litigation. A number of entities, including the Attorneys General from New York, Massachusetts, California, and Illinois, have already announced their intent to challenge the proposal should it become final.