Jan 262021

D.C. Circuit Strikes Down ACE Rule

Samuel B. Boxerman and Jack Raffetto
, , , , ,

On January 19, 2021, the U.S. Court of Appeals for the District of Columbia Circuit struck down the Affordable Clean Energy Rule (ACE), which the Environmental Protection Agency (EPA) promulgated in 2019 to replace the Obama-era Clean Power Plan (CPP). The CPP had sought to reduce greenhouse gas (GHG) emissions from existing power plants, in part, by authorizing states to increase renewable generation. As explained in a previous post, EPA had reasoned that it had the discretion to define the best system of emission reduction (BSER) at a plant under Section 111 of the Clean Air Act (Act) to include measures employed outside the facility (such as new renewable resources) that were located “beyond the fenceline.” Stayed by the Supreme Court in 2016, the CPP never went into effect. Instead, the Trump administration repealed the CPP and replaced it with ACE. In ACE, EPA reasoned that Section 111 of the Act required EPA to only find BSER to be a technology that could be applied “inside the fenceline” on the facility.

In American Lung Association et al. v. EPA, the D.C. Circuit vacated ACE, holding that EPA fundamentally misconstrued the Act and acted arbitrarily and capriciously when it adopted the rule. The court found that Section 111 of the Act does not limit BSER to only consider technologies applied “inside the fenceline” at the facility. With President Biden’s focus on reducing GHG emissions, it is clear that the new administration will not appeal the decision, as environmental groups and Democrats opposed ACE as not materially reducing GHG emissions — a point the court highlighted, but there are reports that intervenors who supported ACE may consider asking the Supreme Court to review the decision. What remains unclear is what course a Biden EPA will follow — will EPA return to a CPP-like rule, or will it take a different approach to power plant GHG emissions?

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Samuel B. Boxerman

Washington, D.C.

sboxerman@sidley.com

Jack Raffetto

Washington, D.C.

jraffetto@sidley.com

You might also like
U.S. Fifth Circuit Reverses EPA’s Denial of Fuel Program Hardship Exemption for Refineries

In Calumet Shreveport Refining LLC v. EPA, Case No. 22-60266 (5th Cir. Nov. 22, 2023), the U.S. Court of Appeals for the Fifth Circuit struck down Environmental Protection Agency (EPA) denials of six small refineries’ petitions for hardship relief under the Clean Air Act Renewable Fuel Standard (RFS) program, holding that EPA used an “impermissibly retroactive” standard to deny the refineries’ petitions in violation of the Administrative Procedure Act. This ruling could serve as a basis for other refineries to challenge EPA’s retroactive denial of their hardship petitions — and provides support for similar petitions pending before the U.S. Court of Appeals for the D.C. Circuit.

U.S. EPA Publishes New Regulations Governing State Plans for Existing Sources of Emissions

On November 9, 2023, the U.S. Environmental Protection Agency (EPA) published implementing regulations that set timelines and other requirements for state plans to limit pollution from existing sources under Clean Air Act (CAA) Section 111. The amended provisions apply to all emissions guidelines published after July 8, 2019, and will affect the scope and pace of development of updated performance standards for existing facilities.

U.S. EPA Enforcement Office Issues a Climate Enforcement and Compliance Strategy Memorandum

On September 28, 2023, the U.S. Environmental Protection Agency (EPA) Office of Enforcement and Compliance Assurance (OECA) issued a memorandum outlining a Climate Enforcement and Compliance Strategy, identifying several steps the office plans to take to address climate change (the Strategy Memo). As part of the strategy, EPA plans to expand its efforts to address climate change by increased enforcement of rules governing greenhouse gas–forming pollutants and incorporating climate-related mitigation efforts, including renewable energy projects into settlements as mitigation or supplemental environmental projects. The Strategy Memo comes only a month after EPA issued its first-ever national enforcement and compliance initiative on climate change.