Bloomberg News

EPA Cross-State Emissions Rule Put on Hold by Court

January 04, 2012

(Corrects judge’s name in third paragraph of story published Dec. 30.)

Dec. 30 (Bloomberg) -- The U.S. Environmental Protection Agency must delay implementing rules on interstate air pollution on Jan. 1, a federal court ruled, siding with electric power producers seeking to defeat the new regulations.

A three-judge panel of the U.S. Appeals Court in Washington today granted a request by electric power producers and other challengers to delay the deadline for plants in 27 states to begin reducing emissions of sulfur dioxide and nitrogen oxide while the court considers the rule’s legality.

“Petitioners have satisfied the standards required for a stay pending court review,” Judges Brett Kavanaugh, Thomas Griffith and Judith Rogers said in the brief ruling.

More than three dozen lawsuits in the Washington court seek to derail the EPA’s Cross-State Air Pollution Rule, which was issued in July and revised in October. The court hasn’t scheduled a date for argument, though today’s order suggested the judges would hear the case by April.

Southern Co., EME Homer City Generation LP, a unit of Edison International, and Energy Future Holdings Corp. units in Texas are among the power companies challenging the rule. The state of Texas, the National Mining Association and the International Brotherhood of Electrical Workers joined in parallel cases, saying the rule puts an undue financial burden on power producers and threatens electricity reliability by forcing companies to shut some older plants.

‘Not a Decision’

“The court’s decision is not a decision on the merits of the rule and EPA firmly believes that when the court does weigh the merits of the rule it will ultimately be upheld,” Betsaida Alcantara, an EPA spokeswoman, said in an e-mail.

The EPA rules, which apply to Texas and 26 eastern states, impose caps on sulfur dioxide, which can lead to acid rain and soot harmful to humans and ecosystems, and nitrogen oxide, a component of ground-level ozone and a main ingredient of smog. The rule applies to emissions that cross state lines.

Power companies, state officials and lawmakers said the EPA provided too little time to comply, and argued in court that the October revisions should invalidate the entire rule.

Luminant Generation Co., an Energy Future Holdings Corp. unit, claims the measure will force it to eliminate at least 500 jobs.

‘Irreparable Harm’

“We are pleased with the court’s ruling because it recognizes the irreparable harm that would have resulted from the short six-month timeline for compliance outlined in the original rule,” David Campbell, Luminant’s chief executive officer, said in a statement.

Scott Segal, a lobbyist at Bracewell & Giuliani LLC in Washington, representing operators of coal-fired plants such as Southern Co., said postponement of regulations are allowed when there is “a strong chance of success” the challenge will succeed and when the parties can be injured without such relief.

“Stays are hard to come by in the world of Clean Air Act litigation, which makes the stay of the cross-state rule all the more significant,” Segal said in an e-mail.

The power companies’ effort is opposed by the Natural Resources Defense Council, power companies such as Chicago-based Exelon Corp. and states such as New York and Illinois.

“Today’s judicial decision temporarily halts implementation of life-saving clean air protections for 240 million Americans pending full review of the facts and the law,” Vickie Patton, general counsel of the Environmental Defense Fund, said in an e-mailed statement. “Several years ago, this same court similarly halted EPA’s first interstate air pollution protection program and then affirmed EPA’s action after a complete review of the facts and law.”

‘Wouldn’t Be Surprised’

It is highly unlikely that the cross-states rules will take effect in 2012, even if the EPA ends up winning the court case, Henry Eisenberg, counsel with the environmental department of Skadden Arps Slate Meagher & Flom LLP, said in a phone interview.

“I wouldn’t be surprised if EPA set the clock back,” Eisenberg said.

The stay “suggests clearly that the petitioners have brought issues that are likely to be decided in their favor,” Christine Tezak, senior policy analyst with Robert W. Baird & Co. Inc., said in a phone interview. Therefore, the rule, “as written, likely won’t ever go into effect,” she said.

Power Companies

Today’s ruling takes some of the pressure off of power companies that rely heavily on coal-fired plants to rapidly install pollution controls or switch to cleaner-burning fuels, such as natural gas, Tezak said.

They’ll still need to invest over time in scrubbers, baghouses and other technology to comply with new EPA curbs on mercury and other airborne toxins, which were made final earlier this month and will take effect in March 2015.

“What you’ll have for coal-fired utility owners is a better opportunity to more rationally invest in their fleet,” Tezak said.

The cross-state rule would help avoid an estimated 13,000 to 34,000 premature deaths annually by 2014 and reduce hospital and emergency room visits by 19,000 a year, according to the EPA.

Coal accounts for 98 percent of sulfur dioxide and 92 percent of nitrogen oxides released into the air by power plants, according to the EPA. Texas consumes more electricity and uses more coal than any other state, according to the U.S. Energy Information Administration.

The case is EME Homer City Generation LP v. U.S. Environmental Protection Agency, 11-1302, U.S. Court of Appeals for the District of Columbia (Washington).

--With assistance from Mark Drajem in Washington. Editors: Peter Blumberg, Mary Romano

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net; Brian Wingfield in Washington at bwingfield3@bloomberg.net Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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