This story was updated at 3:18 p.m. EDT.
A federal court today sent part of U.S. EPA's landmark rule meant to curb air pollution drifting across state lines back to the agency but upheld the rule against broader challenges by state and industry petitioners.
The U.S. Court of Appeals for the District of Columbia Circuit found that EPA had erred in its 2014 budgets for sulfur dioxide and ozone pollution in several states. While it did not vacate the budgets, the court sent them back to EPA for reconsideration.
Circuit Judge Brett Kavanaugh wrote the ruling.
EPA's budgets "have required states to reduce pollutants beyond the point necessary" to achieve air quality improvements in downwind areas, Kavanaugh wrote.
The court rejected other arguments by states and local petitioners that the agency did not have the authority to put in place federal plans for 22 states. The court also rejected challenges to the models used by EPA to create the rule.
The Environmental Defense Fund touted the decision for leaving EPA's rule fully in place. EDF noted that the court affirmed EPA's core methodology underlying the rule.
"The Cross-State Air Pollution Rule will continue to protect 240 million Americans from dangerous smokestack pollution in upwind states," said EDF attorney Graham McCahan, who argued the case in its remand phase, in a statement. "The Cross-State Air Pollution Rule is already helping to ensure healthier and longer lives for millions of Americans, including the children at risk of increased asthma attacks."
Kavanaugh wrote that sending the rule back to the agency without vacating it created "a risk that an agency may drag its feet and keep in place an unlawful agency rule." The court urged EPA to move "promptly" on reconsideration of the rule and noted that the petitioners may bring a lawsuit if the agency does not act swiftly.
EPA also said it was pleased that the court had kept the rule in place.
"The Cross-State Rule was promulgated to address a serious problem and continued implementation of the rule will lead to significant benefits for human health and the environment. The agency remains committed to working with States and the power sector as we move forward to implement the Rule," EPA said. "We are reviewing the decision and will determine any appropriate further course of action once our review is complete."
More than a dozen states had asked the U.S. Court of Appeals for the District of Columbia Circuit to throw out all or part of EPA's Cross-State Air Pollution Rule, or CSAPR, a regulatory regime for 28 Eastern states.
The Supreme Court in April 2014 upheld the program's reliance on costs for determining how much upwind states must reduce emissions of pollutants like nitrogen oxides (NOx) and sulfur dioxide (SO2).
The justices had remanded the case to the D.C. Circuit to resolve remaining issues, and the states as well as a large number of utilities and energy companies had pressed the appeals court to vacate major components of CSAPR that had been finalized in 2011.
At issue in today's ruling, the petitioners had challenged EPA's 2014 sulfur dioxide budgets for Texas, Alabama, Georgia and South Carolina. In downwind states, SO2 transforms into fine particulate matter, a pollutant linked with lung problems.
They had also challenged the 2014 ozone-season nitrogen oxides emission budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. NOx is an important precursor to ground-level ozone, which is a main component of smog.
The challengers' main argument was that CSAPR sometimes required an upwind state to cut its emissions by more than its contribution to a neighboring state exceeding air standards. In the rule, EPA had applied a two-step approach to determine whether and to what extent a state must reduce its emissions to comply with the Clean Air Act's "good neighbor" provision.
The court agreed with the petitioners, finding that EPA had misapplied a uniform threshold for upwind states that helped downwind states overachieve national ambient air quality standards.
In Texas, for example, the court found that EPA's emissions budget for SO2 would reduce particulate matter pollution in Madison, Ill., by 76 micrograms per cubic meter more than is needed to comply with the fine particle standard.
Texas, one of the main state challengers to the emission budgets, hailed the ruling.
"The EPA’s agenda-driven mandates would have increased energy costs for hard-working Texans and decreased reliability," Texas Attorney General Ken Paxton (R) said in a statement. "I’m pleased the court has sent the EPA marching back to the drawing board."
EPA had, in part, argued that it had the authority to set the budgets even if they caused downwind states to overattain air quality standards. The agency described overattainment as an "incidental" benefit that would occur as a result of its rule.
The Supreme Court, however, had found that EPA was not allowed to set targets that achieve overattainment if they weren't actually necessary, Kavanaugh wrote.
Frank O'Donnell, president of advocacy group Clean Air Watch, said, however, that the court had missed the point that CSAPR was written to comply with older criteria air pollution standards. EPA is currently working on a rule that would tighten the national ambient air quality standard for ozone from 75 parts per billion to between 65 and 70 ppb.
"We need more power plant cleanup, not less," O'Donnell said. "The court overlooked the fact that CSAPR is a tool to meet outdated standards."
Before last year's Supreme Court ruling, EPA had long struggled to implement a program for pollution that crosses state lines.
The agency's past two attempts have been thrown out in court, including the George W. Bush administration's Clean Air Interstate Rule, or CAIR, which the D.C. Circuit tossed in 2008 for being insufficient to protect public health in North Carolina v. EPA.
Click here for the ruling.
Reporter Ariel Wittenberg contributed.