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Judges Toss EPA Rule To Reduce Smog, Soot
It Was Agency's Most Aggressive Air Measure

By Del Quentin Wilber and Marc Kaufman
Washington Post Staff Writers
Saturday, July 12, 2008

A federal appeals court yesterday threw out a major component of the Bush administration's effort to reduce unhealthy levels of soot and smog in Eastern and Midwestern states, a decision that environmental groups worry will delay action on air pollution well into the next administration.

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled unanimously that the Environmental Protection Agency overstepped its authority in instituting a rule that would have established a cap-and-trade system for soot and smog.

The court ruling came on the same day that the administration said it would take no steps under the Clean Air Act to regulate greenhouse gas emissions that contribute to global warming, even though the EPA formally announced that it would seek public comment on the issue.

The Clean Air Interstate Rule (CAIR) rejected by the court does not apply to greenhouse gases such as carbon dioxide.

The rule represented the Bush administration's most aggressive action to clean the air over the next two decades. The EPA estimated that the rule would help prevent 17,000 premature deaths and reduce levels of sulfur dioxide and nitrogen oxides by as much as 70 percent by 2025. An unusual alliance of power companies and environmental groups supported the measure.

But the judges found that the EPA had committed "more than several fatal flaws" in creating the measure, which was challenged by several power companies and the state of North Carolina for a variety of contrasting reasons.

"No amount of tinkering with the rule or revising of the explanations will transform CAIR, as written, into an acceptable rule," according to the unanimous 60-page opinion issued by the D.C. Circuit's chief judge, David B. Sentelle, and Judges Judith W. Rogers and Janice Rogers Brown.

EPA Administrator Stephen L. Johnson said in a conference call with reporters that "we are extremely disappointed in the court's decision because it's overturning one of the most protective [air pollution] rules in our nation's history. . . . We'll wait and see what our next steps are."

Environmental groups said the decision will delay efforts to reduce harmful air pollution and will leave tough decisions to be made by the next president and Congress.

"This is probably the biggest air-quality setback ever suffered by the EPA under any administration," said John Walke, clean air director and senior attorney for the National Resources Defense Council, an advocacy group.

Lawmakers who support tougher air pollution standards said the decision should help their efforts to pass legislation.

"Our air isn't getting any healthier as we battle new clean air regulations in the courts and Congress continues to stall in passing strong clean air legislation," Sen. Thomas R. Carper (D-Del.), chairman of the Senate clean air and nuclear safety subcommittee, said in a statement.

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.

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