Dueling Challenge to Emissions Rule Fought at DC Circuit

WASHINGTON (CN) – Are regulatory limits on nitrogen oxide emissions from power plants too severe or too charitable? The D.C. Circuit is poised to have the last word after a three-hour hearing Wednesday.

Wisconsin and several other states brought the underlying challenge two years ago when the Environmental Protection Agency lowered ambient air quality standards for ozone to 75 parts per billion, down from 80 ppb.

Since nitrogen oxide emissions can travel downwind to other states while being transformed into ozone in the atmosphere along the way, the cross-state air pollution rule also includes requirements for power plants in upwind states.

In support of their claims that the rule is too stringent, however, upwind states like Wisconsin have argued that EPA’s own data shows that the plans won’t lead to any meaningful reduction of cross-state pollution, or help downwind states meet ozone standards.

Wisconsin Solicitor General Misha Tseytlin emphasized this point Wednesday at oral arguments before the D.C. Circuit.

“During the comment period, numerous commenters pointed out to EPA that imposing FIPs on states like Wisconsin, Iowa and others would make no sense from the point of a cost-benefit analysis,” Tseytlin said, abbreviating federal implementation plans.

Tseytlin said that’s because many of the power plants in these states already have the very emissions controls that the EPA wants installed. As a result, the actual benefits are minimal, while power companies are “swept into a complicated compliance, trading, reporting ratio,” Tseytlin argued.

Tseytlin said the agency was required to make a justification on the record when its methodology produced an irrationality, and that the EPA should be made to conduct a cost-benefit analysis on remand.

“Maybe at the end of the day they’ll say that it’s too much trouble to carve individual states out and will give some on-the-record basis for that. But we can’t know that unless they say that,” Tseytlin said

Justice Department attorney Amy Dona argued at the same hearing, however, that the EPA’s rule strikes an appropriate balance.

Dona suggested that the 2018 attainment deadline was flexible, arguing that the agency must consider what upwind states could feasibly implement by 2017.

The correct standard is for states to attain compliance with the rule “as expeditiously as practicable,” Dona argued. She also said the law allows agency discretion so long as it can show that the rule was a concrete step toward addressing the good-neighbor provision, and that it can explain the next step to be taken.

If the court agrees with how the environmental groups interpret the rule, Dona said “it would potentially shift too much burden to the upwind states.”

As for intent, Dona said Congress would not want the EPA to implement measures so harsh that they would cause power plants to shut down.

U.S. Circuit Judge Patricia Millett pushed Dona to explain how the agency harmonized its rule with the ozone standard deadlines for 2018 and beyond.

“What does harmonize mean,” Millett asked. “We just have to be cognizant of the deadlines?”

Dona had difficulty pointing to any concrete action the agency had taken to harmonize with the 2018 deadlines, but said the EPA is allowed to implement a partial remedy when it doesn’t have the capacity to implement a full remedy.

Millett then pointed out that the agency doesn’t even seem to have a partial remedy.

“You’ve got nothing,” she said.

Wisconsin’s challenge has also brought dueling arguments from environmental groups, which claim that the rule as not stringent enough, and industry groups, which want the rule thrown out.

Arguing on behalf of the environmental groups, Earthjustice attorney Neil Gormley told the appeals court Wednesday that the EPA hasn’t carried the heavy burden of showing that the attainment deadlines are impossible to meet.

Describing them as a “hard stop” on the agency’s discretion, Gormley said there is little room for infeasibility arguments when Congress intended the deadlines to serve as a way to restrict the EPA’s discretion.

The EPA was required to limit significant contributions from upwind states to the fullest extent possible by the 2018 deadline, which passed in July, he said.

Utility and power companies pushed back against the rule as well this past April, telling the D.C. Circuit that the EPA used a flawed methodology to identify problem areas in downwind states and did not properly consider actual air quality.

“EPA’s disregard of key factors meant that it failed to ensure against unjustified overstatement of downwind ozone concentrations for which upwind states were held liable,” the industry brief says.

This, they argue, led to over-control of upwind emissions.

The EPA contests that claim, however, arguing that D.C. Circuit and Supreme Court precedent have already legitimized the methodology. In an April 9 brief, the EPA argued that the rule has not resulted in over-control nor has it imposed “unreasonable requirements or unreasonably stringent limitations on states or their electric generating units.”

At the close of oral arguments, the appeals panel said it would take the matter under advisement, but did not indicate when the court would issue an opinion in the case.

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