Bloomberg News

Obama’s Pollution-Control Agenda Goes to Court Tomorrow

December 09, 2013

Clean Air Act Rally

Health and environmental groups say the Environmental Protection Agency rules clean the air and reduce heart attacks, asthma and related illnesses. Photographer: AAron Ontiveroz/The Denver Post via Getty Images

Two of President Barack Obama’s top pollution-control measures face courtroom tests tomorrow as coal-dependent utilities, miners and some states challenge what they call overreach by the Environmental Protection Agency.

Efforts to regulate pollutants that cause smog and soot, as well as mercury from coal plants, have moved in fits and starts for more than a decade. If both rules go forward it would cause power producers such as American Electric Power Co. (AEP:US) and Southern Co. (SO:US) to shutter old plants or invest billions of dollars in pollution-control technology.

Health and environmental groups say the rules clean the air and reduce heart attacks, asthma and related illnesses. The decisions in these cases -- one being argued before the Supreme Court and the other in federal appeals court -- could have a longstanding impact on how the Clean Air Act is implemented.

“This is the biggest day for clean air in American courts -- ever,” said John Walke, clean air director at the Natural Resources Defense Council in Washington.

The Supreme Court will hear arguments over reviving an EPA rule that would limit sulfur dioxide and nitrogen oxide emissions in 28 states whose pollution blows into neighboring jurisdictions. All are in the eastern two-thirds of the country.

The U.S. Court of Appeals for the D.C. Circuit struck down the rule. It said the regulation was too strict and that EPA didn’t give states a chance to put in place their own pollution-reduction plans before imposing a nationwide standard. The Obama administration and environmental groups are appealing.

‘Workable Framework’

With the rule thrown out, EPA has been enforcing an earlier version from the George W. Bush administration, even though a different panel of the same court previously said that approach was insufficient.

Because of those conflicting decisions, “it’s important for the Supreme Court to provide a workable framework” for the EPA, David Marshall, senior counsel for the Clean Air Task Force, a group that advocates for tighter pollution rules, said in a conference call with reporters.

Separately today, a group of East Coast governors petitioned the EPA to force nine upwind states such as Indiana and Ohio to cut down on the ozone-causing pollution they emit. Even if they shuttered all their power plants and factories, states such as Vermont and Delaware can’t reduce their ozone measures to safe levels, leaders from those states said today.

Governor Markell

“There is virtually nothing left that we can do about” harmful ozone levels, Delaware Governor Jack Markell said at a press conference in Washington today.

The EPA believes the downwind pollution is an “important public health issue,” and will review the petition, said Alisha Johnson, an agency spokeswoman.

Sulfur dioxide can lead to acid rain and soot emissions, and nitrogen oxide is a component of ground-level ozone, a main source of smog. Coal accounts for 98 percent of sulfur dioxide and 92 percent of nitrogen oxide released into the air by power plants, according to the EPA.

Lawyers representing companies such as Energy Future Holdings Corp.’s Luminant, the largest power producer in Texas, urged the high court to uphold the decision, saying EPA’s plan was too stringent and not necessary to ensure that downwind states can attain healthy air.

“EPA’s own data showed that the agency was imposing emissions reductions far greater than necessary for downwind states to achieve attainment,” lawyers for Luminant told the court. Peter Keisler, the company’s leading lawyer on the case, didn’t return a telephone message.

Mine Workers

The Supreme Court is also looking at technical issues of administrative procedure, such as whether an entity can sue on an issue that wasn’t raised in public comments to the agency while it was developing its regulation.

The final decision may rest more on those questions, said Sean Donahue, a Washington lawyer who represents the Environmental Defense Fund, a watchdog group.

Separately, Peabody Energy Corp. (BTU:US), the United Mine Workers of America, the state of Texas and other companies and states have filed a court case to try to overturn the EPA’s standards on mercury and acid gases from power plants. That case is set to be argued before the D.C. Circuit Court tomorrow, as well.

Outside analysts say the practical impact of both cases is limited, as utilities are already preparing for these rules to kick in, and cheap natural gas is pushing old coal plants into the grave.

Mercury Rule

Because of the makeup of the three-judge panel reviewing the mercury rule, that standard is likely to be upheld, and because the mercury rule is in place and begins in 2015, the net impact of the sulfur dioxide case will be limited, said James Lucier, an analyst at Capital Alpha Partners LLC in Washington.

Still, Lucier said there could be a long-term impact: If the Supreme Court reverses the lower court ruling, “this might strengthen the EPA’s hand in moving forward on carbon regulations.”

Those proposed rules on greenhouse-gas emissions from existing power plants are scheduled to be issued next June.

February Case

The Supreme Court in February will take up a different aspect of Obama’s efforts against climate-change, the EPA permitting rules that apply to existing stationary sources of greenhouse gases. Industry trade groups and Republican-led states are challenging those rules.

Meanwhile, the companies named in the case set for argument tomorrow are out of luck. General Electric Co. (GE:US), which owns the Homer City plant that is named in the Supreme Court case, decided to install a scrubber to comply with both the sulfur dioxide and mercury rules. The company that had run the plant, a subsidiary of Edison International, is still participating in the case.

White Stallion Energy Center, which led the mercury challenge, dropped a bid to build a power plant in Texas.

The D.C. Circuit case is White Stallion Energy Ctr. LLC v. EPA No. 12-1100. The Supreme Court cases are Environmental Protection Agency v. EME Homer City Generation, 12-1182, and American Lung Association v. EME Homer City, 12-1183.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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