As anticipated, on October 10 the EPA signed a proposed rule to repeal the Clean Power Plan rules for existing stationary sources. The proposed rule concludes that the Clean Power Plan exceeds EPA’s authority under Section 111(d) of the Clean Air Act by regulating emissions by (among other approaches) substituting generation from lower-emitting existing natural gas combined cycle units and zero-emitting renewable energy generating capacity.

Rather, EPA has now determined that any system of emission reduction must be “applicable at and to an individual source,” such as measures based on a physical or operational change to a building, structure, facility, or installation at that source. It offers justification for this determination based on the statutory text of Section 111 and its legislative history; prior agency practice; statutory context; and broader policy concerns – arguments which closely follow those in the motions challenging EPA’s authority in the D.C. Circuit Court litigation.

Significantly, the proposed rule states that the EPA has not determined the scope of any potential rule to regulate greenhouse gas emissions from existing electric utility generating units. In light of EPA’s 2009 endangerment finding (since upheld by the U.S. Supreme Court), EPA has an affirmative statutory obligation to regulate greenhouse gases. To address this obligation, EPA intends to issue an Advance Notice of Proposed Rulemaking in the near future to solicit information on systems of emission reduction that are consistent with EPA’s legal interpretation of its scope of authority.

EPA will offer a public hearing on the proposed repeal if it receives a request for a hearing within 15 days from the date the proposed rule is published in the Federal Rule. In addition, EPA will accept comments on the proposed rule for 60 days from the date of publication.