U.S. Public Policy and Law Alert
On 19 January 2021, the eve of inauguration for the Biden Administration, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) struck down the Affordable Clean Energy Rule (ACE Rule). Issued under the Trump Administration’s Environmental Protection Agency (EPA), the ACE Rule repealed and replaced the formerly enacted Clean Power Plan (CPP) and sought to establish a more narrowly defined framework for the regulation of power plant greenhouse gas (GHG) emissions. As a premise for the ACE Rule, the Trump EPA argued that Section 111 of the Clean Air Act (CAA), codified at 42 U.S.C. § 7411, contains clear and unambiguous language limiting the EPA’s emission reduction measures to improvements “at” and “to” existing GHG emissions sources. However, the D.C. Circuit held that the CAA does not require the EPA to confine its GHG regulation in this way and, in fact, that the Trump EPA’s interpretation under the ACE Rule constituted a “fundamental misconstruction” of the statute. The D.C. Circuit also found that the ACE Rule’s extended compliance deadline requirements were arbitrary and capricious insofar as they relaxed the schedules for federal action and state compliance under Section 7411(d). The D.C. Circuit’s decision clears the way for the Biden EPA to establish a new regulatory framework for power plant GHG emissions.