Troutman Pepper Hamilton Sanders LLP

01/25/2021 | News release | Distributed by Public on 01/25/2021 23:24

Affordable Clean Energy (ACE) Rule Vacated, But Appeal Still Possible

On January 20, the last full day of the Trump administration, a three-judge panel of the D.C. Circuit Court of Appeals vacated the Affordable Clean Energy (ACE) rule, the Trump EPA's replacement rule for the Clean Power Plan. The Clean Power Plan was a cornerstone of the Obama EPA's efforts to address climate change and would have required electric utilities to shift generation from fossil fuels to renewable resources. That aggressive rule was halted by an unprecedented stay of the rule by the Supreme Court, but a decision on the merits has never been issued because the Trump administration took office and put the litigation on hold. In its January 20 opinion, the D.C. Circuit has now issued the first decision on the merits of the legal issues underlying both ACE and the Clean Power Plan.

Key to the decision was the court's rejection of EPA's claim that the Clean Air Act (Act) does not allow for the generation shifting required under the Clean Power Plan. In ACE, EPA read Section 111 of the Clean Air Act to preclude generation shifting because it only authorizes EPA to impose standards that reflect measures that can be applied at an individual source. The per curiam opinion from Judges Millett, Pickard, and Walker rejected that theory. The court held that Section 111 does not unambiguously limit the 'best system of emissions reduction' to measures that can be taken at a particular source, stating that the interpretation underlying ACE 'is simply not supported by the text, let alone plainly and unambiguously required by it.'

In its lengthy opinion, the court also dismissed arguments that the Clean Power Plan was illegal under the 'major questions' doctrine because the court did not view it as an extraordinary exercise of administrative authority. The court also shot down an argument from coal industry petitioners that EPA does not have authority to regulate GHGs from existing power plants at all because they are already regulated under Section 112 of the Act. Judge Walker, however, issued an opinion expressing his agreement with both of these legal theories. In addition to vacating the ACE rule, the D.C. Circuit vacated changes to procedural rules that extended compliance deadlines for state plans submitted to EPA under Section 111.

With the ACE rule set aside and EPA's restrictive view of its authority under Section 111 dismantled by the D.C. Circuit panel, the Biden EPA might appear to have a blank check to write as it crafts its own plan for addressing GHGs from existing power plants. However, the litigation over the repeal of the Clean Power Plan and vacatur of the ACE rule is not necessarily over - the supporters of ACE will have 45 days to request a rehearing from the D.C. Circuit and 150 days to petition the Supreme Court for review of the decision. If the now even more conservative Supreme Court takes the same view of the Clean Power Plan hinted at in its unprecedented stay, there may be more to come in this protracted battle over EPA's authority to regulate greenhouse gases from existing power plants under the Clean Air Act.