Beveridge & Diamond
 

New Executive Order Creates a Changed Climate for Climate Change and Energy

Authors: Jamie Auslander, Peter Schaumberg, David Friedland, Brook Detterman
Beveridge & Diamond, P.C., March 28, 2017

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On March 28, 2017, President Trump signed an Executive Order entitled “Promoting Energy Independence and Economic Growth” (EO).  This latest EO aims to further incentivize domestic energy production, particularly coal, oil and gas, by rolling back regulations and guidance premised on climate change considerations.  If fully implemented, it would have noticeable and substantive impacts on EPA, Interior, and other agency programs.  Yet it remains to be seen how quickly or effectively the stroke of the President’s pen will translate into on-the-ground actions, and to what extent it may yield opportunities or challenges for energy and natural resources project development.  In the interim, the EO sets in motion several energy-based initiatives across multiple agencies warranting close monitoring and active participation. 

The EO means almost instant change for some programs:

  • After more than 5 years spent in developing and finalizing the Council on Environmental Quality’s guidance on consideration of climate change in NEPA environmental reviews, the EO rescinds that guidance.
  • The moratorium on new coal leases on federal lands in effect since January 2016, and likely the ongoing NEPA review of the coal leasing program, will cease.
  • The government will severely discount or no longer use the social cost of carbon in regulatory or other settings, and may revisit prior calculations. The EO disbands the interagency working group on this issue, and withdraws its work product.
  • President Trump will also brush aside President Obama’s broader Climate Action Plan announced in 2013, including several Executive Orders and guidance items implementing that Plan.
  • The EO revokes the President’s November 2015 memorandum calling for heightened mitigation standards, and requires individual agencies to undo actions implementing that directive. 

In other instances, any impacts of the EO will be more delayed:

  • Most notably, the EO targets the Clean Power Plan limiting greenhouse gas emissions for existing power plants, which is currently stayed pending resolution of high-profile litigation in the D.C. Circuit. The EO directs EPA Administrator Pruitt to review the Clean Power Plan.
  • EPA also must reassess its recently promulgated New Source Performance Standard for new coal-fired power plants.
  • Likewise, EPA must revisit its June 2016 regulation of methane emissions from new oil and gas operations.
  • The EO directs the Secretary of the Interior to review the Bureau of Land Management (BLM) November 2016 regulation of methane emissions from new and existing oil and gas operations, including venting and flaring.
  • Interior must also reexamine BLM’s hydraulic fracturing rule, which was invalidated by a federal district court and is now on appeal to the Tenth Circuit.
  • Over the next 180 days (with interim deadlines), agencies must identify existing regulations, guidance, and policies that “potentially burden” domestic energy production, “with particular attention to oil, natural gas, coal, and nuclear energy resources,” and report them to the White House as additional targets for suspension, revision, or rescission.
  • The new EO is silent on continuing U.S. participation in the Paris climate accord and EPA’s baseline endangerment finding for greenhouse gases under the Clean Air Act, but the administration has not taken these items off the table. 

While this agenda is sweeping and a sharp departure from the past few years under President Obama, its ultimate impact is uncertain. For example, the EO does not necessarily obviate consideration of climate change in NEPA reviews – courts remain the driver here, and thinner administrative records could be more vulnerable to NEPA-based challenges by project opponents.  Likewise, elimination of mitigation guidance does not eliminate mitigation where required, a frequent ground for legal challenges to agency permitting decisions.  Rescission or amendment of current, legally binding climate-related regulations will require likely years of additional rulemaking under the Administrative Procedure Act, with uncertain outcomes.  Utilities will still face economic and other factors in determining their optimal energy mix. 

Litigation also stands in the way of its near-term implementation, as the EO recognizes. Some rules, including the Clean Power Plan and the fracking rule, are actively being litigated, and it is unclear to what degree the courts will be sympathetic to suspending the litigation to facilitate rescission or rewriting of those rules.  In particular, all briefing and oral argument have been completed in the Clean Power Plan case, and the D.C. Circuit may want to issue a merits ruling that could limit the government’s options going forward.  As another example, it is unclear whether the EO and related actions to pare back regulation of greenhouse gases under the Clean Air Act will affect the viability or preemption of tort claims based on alleged climate change-related impacts.  At the same time, the change in course under the EO creates opportunities for energy project proponents to proactively seek more streamlined environmental reviews or permit approvals, participate in the refashioning of climate policy, and identify further regulatory targets for reform. 

Beveridge & Diamond’s Natural Resources & Project Development practice and Air and Climate Change practice counsel clients on the issues addressed in the March 28 Executive Order, including representing clients in litigation. For more information on how the Executive Order may impact your business, please contact the authors or your usual Beveridge & Diamond contact.

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