Environmental Protection Agency (EPA) Administrator Scott Pruitt declared “the war against coal is over” yesterday in his announcement that the EPA will move to repeal the Clean Power Plan. In a lengthy proposal leaked last week that was then updated and signed October 10, the EPA proposes to repeal the Clean Power Plan (CPP), a controversial regulation designed to cut carbon dioxide (CO2) emissions from existing fossil fuel-fired power plants. In support of the proposal, the EPA describes the Obama-era EPA’s interpretation of the Clean Air Act as unlawful.

The Obama Administration promulgated the CPP under Section 111(d) of the Clean Air Act in 2015. In the 2015 CPP, the EPA determined that the best system of emission reduction (BSER) for CO2 emissions from existing fossil fuel-fired power plants was based on the following three “building blocks,” or types of measures, that could be taken by owners of power plants:

  1. Heat-rate improvements at coal-fired units;
  2. Substituting increased generation from lower-emitting existing natural gas combined cycle units for decreased emissions from coal-fired units; and
  3. Increasing generation from new zero-emitting renewable energy generating capacity.

While the first building block requires measures that can be implemented “within the fenceline” of a source, building blocks two and three are “beyond the fenceline” measures designed to shift generation away from coal. In today’s proposal, the EPA returns to a more traditional BSER, finding that it must be something that “physically or operationally changes the source itself, and that is taken at or applied to individual, particular sources.” Consequently, the CPP, in relying on building blocks two and three, exceeds the EPA’s statutory authority. Moreover, EPA asserts that building block one, even though affecting only the source, cannot stand alone if the other building blocks are repealed. In making this last assertion, the EPA relies on statements from the preamble to the 2015 CPP that building block one may result in increased unit utilization after efficiency improvements, resulting in more emissions from those units, rather than less as is the intent of the rule. The EPA requests comments limited to its new statutory interpretation.

As part of the action, the EPA also proposes to rescind the two legal memoranda in the CPP docket as inconsistent with its new interpretation and requests comment limited to its new legal interpretation.

What will Administrator Pruitt do next with respect to greenhouse gas (GHG) emissions? He has not yet laid out a clear plan. Administrator Pruitt indicated he had no intention of revisiting the EPA’s 2009 GHG endangerment finding. With the GHG endangerment finding continuing in effect, the EPA is still required to provide a rationale for regulating, or not regulating, emissions from power plants, the largest stationary source of GHG emissions in the U.S. The Section 111(b) rule, applicable to new sources, is a predicate to regulating under Section 111(d), and it remains effective, although also subject to litigation. If the EPA regulates new sources under Section 111(b), it “must” also regulate existing sources under Section 111(d). Whether the EPA will address the Section 111(b) rule directly or wait for the litigation to run its course is unknown, but the specific interpretation of BSER will affect adoption of all new source performance standards.

Administrator Pruitt is not the first to announce the end of the “war on coal.” The repeal announcement comes during a period of falling power plant emissions. Environmental groups have already claimed that the war on coal has been won. These groups claim that power plant emissions have fallen so much that the U.S. is well on its way to meet the CPP’s goal of reducing power plant emissions by 32% from 2005 levels by 2030, regardless of whether the regulation remains intact. The fall in emissions is widely acknowledged to be the result of power plant economics.

The EPA will accept public comments for 60 days from the date the proposal is published in the Federal Register.