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D.C. Circuit Upholds EPA’s Mercury and Air Toxics Standards

Posted Monday, April 21st, 2014

On April 15, 2014, the U.S. Court of Appeals for the District of Columbia Circuit upheld the U.S. Environmental Protection Agency’s (EPA) Mercury and Air Toxics Standards (MATS) final rule, which limits emissions of mercury, acid gases, and other hazardous air pollutants (HAPs) from electric utility steam generating units (EGUs).  The MATS rule was challenged by regulated entities, states, and environmental groups; however, the court ruled in EPA’s favor on every challenge.

Challenges brought by regulated entities and the states focused in large part on EPA’s interpretation of the “appropriate and necessary” requirement in section 112(n)(1)(A) of the Clean Air Act (CAA), which requires EPA to regulate EGUs if it finds such regulation to be “appropriate and necessary.”  Those challenges claimed that EPA improperly:

  • Relied on the delisting criteria of section 112(c)(9) of the CAA to interpret the statutorily undefined term “hazard to public health”;
  • Failed to consider costs in determining whether regulation of HAP emissions from electric steam EGUs is “appropriate and necessary”;
  • Considered environmental and other harms, rather than only considering public health hazards, in making its “appropriate and necessary” determination;
  • Considered public health hazards that HAP emissions from EGUs merely contribute to, rather than limiting consideration to only those public health hazards caused exclusively by EGU HAP emissions;
  • Effected regulation of HAPs through section 112(d) maximum achieveable control technology (MACT) standards, rather than under section 112(n)(1)(A) of the CAA; and
  • Regulated all HAPs under the MATS rule, rather than limiting the MATS rule to only those individual HAPs for which it is “necessary and appropriate” to regulate.

The court held for EPA on each challenge, concluding that EPA’s interpretation of the “appropriate and necessary” requirement was reasonable, and thus deference must be given to EPA under the Chevron doctrine.  Judge Kavanaugh dissented on the issue of EPA’s consideration of costs, taking the position that EPA should have considered costs in making the “appropriate and necessary” determination.

The Court also denied a variety of other challenges raised by regulated entities, including that EPA improperly:

  • Failed to distinguish between major and area sources;
  • Based its mercury MACT floor on biased data from the “best of the best” EGUs;
  • Failed to set a less stringent, health-based emission standard for acid gases;
  • Denied a petition seeking to remove coal-fired EGUs from the list of sources regulated under section 112 of the CAA;
  • Relied on contaminated emissions samples in determining the risks from non-mercury EGU emissions;
  • Failed to create a subcategory for circulating fluidized bed (CFB) EGUs;
  • Failed to provide a separate acid gas standard for coal-refuse-fired CFBs;
  • Set an unachievable emission standard for the lignite-fired EGU subcategory based on an improperly calculated MACT floor; and
  • Failed to issue a blanket one-year compliance extension to all public power companies.

The court also denied two challenges raised by environmental groups regarding provisions that provided alternative options for monitoring and allowed compliance to be demonstrated through emissions averaging.  The environmental groups claimed that the alternative monitoring options would not reasonably assure compliance, and that emissions averaging unlawfully relaxes the stringency of the MACT floor standards.

Finally, the court denied Julander Energy Company’s challenge on the basis of standing, holding that Julander lacked prudential standing because its interests do not come within the zone-of-interests to be protected by the CAA.  Julander is an oil and gas development company that challenged EPA’s decision not to adopt stricter emission standards by requiring fuel switching from coal to natural gas.  The court determined that Julander’s business interest in increasing regulatory burdens on regulated entities was outside the CAA’s zone of interests.  Judge Kavanaugh reluctantly concurred that Julander lacked prudential standing, but expressed concern that the D.C. Circuit’s existing case law on the issue is inconsistent, and the Court’s holding that competitors are outside the zone of interests may be inconsistent with governing U.S. Supreme Court precedents.

Pursuant to the court’s decision, the MATS rule remains in effect; though, challengers may still petition for rehearing by the D.C. Circuit, or appeal to the U.S. Supreme Court.  For additional information, contact Andrew Holway.

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