Am. Lung Ass’n v. EPA - 450 U.S. App. D.C. 385, 985 F.3d 914 (2021)

Rule:

The Clean Air Act contains its own limits on regulation, like mandating that the EPA take into account such factors as available technology and the cost of compliance. 42 U.S.C.S. § 7521(a)(2). 42 U.S.C.S. § 7411(a)(1) requires consideration of health and environmental impacts, energy requirements, and cost. In that way, Congress designed the Clean Air Act's processes for regulating air pollution to adapt to changing circumstances and scientific developments without imposing unreasonable technological or financial burdens on industry.

Facts:

In 1963, Congress passed the Clean Air Act, 42 U.S.C. § 7401 et seq., "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population[.]" Animating the Act was Congress' finding that "growth in the amount and complexity of air pollution brought about by urbanization, industrial development, and the increasing use of motor vehicles[] has resulted in mounting dangers to the public health and welfare[.]" In the last decade, the EPA has heavily focused its regulation of greenhouse gases on the power sector because "power plants are far and away the largest stationary-category source of greenhouse gases[,]" and "power plants' contributions to CO2 pollution * * * dwarf[] other categories[.]" The EPA then turned to the regulation of existing power plants. The EPA began, as the Clean Air Act requires, by determining the best system of emission reduction that has been adequately demonstrated for existing fossil-fuel-fired power plants. In identifying that system, the EPA chose to build on the established grid system and methods of operation already adopted by and familiar to the power sector. The regulations and standards that the EPA formulated came to be known as the Clean Power Plan.  In the Clean Power Plan, the EPA determined that a combination of three existing methods of emission reduction—which the Plan referred to as building blocks, 80 Fed. Reg. at 64,667—formed the "best system of emission reduction." First, the system incorporated heat-rate improvements—that is, technological measures that improve efficiency at coal-fired steam power plants and, in that way, reduce the amount of coal that must be burned to produce each watt of electricity to the grid. Second, the system added the "substitut[ion of] increased generation from lower-emitting existing natural gas combined cycle units for generation from higher-emitting affected steam generating" power plants, which are mostly coal-fired. Third, the system prioritized the use of electricity generated from zero-emitting renewable-energy sources over electricity from the heavily greenhouse-gas-polluting fossil-fuel-fired power plants. In 2019, the EPA issued a new rule that repealed and replaced the Clean Power Plan: The Affordable Clean Energy (ACE) Rule. Considering its authority under Section 7411 to be confined to physical changes to the power plants themselves, the EPA's ACE Rule determined a new best system of emission reduction for coal-fired power plants only. The EPA left unaddressed in this rulemaking (or elsewhere) greenhouse gas emissions from other types of fossil-fuel-fired power plants, such as those fired by natural gas or oil. The ACE Rule included some new regulations under Section 7411(d). As relevant here, the regulations significantly extend the States' deadlines for the development and submittal of their plans for emission reduction from nine months to three years. Similarly, the new regulations extend the EPA's deadline to act on those plans from four months to one year. The new regulations also extend the EPA's deadline to substitute its own plan for a non-compliant State's plan from six months after the submission deadline to two years after a finding that the plan was incomplete, disapproved, or unsubmitted. Finally, the requirement that States demonstrate compliance progress is now triggered only where a State's compliance schedule stretches more than two years from when its plan was originally due, as opposed to the one-year period in the prior regulations. 

Twelve petitions for review of the ACE Rule were timely filed in court and consolidated in the instant case. The petitioners fall into three groups. The first grouping consists of petitioners who seek review of the ACE Rule's conclusion that Section 7411 only permits emission reduction measures that can be implemented at and applied to the source. The second grouping is petitioners who challenge the ACE Rule's imposition of any emission limits as unlawful because, in their view, (i) the EPA failed to make a specific endangerment finding for carbon dioxide emitted from existing power plants; (ii) the EPA's regulation of mercury emissions from coal-fired power plants under Section 7412 precludes the regulation of greenhouse gas emissions under Section 7411; and (iii) the EPA should have regulated carbon dioxide from stationary sources, including power plants, under the NAAQS program. The third petitioner group is the Biogenic CO 2 Coalition. They object only to the ACE Rule's determination that States may not count biomass co-firing as a method of complying with numerical emission limits.

Issue:

Did the Environmental Protection Agency (EPA) acted lawfully in adopting the 2019 Affordable Clean Energy Rule (ACE Rule), 84 Fed. Reg. 32,520 (July 8, 2019), as a means of regulating power plants' emissions of greenhouse gases?

Answer:

No.

Conclusion:

Although the EPA had the legal authority to adopt rules regulating those emissions, 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 § 7411(d) of the Clean Air Act, which did not, as the EPA claimed, constrain the EPA to identifying a best system of emission reduction consisting only of controls that could be applied at and to a stationary source, and the ACE Rule's amendment of the regulatory framework to slow the process for reduction of emissions was arbitrary and capricious.