Agency could ditch key part of ACE if courts rule against it

Source: Niina Heikkinen, E&E News reporter • Posted: Friday, August 24, 2018

EPA’s plan to make it cheaper for power plants to become more efficient could also lead to legal headaches for the agency’s newest climate rule.

The source of the trouble is EPA’s proposal to loosen certain permitting requirements when operators make significant improvements to their facilities. The measure is an important part of the proposed Affordable Clean Energy rule.

EPA’s air chief, Bill Wehrum, said Tuesday that the agency’s focus on facility-level emissions reductions could trigger permitting requirements under the agency’s New Source Review program. To prevent that from happening, the agency is proposing to “align” the NSR program with its new rule for power plants — making it cheaper for facilities to make upgrades.

Critics of the proposal say changing the permitting process is legally vulnerable. They point to similar efforts pushed by Wehrum under the George W. Bush administration to reform NSR. Those efforts were defeated in court.

In one short sentence tucked halfway through the proposed rule, EPA appears to acknowledge the legal risks of including changes to the NSR program in the broader rule.

“EPA intends that the NSR revisions, if finalized, would be severable from the other provisions on judicial review,” the agency wrote. In other words, the agency could jettison its changes to NSR if they threaten the broader rule.

John Walke, director of the federal clean air, climate and clean energy program at the Natural Resources Defense Council, explained that making a portion of the rule “severable” means that if a court overturned that portion, the whole rulemaking wouldn’t be overturned along with it.

“The obvious explanation is they don’t want ACE to go down with the ship,” said Walke.

A former EPA official warned that there is no guarantee EPA’s efforts to put some distance between its permitting reforms and its rule on carbon emissions would pass legal muster.

“My understanding is that courts do not necessarily have to accept agencies’ declarations of severability at face value, but scrutinize severability claims on the merits,” said Joseph Goffman in an email.

If a court determines that the changes to the NSR program are instrumental in allowing states to meet requirements under the rule, then the court might not allow that piece to be considered separately. Wehrum’s comments about the need to align the permitting program could undermine EPA’s argument that the change to NSR wasn’t an instrumental part of the rule, Goffman said.

Kirk Johnson, senior vice president of government relations at the National Rural Electric Cooperative Association, described this as a common practice used by the agency to protect parts of the rulemaking from legal challenges. The organization has come out in favor of EPA’s replacement plan.

“They recognize that we in the utility industry have faced barriers to efficiency improvements because of concerns for New Source Review,” said Johnson. “We certainly believe that that effort to modify NSR is a move in the right direction.”

Considering NSR separately from the rest of the rule might help save the climate rule from legal challenge but could have costly ripple effects for coal-fired power plants, according to Walke.

“If NSR reforms are struck down, that means industry is limited to ‘inside the fence line,’ which could trigger the need for conventional pollution controls of NSR. That could fundamentally change the economics of coal plants in a way that the Clean Power Plan really did not,” Walke said.