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US appeals court tosses out Trump power plant GHG rule

19 January 2021 Amena Saiyid

One day before President-elect Joe Biden assumes office, a US federal appeals court in Washington, DC tossed out a signature Trump administration regulation that limited power plant releases of greenhouse gases, terming it illegal.

A three-judge panel for the US Court of Appeals for the District of Columbia Circuit said on 19 January that the US Environmental Protection Agency (EPA) misconstrued the Clean Air Act, the nation's key air pollution law, and ordered the agency to rewrite the Affordable Clean Energy rule, or ACE.

"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 in a per curiam opinion.

With the dismissal of the ACE rule, Biden now has a clean slate to rewrite limits for power plant carbon emissions using this opinion as a guide.

"This decision frees up the new Biden administration to begin working immediately on the science-based greenhouse pollution rules we desperately need to make up for lost time," Clare Lakewood, legal director for the nonprofit Center for Biological Diversity's Climate Law Institute that was involved in the litigation, said.

Released in 2019, ACE replaced the Obama administration's more stringent 2015 Clean Power Plan—which set the first carbon dioxide limits for existing coal-fired power plants—with standards based on a list of technologies that EPA identified for upgrading plant equipment and improving operations. The ACE rule did not set a numerical standard for power plants.

Upon publication of the ACE rule, 23 states and eight cities led by New York, along with separate coalitions of environmental and public health groups, trade associations for renewable energy, and power utilities challenged its legality. The rule was backed by a West Virginia-led coalition of 20 states as well as coal companies, notably Texas-based North American Coal and Colorado-based Westmoreland Mining.

These separate coalitions already were challenging the repeal of the Clean Power Plan.

The petitioning states and groups asked the court whether EPA acted lawfully in adopting the regulation, and the judges responded with a resounding, "It did not."

The judges said EPA not only misconstrued a Clean Air Act provision, but also acted arbitrarily and capriciously by slowing down the process of emissions reductions.

In contrast to the Obama rule, ACE barred the trading of carbon dioxide credits and averaging carbon dioxide reductions across coal-fired units and forbade states from including carbon capture and storage technologies as one of the approaches to limiting emissions. The rule also didn't allow utilities to co-fire biomass, or woody pellets, to reduce their carbon footprint.

This was the result of the Trump EPA's narrow reading of Section 111(d) of the Clean Air Act, or Section 7411 of the US Code, which underpins the ACE rule. The ACE rule only permits electric utilities to limit carbon dioxide emissions within the fencelines or boundaries of affected coal-fired units.

"The EPA's new reading of Section 7411 would atrophy the muscle that Congress deliberately built up," the judges wrote, adding: "The EPA asserts it lacks authority to curb a pollutant that the agency itself has repeatedly deemed a grave danger to health and welfare but that eludes effective control under other provisions of the act."

The DC Circuit judges said EPA's position was wrong. They said the statute says nothing about the measures that sources may use to comply with the standards states apply, and "the EPA cites no separate authority that would require compliance measures to be source-specific" or limited to measures taken inside the fenceline of a power plant. They cited emissions trading as an example for meeting carbon limits, an approach that ACE had barred. They also found nothing in the statute to bar generation shifting to meet emissions limits.

"In sum, the straitened vision of the EPA's best system that the agency espies in Section 7411 is simply not supported by the text, let alone plainly and unambiguously required by it," the judges wrote.

Judge Justin Walker, a Trump appointee, dissented in part from his two colleagues on the DC Circuit panel, Cornelia Pillard and Patricia Millett, because he said EPA was within its right to repeal the Obama rule, but improperly applied the law to the ACE rule. Both Pillard and Millett were appointed by President Barack Obama in 2013.

The EPA for its part said it was disappointed and "will explore all litigation options."

"We are disappointed that the panel majority rejected EPA's well-supported repeal of the Clean Power Plan and its regulation of GHGs 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 spokeswoman Molly Block said in a 19 January statement.

New York University School of Law's Institute of Policy Integrity said the Trump administration devised "an unsupportable legal theory" to justify the repeal of the Clean Power Plan.

However, Megan Houdeshel, a Clean Air Act attorney with Dorsey & Whitney who helps mining and industrial clients with permitting and compliance, warned companies of regulatory uncertainty in the coming months.

"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," Houdeshel said in a statement.

No rush to comply

EPA had given states until 8 July 2022 to write plans to implement the ACE rule, and a recent IHS Markit survey found that states are in no rush to write plans. Three states-North Dakota, Maryland, and Virginia-said they were holding off on writing their plans until they had more certainty about what Biden plans to do with the rule.

The DC Circuit also struck down this compliance timeline, saying it was unnecessarily slowing down the process of emissions reductions.

Maryland, which opposed the rule in court, welcomed the DC Circuit's ruling, especially as it gives the green light to carbon emissions trading. Maryland is a member of the Regional Greenhouse Gas Initiative (RGGI), a carbon emissions trading program among 11 northeastern US states.

"Maryland appreciates this good news as the rule reduced climate ambition and potentially clouded the bright future for [RGGI] and other collaborations beyond individual power plants and states," Maryland Environment Secretary Benjamin Grumbles said in a statement.

Joanne Spalding, chief climate counsel at the environmental nonprofit Sierra Club, called the court's ruling an "apt bookend to the Trump administration's EPA."

Posted 19 January 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit

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