Originally published for customers November 1, 2023
The DC Circuit denied a motion to stay the Good Neighbor Rule while considering appeals. States and private petitioners have responded by filing 3 emergency applications to the rule (effective since August) which will impact coal and natural gas generation and grid reliability if it survives.
What’s the issue?
The Environmental Protection Agency’s (EPA) final rule implementing the “Good Neighbor” provisions of the Clean Air Act (Good Neighbor Rule) has been challenged at the United States Court of Appeals for the District of Columbia Circuit (DC Circuit). But on September 25, 2023, the DC Circuit denied a motion to stay the rule while it considered the appeals. In response, states and private petitioners have filed three emergency applications with the Supreme Court to stay the Good Neighbor Rule, which became effective on August 4, 2023.
Why does it matter?
The Good Neighbor Rule enacts emission limitations on certain stationary sources in twenty states, including coal and natural gas power plants and reciprocating internal combustion engines (RICE) used by pipelines to compress natural gas. Absent a stay, pipeline operators will have to meet the rule’s May 1, 2026 deadline, which may require prolonged and simultaneous outages while they take pipeline engines offline for retrofits. If the rule survives the underlying challenges, it will impact coal and natural gas generation and grid reliability.
What’s our view?
We expect the Supreme Court to grant a stay. But even if it does, the real test of the merits of the Good Neighbor Rule will bear out in the underlying litigation, which may also end up at the Supreme Court. If it is upheld, the rule could present real reliability and electricity price issues as more coal retirements happen and replacement capacity is needed, but such replacement capacity would not be provided as easily as that provided by the use of natural gas absent associated carbon capture infrastructure.
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