Final Rule Published on EPA Power Plan

October 28, 2015

pic-energyOn Oct. 23, the long-awaited Clean Air Act (CAA) rules affecting new and existing power plants was published in the Federal Register. The final rule was originally released in August, however, they were not officially published in the Federal Register until just last week. There is much speculation that rules were not promptly published in the Federal Register following their August release in order to stall any litigation or Congressional action on the final rules prior to the United Nations Climate Change Conference in Paris this December.

These rules impacting new and existing power plants are a key component to President Barack Obama’s Clean Power Plan. The rules will require a 32 percent reduction in the power sector’s carbon emissions by 2030 based on 2005 levels of emissions from power plants. Under the rules, each state has been assigned a specific target-date based on the current composition of its power generation capacity. Under the rules, states are required to submit a plan to the Environmental Protection Agency (EPA) on how they will achieve their goals by Sept. 2016. However, upon further request, states can receive a two-year extension on that requirement. In the final rule, the compliance period does not begin until 2022. Released alongside the final rules was also a proposed rule creating a federal implementation plan should a state not submit a plan to comply with the final rules.

The targets imposed by EPA will make it very difficult for many states heavily reliant on coal fired power plants to comply with the regulations without shifting a significant portion of their capacity towards natural gas and alternative power sources. For this reason, the rules have raised concern in many states about their potential to increase the costs of energy as well the impact on reliability of electric grids.

When the rules were initially released in August several states began litigation to vacate the rule and remand it back to the agency for further consideration. That lawsuit was essentially thrown out as premature because the regulations were not yet published in the Federal Register and therefore not officially final. As expected, on Oct. 23, after the final rule’s publication 26 states and a host of other organizations filed lawsuits arguing that EPA has exceeded its authority in promulgating these rules. Litigation will likely take several years to ultimately resolve, causing significant uncertainty into the energy industry for the foreseeable future.

Publication of the final rule comes on the heels of an Oct. 22, House Energy and Commerce Subcommittee on Power and Energy hearing entitled “EPA’s CO2 Regulations for New and Existing Power Plants: Legal Perspectives.”

During the hearing, panelists discussed the potential impacts on electricity rates, reliability, implementation and compliance issues. However, the focus was on the legality of the regulations and whether or not EPA has exceeded its authority. NSBA is concerned by the regulations’ potential impact on reliability in the electric grid as well as the cost of energy to small businesses. A recent NSBA survey indicated that more than 90 percent of small business owners were concerned with increases to the price of the energy needed to run their business and almost as many. Furthermore,  87 percent of those surveyed  indicated that increases or volatility in energy prices hurt their businesses. The Regulatory Impact Analysis released along with the final rule estimates that in 2020 the regulation could cost between $1.4 billion and $2.5 billion.

In response to the final rules, Republican lawmakers in both chambers have offered the Congressional Review Act (CRA) resolutions which seeks to stop the rules. The CRA gives Congress the ability stop agency regulation, but has only been used effectively once, in 2001. A joint resolution opposing the regulations offered by Sen. Shelley Moore Capito (R-W.Va.) (S.J.Res. 24) under the CRA has garnered the support of 49 senators. Rep. Ed Whitfield (R-Ky.) introduced similar legislation (H.J.Res. 71 and H.J.Res. 72), under the CRA to block implementation of the rules. However, in addition to passing both chambers of Congress, a successful CRA challenge would require a presidential signature, or alternatively enough votes to overcome his veto, and such action is unlikely.

NSBA supports an all-inclusive approach to meeting increasing demand for energy in this country, and favors that over approaches which may prematurely retire viable energy producing methods from the U.S.’s energy production capacity.

Click here for NSBA’s statement on final rules.