American Lung Association v. EPA

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The D.C. Circuit Court of Appeals granted the U.S. Environmental Protection Agency’s (EPA’s) motion to govern further proceedings on remand from the Supreme Court’s decision holding that the Clean Air Act did not give EPA authority to use “generation-shifting” measures to set carbon dioxide emission limits for existing power plants. The D.C. Circuit denied petitions for review challenging the repeal of the Obama administration’s Clean Power Plan, which utilized such measures. The D.C. Circuit held challenges to the Trump administration’s replacement rule—the Affordable Clean Energy Rule—in abeyance pending EPA’s completion of a new rulemaking.

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On February 22, 2021, the D.C. Circuit Court of Appeals granted the U.S. Environmental Protection Agency’s (EPA’s) motion for a partial stay of the issuance of the mandate in the lawsuit challenging the Trump administration’s final rule repealing and replacing the Obama administration’s Clean Power Plan, which regulated greenhouse gas emissions from existing power plants under Section 111(d) of the Clean Air Act. On January 19, the D.C. Circuit vacated both the repeal and replacement components of the final rule, finding that the rule was based on an erroneous reading of the Clean Air Act. In its February 12 motion for partial stay of the mandate, EPA indicated that it “strongly” believed that no Section 111(d) rule should go into effect until EPA conducted new rulemaking in response to the January 19 decision. In its February 22 order, the court withheld issuance of the mandate with respect to the repeal of the Clean Power Plan and directed issuance of the mandate “in the normal course” for the vacatur of the replacement portion of the rule as well as timing provisions in the implementing regulations. EPA was directed to file status reports at 90-day intervals.

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On January 19, 2021, the D.C. Circuit Court of Appeals ruled that the U.S. Environmental Protection Agency’s (EPA’s) Affordable Clean Energy Rule (ACE Rule) for greenhouse gas emissions from power plants rested on an erroneous interpretation of the Clean Air Act that barred EPA from considering measures beyond those that apply at and to an individual source. The court therefore vacated and remanded the ACE Rule—which repealed the 2015 Clean Power Plan rule and in its place adopted a replacement rule that relied only on heat-rate improvements at individual plants. In concluding that Section 111 of the Clean Air Act does not limit EPA to identifying a “best system of emission reduction” consisting only of controls “that can be applied at and to a stationary source,” the D.C. Circuit’s majority opinion first concluded that neither the text nor the statutory history, structure, and purpose compelled such a reading. Second, the D.C. Circuit ruled that EPA incorrectly invoked the “major questions doctrine”—which requires a clear statement from Congress when an agency’s regulatory action is of “extraordinary” significance—to support its interpretation of Section 111. The court found that Congress and the courts had long recognized EPA’s authority to regulate greenhouse gases from power plants under Section 111, and that the major questions doctrine did not apply to EPA’s identification of the “best system of emission reduction.” The court said Congress knew “both the scope and important of what it was doing” when it gave EPA authority to set standards and that it “cabined the EPA’s authority with concrete and judicially enforceable statutory limitations.” With respect to the significant regulatory consequences of the standards, the D.C. Circuit indicated that the consequences were “a product of the greenhouse gas problem, not of the best-system’s role in the solution,” writing that “any nationwide regulation of [power plants’] greenhouse gas pollution will necessarily affect a broad swath of the Nation’s electricity customers.” The court also rejected EPA’s contention that the major questions doctrine applied because the Clean Power Plan regulated the electric grid and not air pollution. Third, the D.C. Circuit held that the federalism canon—requiring that Congress use “exceedingly clear language” to alter the balance of power between the federal government and the states—did not support an interpretation limiting the best system of emission reduction to measures applied at and to the source. The D.C. Circuit also rejected two arguments by coal companies against the ACE Rule. First, the court found that EPA made and retained the requisite endangerment finding for regulation of carbon dioxide emissions from power plants. Second, the court found that EPA “correctly and consistently” interpreted the Clean Air Act to permit both regulation of a source’s hazardous air pollutant emissions under Section 112 and emissions of other pollutants under Section 111(d). The D.C. Circuit also concluded that two petitioners—Texas Public Policy Foundation and Competitive Enterprise Institute—lacked organizational standing to challenge EPA’s authority to promulgate the ACE Rule. Finally, the D.C. Circuit found that amendments to the regulations implementing Section 111(d)—which extended the timeline for compliance—lacked reasoned support. Because EPA’s sole defense for repeal of the Clean Power Plan and replacement with the Affordable Clean Energy Rule was that the interpretation underlying the rule was the only permissible one, the D.C. Circuit vacated the ACE Rule and remanded to EPA. Judge Walker issued a separate opinion dissenting from the majority’s conclusion that EPA had authority to regulate coal-fired power plants under both Section 111 and Section 112. Although he concluded that regulation of coal-fired power plants was foreclosed for this “more mundane reason” and thus concurred in the vacating of the ACE Rule, Judge Walker also wrote that he doubted the validity of the Clean Power Plan—which he characterized as “arguably one of the most consequential rules ever proposed by an administrative agency”—under the major questions doctrine. The court directed that issuance of the mandate be withheld until seven days after disposition of any petition for rehearing or petition for rehearing en banc.

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Briefing was completed in the litigation challenging the U.S. Environmental Protection Agency's repeal of the Clean Power Plan and the promulgation of the Affordable Clean Energy Rule in its place. The D.C. Circuit scheduled oral argument for October 8, 2020.

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The National Association of Home Builders filed a brief in support of EPA’s repeal of the Clean Power Plan, asserting that EPA “rightfully eliminates the Clean Power Plan’s overly expansive regulatory framework.”

