On January 19, Donald Trump's last full day as president, his signature energy and environmental rulemaking, the Affordable Clean Energy (ACE) rule, was vacated in a 2-1 ruling by the U.S. Court of Appeals for the District of Columbia Circuit.

In vacating the rule, the court sent the matter back to the U.S. Environmental Protection Agency (EPA) (Washington, D.C.). Given the change in administration, and President Joe Biden's emphasis on reducing carbon dioxide (CO2) emissions from the Electric Power Industry, among other sectors, whatever rules come out of the Biden EPA are likely to be very different from Trump's ACE rule. Groups that sided with the EPA in defending the ACE rule could seek a rehearing of the case before the full DC circuit court, or appeal to the U.S. Supreme Court. The prospects of that are uncertain.

For more on the ACE rule, see June 25, 2019, article - Litigation Expected for EPA's New Clean Air Plan. For more on the new Biden administration's early signals about energy and environmental regulation, see January 11, 2021, article - How Far and Fast Can the Biden Administration Push Electric Vehicles?

In a statement, EPA spokesperson Molly Block said: "We are disappointed that the panel majority rejected EPA's well-supported repeal of the Clean Power Plan and its regulation of (greenhouse gases) from coal-fired power plants in the Affordable Clean Energy rule. The decision risks injecting more uncertainty at a time when the nation needs regulatory stability. EPA is reviewing the decision and will explore all available litigation options."

The ruling was praised by environmental groups. The court's decision "is the perfect Inauguration Day present for America," said Ben Levitan, senior attorney for the Environmental Defense Fund (EDF) (New York, New York). "It confirms that the Trump administration's dubious attempt to get rid of commonsense limits on climate pollution from power plants was illegal, it reaffirms that the Clean Air Act and the Endangerment Finding are the law of the land, and it restores the vibrancy of the rule of law." He added: "Now we can turn to the critically important work of protecting Americans from climate change and creating new clean energy jobs."

Electric utility groups have had deep divisions over efforts to regulate CO2 emissions by the Obama and Trump administrations. A spokesman for the Edison Electric Institute (EEI) (Washington, D.C.), the trade group representing shareholder-owned utilities, noted that it was not a litigant in the ACE case and had no comment. In a statement, the American Public Power Association (APPA) (Washington, D.C.), a group representing publicly owned electric utilities, said: "The power sector has reduced its CO2 emissions beyond ACE's target reductions. That being said, we fully expect the Biden administration to draft new rules governing CO2 emissions from the sector, so we are looking out for those."

In vacating the Trump administration's ACE rule, the court, in a lengthy opinion, wrote: "The question in this case is whether the Environmental Protection Agency (EPA) acted lawfully in adopting the 2019 Affordable Clean Energy Rule (ACE Rule), as a means of regulating power plants' emissions of greenhouse gases. It did not."

"Although the EPA has the legal authority to adopt rules regulating those emissions," the court continued, "the central operative terms of the ACE Rule and the repeal of its predecessor rule, the Clean Power Plan, hinged on a fundamental misconstruction of Section 7411(d) of the Clean Air Act. In addition, the ACE rule's amendment of the regulatory framework to slow the process for reduction of emissions is arbitrary and capricious. For those reasons, the ACE Rule is vacated, and the record is remanded to the EPA for further proceedings consistent with this opinion."

"Policy priorities may change from one administration to the next," the court's majority wrote in their decision, "but statutory text changes only when it is amended. The EPA's tortured series of misreadings of Section 7411 (of the Clean Air Act) cannot unambiguously foreclose the authority Congress conferred. The EPA has ample discretion in carrying out its mandate. But it may not shirk its responsibility by imagining new limitations that the plain language of the statute does not clearly require."

A good bit of the court majority's 147-page decision focused on demolishing the EPA's assertion that the Clean Air Act limited the agency's regulatory purview to changes that could implemented to generators on an existing coal-fired power plant site. The court rejected that assertion, noting that the original law spoke of a "best system of emissions reductions," which could include heat rate improvements to coal-fired generators as well as what was called "generating shifting," basically moving to lower or zero-emissions generation outside the fence-line of an existing coal-fired power plant.

Consistent to what is known as cooperative federalism, the court noted that states were "free to choose any measures, approaches, or technologies that they deemed appropriate to meet the (emissions) federal guidelines. For example, they could adopt technological controls already in use by some power plants like carbon capture and sequestration ... or co-firing. ... The EPA also suggested that States might rely on emissions-trading programs ... and other potential compliance strategies."

The decision noted that the EPA predicted relying only on heat-rate improvements to coal-fired power plants would reduce those emissions by less than 1%, and could actually lead to an increase in emissions.

In its ruling, the court cited a 2007 U.S. Supreme Court ruling, Massachusetts v. EPA, which held that climate change has been called "the most pressing environmental challenge of our time." It also noted that regulation of CO2 emissions was required under the Clean Air Act once the EPA determined those emissions "are polluting our atmosphere and causing significant and harmful effects on the human environment."

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