Federal Court Ruling Breathes New Life Into Coal

Cross-State Air Pollution Rule Referred Back to EPA

Ken Silverstein | Aug 22, 2012

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After a series of legislative and legal defeats, coal groups just scored a major victory. A federal appeals court is now telling the U.S. Environmental Protection to rewrite its “Cross-State Air Pollution Rule.” That law is intended to limit the levels of harmful emissions as they travel across state lines.

The U.S. Court of Appeals for the District of Columbia ruled this week two-to-one in favor of several states and some large utilities that sued to have the requirement stopped. The two judges said essentially that EPA has overstepped its authority by requiring power companies to reduce their sulfur dioxide and nitrogen oxide levels at greater rates than what the law had intended. EPA acted in such a manner so that downwind territories would not run afoul of clean air laws.

"More than a dozen states brought this case forward, and the American Coalition for Clean Coal Electricity commends them for the hard work and commitment they have shown in standing up for balanced environmental policies,” says Evan Tracey, a senior vice president with the trade group. “The Cross-State Air Pollution Rule would have led to higher energy prices, job losses and premature coal plant retirements.”

The group points to Texas-based Luminant, which says that the ruling allows it to keep generating 1,300 megawatts of electricity while also employing 500 workers.

The court decision is breathing new life into a coal sector that has had the wind knocked out of it. Unfriendly congressional votes regarding mercury pollution have occurred, along with adverse federal court rulings that are upholding EPA’s right to regulate carbon dioxide under the Clean Air Act.

The Cross-State Air Pollution Rule was enacted in July 2011 and it was to take effect in January 2012. Last December, the D.C. Court of Appeals suspended the regulation, all based on the lawsuit brought by the states and the utilities. If this law would have been allowed to stand, it would have affected 28 states and replaced one written in 2005 by the Bush administration -- one that the same court said in 2008 was insufficient. Now, EPA must go back to the drawing board.

“Congress did not authorize EPA to simply adopt limits on emissions as EPA deemed reasonable,” writes Judge Brett Kavanaugh. “We conclude that EPA has transgressed its authority.”

Legal Strategies

Environmental groups are saying that the two judges who ruled in favor of the utilities got it wrong. They are now trying to assess their legal strategies, with the Natural Resources Defense Council saying that they might ask for a re-hearing before the full bench comprising the D.C. appeals court, although those judges can reject their plea.

That option is preferable to waiting several more years for EPA to finish a rewrite, it says, pointing out that the one jurist who dissented has already made their case. There, Judge Judith Rogers wrote a lengthy opinion stating that the court is interfering with environmental regulators as they are attempting to uphold the statute. She says that the majority’s ruling “redesigns” federal-state relations. 

“This decision allows harmful power plant air pollution to continue to aggravate major health problems and foul up our air. This is a loss for all of us, but especially for those living downwind from major polluters,” adds John Walke, clean air director at the Natural Resources Defense Council.

According to EPA, the levels of sulfur dioxide and nitrogen oxide would have been cut in half under the Cross-State Air Pollution Rule. Collectively, the law would have cost utilities $800 million a year beginning in 2014 -- an expense that would have been outweighed by savings in the health field, it adds.

The Electric Reliability Coordinating Council, however, says that the majority opinion got it exactly right. That coalition, which works on clean air issues, goes on to say that EPA has taken liberties with the federal statutes that will result in higher electricity prices for all consumers. In doing so, it adds, the EPA is intruding on certain authorities granted to the states.

“EPA has not showed sufficient respect or deference to state programs,” says Scott Segal, director of the group. "The court’s “decision is a stern warning against EPA’s recent views.”

EPA’s critics have long made this argument -- that the regulatory agency under the Obama administration is too aggressive in its pursuits. The current decision will not affect existing laws or court rulings. But it will assuredly energize coal-based groups while potentially tempering future EPA actions.


EnergyBiz Insider has been awarded the Gold for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been named one of the Top Economics Journalists by Wall Street Economists.

Twitter: @Ken_Silverstein

energybizinsider@energycentral.com


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Comments

Problem with simply switching fuel in steam plants

The problem with converting coal-fired plants to gas fuel is that one wastes the "premium fuel" quality of gas.  One should not burn gas to make steam because gas can be used at much higher temperatures than those at which the steam cycle operates.  There are far more uses for natural gas than just making power as well--it is a chemical feedstock and is a much cleaner fuel for residential and business heating as well as a cleaner fuel for vehicles.

Coal-fired steam plants make good use of a less-than-premium fuel that basically cannot be feasibly burned in a gas turbine combined cycle plant directly.  Unfortunately, integrated coal gasification combined cycle is proving very expensive to build and somewhat difficult to operate.  There are some hot windbox repowering schemes and boiler feedwater heating schemes combining gas turbines and coal-fired boilers but a drawback is the schemes decrease the operational flexibility inherent in gas turbine power.

Coal Victory may be short lived

After this court’s decision EPA announced that they were reviewing it; EPA can appeal decision to the Supreme Court. Presidential election and congressional partisan composition will also play a role in stricter environmental regulation of coal-fired power plants.

 

In addition the relatively low cost of Natural Gas encourages fuel-switching – further reducing growth of coal as energy source. This trend should remain at least until end of year and into 2013.

 

Recognizing these short-term variables translates into a wait-and-see approach to coal usage and new coal fired power plants.

 

Richard W. Goodwin West Palm Beach FL