On June 16, 2020, EPA filed its brief defending the repeal of the Obama administration’s Clean Power Plan and the promulgation of the Trump administration’s replacement rule, the Affordable Clean Energy (ACE) Rule. EPA argued that the Clean Power Plan was unlawful because Section 111(d) required that emissions reductions occur at a particular source and did not authorize the Clean Power Plan’s “generation shifting” measures. EPA also contended that it had properly defined a “Best System of Emissions Reduction” as an array of heat ray improvement methods and had properly identified the degree of emission limitations achievable. EPA also responded to arguments that it lacked authority to regulate carbon dioxide emissions at existing power plants; EPA argued that the ACE Rule was lawful based on EPA’s 2015 New Source Rule and did not require a new endangerment finding. In addition, EPA said regulation of hazardous air pollutant emissions under Section 112 did not bar regulation of carbon dioxide emissions under Section 111(d). EPA also argued that states could not adopt trading programs in place of source-specific emission standards and that the Clean Air Act did not permit compliance with the ACE Rule through biomass co-firing.

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Individuals, companies, and organizations filed 18 amicus briefs in support of the Public Health and Environmental Petitioners, State and Municipal Petitioners, Clean Energy Associations, and Power Company Petitioners. The amicus parties included climate scientists, administrative law professors, members of Congress, the co-leader of the Interagency Working Group that developed the Social Cost of Carbon methodology, the principal staff drafter of the 1970 Clean Air Act Amendments, outdoor gear companies, a coalition of local governments and officials and municipal organizations, Service Employees International Union, medical groups, and faith organizations.

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Petitioner Biogenic CO2 Coalition argued that the ACE Rule improperly prevented power plants from counting the co-firing of biomass as a compliance measure.

Coal Industry Petitioners and another set of petitioners with members that included companies in the petroleum, trucking, forest products, and other industries, as well as individuals and nonprofit organizations, filed briefs arguing that EPA could not regulate carbon dioxide emissions from existing power plants under Section 111.

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Petitioners in the lawsuits challenging the repeal of the Clean Power Plan and its replacement with the Affordable Clean Energy (ACE) Rule filed briefs in the D.C. Circuit. Arguments in the briefs filed by Public Health and Environmental Petitioners and State and Municipal Petitioners included that EPA had unreasonably determined that the “best system of emission reduction” for power plants could not include shifting generation to less-polluting plants; that the ACE Rule improperly repealed regulations for gas- and oil-fired plants without instituting new regulations; and that EPA unlawfully failed to establish a minimum degree of emission limitation to be incorporated in standards of performance. The initial briefs of Clean Energy Associations and Power Company Petitioners largely focused on arguments against EPA’s limitations on generation-shifting.

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On February 3, 2020, the D.C. Circuit Court of Appeals set the briefing schedule for cases challenging EPA’s repeal of the Obama administration’s Clean Power Plan and the promulgation of the Affordable Clean Energy rule to regulate greenhouse gas emissions from existing coal-fired power plants. Petitioners’ opening briefs are due March 27, respondents’ brief is due May 26, briefs for respondent-intervenors are due June 25, and reply briefs are due July 9, with final briefs to be filed on July 30.

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Nevada filed a notice indicating it intended to join the briefs of the State and Municipal Petitioners.

On November 22, 2019, the D.C. Circuit Court of Appeals denied a motion by the U.S. Environmental Protection Agency (EPA) to expedite pending challenges to the Affordable Clean Energy (ACE) rule, which repealed and replaced the Obama administration’s Clean Power Plan. The D.C. Circuit said the respondents had not “articulated ‘strongly compelling’ reasons that would justify expedition.” The court also denied motions by the Environmental and Public Health Petitioners and the State and Municipal Petitioners to hold the cases in abeyance pending the resolution of the petitioners’ requests for administrative reconsideration. (The Environmental and Public Health Petitioners also argued that the cases should be held in abeyance until EPA finalized its proposal to relax the application of New Source Review (NSR) requirements; the petitioners argued that EPA’s anticipated finalization of the NSR regulations would be “highly disruptive” to the litigation because it would alter essential aspects of the ACE rule, including costs, emissions consequences, and sources’ expected responses.) The D.C. Circuit also denied a motion by the Biogenic CO2 Coalition to sever its case—which solely raised the issue of EPA’s regulation of emissions from agricultural biomass feedstocks—and hold the case in abeyance pending EPA’s “forthcoming” administrative resolution of biogenic emissions issues. The court directed the parties to submit a proposed format for briefing within 30 days.

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Environmental and Public Health Petitioners and State and Municipal Petitioners filed their own motion requesting that the court hold the proceedings in abeyance pending EPA final action on petitions for reconsideration.

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Petitioners challenging EPA’s repeal and replacement of the Clean Power Plan opposed EPA’s and aligned intervenors’ motions to expedite the case. The petitioners argued that the motions did not satisfy the standard described in the D.C. Circuit’s Handbook of Practice and Internal Procedures for expediting cases, which states that the court “grants expedited consideration very rarely” and that the reasons “must be strongly compelling.” The petitioners also argued that granting the motion would prejudice the petitioners’ interests.

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EPA filed a motion seeking to expedite the D.C. Circuit’s consideration of the case. EPA requested a briefing schedule in which petitioners would file opening briefs by December 5, and briefing would be completed in February, potentially allowing oral argument as early as April 2020. The petitioners did not consent to the motion.

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A number of entities applied to intervene in support of EPA in the proceeding, including coal companies Murray Energy Corporation and Westmoreland Mining Holdings LLC, the national association of rural electric cooperatives, the U.S. Chamber of Commerce, owners of coal-fired generating facilities, and a trade association of companies involved in the production, transportation, and use of coal to produce electricity.

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