Court Kills Trump Rule on Power Plant Emissions

A federal appeals court has vacated the Trump administration’s rollback of Obama-era greenhouse gas emission standards for power plants. A three-judge panel of the U.S. Court of Appeals for the District of Columbia on Jan. 19 said the measure intended to replace those standards, the Affordable Clean Energy (ACE) rule, “rested critically on a mistaken reading of the Clean Air Act,” or CAA.

The panel in its ruling said the U.S. Environmental Protection Agency’s (EPA’s) recission of the 2015 Clean Power Plan (CPP), and subsequent adoption of the 2019 ACE rule, failed to comply with the CAA. The decision is another blow to the Trump administration’s bid to leave a legacy of deregulation, particularly at the EPA, as it rebukes one of the administration’s highest-profile replacements of Obama-era environmental rules.

The judges among other things found that the ACE rule failed to provide adequate environmental and public health protections. The court’s opinion Tuesday directs the EPA to start over with a new regulatory approach, which means the incoming Biden administration will have an opportunity to carry out its own rule-making.

“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,” the court wrote in its unsigned opinion.

Mixed Reaction to Ruling

The three-judge panel is two Democratic appointees and one Trump-appointed judge. They considered whether the federal CAA requires the EPA to limit new rules to reduce emissions to a particular power plant—as set out in the ACE rule—or if the agency can take a sector-wide approach to regulating emissions.

“Because promulgation of the ACE Rule and its embedded repeal of the Clean Power Plan rested critically on a mistaken reading of the Clean Air Act, we vacate the ACE Rule and remand to the Agency,” the judges wrote. The court’s action Tuesday also vacated amendments that extended the timeline under which companies had to come into compliance with the rule. 

EPA spokesperson Molly Block in an emailed statement 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 D.C. court, or the U.S. Supreme Court, could be asked to review the decision. Megan Houdeshel, a partner at international law firm Dorsey & Whitney who advises clients on environmental and regulatory matters, in an email to POWER said, “I think the decision is just the first example of many we are going to see in terms of industry uncertainty when it comes to Trump-era regulations. Whether it be courts overturning regulations, or the incoming Biden administration reversing course on executive orders and policy, companies should be ready for changes in environmental regulations applicable to their business and operation.”

Con Edison, the subsidiary of Consolidated Edison and leading electricity supplier to New York City, in a statement sent to POWER said, “Con Edison applauds today’s federal court decision striking down the rollback of historic greenhouse gas emission regulations. Con Edison was proud to be one of the litigants in this historic case, and we are eager to get to work with Congress and the incoming administration to finally implement the bold actions necessary to address the real and growing threat of climate change.”

Arguments Heard Last Year

The D.C. Circuit heard arguments around the ACE measure last fall, after several states, cities, and environmental groups took aim at the rule. During a day-long hearing on Oct. 8, 2020, judges appeared skeptical of the Trump administration’s replacement for the CPP. The judges repeatedly pressed a government lawyer defending the regulation, asking how it would actually work in practice.

The ACE rule is based on the legal theory that the CPP, pursued by the Obama-era EPA, took a broad, systemwide approach to cutting carbon pollution from existing power plants, and exceeded the EPA’s authority under Section 111(d) of the CAA.

The ACE rule would not require states to meet specific emissions reduction targets, but rather would require states to submit implementation plans, or SIPs, that reflect potential efficiency gains that existing coal-fired power plants could achieve through equipment and operational upgrades, or heat-rate improvements.

The rule means that some states could determine that no upgrades—and thus, no emission reductions—would be required if a coal plant is nearing the end of its useful life. The EPA’s own analysis showed that the ACE rule would only be expected to achieve less than 1% in emissions reductions by 2030 beyond a business-as-usual approach.

The court in its opinion Tuesday wrote, “In other words, the EPA reads the statute to require the Agency to turn its back on major elements of the systems that the power sector is actually and successfully using to efficiently and cost-effectively achieve the greatest emission reductions.” The court added that there is “no basis—grammatical, contextual, or otherwise—for the EPA’s assertion.”

Judge Justin R. Walker, the Trump appointee on the panel, dissented in part from the ruling, instead rejecting the ACE rule on other grounds. Walker said the EPA has no authority to regulate power plants under the CAA provision in question.

Court’s Concerns

The D.C. Circuit’s three-judge panel heard more than nine hours of oral arguments about the ACE rule in that Oct. 8 session. The judges were concerned about how a reviewing court might assess the EPA’s SIP approvals pursuant to the ACE rule, in large part because the judges were unclear about what standards would be applied to what they called inevitable court cases, due to the arbitrary nature of allowing states to set their own measures—or set no standards at all.

The panel also debated whether the Trump EPA’s repeal of the CPP was even legal. The CPP was never enacted, and was left in legal limbo due to numerous lawsuits from states and other parties concerned about its impacts. Notably, in public comments on the ACE rule, the Edison Electric Institute, that association that represents U.S. investor-owned electric companies, noted that the U.S. power sector would already have complied with the final 2030 goals of the CPP, in terms of gross emissions reductions, even before the 2022 start date for the ACE program.

Even proponents of the CPP have said they would rather the EPA draft an updated plan for emissions, rather than reviving Obama-era standards. President-elect Biden and several of his appointees have pledged to act aggressively on climate change, and analysts have said the new administration likely will move quickly to craft a new EPA rule for power plant emissions.

Darrell Proctor is associate editor for POWER (@POWERmagazine).

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