The CSAPR Decision and the Dirty Dealings of Utilities

Guest Blog | September 20, 2012 | Coal, Energy Policy


 UPDATE: On Friday, Oct. 5, 2012, the Environmental Protection Agency asked a federal court to rehear its case for the Cross-State Air Pollution Rule – click here to read more. 

To see previous Blog posts regarding interstate air pollution regulations and explaining the rule more specifically, click here.

CSAPR - our friendly ghost of interstate air regulation?

Ever feel like you can’t win for losing? That must be the same way the Environmental Protection Agency feels after having their newest effort to decrease interstate air pollution rejected by the courts, yet again. On August 21, 2012, EPA’s Cross State Air Pollution Rule (CSAPR, pronounced affectionately, although un-intuitively, as Casper – remember the ghost?) was found unlawful, further hindering the effort to reign in harmful emissions of sulfur dioxide (SO2) and nitrogen oxide (NOx) that travel across state lines.  A panel of the United States Court of Appeals for the District of Columbia found that the CSAPR cleanup apportionment scheme exceeded EPA’s authority to regulate interstate air pollution. Click here to read the Court’s decision.  You may wonder “what’s the big deal?”  Well, as it turns out, the CSAPR ruling opens the door for more dirty air in the Southeast and more dirty tricks from electric utilities.

Our Southeast states make up the bulk of the “downwind” side of the upwind/downwind emission balancing game inherent in the CSAPR dealings.  This means that areas, such as East Tennessee, already feel the effects of interstate air pollution and suffer from significant deterioration of air quality as a result of emissions from upwind states.  Additionally, the majority of coal fired power plants in the nation are located in the Southeast.  So, if and when an interstate air pollution regulation is promulgated, utilities operating in the Southeast will need to invest significant resources into either updating older, dirtier power plants or building new, cleaner energy generation sources as they retire coal plants.  In the wake of another regulatory setback, new, proposed coal plants, like Plant Washington in Georgia, will be unable to adequately plan designs of their facilities to meet, as yet unknown, emissions standards.

Although other air pollution regulations are still in place and functioning, like the National Ambient Air Quality Standards and the Regional Haze Program, without a rule like CSAPR, we are left with toothless regulations that do not force power plants to reduce harmful air emissions that contribute to air quality degradation in their own states and beyond.  One of the main concerns that CSAPR was meant to address was the fact that prior emissions trading schemes applied to states as a whole and not to particular sources.  This type of scheme did nothing to address so-called pollution hotspots, created by the fact that dirty emissions sources could buy allowances from cleaner sources in other parts of the state while doing nothing to clean up their own plants.  Like some kind of perverse pollution yard sale, dirty plants were being rewarded for finding bargain emissions from those plants that decided to clean up house.

To put this whole debacle into context, EPA’s initial effort to regulate air emissions from upstate sources that significantly contribute to pollution in downwind states (the 2005 Clean Air Interstate Rule (CAIR)) was also struck down in the courts.  (For those interested in the Court’s reasoning behind invalidating CAIR, you can find the opinion here.) While EPA fashioned their new rule, the remedy provided by CAIR, known as the NOx SIP Call trading program, was left in place.  This trading program sets emissions allowances for particular sources, e.g. power plants, and allows plants to either reduce their emissions to meet these allowances or purchase surplus allowances from plants that were able to significantly reduce emissions.  In invalidating CAIR, the Court instructed EPA to go back to the drawing board and craft an interstate air pollution rule that would conform to the Clean Air Act as well as applicable court precedent.  So, like a good student, EPA went back to the drawing board and came up with CSAPR and released it for public comment.

Normally speaking, and legally speaking, the public comment period is the time for interested and affected parties (ie. utilities and groups like ours) to voice any and all concerns with the proposed regulation.  The benefit of following this procedure lies in the fact that affected parties have the ability to help shape regulations by voicing legitimate concerns to an agency who can then tweak their regulation to address said concerns – thus avoiding lengthy, complicated court battles when the rule is promulgated.  In the case of CSAPR, however, this streamlined procedure was abandoned for the administrative mess we have now.

It is a long accepted tenet of rule-making procedure that subsequent judicial review is only available for those issues raised with “reasonable specificity” during the public comment period.  So, the fact that petitioners (like Southern Company, the Mississippi Public Service Commission and the State of Georgia – to name a few from our own backyard), didn’t raise objections to certain facets of CSAPR during the public comment period, means then EPA can move forward, adjust the regulations in response to comments it did receive, and finalize their long overdue rule to address interstate air pollution, right?  Wrong.  In its ruling, the U.S. Court of Appeals found that EPA had “more than ‘adequate notification of the general substance’” of the utilities’ challenges merely because “one of the central questions in the long history of EPA’s efforts to implement the good neighbor provision has been whether EPA has complied with the basic statutory limits on its authority.”  Fundamentally, the Court is telling EPA that, it really doesn’t matter whether or not industry followed administrative procedure, you should have known this type of challenge was coming because…. well just ’cause!

This shocking anomaly of judicial review not only has the dissenting judge in the CSAPR opinion upset and dumbfounded, it also begs the question “why didn’t the utilities bring these challenges up in the public comment period?” We may never get that answer.  What is clear, however, is that the utilities failed to play an effective role in the constructive, efficient public notice and comment administrative process and opted, instead, to play dirty pool in the legal system.  Apparently, the majority of the Court had no qualms with the utilities ambush tactics, although the dissenting opinion called the majority’s conclusions “unsupported by a factual record, and a trampling on this court’s precedent.”

Although the Court agreed with industry challengers in its opinion, the uncertainty left in the wake of yet another EPA interstate rule’s defeat should not feel like much of a victory for industry.  It is perplexing that industry constantly complains of the uncertainty caused by environmental regulations but consistently participates in the type of tactics that create long, drawn out legal battles.  It seems that the maelstrom of inaction and confusion surrounding CSAPR is evidence of the dirty games the electrical industry plays to ensure their plants will stay dirty rather than working proactively to craft rules that give them the certainty they supposedly want so badly.

So what is, perhaps, the ultimate lesson in regards to regulation of interstate air pollution?

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