Judges Toss EPA Rule To Reduce Smog, Soot

Carper has introduced legislation setting limits on soot and smog that would be stricter than those in the Bush rule.

The interstate rule was one of the administration's signature air pollution policies. It would have required 28 states and the District of Columbia to reduce emissions of nitrogen oxides and sulfur dioxide from power plants.

It took a regional approach to the issue and established a cap-and-trade system that would have allowed utilities to sell and buy pollution credits as long as total industry emissions remained below a preset cap.

Environmental groups said the rule would have been particularly helpful in the D.C. region. Much of the area's air pollution on summer days arrives from coal-fired power plants and industry farther west.

While several environmental groups criticized the rule for not setting more aggressive pollution limits, they nevertheless welcomed the measure, saying it was the best they could expect from the administration.

Many power companies also supported the rule because it was not as costly as some proposals pending in Congress. Even North Carolina-based Duke Energy, one of the companies that challenged the measure, said in a statement that it did not intend to have it overturned.

William M. Bumpers, an attorney with Baker Botts LLP, said most of the 20 or so electric companies that his firm represents supported the rule. Some made large investments to upgrade their coal-fired plants, assuming the rule would remain, he said. With the rule vacated, he said, companies will have to rethink their plans.

"This is a train wreck for the EPA, and it's a train wreck for the environment," Bumpers said. "Companies have invested billions of dollars under this rule, and they're not very happy today."

However, not all power companies supported the EPA's action. Several, led by Duke Energy, filed court challenges, arguing that the agency had set pollution limits arbitrarily.

North Carolina attacked the plan from a different angle, saying the program was not tough enough because utilities would be allowed to pollute more by buying credits. Such utilities then would actually be dumping more soot and smog onto North Carolina communities, the state argued.

In agreeing with those arguments, the judges said the EPA's regional cap system "is fundamentally flawed" because it does not take into proper consideration state-specific emissions and needed reductions. It said the agency arbitrarily tied sulfur dioxide emissions to limits passed by Congress in 1990 legislation that addressed acid rain.

And, the judges wrote, the agency improperly set caps on nitrogen oxide by giving states with cleaner plants fewer pollution credits. Though the court said the "EPA's redistributional instinct may be laudatory," the agency doesn't have the authority to force one state to "share the burden of reducing" another's emissions.

"EPA must redo its analysis from the ground up," the judges wrote.

Staff writer Juliet Eilperin contributed to this report.