trending Market Intelligence /marketintelligence/en/news-insights/trending/onw-wnliylen49wfyoo-eq2 content esgSubNav
In This List

DC Circuit affirms US EPA's regional haze rule revisions

Blog

Insight Weekly: Global stock performance; hydrogen pilot projects; Powell's Fed future unsure

Blog

Insight Weekly Labor market recovery hurdles power market integration nonbank MA hunt

Blog

Q&A: Q2'21 Power Forecast: Overheated Power Markets are Here – Who Wins, Who Loses, and Why?

Blog

ESG & Technology: Impacts and Implications


DC Circuit affirms US EPA's regional haze rule revisions

In a ruling that may bring on a feeling of déjà vu, the U.S. Court of Appeals for the District of Columbia Circuit has upheld the U.S. Environmental Protection Agency's revision to its regional haze rule to reflect the replacement of the Clean Air Interstate Rule, noting that it rejected many of the same arguments in previous cases.

The rule, or CAIR, was aimed at improving air quality by cutting sulfur dioxide and nitrogen oxide emissions that contribute to pollution problems in other states by establishing an emissions trading program. However, the D.C. Circuit in July 2008 found the trading program to be illegal and directed the agency to issue a replacement rule.

The EPA did not comply with that directive until it issued the Cross-State Air Pollution Rule, or CSAPR, in July 2011. Pursuant to that rule, power plants in the eastern half of the United States had to to cut power plant emissions that cross state lines and contribute to ground-level ozone and fine particle pollution in other states. CSAPR also allows sources to trade emissions allowances with other sources but in a way that it claimed resolved the court's concerns.

After the promulgation of CSAPR, the EPA moved to allow applicable states to use that rule for compliance with the regional haze rule, which similarly regulates the emissions of SO2 and NOx. The resulting regional haze rule revision, issued in 2012, allowed utilities to use an alternative to the regional haze rule's Best Available Retrofit Technology, or BART, such as participation in a CSAPR trading program. At the same time, the agency disapproved a handful of state implementation plans that relied on CAIR and replaced those plans with federal implementation plans until the states in question crafted replacements.

Crying foul, several parties challenged various aspects of the EPA's actions to replace CAIR with CSAPR for compliance with the regional haze rule. For instance, the National Parks Conservation Association and the Sierra Club challenged the decision to allow states to treat CSAPR compliance as a "better than BART" alternative to the regional haze rule's specifications. Texas, the Louisiana Department of Environmental Quality, power companies and industry coalition Utility Air Regulatory Group litigated the EPA's disapproval of state implementation plans that relied on CAIR.

After many years of litigation and a period in which the case laid dormant, the D.C. Circuit has now affirmed the EPA's actions.

The arguments

The conservation groups argued that the EPA should have determined BART for each individual source rather than relying on a presumptive or generic set of requirements. But Judge Stephen Williams, who penned the court's opinion denying the complaints, called the conservation groups' assertions "a cavalcade of attacks on alleged modelling errors."

Williams said the groups specifically "fix on a comment" that the EPA did not address when it collected feedback on the regional haze revision, which asserted the agency did not take into account the remaining useful life of the sources at issue. The comment explained that when a facility like a power plant transitions toward retirement, the state and EPA may tolerate less stringent emissions standards in the short run because the facility will soon be producing zero emissions. But the court agreed with the EPA that the effects of a facility's useful life are too speculative to model.

The conservation groups also asserted that the EPA should have applied a more stringent "better than BART" test than that used under CAIR. But the judge rejected that assertion because the groups "either repeat or assume premises that this court has already rejected." For instance, when the D.C. Circuit addressed the many legal challenges to the CAIR rule, Williams recalled it found that an emissions control program used to satisfy an unrelated statutory provision can still qualify as a "better than BART" alternative. And that opinion did not change with issuance of CSAPR.

Finally, the conservation groups argued that the EPA used incorrect averages to compare CSAPR and BART. The groups wanted the EPA to show that CSAPR "is not better than BART in all places and circumstances." But the judges rejected that assertion, with Williams explaining, "it is in the nature of averages that some particular sites may under perform while others over perform."

Turning to the appeals by the industry and states, they argued that if compliance with CAIR had for years allowed them to exceed a "better than BART" standard, then their continued enforcement of those programs must be an adequate alternative to BART.

"Without CAIR — which all parties agree is dead and beyond revival — there is no legal basis for a requirement that states control their sources at CAIR levels," Williams wrote. "We cannot order EPA to consider CAIR an alternative to BART without resurrecting CAIR itself, a rule that we have already stricken and ordered to be vacated."

The EPA did affirm a CAIR-based state plan for Connecticut, but the D.C. Circuit agreed with the EPA's explanation that the plan was reasonable because of that state's "comparatively low emissions and its only partial reliance on CAIR."

Joining Williams in the opinion — Utility Air Regulatory Group v. EPA (No. 12-1342, et al.) — were Justices Cornelia Pillard and Thomas Griffith.