By Claudia O’Brien, Bob Wyman, Joel Beauvais, Stacey VanBelleghem, Bridget Reineking, and Kimberly Leefatt

On March 28, 2017, President Donald Trump signed an executive order (EO) directing executive departments and agencies to review regulations that potentially burden the development or use of domestically-produced energy resources. This EO sets the stage for what could become a series of sweeping reversals of the Obama Administration’s greenhouse gas (GHG) reduction and climate change polices. In particular, the order lays the groundwork for reform of the Clean Power Plan (CPP) and the new source pollution standards for new, modified and reconstructed power plants (NSPS).

The issuance of this EO kicks off a long and complex process for EPA to review both the CPP and NSPS, draft and publish proposals to revise or rescind the rules, accept notice and comment on the proposals, address comments on the proposals, and then issue final rules. Regardless of whether EPA proposes to suspend, revise, or rescind the rules, legal challenges are sure to follow. The outcome of these rulemakings and subsequent litigation will be consequential for the future of federal regulation of GHGs under the Clean Air Act (CAA).

The current uncertainty over the GHG regulations governing the electric power sector is likely to remain for the foreseeable future. Since CPP implementation was stayed by the Supreme Court, existing sources in the electric power sector will be free of federally-imposed emissions constraints while EPA reevaluates the CPP and NSPS and completes its rulemakings, and while EPA faces legal challenges to its determinations, assuming the Agency opts for full rescission of the CPP rather than a limited, inside-the-fence regulation. Some states and regulated entities will view potential revision or rescission of the CPP and NSPS as a welcome reprieve from the requirements imposed by these rules. Other states and regulated entities will fight attempts to weaken the CPP and NSPS, which they supported as a framework for achieving emission reductions or as a competitive advantage based on their portfolio mixes and for setting the stage for more uniform regional or nationwide GHG regulations and markets. In the interim of federal regulatory uncertainty, states will assume the principal role of GHG regulators, and the electric power sector will continue to encounter a patchwork of regulations lacking any degree of national uniformity. In any event, strong economic and policy drivers are likely to continue to move the country towards lower-emitting generation.