National Tribal Air Association

U.S. EPA hit another obstacle last Friday on a decade-old effort to clamp down on soot- and smog-forming emissions that drift across state lines, as a panel of federal judges gave hundreds of coal-burning power plants an eleventh-hour reprieve from new pollution limits that would have taken effect on New Year's Day.

With a decision to stay the rules while a panel of judges reviews them, the U.S. Circuit Court of Appeals for the District of Columbia told EPA to continue enforcing the George W. Bush administration's Clean Air Interstate Rule, or CAIR -- a program that the D.C. Circuit ordered the agency to replace with a 2008 decision saying that CAIR wouldn't do enough to hold states responsible for dirtying their neighbors' air.

Friday's ruling will spare Texas and a few other of the 27 Eastern states included in the Cross-State Air Pollution Rule (CSAPR) from new limits on sulfur dioxide (SO2) and nitrogen oxides (NOx) that would have applied starting Jan. 1.

States, power companies and advocacy groups involved in the court case now have until Jan. 17 to suggest plans for briefing in the case. The three-judge panel intends to hold oral arguments by this April, and EPA says it expects to prevail.

"The court's decision is not a decision on the merits of the rule and EPA firmly believes that when the court does weigh the merits of the rule it will ultimately be upheld," EPA spokeswoman Betsaida Alcantara said in a statement. "It is disappointing that the significant public health benefits of the [rule] may be delayed, even temporarily, especially given EPA's work to utilize the Clean Air Act's flexibility to ensure the rule is achievable."

EPA estimates the cross-state rule would cost the power sector about $800 million per year, on top of $1.6 billion to comply with CAIR. Power plants would need to reduce their SO2 emissions by 73 percent and their nitrogen oxides by 54 percent from 2005 levels under a second round of stricter emissions limits that would take effect in 2014.

Both programs use emissions trading, which allows power companies to choose between running higher-emitting plants less often, making greater use of pollution control equipment or buying emissions credits.

EPA previously said emission allowances from CAIR would be replaced with new allowances for 2012. Alcantara said the agency will return to the old trading program "as seamlessly as possible," but details were not immediately available.

The cap-and-trade program for power plants has been in constant flux since 2001, when the incoming George W. Bush administration first proposed a new package of rules under the name Clear Skies. EPA came out with CAIR after that plan floundered in Congress.

The long-standing negotiations on interstate pollution from power plants were set aside at the start of the new Congress as politics left slim chances for an agreement. Meanwhile, the Republican-led House passed legislation last fall to overturn the Obama administration's replacement for CAIR, saying it wasn't needed and would stifle the economy by raising the price of electricity in places that mainly burn coal.

Power companies -- such as Atlanta-based Southern Co. and Dallas-based Energy Future Holdings Corp. -- sued EPA over the new rules, saying they didn't get enough time to comply and would face irreparable harm. Scott Segal, a lobbyist at Bracewell & Giuliani LLP who represents the companies, said Friday's stay signals the challengers have a "strong chance of success on the merits."

"Stays are hard to come by in the world of Clean Air Act litigation, which makes the stay of the cross-state rule all the more significant," he said in an email.

Vickie Patton, general counsel at the Environmental Defense Fund, said she expects the overall cross-state program to withstand challenges because it was designed to meet an unfulfilled legal requirement. Several years back, the D.C. Circuit temporarily stayed a similar rule requiring states to reduce their NOx emissions, but the court went on to uphold the program.

Patton said the decision to freeze the new program is disappointing because the pollution curbs would prevent thousands of heart attacks, cases of respiratory illness and premature deaths this year.

"It's important to have the Clean Air Interstate Rule as the backstop, but it falls far short of protecting human health and the environment in the way that the cross-state air pollution protections do, and in the way that the court itself found necessary," she said in an interview