WASHINGTON D.C., July 8, 2019 – Today, the U.S. Environmental Protection Agency (EPA) 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. 84 Fed. Reg. 32,520 (July 8, 2019). 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 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, 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concluding that the regulation was premised on a flawed legal interpretation of the Clean Air Act and must be repealed in its entirety.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, EPA is replacing the Clean Power Plan with less stringent emission guidelines for greenhouse gases. 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 (i.e., 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. 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, 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, EPA largely finalized its proposed versions of these actions. However, 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. 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. 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, 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. “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 September 6, 2019. Baker Botts lawyers anticipate that the rule will be challenged immediately, particularly by environmental groups, who 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 September 6, 2019.

According to Ms. Jezouit, there are numerous issues that litigants are likely to target in their ACE Rule challenges, including: the validity of 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 EPA structured the ACE Rule; the determination of which technologies constitute BSER; and 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.

To schedule an interview with Baker Botts Environmental partners, please contact Sheena Cochran.

With 34 dedicated lawyers in five offices nationwide, Baker Botts’ Environmental practice is one of the largest and most diverse in the United States. The firm’s environmental lawyers integrate a broad array of skills to help clients solve their environmental challenges. The practice assists clients with issues arising in all media (air, water, and waste) and under every major environmental statute and regulatory program.

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