Supreme Court agrees to review EPA Cross-State Air Pollution Rule:
A federal appeals court in Washington invalidated the EPA's effort last year, handing a significant defeat to the Obama administration's regulatory approach. The regulation required cuts in emissions of nitrogen oxide and sulfur dioxide, both associated with higher rates of heart attacks and respiratory illnesses.
The EPA's Cross-State Air Pollution Rule, issued in 2011, sought to set pollution reductions for 28 upwind states whose emissions of soot- and smog-forming air pollution degrade the air quality of states downwind.
The regulation would have affected about 1,000 power plants in the eastern half of the U.S. To comply, companies with older coal-fired plants would have had to burn less coal, shut the plants down or pay for credits to offset pollution.
The cross-state rule was to replace a Bush-era rule that the appeals court sent back to the EPA in 2008. The U.S. Court of Appeals for the District of Columbia Circuit faulted the Bush rule for allowing states to comply by paying other states to reduce pollution, rather than forcing each state to clean up power plants within its borders. The judges ordered the EPA to rewrite the rule, but also to enforce it in the meantime so as to achieve at least some pollution reduction.
The Obama administration's approach would have taken effect in early 2012, requiring steeper pollution cuts than the Bush rule and forcing some older power plants to close immediately or burn less coal. For now, the Bush rule remains in force and those plants may be able to keep operating until at least 2015, when a stricter EPA rule curbing mercury emissions begins to take effect.
Several states, including Ohio, Michigan and Texas, along with coal-fired power plant owners American Electric Power Co. (AEP), Southern Co. (SO), Xcel Energy Inc. (EXC), and others, challenged the EPA's efforts on several grounds.
Environmentalists and other states, including New York and Massachusetts, backed the EPA, as did companies seeking to turn a profit by replacing coal-fired power plants, a group that includes natural gas-plant owner Calpine Corp. (CPN) and Exelon Corp., owner of the largest U.S. nuclear fleet.
In a divided ruling last summer, the U.S. Court of Appeals for the District of Columbia Circuit said that while the Bush-era rule didn't go far enough to cut pollution, the Obama administration rule went too far and exceeded the EPA's powers under the Clean Air Act.
The court said the EPA wrongly required some states to reduce more than their fair share of air pollution. It said the agency prematurely imposed federal pollution-reduction requirements without first giving states a sufficient chance to reduce pollution on their own terms.
A dissenting judge said the appeals court's ruling trampled on previous court precedent and allowed the challengers to make arguments they had never raised with the EPA.
In the Obama administration's appeal to the Supreme Court, U.S. Solicitor General Donald Verrilli said the lower court ruling would "gravely undermine" the EPA's clean-air enforcement.
Analysts have said the cross-state rule would have accelerated some coal-plant shutdowns, but the plants' days are still numbered because low natural-gas prices are making coal a less attractive fuel source and because the upcoming EPA mercury rule will force plants to cut toxic emissions so much that it will be cheaper to mothball them than to install pollution-control equipment.
The court will consider the case during its next term, which begins in October, with a decision expected by July 2014.