April 04, 2017

Climate Change Executive Order: What's Next?

On March 28, 2017, President Trump made good on his campaign promise to take action to repeal President Obama’s climate agenda, including the Clean Power Plan (CPP). In his “Executive Order on Promoting Energy Independence and Economic Growth,” (the EO) President Trump called on the Environmental Protection Agency (EPA) to review the CPP for consistency with the stated goal of identifying and eliminating “aspects of agency actions that burden domestic energy production” including oil and natural gas, coal, and nuclear power. Assuming the administrator finds the CPP inconsistent with this stated goal, he is instructed to “suspend, revise or rescind” the CPP and its related guidance.

What’s in the Executive Order?

The EO reaches beyond EPA to other federal agencies whose regulations might burden domestic energy production. It rescinds various Obama-era executive orders regarding climate change, including President Obama’s Climate Action Plan and the strategy to reduce methane emissions. It directs administrators of other federal agencies to review those agencies’ rules for inconsistency with the stated goal, and provide a report to the Office of Management and Budget (OMB) within 180 days that identifies existing agency actions (regulations, guidance, policies, etc.) “that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.”

The EO also walks back how federal agencies should consider greenhouse gas (GHG) emissions in making decisions. It repeals guidance on that topic for agencies performing reviews under the National Environmental Policy Act (NEPA), better known as the “Social Cost of Carbon,” and directs agencies to estimate potential costs associated with GHG and nitrogen oxides emissions according to 2003 OMB guidance, rather than more recent guidance prepared by the Interagency Working Group on Social Cost of Greenhouse Gases (IWG). (This EO also disbands the IWG.)

The EO strives to protect both coal and oil and natural gas development. On the coal side, in addition to repealing the CPP, the EO rescinds the moratorium against coal leasing on federal land, among other actions. On the oil and gas side, it instructs the Bureau of Land Management to review recent rules regarding hydraulic fracturing on federal and Indian Lands for consistency with the stated goal and to suspend, revise or rescind those rules. The most recent Clean Air Act regulations that regulate methane from the oil and gas sector — known as “Quad Oa” — are identified for the same treatment

What’s Next?

The impacts of the EO will vary. Initially, because all of the identified regulations have been finalized, they will need to go through notice and comment rulemaking before they can be repealed. There is little doubt this will provoke lawsuits from environmental groups and the states which supported the regulations, tying the repeal actions up in court.

The repeal of the CPP may not have much immediate practical effect, just as its enactment did not have immediate practical effect. The regulation had been under a stay by the Supreme Court since early last year, so few states had moved forward on developing their implementation plans. To reinforce that fact, Administrator Pruitt wrote to all of the nation’s governors reminding them that they have no obligation to prepare for the Clean Power Plan. Market forces such as the affordability of natural gas and pre-CPP Clean Air Act regulations of other pollutants have pushed utilities toward other fuel sources. Because most utilities are subject to long-range planning requirements, this change was in place before the CPP was finalized (and before it was challenged in court). However, with the CPP repealed, the regulatory bar against coal use would be removed and utilities might feel more comfortable continuing to rely on the fuel in future planning.

As for the EO’s effect on the ongoing lawsuits against the CPP, the EPA has requested that the D.C. Circuit hold its decision on the existing source standard in abeyance until the agency can reconsider the regulations in accordance with the EO. For the new source standard the Administration asked for the oral arguments scheduled for this month to be delayed, and the Court readily agreed. While 16 states have signaled they will mount a court challenge to EPA's move to reverse the Clean Power Plan, 29 states had sued to block the plan.

On the oil and gas front, the impacts have been more immediate. EPA had already rescinded an information request sent to oil and gas companies that would have helped the agency draft further methane rules. The March 29 EO can also be expected to result in a slowdown in EPA’s previous enforcement initiatives against the oil and gas industry.

At the Department of the Interior, Secretary Zinke issued a secretarial order calling for all nine agencies within the Department to provide a list of "all department actions they have adopted, or are in the process of developing," that relate to the actions rescinded by the EO. They have 14 days to respond. Zinke also pledged to expedite any applications to mine coal on federal lands.

Finally, the CPP was a cornerstone of the United States’ commitments in the United Nations Framework Convention on Climate Change, also known as the Paris Climate Agreement. President Trump’s position regarding the U.S. remaining a party to that agreement has not yet been clarified. However, should the U.S. remain a party, without the CPP in place, the question will turn on whether the Trump administration attempts to meet the reduction targets without the CPP or ignores the targets since the agreement lacks an enforceable mechanism.

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