Federal appeals court strikes down air pollution rule

WASHINGTON — The US Court of Appeals for the District of Columbia Circuit overturned one of the Obama administration’s hallmark air quality rules Tuesday, ruling that the Environmental Protection Agency had overstepped its authority in curbing pollution from Midwest power plants too sharply.

The 2-to-1 ruling by the appeals court represents a major victory for utilities and business groups, who fought the Cross-State Air Pollution Rule on the grounds that it was costly, burdensome, and arbitrary. Environmentalists, who had hailed the rule as a major improvement over a Bush-era regulation, bemoaned the decision as a blow to public health.

For years federal regulators have struggled with how best to cut harmful sulfur dioxide and nitrogen oxide emissions from Midwest power plants, which blows downwind and contributes to forming smog and acid rain in the East. The EPA issued a rule — which was supposed to take effect Jan. 1, 2011, but was delayed by the court — that would have required utilities in 28 states to install new pollution controls. It also established a limited cap-and-trade system that would have allowed utilities to buy and sell pollution credits in order to comply with the new standards.


EPA officials calculated that the new rule would yield health benefits for 240 million Americans. The agency predicted that by 2014 this rule, in concert with others, would cut sulfur dioxide emissions nationwide by 73 percent compared with 2005 levels, and reduce nitrogen oxide emissions nationwide by 54 percent.

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But Southern Co., EME Homer City Generation, and Energy Future Holdings Corp. units in Texas challenged the rule, saying they could not meet the new requirements in time, while the state of Texas, the National Mining Association, and the International Brotherhood of Electrical Workers also sued EPA in separate cases on the grounds that it was based on flawed computer models and could jeopardize the nation’s electricity supply by forcing companies to shut down older coal-fired plants.

In the ruling, the court wrote that the EPA used a section in the Clean Air Act known as the good neighbor provision to “impose massive emissions reduction requirements on upwind states without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA’s Transport Rule violates the statute.” It also wrote that the EPA overstepped its bounds in regulating power plants directly, rather than giving upwind states a chance to develop their own plans for federal compliance.

“EPA can’t force states to do more than their fair share and can’t force one-size-fits-all federal programs without allowing states to craft their own solution,” said Joseph Stanko, who heads government relations at the law firm Hunton & Williams and represents coal-fired utilities.

Jeffrey R. Holmstead, who helped craft an earlier interstate pollution rule when he headed EPA’s air and radiation office under George W. Bush and is now a partner at Bracewell & Giuliani, said the ruling might prompt environmentalists and industry officials to seek new legislation to resolve the issue. But Holmstead said it represents a significant legal loss for an administration that has worked aggressively to curb power-plant pollution.


“This is certainly a major setback for the administration’s efforts to target coal-fired power plants, and I think it raises the real possibility that by overreaching, they may come up with nothing,” he said.

Frank O’Donnell, of the advocacy group Clean Air Watch, called the Cross-State Air Pollution Rule a key element of the administration’s effort to improve the nation’s air quality.

“This is clearly a big blow for breathers in downwind states,” O’Donnell said. “The court’s rationale in this case is a legal one. This decision does not eliminate the need to reduce dangerous air pollution that blows across state lines.”

John Walke, clean air director at the advocacy group Natural Resources Defense Council, urged the administration to appeal the decision.

“This rule would have prevented thousands of premature deaths and saved tens of billions of dollars a year in health costs, but two judges blocked that from happening and forced EPA to further delay long overdue health safeguards for Americans,” Walke said in a statement. “The majority opinion is an outlier at odds with the court’s own rulings as well as the Clean Air Act.”


The EPA could not be reached immediately for comment on the ruling.

The interstate air pollution rule enacted under Bush, which phases in emissions reductions over a longer period of time, was vacated by the federal appeals court in 2008. The federal appeals court had reinstated that rule, the Clean Air Interstate Rule, when it suspended the Obama administration’s regulation, and the Bush rule will remain in place for now.