US court rejects challenge to EPA NOx rule

US court rejects state, industry challenge to EPA NOx rule

Washington (Platts)--12Apr2004


The US Court of Appeals for the District of Columbia Circuit has rejected a
state and industry challenge to the Environmental Protection Agency's formula
for projecting generating capacity growth rates used to develop nitrogen oxide
emission limits for power plants in 22 states and the District of Columbia.
The states, joined by Alabama Power and the industry-led Utility Air
Regulatory Group, filed multiple challenges to EPA's capacity growth-rate
methodology, arguing, among other things, that EPA's calculations were too
conservative and failed to take into account higher growth forecasts compiled
by the North American Electric Reliability Council. More generous growth-rate
projections would allow the so-called "upwind" states--earlier found by EPA to
be responsible for contributing to high NOx levels in downwind states--to
increase their maximum NOx emissions. The appeals court in 2001 ordered EPA to
better explain it methodology for determining growth rates, saying that the
agency had failed to show that its model was a reasoned approach.

In a May 2002 remand response, the agency said it would retain its model for
projecting generation growth, but would provide a fuller explanation to
satisfy the court's concerns. Shortly after EPA made its announcement, West
Virginia and Illinois, joined by industry, asked the court to review the
response, saying EPA's projections were unsupportable and unreasonable,
despite the expanded explanation. The plaintiffs also argued that EPA had
failed to give parties an opportunity to comment on the remand response. While
the court agreed that EPA erred in not proving an opportunity to comment, it
found that the petitioners "have not shown a substantial likelihood that the
rule would have been significantly changed" had comments been permitted.
Further, the court ruled that because the petitioners failed to raise issues
over legitimacy of EPA's projection methodology, including its failure to
consider NERC estimates, when the agency was developing the modeling program
or in earlier court challenges, they could not now raise new issues.

This story was first published in Platts real-time news and market reporting
service Platts Electricity Alert (http://electricityalert.platts.com ).