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Challengers to the Environmental Protection Agency's interstate air pollution transport rule may have a “significant problem” because one of their key arguments may not have been raised during the rule's public comment period, a federal judge said April 13 (EME Homer City Generation LP v. EPA, D.C. Cir., No. 11-1302, oral arguments 4/13/12).
Petitioners may only litigate issues they brought to the agency's attention in comments, Judge Thomas Griffith of the U.S. Court of Appeals for the District of Columbia Circuit said during oral arguments over the Cross-State Air Pollution Rule.
Attorneys representing power plants and states that are challenging the rule have said the court should vacate the rule, based on EPA's methodology for determining which states make a “significant contribution” to downwind air quality problems.
However, the petitioners' comments do not appear to have addressed EPA's methodology for determining a “significant contribution,” Griffith said.
Industry petitioners include EME Homer City Generation LP and Luminant Generation Co. LLC. States challenging the rule include Texas, Michigan, and Ohio.
Griffith appeared to be a possible swing vote on the three-judge panel deciding the fate of EPA's latest attempt to regulate air pollution that crosses state lines. Judge Judith Rogers's questions were more critical of the petitioners' arguments, and Judge Brett Kavanaugh appeared skeptical of EPA's regulation.
“It could come down to which position Judge Griffith supports,” John Walke, director of the clean air program for the Natural Resources Defense Council, said after the arguments.
Griffith's questions regarding the public comments could be indicative of his thinking, and “that is what makes me the most nervous,” Jeffrey Holmstead, a former EPA assistant administrator for air and radiation who is representing GenOn Energy Inc. in the case, told BNA.
EPA issued the final rule in July 2011. It requires 28 states in the East, Midwest, and South to reduce power plant emissions of nitrogen oxides and sulfur dioxide that cross state lines (76 Fed. Reg. 48,208; 131 DEN A-6, 7/8/11).
The rule, which affects 3,631 fossil fuel-fired electricity generating units, including 990 coal-fired units, is intended to help downwind states meet national ambient air quality standards for ozone and fine particulate matter.
In addition to the significant contribution issue, the challengers argue that EPA inappropriately implemented the rule through federal plans, instead of allowing states to develop their own implementation plans (69 DEN B-1, 4/11/12).
EPA projected that the rule would reduce emissions of sulfur dioxide from power plants by 73 percent by 2014, nitrogen oxides by 54 percent, and ozone-season nitrogen oxides by 33 percent, compared with 2005 levels.
The “good neighbor” provision of the Clean Air Act, Section 110(a)(2)(D), requires states to reduce emissions that “contribute significantly” to nonattainment of air quality standards in downwind states.
In determining each state's “significant contribution,” EPA first identified states that contributed an amount of ozone or particulate matter in downwind states that was more than 1 percent of the standard. For those states, the agency then determined the reductions that would be required by taking into account the cost of emissions controls.
Peter Keisler, an attorney with Sidley Austin LLP who represented petitioners during oral arguments, said Tennessee did address EPA's “significant contribution” methodology in their comments.
The Tennessee comments said, “A lower cost threshold should be considered for any State that can reduce their contribution below 1% significance.”
In addition, Wisconsin mentioned the issue, saying EPA should determine “significant contribution” based on air quality, not on an “arbitrarily low cost threshold.”
Despite those mentions, EPA said in a March 1 brief that petitioners were required to raise the issue “forcefully” in comments.
On the merits of the significant contribution argument, Keisler said EPA's methodology could push a state to reduce its emissions below the 1 percent threshold.
Kavanaugh said a state should not have to shoulder the burden of reducing its emissions beyond its significant contribution level.
EPA promulgated the cross-state rule through federal implementation plans, rather than calling on states to submit state implementation plans for agency approval.
EPA said it either disapproved the SIPs that states submitted, or it made findings that states never submitted their plans. In the absence of an approved state plan, the agency has an obligation under the Clean Air Act to issue federal plans.
Rogers said the cross-state rule is one means of addressing interstate transport, but it is not the only way. States could have developed their own plans to reduce transported pollution based on their emissions data and meteorological studies, she said.
Petitioners have said it would not be appropriate for states to issue SIPs without knowing what the cross-state standard would be. Kavanaugh said that argument has a “ton of common sense behind it.”
States would have wasted money guessing what standard EPA would set under the cross-state rule, Kavanaugh said, adding that EPA probably would have disapproved those state plans anyway.
The judges are expected to issue their decision in the summer or fall.
The first phase of the cross-state rule was set to take effect Jan. 1, 2012, but the D.C. Circuit on Dec. 30, 2011, stayed the rule while the legal challenges play out.
The rule is meant to replace another rule issued in 2005 called the Clean Air Interstate Rule, which the D.C. Circuit remanded to EPA in 2008. The court said it did not ensure that upwind emissions reductions would be sufficient to help downwind states meet air quality standards.
However, the court allowed the Clean Air Interstate Rule to remain in place until a replacement program is implemented, and it remains in effect today.
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