FEDERAL COURT THROWS OUT EPA RULE LIMITING SO2, NOX EMISSIONS

Agency to Start Fresh Once Again on ‘Good Neighbor’ Provision

Tamar Hallerman
GHG Monitor
08/24/12

A federal appeals court this week vacated an Environmental Protection Agency ‘good neighbor’ rulemaking that would have required states to sharply reduce sulfur dioxide and nitrogen oxide emissions from coal- and gas-fired power plants. In a 2-1 ruling dated Aug. 21, the U.S. Court of Appeals for the District of Columbia threw out EPA’s so-called Cross-State Air Pollution Rule (CSAPR), arguing that the agency exceeded its statutory authority under the Clean Air Act while implementing the required rule, one meant to curb the emissions of fine pollutants that are easily transported across state lines to downwind states. Finalized in summer 2011 after the same court threw out a weaker Bush-era standard, CSAPR, required under the Clean Air Act, has long been an area of contention between EPA, fossil fuel-reliant upwind states and the courts.

The rulemaking would have compelled 28 Eastern and Midwestern states to reduce SO2 and NOx emissions from power plants by 73 percent and 54 percent below 2005 levels, respectively, beginning in January 2012. CSAPR would have created a trading system where states could buy, sell and trade pollution credits tied to reductions in SO2 and NOx emissions, where ultimately the cleanup work would be done where it is cheapest and easiest to do so. However, a group of upwind states, utilities and coal companies sued the agency, and on Dec. 30, 2011, two days before CSAPR was slated to go into effect, the court stayed the rulemaking.

Writing for the majority this week, Judge Brett Kavanaugh said that EPA exceeded its authority under the Clean Air Act by requiring some upwind states to clean up more than their contribution to the increased pollution in downwind states. “EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind states without regard to the limits imposed by the statutory text,” Kavanaugh wrote, arguing that upwind states should make emissions reductions in proportion to the size of their contributions to the downwind states’ extra pollution. The majority also argued that EPA was at fault for not allowing states the opportunity to first submit their own compliance plans to meet the SO2 and NOx limits as required under the Clean Air Act before stepping in to offer a federal plan. “By preemptively issuing [a federal plan], EPA denied the states that first opportunity to implement the reductions required under their good neighbor obligations,” the majority opinion said. The court ordered EPA to go back to the drawing board and craft a new rulemaking, which will likely take several years to complete at minimum, analysts predicted. In the meantime, the court upheld the Bush-era 2005 Clean Air Interstate Rule (CAIR), which that same court threw out in 2008. 

‘Unsettling’ Ruling Based on ‘Absurdity,’ Dissent Writes

The court’s dissenting Judge Judith Rogers wrote a scathing critique of the ruling. In a 44-page opinion, she said that the majority “disregards” precedents set by Congress, the Clean Air Act and the court in previous rulings. “The result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress’s vision of cooperative federalism between the states and the federal government in implementing the Clean Air Act based on the court’s own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court’s precedent on which the Environmental Protection Agency was entitled to rely in developing the [CSAPR] rather than be blindsided by arguments raised for the first time in this court,” Rogers wrote.

EPA said in a statement that it is reviewing the decision. “When that review is complete, EPA will determine the appropriate course of action,” the statement said. The agency previously said that the rule would lead to up to $280 billion in annual health benefits while preventing more than 30,000 premature deaths.

Greens Urge EPA to Appeal Decision

Environmental groups were quick to decry the ruling. “I’m frustrated and disappointed,” Senior Counsel for the Clean Air Task Force David Marshall told GHG Monitor. “This is a really unfortunate decision that is going to mean dirtier air for a lot of people in the eastern United States because two judges have decided to overturn decades worth of substantive EPA work on this.” The Natural Resources Defense Council agreed. “This decision allows harmful power plant air pollution to continue to aggravate major health problems and foul up our air,” John Walke, NRDC’s clean air director, said in a statement. “This is a loss for all of us, but especially for those living downwind from major polluters.”

Some supporters called for EPA to appeal the rulemaking to the Supreme Court. “I urge the Obama administration to appeal this misguided decision by the courts so that Massachusetts and other states impacted by harmful emissions from old, polluting coal plants can clean up their air,” Rep. Ed Markey (D-Mass.) said in a statement. Marshall suggested that EPA take advantage of a rarely-used option within the U.S. Court of Appeals that allows the agency to appeal within the court for all eight sitting judges to hear the case instead of the typical three judge panel. “It’s a fairly unusual approach, but this is quite an exceptional case,” he said. “This is the third set of three-judge panels that has heard a case where industry has challenged EPA on transport rulemakings under the good neighbor provision of the Clean Air Act. Each case has provided EPA with different guidance. Part of the frustration that I’m feeling is that the guidance seems to change with each new attempt, and it’s hard to gauge what EPA can do given the guidance from the court.”

Industry Groups Cheer Ruling

Meanwhile, many utilities spoke out in favor of the majority opinion. “The importance of the ruling cannot be overstated. The court was clear in finding that EPA had overstepped its legal authority in developing the rule,” said Scott Segal, director of the Electric Reliability Coordinating Council, a coalition of electric utilities, in a statement. “EPA had violated a key principle underlying the Clean Air Act—cooperative federalism. Not only in this interstate rule case, but also in regional haze rules, consideration of implementation plans and in permitting decisions, EPA has not showed sufficient respect or deference to state programs. Today’s decision is a stern warning against EPA’s recent views.” Texas Attorney General Greg Abbott, who became an early leader in the fight against CSAPR on behalf of upwind states, took to Twitter to express his opinion of the ruling. “EPA overlords suffer another defeat to Texas: the power to regulate is the power to destroy,” he said.