It might sound counterintuitive that the Trump administration is contemplating a "replacement" version of former President Barack Obama's climate change rules, but that's what miners and major labor groups are pushing in meetings with the Environmental Protection Agency and the White House.
The EPA is reviewing the Obama administration's Clean Power Plan as part of a process that ultimately will see the plan repealed or re-proposed as a replacement rule that it can justify as legally defensible under the Clean Air Act.
A presentation given by the United Mine Workers of America and boiler and utility unions to the Office of Management and Budget at a June 26 meeting at the White House examined the legal basis for a replacement rule. The meeting included EPA, OMB, AFL-CIO, the International Brotherhood of Electrical Workers, Utility Workers Union of America, and others.
The meeting was part of a series of meetings OMB is holding to review an EPA proposed rule on the Clean Power Plan that many believe will result in a replacement rule, rather than a repeal. But the proposal won't be made public until after the review period concludes.
"The details of any replacement rule will be up to EPA, we offered some suggestions, and we may have more in the future," said Phil Smith, the United Mine Workers' head of communications and government affairs. "I really have no way no gauge at this point whether or not they are serious about it."
Conservative groups and clean energy advocates say that if the EPA goes for a replacement rule, a Trump Clean Power Plan most likely would favor coal-fired power plants by rewarding them for improving boiler heat-rate efficiency. That was one of the options that the labor unions suggested to the administration last month.
Heat-rate efficiency refers to the amount of heat necessary to burn coal to generate a unit of electricity. Increasing heat-rate efficiency reduces the amount of fuel needed to generate power.
"There's a rumor that Administrator [Scott] Pruitt is going to, in order to put the best legal foot forward on climate change, push for what is ‘Building Block One' of the Clean Power Plan. That's limited to heat-rate improvements at coal-fired facilities, and that will reduce emissions 2 to 3 percent depending on the figure," said Sam Batkins, who was the conservative American Action Forum's regulatory director until last month.
Batkins discussed the issue before he left the free-market think tank to work for credit card giant Mastercard's policy team. He had been tracking the administration's deregulation agenda, which includes rolling back Obama's climate regulations. He was not part of the OMB meetings, but is privy to what is being considered.
The heat-rate improvements were part of the Obama climate plan's four "building blocks" that states would use to reduce their greenhouse gas emissions. Other blocks included natural gas switching, renewable energy, and energy-efficiency programs, which many states argued goes beyond EPA's authority to regulate.
Under the Obama administration, utilities had criticized the efficiency improvements at coal plants as "wildly over-optimistic" and said they would raise costs for power plants, Batkins recalled.
At the same time, power plants will want to run at the highest efficiency level possible, he said. So, naturally, there is an incentive to make the heat-rate improvements to maximize profits and reduce the cost of operating a plant, he says.
"To some extent, I think Administrator Pruitt is going to work as best he can to sort of minimize those costs," Batkins said.
The recent meetings at the OMB would justify those rumors to some degree, and EPA could be at least contemplating the idea of proposing a heat-rate improvement greenhouse gas emissions plan in which coal comes out a winner.
Although the unions think the idea has merit, they also see room for some sizable tweaks, according to their presentation.
"Building Block #1 – ‘inside the fence' plant efficiency improvements unanimously agreed as valid by state and non‐state petitioners," the presentation reads. But then, it says in the next slide that "heat-rate improvements are not very effective in reducing [carbon dioxide] emissions," stating that the original version of the power plant building block was "believed to achieve only 2‐3 percent reductions reductions of CO2."
Instead, the unions contemplate setting "a standard of performance" based on a statistical analysis of the country's best-performing power plants "to set state targets (e.g., top 20 percent, top 25 percent) in tons or emission rates."
The standard would allow trading of emission credits to minimize the cost of compliance, according to the presentation. It also would have to consider changing the EPA's current standards for New Source Review, which "can dramatically improve plant efficiency."
New Source Review refers to the existing review process used by the EPA to determine if a power plant requires pollution controls under the Clean Air Act. But the process doesn't provide an incentive for a coal power plant to increase efficiency.
"The NSR program has stymied investment in the existing coal fleet" through "onerous NSR permitting requirements," the document read.
Part of the reason the Trump administration would need to weigh its own version of the Clean Power Plan is because of a 2007 Supreme Court ruling in the case Massachusetts v. EPA. The high court ruled that the EPA can regulate climate change-causing carbon dioxide emissions as a pollutant, leading the agency to issue a subsequent "endangerment finding" showing that carbon dioxide poses a public health risk and needs to be regulated.
"They have to do something" because of the endangerment finding, said a source with a clean energy group that supports the Clean Power Plan, who spoke on the condition of anonymity to discuss the issue more freely. "Presumably, they are going to go inside the fence line to require minimal efficiency improvements at existing plants, or something like that.... I think they are crafty enough to do that without putting any teeth behind it."
That would keep the D.C. Circuit Court of Appeals from ruling on the lawsuit filed by two dozen states and more than 100 industry groups opposing the Clean Power Plan. The court, which heard oral arguments last fall, could rescind the regulation or back it, or some variation of the two. The court did agree to allow the EPA time to review the rule. Meanwhile, the climate plan has been stayed by the Supreme Court until the case has been fully litigated.
Pruitt had been a party to the lawsuit when he served as Oklahoma's attorney general. The Trump administration agrees with the legal claims that Pruitt and the states put forward, arguing that the EPA overstepped its authority under the Clean Air Act.
The administration sees the Clean Power Plan as going "outside the fence line" of a power plant by including residential efficiency and state renewable energy programs in regulating emissions.
The OMB and White House did not respond to requests for comment. EPA spokesman Jahan Wilcox said only that "a revision of the Clean Power Plan is going through the interagency review process."
However, the OMB and EPA personnel who participated in the June 26 meeting "seemed to be quite interested in what we had to say," Smith said. "These meetings are normally very boring affairs with us doing all the talking. That was not the case here. They were engaged and asked a lot of questions."
Environmental groups such as the Sierra Club also met with the administration last month on its plans for the Clean Power Plan. A representative for the group said they used their sitdown to urge the administration to move forward with the Obama administration's finalized rule, but "did not hear much relevant information from OMB."
Sierra Club representatives "simply went and reiterated our support for the Clean Power Plan, which took years to write and involved unprecedented stakeholder outreach with everyone from environmental groups to the fossil fuel industry," the representative said.
Under section 111(d) of the Clean Air Act, the EPA is allowed to regulate emissions only on a plant-by-plant basis and cannot include items outside of the fence line to meet the Clean Power Plan, states, unions and the administration argues.
"We could support an inside the fence replacement rule, especially one coupled to NSR reforms that would help modernize the aging coal fleet," said Smith. "It is also clear to us, as shown by the Supreme Court stay, that the Clean Power Plan was an illegal overreach by going outside the fence."
The clean energy group source said once the new plan is proposed, "We will be arguing along with a lot of other people that you need to do these other things." But he expects the administration to say no, "and we will litigate it, and that will go on forever until the next administration."