The comment period has now begun on EPA’s proposal for replacing the Clean Power Plan, named the “Affordable Clean Energy”—or “ACE”—rule.  The rule was published in the Federal Register on August 31. And there is plenty to keep commenters busy over the next 60 days, given that EPA expressly identified 75 distinct requests for comment, not counting potential sub-issues and issues that EPA did not count.  Comments are due by October 30th. Here are the top 10 key aspects of the rule that are likely to be the subject of the most fervent comments:

  1. Section 111(d) Authority. As previously set forth in its proposed repeal of the Clean Power Plan, EPA has decided to return to its historical interpretation of Section 111(d) of the Clean Air Act—that it only authorizes EPA to establish the best system of emission reduction based on measures that can be employed within the fenceline of a source subject to the rule.  Conversely, EPA makes clear that its historical reading of Section 111(d) precludes the use of “generation-shifting,” “reduced utilization,” or “redefining the source” as part of a Section 111(d) emission guideline, all of which were relied upon heavily under the Clean Power Plan.  In the ACE proposal, EPA also characterizes its authority as merely providing “information” to states, that then have the authority to establish the enforceable, pound per megawatt hour “performance standards” on a unit-by-unit or source-category basis.  EPA also leaves to the states to determine the compliance deadlines associated with those performance standards.
  2. The Best System of Emission Reduction (BSER). EPA has determined that the best system for reducing greenhouse gas emission reductions from existing power plants (consistent with its reading of Section 111(d)) is to improve the efficiency of those power plants.  Specifically, EPA listed six equipment upgrades and a seventh catch-all for improved operating practices that could be used to improve the efficiency with which power plants convert fuel into electricity.  EPA expressly rejected carbon capture and sequestration as insufficiently demonstrated and co-firing with gas or biomass as insufficiently available and unnecessarily costly.
  3. Affected Sources Subject to the Rule. ACE, as proposed, would apply only to coal-fired power plants, not gas-fired plants (unlike the Clean Power Plan, which applied to both).  EPA’s basis for excluding gas-fired units is that it does not have enough information to establish a similar efficiency-based emission guideline for them.  However, ACE is likely to set a precedent that could be important if EPA later decides that a similar program might be appropriate for gas generators after all.  Exclusion from ACE might also mean that gas-fired plants will be unable to take advantage of EPA’s New Source Review reforms, summarized below.
  4. No Presumptive Limits or Cumulative Targets: Unlike the Clean Power Plan, which focused on national and interconnection-level emission reduction targets to establish mandatory emission budgets for each state, ACE is not based on a cumulative emission reduction target, nor does it provide any presumptive limits or a prescriptive methodology for states to follow in setting performance standards.  That approach provides states maximum flexibility and authority, but it may also lead to significant variability from state-to-state, as plans are developed and submitted to EPA for approval. EPA did provide a range of expected efficiency improvement levels for each one of the seven measures proposed, which states must consider, but exactly how states are expected to incorporate those ranges into the process of establishing standards of performance remains unclear.
  5. Some Averaging, But No Trading: In describing the requirements for states, EPA made clear that averaging between affected units within a single facility will be allowed, but averaging or trading of emission reductions between facilities will be out of bounds.  This aspect of the rule is likely to be trouble to states that have already sought to reduce greenhouse gas emissions via a trading program, such as the states participating in the Regional Greenhouse Gas Initiative.
  6. Cost Implications: ACE expressly allows states to decide which measures are cost-effective, and therefore a valid basis for establishing a performance standard, and which measures might be too costly.  As noted above, that evaluation can be case-by-case, so states will need to conduct a detailed assessment of each covered facility’s economic characteristics.  EPA has also indicated a preference for including in that analysis the costs associated with any additional permitting or control requirements that could be triggered by the measures required—something EPA has not typically considered in the past.
  7. New Source Review (NSR) Reform: EPA has resurrected a 2007 proposal for NSR reform that would add to the current NSR permitting applicability test a preliminary hourly emissions check.  In short, if maximum hourly emissions are not expected to increase, NSR will not apply.  The concept could be highly beneficial in simplifying and clarifying the controversial NSR program, and the hourly test squares nicely with the new 1-hour national ambient air quality standards.  However, the exact form of EPA’s proposed preliminary hourly test leaves much to be desired, in that it relies on either a single highest hour or a flawed statistical analysis that must be compared to every single hour of emissions in the future.  It also fails to implement the statutory requirement for evaluating only those emissions increases caused by a project.
  8. State Plan Deadlines: EPA has proposed to significantly extend the deadline for state plans and for EPA action to approve those plans or issue federal plans for states that failed to submit an approvable one.  This timeline will give states much more time to work with EPA and make sure their plan is approvable, but it also means that the deadline for approving plans will not arrive until the next presidential administration.
  9. Adopting Standards Less (or More) Stringent than Guidelines: EPA’s ACE proposal confirms that a state’s standards of performance may be less stringent than the “information” comprising EPA’s emission guidelines.  However, for a less-stringent state plan to be approvable, states must demonstrate the reasonableness of their decisions.  How much or little deference EPA will pay to the state’s demonstrations will be, as noted above, up to the next presidential administration.
  10. Rule Benefits and Costs: In evaluating the potential impacts of its proposal—its costs and benefits—EPA compared its ACE proposal to two baselines, one with the Clean Power Plan in place, and one without it, which reflects the current state of the law in light of the Supreme Court’s stay of the Clean Power Plan.  EPA also relied on the social cost of carbon (but only domestic benefits) and co-benefits of particulate matter reductions (but noting that it has low confidence in the vast majority of the health benefits calculated).  All told, the rule predictably provides fewer benefits and imposes lower costs than the Clean Power Plan, but greater benefits and costs than doing nothing.

