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D.C. Circuit Vacates Two Rules Regulating Mercury Emissions from Power Plants

Beveridge & Diamond, P.C., February 22, 2008

On February 8, 2008, the U.S. Court of Appeals for the District of Columbia Circuit vacated two EPA rules that regulate emissions of hazardous air pollutants (“HAPs”) from electric steam generating units (“EGUs”).  New Jersey v. Environmental Protection Agency, No. 05-1097 (D.C. Cir. 2008). The first rule removed new and existing coal- and oil-fired EGUs from the list of sources regulated under Section 112 of the Clean Air Act (the “Delisting Rule”). The second rule set performance standards for new coal-fired EGUs, including total mercury emissions limits, and creates a voluntary cap-and-trade system for new and existing coal-fired EGUs, known as the Clean Air Mercury Rule. State air control agencies and environmental groups challenged both rules as contrary to the plain language and structure of Sections 111 and 112, and the D.C. Circuit agreed. 

Delisting Rule.  Section 112 requires EPA to regulate emissions of over one hundred HAPs (including mercury) from various sources by imposing emissions control requirements, and to regulate emissions of HAPs from specific sources, like EGUs, when EPA determines that it is “appropriate and necessary.” In 2000, EPA determined that it was appropriate and necessary to regulate mercury emissions from coal- and oil-fired EGUs, and therefore listed the facilities as sources of HAPs under Section 112. Once listed, source categories can be delisted only if EPA makes specific findings under Section 112(c)(9). EPA, however, delisted EGUs in 2005 without making these specific findings, arguing that its 2000 decision was not a “final agency action” and the regulation of EGUs under Section 112 was neither “appropriate” or “necessary.” The D.C. Circuit disagreed, finding that Section 112 is unambiguous in its requirement that EPA make specific findings before it delists a source of HAPs. 

Clean Air Mercury Rule.  In 2005, EPA also promulgated the Clean Air Mercury Rule, which established a “cap and trade” program for mercury emissions from EGUs.  Because the Agency had recently delisted EGUs under Section 112, the Clean Air Mercury Rule was issued exclusively under Section 111 (New Source Performance Standards). The court rejected this approach, holding that because the EGUs were in fact Section 112 sources, EPA did not have authority to regulate them under Section 111, and that it was doubtful EPA would have issued the remainder had it anticipated the Court’s decision on the delisting rule. Thus, while much of the discussion of this case has focused on the Court’s alleged “rejection” of EPA’s “cap and trade” mercury program, the Court’s decision was in fact purely a procedural one, and did not reach the merits of these arguments. 

For more information, please contact Laura McAfee, lmcafee@bdlaw.com, or Holli Feichko, hfeichko@bdlaw.com.

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