The Environmental Protection Agency (EPA) has continued its efforts to regulate power plants, previewing a series of wide-ranging rules that it plans to impose on power plant operators in the near future. Even though the EPA’s ability to regulate greenhouse gas emissions is currently in doubt, the agency continues to press forward and has served up what power plant operators may see as a warning of future actions.

Power Plant Operators May See Drastic Changes

In a far-ranging speech at the S&P Global Conference, EPA Administrator Michael Regan set out his regulatory agenda. It promises to be a sea of change in U.S. regulatory policy, and will be rolled out over the coming year. Regan explicitly said the point of announcing all of these regulations at once was to convince the industry to evaluate its future investments. The EPA’s aim is to get power plant operators to retire coal-based technologies.

In his speech, Regan detailed some of the efforts the EPA has taken thus far in 2022. Most importantly, he mentioned that the EPA will “be taking a fresh look at our options for reducing carbon emissions from both new and existing power plants.” This one sentence will have a significant impact on the nearly 4,000 power plants across the country that are powered by fossil fuels. In addition, the EPA plans to propose greenhouse gas rules for new power plants.

Further, Regan indicated the EPA plans to do the following in the coming year:

  • Propose a legacy Coal Combustion Residual (CCR) surface impoundment rule.
  • Finalize the CCR Federal Permit rule.
  • Propose supplemental effluent guidelines.

The EPA Is Clearly Coming After Coal

Regan championed renewable energy, citing the drop in costs of production. The EPA is choosing winners and losers in its regulatory approach, which will be framed by environmental justice concerns, making life more difficult for power plant operators who may need to incur significant costs.

Administrator Regan announced three principles he expects to apply to his regulatory approach:

  • Continuing transparency and open dialogue with stakeholders most affected by EPA actions.
  • Attempting to protect the “most vulnerable communities” who live near power plants.
  • Ensuring that power producers can continue to provide reliable and affordable electricity.

To the third point, the EPA believes communication is the best way to achieve this goal, even though the policies it is communicating could significantly disrupt power plants’ existing operations.

The EPA’s efforts seem to originate from an anti-coal agenda that its Administrator has not tried to hide. Regan has explicitly doubted coal’s effectiveness and viability in comparison to newer technologies. He seems to be making it his mission to regulate coal out of existence in any way he can.

The EPA’s Rules Are Subject to Federal Law

Of course, the EPA does not have an unlimited ability to regulate however it sees fit. The Administrative Procedures Act (APA) governs how agencies make their rules, including preventing the EPA having a total lawmaking monopoly over environmental law. These regulations may be subject to legal challenges that could make their way to the U.S. Supreme Court. The agency’s greenhouse gas rules are already the subject of a current case before SCOTUS.

The current Supreme Court has not shown the deference to agencies that its predecessor Courts did, and broad agency attempts to regulate—such as those Regan is promoting—may be in danger. The Court could very well find these rules do not pass legal muster.

The U.S. Supreme Court Is About to Rule on a Crucial Environmental Case

If the Supreme Court rules in favor of the appellants in the case of West Virginia v. EPA, all bets are off. This case involves the appeal of a D.C. Circuit decision to strike down Trump-era EPA rules that repealed a prior aggressive greenhouse reduction rule finalized by the Obama Administration.

In this case, the appellants are arguing the rules are outside the EPA’s authority, and that Congress should have a say in these regulations. As of this writing, the Court is in the process of deciding the case. At oral arguments, the Court expressed some sympathy for the appellants’ position.

However, the EPA seems intent on increasing regulations in any way possible. If the Trump Administration’s rules are struck down, the EPA may try to regulate power plants anyway via the Clean Air Act and Clean Water Act. Power plant operators can anticipate a determined EPA that is trying to expand its reach. It may try to use a smorgasbord of rules to push its agenda through after being stripped of some of its authority.

If these rules are struck down, it will not be the end of the line for the EPA. The energy industry can expect new attempts by the EPA to write rules that will fall within the acceptable framework set forth by the Supreme Court in its West Virginia v. EPA decision.

In addition, Congress also has a say in these matters. Already, coal’s defenders in Congress are pressing the EPA for more transparency about its upcoming regulatory plans. Further, aggressive agency rules can get rescinded if there is a change in presidential administrations.

There may be some unknowns at the moment when it comes to the EPA’s regulatory powers, but the one certain thing is that power plant operators can expect significant regulatory uncertainty in the coming year. This uncertainty may increase if control of Congress changes hands.

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