The U.S. Supreme Court on October 29 said it would review the U.S. Court of Appeals for the District of Columbia Circuit decision to vacate and remand the Environmental Protection Agency’s (EPA) Affordable Clean Energy (ACE) rule and repeal of the Clean Power Plan under section 111(d) of the Clean Air Act (CAA).
The appeals court found that ACE, as well as the repeal of the 2015 CPP, “hinged on a fundamental misconstruction of” CAA section 111(d). The appeals court’s decision rejected EPA’s position that the CAA only allows the agency to craft emissions restrictions that apply directly “at the source” of power plants. The position was a departure from the CPP’s sector-wide approach to reducing emissions. “In addition, the ACE rule’s amendment of the regulatory framework to slow the process for the reduction of emissions is arbitrary and capricious,” the appeals court said.
The Supreme Court granted four separate petitions to review the D.C. Circuit's January 2021 decision. The cases are now consolidated for further consideration.
Each petition questioned whether the EPA has the statutory authority to completely restructure the electricity system nationwide.
The questions presented to the court are as follows:
- Whether Congress constitutionally authorized the EPA to issue significant rules – including those capable of reshaping the nation’s electricity grids and unilaterally decarbonizing virtually any sector of the economy under CAA section 111(d) -- without any limits on what the agency can require so long as it considers cost, non-air impacts, and energy requirements;
- Whether the CAA unambiguously excludes generation shifting (also known as emissions trading) from the measures the EPA may consider in determining the “best system of emission reduction” to regulate emissions from existing power plants;
- Whether the EPA can promulgate regulations for existing stationary sources based on binding nationwide “performance standards” at a generation-sector-wide level, instead of at the individual source level, and can those regulations deprive States of all implementation and decision making power in creating their CAA section 111(d) plans; and
- Whether CAA section 111(d) clearly authorizes EPA to decide such matters of vast economic and political significance as to whether and how to restructure the nation’s energy system.
In defending the ACE rule at the D.C. Circuit, the EPA argued that it needed to repeal the CPP and replace it with the ACE rule because the CPP relied on an overly expansive interpretation of Section 111 of the CAA.
The CPP called for emitting sources to implement the best systems of emissions reduction (BESR) that were not limited to “inside the fence” modifications to the source.
The EPA subsequently argued that Section 111 unambiguously constrains EPA to include only improvements "at" and "to" existing sources when determining BSER. The D.C. Circuit disagreed, finding that the provisions defining BSER contain no such spatial limitation.
After the D.C. Circuit's decision, EPA was expected to draft a new rule to regulate carbon dioxide emissions from power plants. Now, with the high court's decision to take up the case, it throws significant uncertainty onto that process.
Oral arguments are likely to be held by the Supreme Court in February or March 2022, and a decision rendered before the court adjourns its October 2021 term on June 30, 2022.