On June 7, 2018, U.S. EPA issued an advance notice of proposed rulemaking (“ANPR”) aimed at developing a consistent and transparent interpretation of cost and benefits consideration in regulatory analyses, including regulations promulgated pursuant to the Clean Air Act, Clean Water Act, Safe Drinking Water Act and other statutes.  EPA will accept comments on the ANPR for 30 days after it is published in the Federal Register. 

Assessing costs and benefits has been a contentious part of EPA rulemakings.  For instance, in the Mercury and Air Toxics (MATS) rulemaking, EPA determined that the monetized cost of the rule would be $9.6 billion annually whereas the monetized benefit would be $4-6 million annually.  EPA determined that MATS was nevertheless “appropriate” regulation, but the Supreme Court reversed, ruling that the agency had improperly refused to consider costs.  While EPA, during the Obama administration, subsequently modified its “appropriate” determination for the MATS rule, it has been speculated that the Trump administration might take some further action in that regard. Continue Reading EPA Considers Changing its Cost-Benefit Review Process

A federal judge last week upheld the constitutionality of the Congressional Review Act (CRA), a law that Congress has used recently to overturn more than a dozen federal regulations from the Obama Administration.  Under the CRA, Congress, by a majority vote, can disapprove a federal regulation if it does so within sixty legislative days after the regulation was adopted.  Once Congress disapproves a regulation, it cannot be readopted in substantially similar form.

Continue Reading Judicial Decision Upholding the Constitutionality of the Congressional Review Act

On Monday February 12, President Trump unveiled his long-awaited infrastructure plan.  According to President Trump, our country’s infrastructure “is in an unacceptable state of disrepair, which damages our country’s competitiveness and our citizens’ quality of life.”  While some view the plan as a step toward streamlining an environmental review process that could delay a project unnecessarily, others worry the proposal could curtail the authority federal agencies exercise over environmental reviews pursuant to the National Environmental Policy Act (NEPA).

