Court Rejects Emission 'Trades'

The case decided yesterday turned on a highly contentious EPA decision from 2005. The agency proposed a "cap-and-trade" program, in which plants were required to reduce their mercury output to a certain level -- or buy credits from plants with emissions below those levels. That rule was to go into effect in 2010.

But environmentalists objected. They said that if a plant were allowed to buy its way out of some cutbacks, the result could be a "hot spot" of pollution in nearby areas.

"There will be neighborhoods that get little or no reduction" in pollution if their local plants take no measures to curb emissions, said Carol M. Browner, the EPA administrator under President Bill Clinton.

After the EPA's decision, a coalition of activist groups and state officials sued. Their argument was that the EPA violated the terms of a clear mandate from Congress -- that all plants be outfitted with the best available technology to cut emissions.

Yesterday, the appeals court agreed.

The EPA "deploys the logic of the Queen of Hearts, substituting EPA's desires for the plain text" of Congress's order. In Lewis Carroll's book, the queen hands out punishments without bothering to justify them, declaring, "Sentence first -- verdict afterwards."

The EPA "actually must follow the law," said Maryland Attorney General Douglas F. Gansler (D). Maryland was one of the states suing the agency. "They have to go back to their job of protecting the environment . . . and putting controls on coal-burning power plants."

But power companies said that without a rule in place, pollution cutbacks could stall.

American Electric Power, for instance, is one of the country's two largest producers of coal-fired electricity. Spokesman Pat Hemlepp said the company had spent $2.6 billion to install technology designed to catch sulfur dioxide and nitrogen oxides, pollutants that are precursors to smog. Those devices cut mercury emissions, as well.

But now, Hemlepp said, the company will postpone purchases of equipment aimed at reducing mercury emissions even further to meet the cap-and-trade targets.

"It doesn't make sense to spend the additional $170 million . . . and risk EPA putting something in place that will require a different control on those plants," Hemlepp said.

Whatever the environmental impact, University of Maryland law professor Robert Percival saw a clear legal signal in yesterday's decision. He said the judges showed surprising pique at the Bush administration.

"It's fairly clear that even judges that are, you know, not that fond of environmental regulation are kind of appalled at how willing the [administration] has been to try to bend the law," said Percival, who heads the school's environmental law program.

Staff researcher Karl Evanzz contributed to this report.