SUPREME COURT

Industry's mercury challenge could undermine attack on EPA climate rule

If coal companies get their way when the Supreme Court reviews U.S. EPA's air standards for mercury and other hazardous emissions, they could undermine their primary legal challenge to another landmark pollution rule: President Obama's greenhouse gas limits for power plants.

The justices last month agreed to review the Utility Air Regulatory Group and National Mining Association's challenge to EPA's 2011 mercury and air toxics standards, or MATS.

A high profile environmental rule of Obama's first term, MATS will yield major health benefits by capping emissions of several toxins. But it carries a hefty price tag: $9.6 billion a year to implement.

EPA promulgated MATS under authority found in Section 112 of the Clean Air Act. That provision is also pivotal to the coal industry's early legal challenge to EPA's proposal to limit greenhouse gas emissions from existing power plants.

In a lawsuit that's drawn backing from most major industry groups, coal company Murray Energy Corp. and several states are asking a federal appeals court to block EPA from finalizing the greenhouse gas rule.

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EPA issued the global warming rule under a rarely used part of the Clean Air Act, Section 111(d). In the lawsuit, the coal companies' primary charge is that the Section 111(d) prohibits EPA from issuing the standards because it is already regulating coal-fired power plants under Section 112.

"Three years ago, EPA promulgated a national emissions standard under Section 112 of the Clean Air Act for [power plants]," Murray wrote in a brief filed to the U.S. Court of Appeals for the District of Columbia Circuit this week.

"Under the express terms of the Clean Air Act, this action barred EPA from using Section 111(d) of the Act to mandate state-by-state standards for these same sources."

So, what happens to that argument if the Supreme Court sides with coal companies in their challenge to the mercury rule and throws it out?

"It is gone," said Thomas Lorenzen, a former Justice Department environmental lawyer now in private practice at Dorsey & Whitney. "It would defeat that as a basis for challenge right now."

To be sure, there are many ways the Supreme Court could rule in the mercury case. The justices limited their review to "whether [EPA] unreasonably refused to consider costs" when determining that it was "appropriate" to regulate the emissions.

The language refers to a requirement in the Clean Air Act that EPA determine it is "appropriate and necessary" to regulate the emissions before going forward with the regulations. The agency didn't consider cost at that early stage, and the challengers think they should have given the high cost of the compliance regulations by installing emissions control technologies (E&ENews PM, Nov. 25).

Amanda Leiter, an environmental law professor at American University's Washington College of Law, said there are several ways the justices may resolve the case without undermining the argument presented in the greenhouse gas case.

Notably, EPA may win and the court could uphold the MATS rule in its entirety. The justices could also side with the challengers and remand the case to EPA to make revisions considering cost. That would leave the MATS rule on the books and preserve the greenhouse gas case challenge.

Or, in a more nuanced ruling, the court could preserve power plants as a "source category" under Section 112 while siding with the challengers.

"EPA [then] continues to have an obligation to regulate mercury from power plants, it just has to rethink how to structure the regulation, considering costs," Leiter said. "Challengers would likely argue that even in this posture, power plants are still a 'source category' ... and that issue would have to be litigated."

Power plants account for a third of the country's greenhouse gas emissions, and EPA's proposed standards would cut carbon emissions by 30 percent by 2030 from 2005 levels and shift the country from coal-based power to renewables like wind and solar.

Importantly, the argument in the greenhouse gas case is not the coal industry's only contention, nor is it a clear winner. It stems from ambiguity created by two versions of Section 111(d) being passed into law -- one from the the Senate and another from the House.

Both versions seek to prohibit EPA for issuing duplicative regulations. The Senate version prevents EPA from regulating a pollutant already covered by Section 112.

The House version, however, bars EPA from using Section 111(d) to regulate a source already included in Section 112. The coal industry claims that version scuttles EPA's greenhouse gas standards right out of the gate because of the MATS regulations.

EPA counters that the glitch presents a prime example of a legislative ambiguity that the agency deserves deference from the court to resolve. The agency has also asked the D.C. Circuit to dismiss the lawsuit because the agency has yet to finalize the standards (Greenwire, Nov. 4).

But it appears clear that if EPA promulgates the standards as proposed, the coal industry will turn to the same argument regarding Section 112 when they file lawsuits challenging the final rules next year.

Twitter: @GreenwireJeremy | Email: jjacobs@eenews.net

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