The Delete Blank Lines item is available via the Reformat Text button on the collection toolbar and via the Format menu, except when the Recycle Bin tab is active. It deletes all totally blank lines from the file. Only lines that have no characters at all are deleted. Lines that consist solely of whitespace are not deleted.
If you want to delete lines that have whitespace too, first use Trim Whitespace from Paragraphs to remove the whitespace, and then use Delete Blank Lines.
See Editing Clips and Text to learn how to use AceText.