WASHINGTON — The U.S. Environmental Protection Agency must delay implementing rules on interstate air pollution that were set to go into effect on Jan. 1 until the law’s legality is determined, a federal court ruled in favor of electric power producers seeking to defeat the new regulations.
Judges Judith Rogers, Thomas Griffith, and Brett Kavanaugh of the U.S. Appeals Court in Washington granted a request on Dec. 30, 2011 by electric power producers and other challengers to delay the deadline for plants in 27 states to begin reducing emissions of sulfur dioxide and nitrogen oxide set by the Clean Air Interstate Rule till the act’s legality is reviewed.
The new law, known as the Cross-State Air Pollution Rule, was meant to replace the Clean Air Interstate Rule.
“The court's decision is not a decision on the merits of the rule and EPA firmly believes that when the court does weigh the merits of the rule it will ultimately be upheld,” a statement from the Environmental Protection Agency said. “It is disappointing that the significant public health benefits of the Cross State Air Pollution Rule may be delayed, even temporarily, especially given EPA's work to utilize the Clean Air Act's flexibility to ensure the rule is achievable.
The agency plans to “ensure the transition back to the Clean Air Interstate Rule occurs as seamlessly as possible,” according to the statement.
The Clean Air Interstate Rule was first issued in March 2005 by the federal agency to provide states with a solution to power plant pollution drifting from one state to another. The rule, which covers 28 eastern states and the District of Columbia, uses a cap and trade system to reduce the sulfur dioxide and nitrogen oxides by 70 percent.
States are required to meet the emission reduction levels either by requiring power plants to participate in an EPA-administered interstate cap and trade system that caps emissions in two stages, or meeting an individual state emissions budget through measures of the state’s choosing.
The power companies’ effort is opposed by the Natural Resources Defense Council, power companies such as Chicago-based Exelon Corp. and states such as New York and Illinois.
The petitioners included power companies like EME Homer City Generation LP, a unit of Edison International and Energy Future Holdings Corp in Texas who filed for the stay due to the “irreparable harm” it would cause to the companies.
The state of Texas, the National Mining Association and the International Brotherhood of Electrical Workers, on the other hand, joined in parallel cases, saying the rule puts an undue financial burden on power producers and threatens electricity reliability by forcing companies to shut some older plants, according to BusinessWeek.
Power companies, state officials and lawmakers said the EPA provided too little time to comply, and argued in court that the October revisions should invalidate the entire rule.
Luminant Generation Co., an Energy Future Holdings Corp. unit based in Dallas, said the decision will allow the company’s employees to continue working on its generation, mining and other operations.
“It also allows Luminant’s Monticello units 1 and 2 to continue operating and providing needed generation for the Texas electric market,” a statement from the company said.
Though the implementation schedule for the act is now uncertain, the court’s stay is likely to push back the start of the program by at least one year or more, depending on the court’s determination — a victory for states and companies with concerns about meeting their CSAPR obligations in 2012, according to Van Ness Feldman, a Washington, D.C.-based law firm that focuses on energy, environmental, natural resource and transporation law.
The stay will also allow the EPA to finalize its “technical adjustments” rulemaking before the rule goes into effect, the firm reported.
“The stay order could have the most substantial impact on the nascent markets for CSAPR allowances,” according to Kyle Danish, a member of the law firm. “Though many traders had taken into account the possibility of a stay, the court’s decision to stay CSAPR and reinstate the CAIR is likely to result in a significant degree of market disruption. The stay order plays havoc with already executed transactions for delivery of 2012 CSAPR allowances.”