EPA tells states they need take no action on Clean Power Plan

As the Environmental Protection Agency begins its re-evaluation of the Clean Power Plan — its 2015 final rule setting limits on carbon dioxide emissions from coal- and other fossil fuel-fired power plants — EPA Administrator Scott Pruitt has sent a letter to state governors reminding them that, at least for the near future, they do not need to take any action to comply with the plan.

In a March 30 letter, Pruitt reminded governors that the U.S. Supreme Court imposed a stay on the Clean Power Plan on Feb. 9, 2016. It is the EPA’s policy that “states have no obligation to spend resources to comply with a rule that has been stayed by the Supreme Court,” he said.

“To the extent any deadlines become relevant in the future, case law and past practice of the EPA supports the application of day-to-day tolling,” he added, suggesting it is the Trump administration’s view that if the stay is lifted in the future, the rule’s compliance deadlines would be extended by the same number of days the stay was in effect.

“The days of coercive federalism are over,” Pruitt declared. “Accordingly, I look forward to working with you, your state experts and local communities as we develop a path forward to improve our environment and bolster the economy in a manner that is respectful of and consistent with the rule of law.”

EPA withdraws proposals on federal plan, trading rules

In a notice published in the April 3 Federal Register, the EPA said it is withdrawing proposed rules it issued in 2015 in conjunction with the Clean Power Plan, namely, the rules setting federal plan requirements, creating model trading rules, and adding design details to the Clean Energy Incentive Program.

The EPA explained that it was withdrawing the proposed rules in light of President Trump’s March 28 executive order to re-evaluate the Clean Power Plan, and also because: 1) the Clean Air Act does not require the agency to finalize the rules, and 2) the Supreme Court stay removes any time pressure to meet approaching compliance deadlines.

On Oct. 23, 2015, the EPA published its final CO2 rule for existing power plants under Section 111(d) of the Clean Air Act. The rule was entitled Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, and is also known as the Clean Power Plan.

On the same date, in connection with the final rule, the EPA published other proposed rules, including a proposal regarding a federal plan and another on model trading rules. In June 2016, the EPA published proposed details of the Clean Energy Incentive Program, an optional program that states could use to encourage early emission reduction projects under the Clean Power Plan.

“The EPA never finalized the October 2015 proposed rule or the CEIP proposed rule, and is not doing so today,” the agency said in its April 3 Federal Register notice. “Instead, it is withdrawing them both.”

The agency said that withdrawing the Clean Power Plan-related proposals gives the EPA time to re-evaluate these proposals “and, if appropriate, put out re-proposals or new proposals to ensure that the public is commenting on EPA’s most up-to-date thinking on these issues.”

The EPA noted that it is possible that the Clean Power Plan as promulgated in 2015 “will be rescinded and that new emission guidelines, if any, for existing EGUs [electric generating units] will be different from the CPP.”

Moody’s sees ‘minimal’ effect on coal market

In a March 31 report, Moody’s Investors Service said it expects that President Trump’s March 28 executive order calling for a review of the Clean Power Plan “will slow, but not halt” the transition the nation is making away from coal.

The executive order “aims to dismantle” the Clean Power Plan, and “also calls for executive departments and federal agencies (agencies) to review all existing regulations that ‘potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources,’” Moody’s noted.

But the credit rating agency said this will do little to change the current marketplace for coal.

“Economics, not regulation, is the prime driver of near-term coal sector distress,” Moody’s said.

“For the next 3-5 years, the primary driver of coal plant shutdowns is expected to be the poor economics of coal vis-a-vis natural gas and renewables. The trend of low gas prices and declining renewable costs are independent of expectations created by the CPP and will continue to affect coal-fired generation even in its absence.”

The presidential executive order issued on March 28 will moderate the move away from coal over the long term, but the near-term effect “is minimal,” the rating agency said.

The executive order “eliminates the tightening cap on carbon emissions imposed by the CPP between 2022 and 2030. This will moderate the pace of retirements in the next decade, a credit positive for coal generators,” the report said. “However, many coal plants will need financial support to survive into the next decade given the sector’s dire economics,” Moody’s said, adding that there are no concrete proposals for such a plan.

Court asked to delay litigation

Meanwhile, the Department of Justice has asked a federal appeals court to put a hold on all litigation pending before it over the EPA rule.

In a March 28 document filed with the U.S. Court of Appeals for the District of Columbia Circuit, Deputy Assistant Attorney General Bruce S. Gelber asked the court to “hold in abeyance,” or suspend, its review of a prominent court case challenging the Clean Power Plan.

On March 30, the D.C. Circuit postponed oral arguments that had been scheduled for April 17 on litigation over the EPA’s CO2 regulations for new, modified or reconstructed power plants. The court said it was postponing the arguments in the case, North Dakota v. EPA, “upon consideration of respondents’ notice of Executive Order, EPA review of rule and forthcoming rulemaking, and motion to hold cases in abeyance.”

The court ordered that the oral argument date be removed from the D.C. Circuit’s calendar “pending disposition of the motion to hold cases in abeyance.”

Reposted witth permission from Public Power Daily

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