The plan calls for $200 billion to be spent rebuilding roads, bridges, highways, railways, waterways, and other infrastructure over the next ten years.  That money will come from cuts to other programs (particularly within the Department of Transportation) and is not intended—at least as proposed—to come from new revenue streams.  According to President Trump, the proposed changes will generate approximately $1.5 trillion in new infrastructure investment.

Continue Reading Trump Administration Reveals Long-Awaited Infrastructure Plan

On January 9, 2018, EPA released the pre-publication copy of its annual civil monetary penalty adjustment.  The final rule is scheduled to be published in the Federal Register on January 10, 2018.  The adjustments are mandated by 2015 revisions to the Federal Civil Penalties Inflation Adjustment Act, which requires federal agencies to make annual inflation adjustments to federal statutory civil penalty amounts.  In the past, EPA only adjusted penalty levels for inflation once every several years.  Beginning in 2017, however, EPA and other federal agencies must adjust their penalty amounts every year. Continue Reading EPA Publishes Updated Civil Penalty Amounts

The GeoProfessional Business Association (GBA) – formerly known as ASFE – has released a new study on the standard of care for conducting Phase I environmental site assessments. This document is the fourth in a series of studies the organization has produced since the inception of the due diligence process in the early 1990’s. The study is an evaluation of approximately 200 Phase I reports from across the country, written between 2007 and 2010. The results of the study will be a valuable tool in determining whether a Phase I conducted during that time period meets the standard of care or not.

Continue Reading New Standard of Care Document on Environmental Due Diligence (“Phase I”) Process now available

On November 2, EPA announced that it plans to hold the public hearing on the proposed repeal of the Clean Power Plan in Charleston, West Virginia and the Agency is extending the deadline for written comments on the rule until January 16, 2018.   The hearing will be held on November 28 and 29 from 9 am – 5 pm at the West Virginia Capitol Complex in Charleston.  A copy of the press release is available here.

On October 10, EPA Administrator Scott Pruitt signed a proposal to repeal the Clean Power Plan (CPP).  The CPP was one of the Obama Administration’s signature environmental regulatory initiatives, designed to reduce CO2 emissions from fossil-fueled electric generating stations.  The repeal proposal asks for public comments within 60 days from the day it is published in the Federal Register.  It is expected that it will be published relatively quickly in the coming weeks.

Continue Reading EPA Takes Step to Rescind, Possibly Replace the Clean Power Plan

On July 20, 2017, EPA published in the Federal Register two final rules intended to begin implementation of the Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act), which significantly reformed the Toxic Substances Control Act (TSCA). The two final rules are the Procedures for Prioritization of Chemicals for Risk Evaluation Under the Toxic Substances Control Act, 82 Federal Register 33753 (Prioritization Rule) and Procedures for Chemical Risk Evaluation under the Amended Toxic Substances Control Act, 82 FR 33726 (Risk Evaluation Rule).  A third TSCA framework rule—the TSCA Inventory Notification (Active/Inactive) Requirements rule (Inventory Rule)—has not yet been published in the Federal Register, although a pre-publication version was released in June 2017 (we previously reported on all three proposed rules here).  Together, these three rules will help the Agency implement the extensive reforms set out in motion by the Lautenberg Act.

The Prioritization Rule and the Risk Evaluation Rule will become effective on September 18, 2017. Upon publication of the Active/Inactive Final Rule in the Federal Register – which EPA has indicated will become effective upon publication – a 180-day clock will be triggered for affected manufacturers, and affected processors must comply within 420 days of publication.

Finally, EPA published the notice of availability of Guidance to Assist Interested Persons in Developing and Submitting Draft Risk Evaluations, a guidance document intended to assist stakeholders with developing and submitting their draft risk evaluations, and has uploaded draft scoping documents for the first ten chemicals for which EPA is required to perform risk evaluations under the Lautenberg Act to its website (EPA’s initiation of the risk evaluation for these ten chemicals was previously discussed here).

Continue Reading EPA Finalizes TSCA Reform Framework Rules