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Court Knocks EPA in Vacating Cross-Border Pollution Rule

The Environmental Protection Agency (EPA) suffered another major defeat last Tuesday when an appeals court in Washington, DC, vacated an agency rule aimed at reducing sulfur dioxide and nitrogen oxide emissions from coal- and natural gas-fired power plants in 28 upwind states located primarily in the East and Texas.

More than a dozen states, industry groups, local government and labor groups challenged the August 2011 Cross-State Air Pollution Rule in the U.S. Court of Appeals for the District of Columbia, arguing that the EPA exceeded its statutory authority under the "good neighbor" provision, which requires upwind states to reduce only their own contributions to a downwind state's nonattainment. The case was styled EME Homer City Generation LP, which owns and operates a coal-fired generation plant in Indiana County, PA, vs. the EPA [No. 11-1302]. EME is owned by Edison International.

"The EPA's transport rule exceeds the agency's statutory authority in two independent respects," said the court opinion by Appellate Judge Brett Kavanaugh. Kavanaugh and Judge Thomas B. Griffith voted in favor of vacating the EPA rule, while Judge Judith Rogers dissented. The court sent the rule back to be reviewed and directed the EPA to administer its existing Clean Air Interstate Rule in the meantime.

Congress granted the EPA authority to require upwind states to reduce only their own significant pollution contributions to a downwind state's nonattainment. But under the EPA's transport rule, the court said upwind states could be required to reduce emissions by more than their own emission contributions to a downwind state's nonattainment.

"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," the court said.

It further said the EPA rule violated the Clean Air Act (CAA), which gives states the initial opportunity to implement the required reductions with respect to pollution sources within their borders.

The court's decision "should not be interpreted as a comment on the wisdom or policy merits of EPA's transport rule. It is not our job to set environmental policy. Our limited but important role is to independently ensure that the agency stays within the boundaries Congress has set. EPA did not do so here."

The court's opinion "is good news for consumers and for the reliability of our electric grid. It is notable that for the second time in two weeks, federal circuit courts have affirmed the primary responsibility of states -- not the EPA -- in determining how to meet air quality standards," said Karen Harbert, CEO of the U.S. Chamber's Institute for 21st Century Energy.

Earlier this month the U.S. Court of Appeals for the Fifth Circuit vacated the EPA decision objecting to the Texas Commission on Environmental Quality's Flexible Permits Program (see related story). The court said the EPA's objections were "16 years tardy," violated the Administrative Procedure Act and were based on regulatory language of its own choosing, not the federal CAA.

"Vacating this rule relieves utilities from unrealistic timelines and unjustified standards for compliance, at least from this particular rule," Harbert said.

"Hopefully [last Tuesday's] decision will cause the EPA to reevaluate their overzealous approach and pursue more balanced environmental and energy policies," said the American Coalition for Clean Coal Electricity.

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