A power plant emitting smoke

EPA Publishes Affordable Clean Energy Rule

The ACE Rule replaces the Clean Power Plan with less stringent emission guidelines for greenhouse gases.

The U.S. Environmental Protection Agency (EPA) recently published a final rule entitled Repeal of the Clean Power Plan; Emission Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units; Revisions to Emission Guidelines Implementing Regulations. The rule is informally known as the Affordable Clean Energy (ACE) Rule.

The ACE Rule contains three EPA actions:

  1. Repeal of the Clean Power Plan: The Clean Power Plan was the EPA’s first attempt at setting limits on greenhouse gas emissions from existing coal-fired power plants. Pursuant to a March 2017 executive order issued by President Trump, the EPA undertook a review of the Clean Power Plan, ultimately concluding that the regulation was premised on a flawed legal interpretation of the Clean Air Act and must be repealed in its entirety.
  2. Replacement of the Clean Power Plan: With the ACE Rule, the EPA is replacing the Clean Power Plan with less stringent emission guidelines for greenhouse gases. The EPA has determined that the “best system of emission reduction” (BSER) for greenhouse gas emissions from existing coal-fired power plants is the implementation of heat rate (that is, efficiency) improvement measures. The ACE Rule’s emission guidelines require states to regulate greenhouse gas emissions from coal-fired power plants to a degree that reflects the emission reductions that would be achieved by implementing efficiency improvement measures at individual coal-fired electric utility steam generating units.
  3. Revision of the Implementing Regulations for Section 111(d) of the Clean Air Act: The EPA had not significantly revised its general implementing regulations for emission guidelines issued under Section 111(d) of the Clean Air Act since the regulations were first issued in 1975. With the ACE Rule, the EPA is issuing new implementing regulations that apply to the greenhouse gas emission guidelines for coal-fired power plants, as well as to all future emission guidelines for stationary sources issued under Section 111(d).

In publishing the ACE Rule, the EPA largely finalized its proposed versions of these actions. However, the EPA opted not to finalize a major portion of its ACE Rule proposal: revisions to the New Source Review (NSR) regulations, which impose permitting requirements for air emissions when a stationary source undertakes certain physical or operational changes. The EPA originally proposed to revise the NSR regulations as part of the ACE Rule to prevent power plant efficiency improvements from triggering costly permitting requirements under the NSR program. The EPA chose not to go forward at this time on the NSR revisions but plans to finalize the NSR revisions in a separate, future rulemaking.

“By limiting the BSER to measures that can be installed at individual coal-fired units, the EPA is attempting to ensure that its rule fits squarely within the bounds of its authority under the Clean Air Act,” said Debra Jezouit, Baker Botts Environmental partner. “The EPA is giving the states the primary authority to determine what is best for the plants within their jurisdiction.”

The ACE Rule will take effect on Sept. 6, 2019.  Baker Botts lawyers anticipate that the rule will be challenged immediately, particularly by environmental groups, which already have complained that the ACE Rule’s emissions guidelines will have the effect of increasing emissions from coal-fired power plants. Petitions for judicial review of the ACE Rule must be filed in the U.S. Court of Appeals for the District of Columbia Circuit by Sept. 6, 2019.

According to Jezouit, there are numerous issues that litigants are likely to target in their ACE Rule challenges, including: validity of the EPA’s narrow interpretation of Section 111(d) of the Clean Air Act, both as a basis for repealing the Clean Power Plan and as a limitation on the way the EPA structured the ACE Rule; the determination of which technologies constitute BSER; and the EPA’s restrictions on the measures sources are allowed to use to comply with emissions standards under the ACE Rule.

Baker Botts has represented a variety of clients in regulatory advocacy related to the Clean Power Plan and the ACE Rule, as well as in the legal challenge to the Clean Power Plan in the U.S. Court of Appeals for the District of Columbia Circuit.

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