United States: US EPA Administrator Regan Previews Strategy For The Power Sector In A Post-Clean Power Plan World

Numerous stakeholders are anxiously awaiting the decision from the Supreme Court in West Virginia v. Environmental Protection Agency, et al., No. 20-153, on whether and how EPA can regulate carbon emissions from power plants. Based on oral argument in late February, the prevailing view is that the Court is likely to rule against EPA and constrain—at least to some degree—EPA's authority under Section 111(d) of the Clean Air Act, which allows EPA to regulate certain air pollutants (including greenhouse gas emissions) from existing stationary sources. Whether the Court rules narrowly based on specific issues of statutory interpretation, or issues a broader decision invoking the "major questions" doctrine, remains to be seen with a decision expected by June.

In the meantime, Administrator Regan recently emphasized that the agency is taking a comprehensive view of regulating the power sector that extends well beyond Section 111(d) regulation. In a speech during CERAWeek, the annual gathering of chief executives, policymakers, investors, and other leaders of global energy companies and economies, Regan provided a preview of the wide range of initiatives EPA is planning.

Acknowledging the Supreme Court case, Regan reaffirmed that "EPA is obligated to put in place emission guidelines for carbon dioxide pollution from existing power plants under Section 111(d) of the Clean Air Act" and promised that EPA will take a fresh look at its options after the Court hands down its decision. But he stressed that EPA is taking an integrated and coordinated approach to regulating the power sector, which allows EPA "to tackle the full array of threats that power plants pose to clean air, safe water, and healthy land." He noted that EPA will be coordinating rules under its air, water, and waste programs, so as to provide "greater transparency, regulatory certainty for long-term investments, opportunities to reduce compliance complexity, and the right signals to create market and price stability." EPA is expected to concentrate the combined effect of these multi-media rulemakings on coal-fired power plants, which could accelerate plant retirements by increasing costs to comply.

Power sector regulatory actions highlighted by Administrator Regan include the following:

• Cross-State Air Pollution Rule.  On March 11th, the day after Administrator Regan's CERA remarks, EPA unveiled its proposed "Good Neighbor" plan to cut smog from power plants and industrial facilities, which includes expanding the number of states in the cross-state air pollution rule from 12 to 25. EPA's proposed Federal Implementation Plan would establish new nitrogen oxides emissions budgets starting in 2023 for fossil fuel-fired power plants. This will help states meet their Clean Air Act "Good Neighbor" obligations for the 2015 Ozone National Ambient Air Quality Standards. EPA will accept comments on the proposed rule for 60 days after publication in the Federal Register.
• Mercury and Air Toxics Standards (MATS).  EPA issued a proposal earlier this year to reaffirm the scientific, economic, and legal underpinnings of the Obama-era 2012 MATS for power plants. EPA is currently seeking information from the public on any new developments that may warrant revisiting the Trump-era 2020 MATS Residual Risk and Technology Review.
• Natural gas combustion turbine white paper.  Later this spring, EPA will release a white paper on control technologies and measures with the potential to mitigate greenhouse gas emissions from new natural gas combustion turbines. The white paper is meant to frame the dialogue "on approaches to reduce climate pollution from new gas-fired units" and will be open for public comment.

Throughout his remarks at CERA, Administrator Regan emphasized EPA would put its commitment to environmental justice into action by improving the health impacts and outcomes to overburdened and underserved communities. He pointed out that "73% of the nation's fossil fuel-fired generation capacity are in communities of color or low-income communities."

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