D.C. Circuit Upholds Key EPA Air Rule Setting Mercury Standards for Power Plants

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By Jessica Coomes  

April 15 --A federal appeals court handed the Environmental Protection Agency a significant victory April 15 by upholding stringent mercury and air toxics standards for power plants, which are among the costliest regulations the agency has promulgated.

The U.S. Court of Appeals for the District of Columbia Circuit rejected argument after argument that industry petitioners made, saying the EPA's decisions were reasonable and the agency deserves deference.

A three-judge panel of Judges Merrick Garland, Judith Rogers and Brett Kavanaugh upheld the standards in an April 15 opinion, although Kavanaugh wrote a dissenting opinion saying the EPA should have considered the cost burden for industry when the agency began the rulemaking process.

In a February 2012 final rule, the EPA issued the mercury and air toxics standards, setting emissions limits for mercury, filterable particulate matter as a surrogate for toxic metals and hydrogen chloride as a surrogate for acid gases. The standards apply to 600 power plants, and the EPA has estimated the rule will cost the power industry $9.6 billion annually (77 Fed. Reg. 9,304).

Judges Disagree About Cost Considerations

Section 112(n)(1)(A) of the Clean Air Act required the EPA to study how power plant emissions affect public health and, based on the results of the study, to regulate power plants if the agency finds that doing so is “appropriate and necessary.” The EPA made the finding in 2000 and confirmed it in 2012.

The Clean Air Act didn't expressly require the EPA to consider costs when it made the finding that regulating power plants was “appropriate,” but it didn't prohibit the agency from doing so either, Garland and Rogers said in the majority opinion. Therefore, the EPA's decision not to consider costs is permissible.

Kavanaugh, however, said considering costs is common sense. He began his dissent by putting the reader in the shoes of the EPA administrator.

“You have to decide whether to go forward with a proposed air quality regulation,” Kavanaugh wrote. “Your only statutory direction is to decide whether it is 'appropriate' to go forward with the regulation. Before making that decision, what information would you want to know? You would certainly want to understand the benefits from the regulations. And you would surely ask how much the regulations would cost. You would no doubt take both of those considerations--benefits and costs--into account in making your decision. That's just common sense and sound government practice.”

Fodder for Appeal

Environmental attorneys who have been following the case closely told Bloomberg BNA April 15 that Kavanaugh's dissenting opinion could be fodder for industry to ask the full D.C. Circuit to rehear the case or to appeal the case to the Supreme Court.

The dissent “keys up the likelihood” that industry petitioners will file petitions for rehearing and Supreme Court petitions, John Walke, clean air director for the Natural Resources Defense Council, told Bloomberg BNA April 15. The majority opinion includes an “exacting and extensive rebuttal” of Kavanaugh's arguments, which “revealed an awareness that other judges on the D.C. Circuit and justices might be reading this opinion during an appeal process.”

Jim Pew, an Earthjustice attorney representing the Sierra Club, a petitioner in the case, told Bloomberg BNA April 15 that while the cost argument doesn't strike him as a strong legal argument, it could form the basis of an industry appeal.

Agency Given Deference

In point after point, all three judges rejected petitioners' other arguments, most from industry and some from environmental groups. The EPA's decisions deserve deference, the judges said.

For example, the court said EPA reasonably concluded it was “appropriate and necessary” to regulate power plants under the Clean Air Act, and it reasonably considered environmental effects as well as health effects when it made the determination.

The agency also reasonably regulated all hazardous air pollutants that power plants emit, not just the pollutants it found to cause health and environmental hazards, the court said. And it didn't have to distinguish between major sources and smaller area sources when it issued the standards.

“It was a group of very weak arguments, most of which had already been tried out a number of times,” Pew said about the case. “Industry was essentially offering up a bunch of policy reasons why they disagreed with the agency. They didn't have any real reason the rule should be overturned.”

The court also rejected challenges from environmental petitioners, who argued the EPA made errors in how it interpreted requirements for emissions averaging and monitoring.

Despite the losses, environmental groups roundly praised the court's decision April 15 and saw the decision as an overall victory.

“The big picture is, we've got rules in place that are going to save up to 11,000 lives a year and reduce some of the worst poison in the environment,” Pew said.

'Tough News' for Industry

Industry expressed disappointment in the D.C. Circuit's ruling April 15.

Hal Quinn, president of the National Mining Association, a petitioner in the case, said in a statement April 15 that the rule is causing power plants to retire, which is putting electricity reliability at risk.

The American Coalition for Clean Coal Electricity said in a statement April 15 that nearly 300 coal plants are shutting down, in part because of the mercury rule.

“Unfortunately tough news like today's ruling is nothing new to our industry,” Laura Sheehan, senior vice president of communications for the American Coalition for Clean Coal Electricity, said in a statement. “If anything, the ruling bolsters our resolve to continue pushing back against EPA overreach and protecting American consumers, who are ultimately paying the price for this costly rule.”

The court also threw out a challenge from Julander Energy Co., an oil and gas company, which said the EPA should have required plants to switch from coal to natural gas.

“Julander's interest in increasing the regulatory burden on others falls outside the zone of interests protected by the [Clean Air Act] and therefore Julander may not proceed as a petitioner in this court,” the D.C. Circuit wrote.


To contact the reporter on this story: Jessica Coomes in Washington at jcoomes@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

The D.C. Circuit's opinion in White Stallion Energy Center LLC v. EPA is available at http://www.bloomberglaw.com/public/document/White_Stallion_Energy_Center_v_EPA_Docket_No_1201100_DC_Cir_Feb_1.

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