DC Circuit rejects Trump EPA ACE rule, opening door for more stringent regulations under Biden

Dive Brief:

The United States Court of Appeals for the D.C. Circuit on Tuesday unanimously struck down the U.S. Environmental Protection Agency's proposed replacement for the Obama-era Clean Power Plan.
EPA's proposed Affordable Clean Energy (ACE) rule, first unveiled in 2018, would have loosened carbon reduction requirements for power plants, relative to the Clean Power Plan (CPP). Environmental and public health groups later filed lawsuits against the rule, arguing in part that it did not fulfill the agency's responsibilities under the Clean Air Act.
The three judge court ruled in favor of advocates finding that the ACE rule "hinged on a fundamental misconstruction of ... the Clean Air Act." Trump-appointed Judge Justin Walker dissented in part but concurred in the judgment.

Dive Insight:

The D.C. Circuit's ruling will allow the incoming Biden administration greater ability to implement stricter emissions rules on power plants.

ACE was intended to repeal and replace the CPP, which called for states to reduce power sector emissions through a variety of methods including requiring utilities to increase coal plant efficiency, or shift away from coal entirely, toward lower-emissions gas and renewable energy resources.

EPA, in issuing the ACE rule and repealing the CPP, argued that the Clean Air Act limits the agency's ability to reduce emissions outside of regulating the source itself — it could mandate an individual power plant to use more stringent emissions control measures, but it could not ask generators to move away from coal-fired power plants and toward cleaner resources. So the ACE rule would have limited its regulations to issuing guidance on increasing power plant efficiency.

The D.C. Circuit found that ACE would not be the most effective means of reducing emissions, and further rejected the idea that EPA is limited under the Clean Air Act to only regulate emissions reductions at the source.

"[T]here is no basis — grammatical, contextual, or otherwise — for the EPA's assertion" that it can only regulate at the source, according to the court's opinion. Instead, under the Clean Air Act, the EPA is required to find the "best system" for reducing emissions and set targets accordingly. EPA's own record shows that the most effective way to reduce emissions in the power sector is for utilities to shift away from coal, the court argued.

"[T]he record before the EPA shows that generation shifting to prioritize use of the cleanest sources of power is one of the most cost-effective means of reducing emissions that plants have already adopted and that have been demonstrated to work, and that generation shifting is capable of achieving far more emission reduction than controls physically confined to the source," the opinion reads.

The ruling will allow the Biden Administration to get to work on new emissions reduction rules quickly, without having to repeal ACE. But it's unclear whether a new rule will be able to go as far as the CPP did. That plan was halted by the U.S. Supreme Court in 2016 to allow legal challenges from coal companies to play out.

"It's true that EPA will need to be careful & strategic and not necessarily reboot the Clean Power Plan," said Jody Freeman, professor of law and director of the Environmental and Energy Law Program at Harvard University in a tweet. "But there are a variety of options for a new rule, and I am uber confident the new team will be smart."

Biden has called for bringing the U.S. power sector to zero emissions by 2035, and in December tapped former North Carolina Department of Environmental Quality (DEQ) Secretary Michael Regan to lead the EPA.

An EPA spokesperson told media outlets the agency was "disappointed" by the outcome "and will explore all available litigation options."