Summary of D.C. Circuit Vacatur and Remand of ACE Rule

On January 19, 2020, in ALA v. EPA, D.C. Circuit Judges Millett, Pillard, and Walker issued a per curiam decision vacating the Environmental Protection Agency’s (EPA or Agency) Affordable Clean Energy (ACE) Rule, remanding it to EPA for further proceedings consistent with the opinion. The question before the Court was whether EPA “acted lawfully” in adopting the ACE Rule as a means of regulating greenhouse gas (GHG) emissions from power plants. The Court states that although EPA has the legal authority to adopt rules regulating GHGs, “the central operative terms of the ACE Rule and the repeal of its predecessor rule, the Clean Power Plan, hinged on a fundamental misconstruction of Section [111(d)] of the Clean Air Act.” Thus, the Court concludes that “[b]ecause the ACE Rule rests squarely on the erroneous legal premise that the statutory text expressly foreclosed consideration of measures other than those that apply at and to the individual source…EPA fundamentally ‘has misconceived the law,’ such that its conclusion ‘may not stand.’”

The Court also holds that “the ACE Rule’s amendment of the regulatory framework to slow the process for reduction of emissions is arbitrary and capricious,” and the Court vacates the amendments to the implementing regulations that extend the compliance timeline.

While Judge Walker agreed with the vacatur of the ACE rule, he explains in his dissent that he disagreed with the Court’s basis for that vacatur. Rather, he would vacate the rule on the grounds that coal-fired power plants are already regulated under Section 112 of the Clean Air Act (CAA), and Section 111 of the CAA “excludes from its scope any power plants regulated under Section 112”; thus, EPA has “no authority to regulate coal-fired power plants under Section 111.”

As a result of the opinion, under the Biden-Harris Administration, EPA will undertake a new rulemaking to replace the ACE Rule consistent with the Court’s opinion.