Regulatory Developments, Special Topics in Environmental Management

Court Vacates Trump Greenhouse Gas Emissions Rule

A three-judge panel in the D.C. Circuit Court of Appeals vacated and remanded the Trump administration’s greenhouse gas emissions rule on January 19, 2021, 1 day before President Joseph Biden, Jr., took office.

Greenhouse gas emissions, GHG, air

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The case, American Lung Association v. Wheeler, alleged that the Trump administration’s Affordable Clean Energy Rule (ACE Rule) violated the Clean Air Act (CAA).

The EPA adopted the ACE Rule in 2019 and, with it, replaced the Obama administration’s Clean Power Plan, which was used to regulate emissions from power plants.

“The Clean Power Plan … set the first limits for climate change pollution from existing power plants,” according to Justia. “The EPA considered its authority under the Clean Air Act, 42 U.S.C. 7401, 7411 to be confined to physical changes to the power plants themselves. The ACE Rule determined a new system of emission reduction for coal-fired power plants only and left unaddressed greenhouse gas emissions from other types of fossil-fuel-fired power plants, such as those fired by natural gas or oil.”

In an extensive 185-page opinion, the court analyzed the “relevant procedural, regulatory, statutory, and legislative history of the Clean Air Act before vacating and remanding the ACE Rule to the agency to ‘consider … afresh’ greenhouse gas emissions standards,” according to The National Law Review. “What the D.C. Circuit’s opinion leaves unstated is whether, under its analysis, the Clean Power Plan should be reinstated during the period of the ACE Rule remand.”

The Clean Power Plan was issued in 2015 and, as argued by the EPA in the American Lung Association case, was “statutorily mandated by (the) EPA’s finding that greenhouse gases in the atmosphere endanger public health and welfare (the ‘GHG Endangerment Finding’),” according to The National Law Review. “Under the Clean Power Plan, EPA set forth three ‘building blocks’ to address greenhouse gas emissions at existing power plants: (1) heat rate improvements, (2) substitution of natural gas units for steam-generating units that are primarily coal-fired, and (3) prioritization of electricity from renewable energy sources over fossil-fueled power plants. The EPA set specific reduction goals for states based on rate or mass reductions with 2030 compliance timelines. States were to propose plans to comply with the Clean Power Plan’s mandates and were allowed some flexibility in their proposals for compliance.”

Under the ACE Rule, specific heat rate improvement goals were set but only for power plants.

“The ACE Rule indicated that the EPA could implement emission reductions only at specific sources and could not require other methods of emission reductions such as generation shifting from fossil fuels to renewable energy,” according to The National Law Review. “The emissions reductions would be unit specific and non-mandatory. The ACE Rule also significantly extended the timelines for compliance for states.”

In defense of the ACE Rule, the EPA argued it could only consider actions “at and to the stationary source” in order to evaluate “systems of emission reduction.” The EPA’s position was that the Clean Power Plan was in error because it broadened the scope of its considerations beyond unit-specific actions to include cap and trade and generation trading. The EPA felt that the CAA statute was very specific, which gave the Agency no choice beyond considering specific actions at each source.

The D.C. Circuit Court disagreed. The court ruled that the EPA mistakenly interpreted the CAA.

It held “that EPA had the authority under the Clean Air Act to consider various methods of systems of emission reductions beyond a specific source (such as renewables) as EPA had done in promulgating the Clean Power Plan,” according to The National Law Review. “The D.C. Circuit also rejected EPA’s arguments regarding federalism and the broad sweep of the Clean Power Plan, holding that greenhouse gas emission regulation is not a matter of traditional state concern, and any regulation of greenhouse gas emissions or lack thereof will necessarily have broad-sweeping implications. EPA is nevertheless mandated by the GHG Endangerment Finding to act with respect to these pollutants. The D.C. Circuit explained that the Clean Air Act itself places limits on the actions that EPA can require with respect to reducing emissions of these pollutants requiring EPA to consider available technologies, costs, and financial implications for industry, and that states had flexibility in complying with the Clean Power Plan.”

Because the rule has been remanded to the EPA for further review and the Biden’s administration’s announcement that it will rejoin the Paris Climate Agreement, any replacement rule will have to meet additional reductions called for in that agreement.

“While the decision does not specifically require that the Clean Power Plan be reinstated, the decision implicitly upheld the legal rationale underlying Clean Power Plan, and it remains to be seen whether any of the petitioners request clarification on the scope of the remedy,” The National Law Review notes. “The Biden EPA may use a framework similar to the elements of the Clean Power Plan upheld in the D.C. Circuit’s decision to address greenhouse gas emissions from existing fossil fuel-fired power plants….”

Those in the fossil fuel industry and states will be required to make drastic emissions reductions and meet specific compliance deadlines.

Compliance mechanisms will also be required, including “retiring coal-fired plants and developing natural gas and renewable energy assets,” says The National Law Review. “Future actions by fossil fuel-fired generation owners, entities in the renewable energy industry, as well as proponents of energy efficiency will likely result in additional demand and incentives for renewables development.”

Interested industry companies will want to pay close attention to the D.C. Court’s future issuance of mandates following its recent decision and the subsequent development of new regulations in the wake of this decision.