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What Comes Next for Mercury Emissions from Power Plants?

The U.S. Supreme Court held this morning that the U.S. Environmental Protection Agency (EPA) acted unreasonably when it determined in 2000, and again in 2012, that it was “appropriate and necessary” to regulate mercury emissions from coal-fired power plants.  The central flaw in EPA’s reasoning, the Court held, is that the agency failed to consider the cost of regulation when making the threshold determination that regulation was “appropriate.”  Under Section 112 of the federal Clean Air Act, EPA must conclude that it is “appropriate” to regulate power plant mercury emissions before it can actually regulate those emissions.

The immediate effect of today’s decision is that the ongoing challenge to EPA’s mercury regulations will be remanded to the U.S. Court of Appeals for the D.C. Circuit, which previously upheld those regulations.  The D.C. Circuit will then face a choice:  Should it vacate the regulations, or should it leave them in place while giving EPA additional time to attempt to justify the agency’s threshold conclusion that the regulations are “appropriate.”

In the past, the D.C. Circuit has sometimes vacated environmental regulations that it found to suffer from threshold flaws, but it has also occasionally left those regulations in place pending agency revisions.  For example, several years ago the D.C. Circuit found that EPA’s Clean Air Interstate Rule (CAIR) was fatally flawed but it nevertheless declined to vacate CAIR.  Instead, it left CAIR in place pending promulgation of a replacement rule.  It remains to be seen whether the D.C. Circuit will take such an approach here.

If the mercury regulations are vacated, today’s decision may have the ironic effect of helping EPA defend its forthcoming greenhouse gas (GHG) regulations for existing power plants.  One of the principal legal objections to the forthcoming GHG regulations is that EPA allegedly lacks authority to issue them because power plants are regulated for mercury emissions.  Thus, if the mercury regulations go away, one of the principal objections to the GHG regulations will be eliminated.

Nevertheless, today’s decision has to be considered a loss for EPA.  The power plant mercury regulations took over two decades to promulgate and were anticipated to have significant environmental benefits, primarily in the form of reductions of particulate matter and sulfur dioxide emissions.  Today’s decision creates some uncertainty about the future of those regulations.  Equally important, today’s decision is another reminder that a majority of the Supreme Court remains deeply skeptical of EPA’s claims about the agency’s statutory authority.

If there is a silver lining for EPA in today’s decision, it is that the Supreme Court did not go so far as to dictate exactly how EPA is to consider costs.  Instead, the Court concluded:  “It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.”




Deadline Extended to Submit Comments on EPA’s Proposed Greenhouse Gas Emission Limits for New Power Plants

The U.S. Environmental Protection Agency (EPA) has announced that it is extending until May 9, 2014, the deadline for submitting comments on its proposed rule to set greenhouse gas emission limits for new coal- and gas-fired power plants.  The announcement came in a Federal Register notice signed by EPA on February 26 and slated for publication in the next several days.

EPA’s proposed rule, which was released publicly in September 2013 but not published in the Federal Register until January 8, 2014, would require “new” electric utility generating units (meaning units built after January 8, 2014) to comply with the following emission limits:  (1) new coal-fired units would be limited to 1,100 pounds of carbon dioxide (CO2) per megawatt-hour of electricity generated (1000 lbs/MwH); and (2) new gas-fired units would be limited to either 1000 lbs/MwH or 1100 lbs/MwH, depending on their size.

EPA’s proposed limit for coal-fired units is based on the agency’s determination that the limit can be achieved through a combination of highly-efficient boiler design (either super-critical pulverized coal or integrated gasification combined cycle technology) and partial implementation of carbon capture and storage (CCS) technologies.  But the CCS aspect of EPA’s proposal has encountered heavy criticism.  Some commentators have argued that (1) CCS is not commercially viable and, therefore, should not be considered as a basis for setting emission limits, and (2) in concluding that CCS is a viable pollution control technology, EPA impermissibly relied on evidence that the Energy Policy Act of 2005 (EPACT 2005) expressly forbids it from considering.

EPA discusses the EPACT 2005 issue at some length in a Notice of Data Availability (NODA) published in the Federal Register on February 26.  And although that NODA calls for comments by March 10, EPA’s new announcement – the one signed on February 26 and slated for publication in the next several days – indicates that EPA will accept comments on the NODA through May 9.  Thus, May 9 is the deadline for submitting comments on both the NODA and the overall proposed rule.

Separately, EPA remains on track to publish proposed emissions guidelines for existing power plants by June 2014.  Interested parties will have an opportunity to comment on that proposal once it has been published.  Finally, parties that are affected by, or interested in, EPA’s air-related activities may want to read McDermott’s recent publication “What’s in the Air this Year?”




Divided Appeals Court Vacates Air Transport Rule Targeted at Coal-Fired Power Plants

by Jeffrey D. Watkiss

In EME Homer City Generation, L.P. v. EPA, two judges of a divided three-judge panel of the United States Court of Appeals for the D.C. Circuit vacated the Environmental Protection Agency’s (EPA) 2011 Cross-State Air Pollution Rule (Transport Rule), which implemented the so-called "good-neighbor" provision of § 110 of the four-decade-old Clean Air Act (CAA). Recognizing that upwind emissions pollute downwind regions, the good-neighbor provision requires CAA implementation plans (federal or state) to prohibit upwind sources of air emissions from contributing significantly to a downwind state’s inability to attain or maintain compliance with national ambient air quality standards (NAAQS). Had it not been stayed and later vacated, the Transport Rule would have put 28 upwind states on emission "budgets" for sulfur dioxides (SO2) and nitrogen oxide (NOx) — both NAAQS criteria pollutants — requiring emission reductions primarily from upwind coal-fired electric generating stations.

Coal-burning power companies, coal companies, labor unions, associated trade associations, states and local governments petitioned for review of EPA’s Transport Rule. On December 30, 2011, the court stayed the Transport Rule and instructed EPA, pending a decision on the merits, to continue administering the agency’s predecessor Clean Air Interstate Rule (CAIR). The Transport Rule was EPA’s attempt to develop a rule that cured problems with CAIR, which a different panel of the D.C. Circuit in 2008 found to violate the CAA in North Carolina v. EPA.

The majority’s August 21, 2012 opinion ruled in favor of the petitioners and vacated EPA’s Transport Rule on the ground that the EPA exceeded its CAA authority in two respects. First, the majority held that, under the Transport Rule, upwind states may be required, in violation of the CAA good-neighbor requirement, to reduce emissions by more than their proportional share of significant upwind contributions to a downwind state’s inability to attain or maintain NAAQS compliance. Second, EPA simultaneously set a Federal Implementation Plan (FIP), according to the majority, that ran afoul of the federalism embedded in the CAA, which requires that states be given the first opportunity to devise a compliance strategy in the form of a State Implementation Plan (SIP).

The dissent opinion is excoriating. It accuses the majority of creating and deciding straw-man issues that the majority wanted to decide, but which were not raised before the agency and were therefore not properly before the court. With respect to EPA’s calculation of the emissions reductions that the Transport Rule would impose on upwind states, the dissent accuses the majority of intentionally misreading North Carolina as requiring the agency to use the same metrics to determine which upwind sources are subject to good-neighbor emissions reductions, on the one hand, and the emissions reductions budget for each such state, on the other hand. According to the dissent, North Carolina ruled to the contrary that EPA’s measure of a state’s “significant contribution” to downstream non-attainment or non-maintenance of NAAQS did not have to correlate directly with the state’s air [...]

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