Title: Power Play: Navigating EPA’s New Rulebook
Speakers: Gerry Pels and Elizabeth Corey
Gerry Pels (00:07):
Hey, Elizabeth, it’s great to see you. There’s a lot of interesting stuff going on at EPA right now.
Elizabeth Corey (00:14):
Yeah. EPA Commissioner Zeldin has really proposed a lot of interesting rulemakings that are coming up.
Gerry Pels (00:21):
Yeah. In fact, on June 17th, EPA proposed repealing greenhouse gas emission limitations applicable to electric generating units, or power plants. And I think this is a pretty big deal.
Elizabeth Corey (00:35):
I think you’re right, Gerry, and it’ll be interesting to see how this plays out for industry. Looking at it broadly, it looks like EPA is looking to repeal three overarching rule packages. They want to roll back the 2015 new source performance standards for EGUs, then they’re looking at rolling back the 2024 carbon pollution standards for EGUs, and separate from that, they want to pull back the emissions guidelines for existing fossil fuel-fired EGUs.
Gerry Pels (01:02):
Yeah. And not only that, EPA is proposing that it is required to make a finding that greenhouse gases significantly contribute to dangerous air pollution — and it’s proposing a finding that they do not significantly contribute to dangerous air pollution. This could have pretty significant effects for industry as a whole. If promulgated and finalized, this new rule could lead to the rollback of all emissions limitation standards applicable to stationary sources with regard to greenhouse gases.
That’s because this pollutant-specific finding that EPA is proposing could be applicable to source categories other than power plants. And the reasoning that EPA used to conclude that greenhouse gases from these sources do not significantly contribute to dangerous air pollution would be equally applicable to many other sources.
Elizabeth Corey (02:05):
That’s an interesting point, especially when you look at it under the statutory authority given under Section 111, where EPA was granted the ability to set standards for new stationary sources, and in some circumstances, emissions guidelines for existing stationary sources. So in order to do that, EPA first has to look at these various source categories and determine which categories, in EPA’s judgment, significantly contribute to dangerous air pollution.
Gerry Pels (02:37):
When did they start doing that with regard to electric generating units?
Elizabeth Corey (02:40):
They really started in the 1970s. There were two source categories that they initially identified: the steam-fired electric generating units and the combustion-fired electric generating units. Then we back up to 2015, and EPA combined these two source categories into a single category and determined that, based on their ability to regulate this category, they had made that significant contribution finding and could now regulate greenhouse gases.
Gerry Pels (03:12):
So in other words, EPA took the position that once it had made a determination that the source category significantly contributes to dangerous air pollution, it could then regulate any air pollutant emitted by those sources.
Elizabeth Corey (03:26):
That’s exactly it.
Gerry Pels (03:27):
Well, I think that is interesting. It seems as though the current EPA is taking a much different approach. They’re basically saying that in addition to finding that the source category must significantly contribute to dangerous air pollution, specific pollutants emitted by those sources must also significantly contribute to dangerous air pollution. And that’s really the basis for their repeal of these rules.
In this case, they’ve basically said that prior administrations were going a little bit too far in believing that they could regulate any air pollutant from these source categories, even if they hadn’t made a determination that those specific air pollutants significantly contribute to dangerous air pollution.
What EPA is doing in its proposal is saying that you have to make that determination, and with regard to greenhouse gases, they do not significantly contribute to dangerous air pollution. And how they get there with greenhouse gases is pretty interesting.
Prior EPA administrations took a volumetric analysis and said that this source category, compared to others, really has a lot of greenhouse gas emissions, so they must be contributing to the overall worldwide concentration of greenhouse gas emissions. They came up with a fairly loose causal analysis. The current EPA is basically saying there needs to be more of a proximate cause between the emissions from these sources and dangerous air pollution — and in this case, it’s not significant.
The way they get there is by looking at greenhouse gases not on a localized basis, but recognizing them as more of a worldwide issue. In that context, these emission sources really don’t contribute that much on an overall basis. As part of their analysis, they note that in the early 2000s, power plants accounted for about 5.5% of overall greenhouse gas emissions worldwide, and by 2022, that amount had decreased to about 3%. So their analysis is: how can that be significant?
Elizabeth Pels (05:48):
It’ll be interesting to see how this plays out — this rule is almost certainly going to be litigated. It’ll be interesting to see how the courts interpret it in light of the Supreme Court’s recent decisions in Loper Bright and, earlier this year, in Seven County, because under Loper Bright, the DC Circuit has de novo review of any legal analysis EPA puts forth. But then under Seven County, EPA is given extreme deference with regard to any technical analysis it puts forth in these rules. So it’s going to be interesting to see how this rule plays out in the courts, because it is almost certainly going to be challenged as soon as it’s promulgated.
Gerry Pels (06:35):
What issues do you see arising in that type of litigation?
Elizabeth Corey (06:40):
I think Loper Bright and Seven County are really going to be interesting. They were both recent Supreme Court cases. Under Loper Bright, any time EPA makes a legal interpretation, the DC Circuit reviews that de novo.
Gerry Pels (07:01):
They did away with the Chevron deference standard.
Elizabeth Pels (07:04):
Yeah, they did. And then there’s an interesting overlap with Seven County, which was just a few months ago, where the Supreme Court said that with regard to the more technical matters in EPA’s analysis and decisions, EPA is given extreme deference.
Gerry Pels (07:20):
That is interesting. It’s hard to say how that litigation will turn out, because I think EPA is taking a somewhat new position here. It seems to have a reasonable basis, but again, it’s hard to say how much deference the courts are going to give it.
There are several things that industry should be considering with regard to these rules, particularly in light of the likely litigation. First, the comment period for these rules ends on August 8th, and industry may want to consider submitting comments. We would suggest that businesses other than power plants may also want to consider commenting, because as we discussed, the approach EPA has taken could be applicable to sources other than electric generating units.
Thoughts that come to mind as worthy of comment include requesting that EPA provide some type of definition as to what constitutes “dangerous air pollution,” because that’s obviously going to be an issue. Industry might also want to consider supporting the proposition that a determination that air pollutants significantly contribute to dangerous air pollution be made on a pollutant-specific basis, and not just rely on the source category. And finally, I think it would be reasonable to support EPA’s position that a more proximate cause is necessary to establish a significant contribution to dangerous air pollution, rather than just a generalized finding. That’s really consistent with approaches EPA has taken in the past under the Clean Air Act, where it has focused on specific air pollutants rather than generalized findings.
Elizabeth Corey (09:32):
You know, it’s interesting too that these rules are being promulgated early enough in the Trump administration that they will have time to be finalized, go through the litigation process, and potentially be implemented before the end of his four-year term.
Gerry Pels (09:46):
Yeah, and I think that’s right, Elizabeth. We should also consider that this is really one of the first steps the administration is taking in rolling back the burdens associated with the regulation of greenhouse gases. EPA Commissioner Zeldin has talked about rolling back the greenhouse gas reporting program, and one of the things that has been asserted is that it doesn’t have a sound statutory basis. That is one of the factors identified in some of the early executive orders, where the president asked agencies to look for rules that could be burdensome on the development of natural resources and fossil fuels, and also to examine rules where there may not be a solid and specific statutory foundation. So I think these are things we should be keeping our eye on for the foreseeable future. It’s going to be really interesting to see how it plays out.
Elizabeth Corey (10:55):
It will be.
Gerry Pels (10:56):
Well, it’s been great talking with you.
Elizabeth Corey (10:58):
You too, Gerry.
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