Washington — The Trump administration has pushed back the timeline for replacing the Obama-era Clean Power Plan in the wake of the record 35-day partial government shutdown, according to US Environmental Protection Agency General Counsel Matthew Leopold.

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After initially aiming to finalize the Affordable Clean Energy, or ACE, rule by the end of March, the EPA now plans to issue the regulation sometime "in the second quarter of this year," Leopold said Thursday.

Leopold disclosed the revised regulatory timeline for one of the administration's signature rulemakings during a panel discussion co-hosted by the Environmental Law Institute and the American Law Institute in Washington, D.C., where he defended the proposal against lines of attack environmental groups likely will pursue once the rule is finalized.

Fellow panelist Vickie Patton, general counsel for the environmental group Earthjustice, challenged Leopold on the ACE rule's proposed determination that certain on-site power plant upgrades represent the best system of carbon dioxide emission reductions under the Clean Air Act.

In contrast to the Clean Power Plan, which sought to reduce greenhouse gas emissions by assigning states bold CO2 reductions targets, the ACE rule would allow coal-fired power plants to make on-site heat-rate improvements without triggering the need to install modern pollution controls under a permitting program known as New Source Review, or NSR.

"This will reduce the burden on new construction projects and allow projects to go forward and create efficiency that some in the regulated community say have been held back because of New Source Review permitting requirements," Leopold explained.

The NSR program is triggered when any "significant modification" at a power plant or other large industrial facility is expected to result in an emissions increase on a tons-per-year basis, requiring facilities to install state-of-the-art pollution controls that can cost more than the proposed modification.

But Patton called the ACE rule's changes to the NSR permitting program "a mockery," noting that the EPA's own analysis shows the proposed replacement regulation would lead to 1,400 more deaths annually compared to the Clean Power Plan due to increased levels of air pollution.

EMISSIONS

Patton interrupted Leopold when he attempted to cite the EPA's estimate that CO2 emissions would decrease roughly 34% in 2030 under the ACE rule compared to 2005 levels. In fact, Patton said, virtually all of those CO2 emission reductions would occur without the rule in place as a result of the nation's continued shift away from coal-fired generation toward natural gas and renewables. "These standards will create a policy framework that will allow for pollution increases," she said.

"We don't deny that the market is heading this direction already, and a lot of the gains that have been made in CO2 reductions are the result of market-driven factors and we celebrate that," Leopold responded. Moreover, Leopold said, the Clean Air Act does not allow the EPA to "come in and play energy regulator on the entire grid" by influencing how different power generation resources are dispatched.

Patton also urged the Trump administration to ask the US Court of Appeals for the District of Columbia Circuit to rule on a stayed legal challenge to the Clean Power Plan, noting that many of the questions at issue now already were fully briefed and argued before the full court in September 2016.

But Leopold disagreed, saying, "Each EPA would like to litigate on its own record, and we're developing a whole new proposal and the D.C. Circuit has decided to allow that."

The matter ultimately will come down to whether the D.C. Circuit finds the Trump administration's efforts to repeal and replace the Clean Power Plan arbitrary and capricious, according to veteran environmental attorney John Cruden. Now a principal at the law firm Beveridge & Diamond PC, Cruden defended the Obama-era rule as head of the US Justice Department's environmental division.

"The D.C. Circuit will pay way more attention to what the statute says, and are you working and operating within the statute," Cruden said in an interview on the sidelines of the event. Establishing a defensible administrative record also is key to surviving a legal challenge, he added, noting that the EPA is in the midst of responding to roughly half a million public comments. "You can actually win on the idea and lose when the record doesn't support it."

-- Zack Hale, S&P Global Market Intelligence, newsdesk@spglobal.com

-- Edited by Annie Siebert, newsdesk@spglobal.com