As the Biden administration steadily chips away at a hefty air emissions to-do list, legal experts see challenges ahead for industry and local regulators tasked with compliance for the incoming regulatory changes.
New rules on carbon, particulate matter, and ozone transport are on the horizon in coming months, creating uncertainty around next steps for regulated industries, according to Holland & Hart LLP partner Emily Shilling.
“It feels sort of like a barrage at this point, but [it’s] yet to be seen what a lot of the final rules are going to end up looking like,” Schilling said. “Industry certainly needs to be keeping an eye out and staying engaged.”
A broad range of industries are watching EPA air rules closely, though potential regulatory uncertainties vary across sectors. Emission control technology, reporting compliance, and operation budgets hang in the balance of agency action on emission rules.
The sheer number of different directions these incoming standards will go in, once finalized, is sure to bring challenges to certain sectors of industry, according to McGuire Woods LLP partner Makram Jaber.
The quickly revolving door of formal rulemakings and informal agency actions such as guidance changes are making it “a near impossible task to plan out more than a few years,” especially if changes in administrations lead to overhauls and rollbacks, King & Spalding LLP partner Doug Henderson said.
“From a pure regulatory perspective, agency interpretations are changing very fast, and they swing with administrations,” Henderson said. “If you’re trying to plan for it, this is one of those challenging times in the history of environmental law.”
Coal Plant Focus
EPA Administrator Michael Regan has made it clear that carbon rules for coal-fired electric generating units are a priority for the agency, and Schilling said the steady flow of new emission rules will target utility greenhouse gas emissions “through the back door.”
No major carbon rule has been finalized to replace the Clean Power Plan or the Affordable Clean Energy Rule, and a closely watched petition on EPA climate rulemaking authority is still pending at the Supreme Court.
But a carbon power plant rule is coming soon, contingent on results from the West Virginia v. EPA case, likely before the end of the Supreme Court term in June, Regan said last week.
“We want to be sure that the rule that we design will fall within where the Supreme Court will land,” Regan told lawmakers during a Senate Environment and Public Works Committee hearing on the EPA’s fiscal 2023 budget request.
Schilling said that from a cost perspective, “the different rules layered on top of one another are intended—as Regan sort of acknowledged—to make the industry look twice at the economic feasibility of operating coal-fired power plants.”
Everything comes down to cost, though what kind of results will be produced from those costs for certain sectors such as utilities remains to be seen, Jaber said.
“The fact that the cost is increasing this way, may lead to a different kind of solution or incentive, it could be shutting down the unit altogether,” Jaber said.
A panel of independent science advisers to the EPA released formal recommendations last month urging the agency to tighten particulate matter, or PM, levels under National Ambient Air Quality Standards. Regular reviews of the standards update legal thresholds in order to more adequately protect the public from the tiny emissions that imbed in the lungs and cause a variety of health problems and mortality.
Those new levels will likely come this summer, setting off a new round of NAAQS proceedings and State Implementation Plans that will affect not just utilities, but “the entire industry,” Jaber said. Power plants, gas plants, material manufacturing facilities, and local air officials will all have to change course under new stringency levels.
“PM NAAQS is another thing that’s going to affect everybody and it’s going to potentially throw a lot of areas into non-attainment, which is a whole different ball game on a lot of things,” Jaber told Bloomberg Law, referring to geographic areas where emission levels don’t meet EPA’s air quality standards.
The “breadth” of proposed ‘good neighbor’ rules on pollution traveling across state lines took some sectors of industry by surprise, according to Schilling, who noted that regional haze rules will also add to the regulatory landscape.
The latest ‘good neighbor’ rule added multiple Western states and industries to its compliance roster that haven’t been targeted before by the rule. Facilities with industrial boilers, for example, will now have to re-evaluate portions of their compliance from scratch since boilers were added to the standards.
“That’s a huge amount of uncertainty, and also likely additional stringency, layered on top of [the Cross-State Air Pollution Rule] and then layered on top of the NAAQS,” she said.
The way administrations use powers beyond notice-and-comment rulemaking can also add a lot to regulator and industry to-do lists beyond what’s in the standards themselves, Henderson said.
“Increasingly a trend for agencies, and I think you’ll see it under all administrations, is things get changed by an agency taking a new interpretation or an agency using its discretionary power,” Henderson said, referring to actions like mandating new toxics release reporting for certain companies.
For now, Schilling sees companies and industry locked in a “waiting game,” staying active in comments on rulemaking and assessing how the soon-to-be-finalized proposed rules will shift existing operations.
“It’s difficult to plan when this is all happening at the same time, and you’re not entirely sure how the rules are going to end up,” she said.