AIR POLLUTION

More legal battles likely after mercury rule survives attack

The Obama administration scored a major victory in court this morning as federal judges kept U.S. EPA's landmark mercury standards for power plants in place, but the legal battle over the rule isn't done yet.

Foes of the mercury standards are weighing their legal options after judges on the U.S. Court of Appeals for the District of Columbia Circuit this morning sided with EPA against state and industry challengers. A three-judge panel agreed to keep EPA's rule in place, allowing the agency to tweak the regulation to bring it in line with a Supreme Court ruling that the agency had failed to properly consider costs.

But legal experts predict it won't be long until the rule is again under attack in court.

EPA has promised to hustle to adjust its rule by next spring and has already issued a draft decision concluding that the benefits of its air toxics standards justified the costs of the rule. In the short order issued by the court, the judges made a point to note that "EPA has represented that it is on track to issue a final finding ... by April 15, 2016." That cost analysis is likely to come under fire.

In addition to expected litigation over EPA's cost analysis, the agency's challengers could ask the appeals court's three-judge panel to rehear the case or seek en banc review by all of the circuit's judges. They could also seek review by the Supreme Court of the lower court's decision.

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In regard to future legal challenges, "nothing would surprise me," said Jim Barnes, a former EPA general counsel who now teaches law at Indiana University. "It seems like there is pretty much a scorched-earth mentality with respect to virtually everything EPA does."

But Barnes questioned the practical impact of more litigation, given that many power producers with coal-fired plants are already addressing their mercury emissions. "If the companies haven't seen the writing on the wall, I think they're even more likely to see it now," Barnes said.

William Yeatman, a senior fellow at the conservative Competitive Enterprise Institute, said in a statement, "While today's unfortunate decision keeps the rule in place for now, EPA is not yet off the hook. The agency still must perform a cost benefit analysis on the mercury rule, and this analysis will be subject to judicial review, which will be no cakewalk for the EPA."

Industry groups and nearly 20 states had asked the appeals court to toss out the EPA rule in light of the Supreme Court's June ruling. Led by White Stallion Energy Center LLC and the state of Michigan, the rule's critics argued that the high court's decision rendered the rule illegal and required that it be vacated.

Luke Popovich, a spokesman for the National Mining Association, said the court's decision to keep the rule in place isn't surprising. The National Mining Association was among the industry groups that had asked for the rule to be tossed out. Typically, Popovich said, "the appellate courts have shown regulatory agencies great discretion, however egregiously wrong they have been."

Asked today about legal strategies in light of the court's order, Eric Groten, an attorney at Vinson & Elkins representing White Stallion Energy Center in the lawsuit, said in an email, "Can't say yet on next steps."

Jim Pew, an attorney at Earthjustice representing environmental groups that supported EPA in the lawsuit, is expecting more battles. "The industry lawyers get paid by the hour and they have no reason to stop their tactics; they've been fighting the controls on power plants for decades," he said. But, he added, "I don't really think there is much left in their arsenal."

EPA issued the Mercury and Air Toxics Standards -- or MATS -- in December 2011 to require coal-burning power plants to reduce emissions of mercury, lead, arsenic and other hazardous air pollutants. Coal plants are the country's largest emitters of mercury, and EPA said that MATS would prevent 11,000 premature deaths a year and yield up to $90 billion in health benefits.

Industry and state opponents of the rule argued that the Supreme Court had unequivocally ruled that EPA exceeded its authority under the Clean Air Act when it issued the mercury standards. EPA, they said, "failed to answer the threshold question Congress directed it to consider before regulating the emission of hazardous air pollutants from power plants: Is such regulation worth it -- that is, are the benefits of regulation worth the costs?" (Greenwire, Sept. 25).

During oral arguments this month on whether to knock down the mercury rules, conservative Judge Brett Kavanaugh forecast that the next big fight over the rule will center on how the agency measures so-called co-benefits.

The Republican appointee pointed to concerns raised by Supreme Court Chief Justice John Roberts regarding EPA's practice of counting health "co-benefits" in justifying the economic impacts of its clean air rules. Those are health benefits not directly attributable to reductions in mercury.

"He referred to that as an end run and bootstrapping and disproportionate," Kavanaugh said of Roberts' comments. "I assume that's going to be the key battleground six months, a year from now, will be whether co-benefits are properly part of the analysis or not" (Greenwire, Dec. 7).

Scott Segal, director of the Electric Reliability Coordinating Council -- a group of power companies -- said that the court's decision "should be viewed against the clear and unmistakable signal sent by the Supreme Court that it will no longer accept EPA analysis that plays fast and loose with calculation of cost and benefit."

Segal added, "Because such behavior characterizes the Clean Power Plan," the Obama administration's rules to crack down on power plants' greenhouse gases, "EPA should be very concerned" about how the high court will react to the Clean Power Plan.

Lawsuits challenging the Clean Power Plan are pending in the D.C. Circuit and are widely expected to make their way to the Supreme Court.

Obama admin, backers laud decision

For now, the Obama administration and its backers are heralding the D.C. Circuit's latest move on mercury.

"EPA is very pleased with the court's decision to leave the Mercury and Air Toxics Standards (MATS) in place," agency spokeswoman Melissa Harrison said in a statement. "All told, for every dollar spent to make these cuts in emissions, the public is receiving up to $9 in health benefits. A majority of power plants have already installed and are operating the controls needed to meet MATS and the rest will be doing so in April 2016."

Pew of Earthjustice said, "It's really very good news for all the people who aren't going to die as a result of air pollution this year and all the people who will stay alive next year because they won't be killed by air pollution."

Brendan Collins, an attorney at Ballard Spahr representing power companies, who asked the court not to toss out the mercury rule, said he, too, was pleased with the court's decision.

"Generators who configured their generation fleets in anticipation of the rule based their investments on their views of how MATS will impact capacity and wholesale prices," he said. "If the rule were vacated, some compliant plants could bypass their controls and reduce their operating costs, and plants that had planned to retire would continue to operate. As a result, the electricity markets would look very different from the way they were expected to look under MATS when generators were making those investment decisions."

His clients include Calpine Corp., Exelon Corp., National Grid Generation LLC and Public Service Enterprise Group Inc.

State and local air pollution control officials also applauded the D.C. Circuit's decision, said Bill Becker, executive director of the National Association of Clean Air Agencies. "We are confident EPA will find the costs of the rule are reasonable and do not alter its earlier determination that regulation of air toxics from power plants is appropriate and necessary to protect public health," Becker said.

A coalition including 15 states and many environmental groups had pressed the court to keep the rule in place while sending it back to the agency for a quick fix.

EPA maintains that it's on track to issue its final consideration of cost in April 2016. EPA published a proposed supplemental finding on Dec. 1 and is accepting comment on its proposal until Jan. 15, 2016 (Greenwire, Nov. 23).

Twitter: @rbravender Email: rbravender@eenews.net

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