Appeals Court Upholds Bulk of Obama Air Pollution Regulation

A U.S. appeals court on Tuesday mostly upheld a major federal environmental regulation requiring states to limit pollution that contributes to unhealthy air in neighboring states but faulted the government for setting too-stringent targets.

The U.S. Court of Appeals for the District of Columbia Circuit rejected several broad challenges to the regulation. But in a partial loss for the government, the court said the U.S. Environmental Protection Agency would have to reconsider the 2014 goals it set for various states for sulfur dioxide and nitrogen oxide emissions.

The court said the rule could remain intact while the government revises the emissions budgets.

Among the challengers were coal company Peabody Energy Corp and utility American Electric Power Co Inc.

The "good neighbor" provision of the Clean Air Act gives the federal government authority to require 28 upwind states, mainly in the eastern part of the country, to limit emissions from coal-fired power plants that pass into neighboring downwind states, causing them to be out of compliance with air pollution targets.

The appeals court ruled that the EPA would have to revise sulfur dioxide emissions budgets for four states and nitrogen oxide budgets for 11 because it had asked them to reduce their emissions by more than required. The affected states include New York, Texas and West Virginia.

Writing on behalf of the three-member panel, Judge Brett Kavanaugh said the government lacked the authority to curb emissions in the affected states as much as it had claimed.

The EPA has "required states to reduce pollutants beyond the point necessary," Kavanaugh wrote.

Although the rule remains intact, Kavanaugh said the court expected the government to "move promptly" and not "drag its feet" in coming up with new budgets.

Both industry groups and states that challenged the rule and environmental groups that defended it could claim a partial victory, with each side getting some of what it wanted.

The case was before the appeals court for a second time. In an August 2012 decision, the same court had thrown out the rule, prompting the Obama administration to seek Supreme Court review. In April 2014, the high court, on a 6-2 vote, upheld the regulation and sent the case back to the appeals court for further proceedings.

Writing for the majority, Justice Ruth Bader Ginsburg had called the EPA rule a cost-effective way to allocate responsibility for emission reductions among upwind states.