High court calls EPA ozone rule implementation 'unlawful'

By Kate Thomas
OGJ Online

HOUSTON, Feb. 28�The US Supreme Court Tuesday handed manufacturers, including power plants, a defeat in upholding the Environmental Protection Agency's (EPA) authority to set clean air standards without regard to cost.

But the court also found EPA exceeded its authority in attempting to impose a new 8-hr ozone standard. In ordering EPA to reconsider how it sets ozone standards, the high court called the agency's existing "implementation policy unlawful." Industry experts said revamping the process and issuing new rules could take a number of years.

"Until EPA develops a valid implementation policy, the 8-hr standard is in limbo," said David Cindric, an environmental attorney with the Houston offices of Vinson & Elkins LLP.

At issue in the case were EPA's smog and soot standards. In 1997, the EPA adopted air standards that imposed new limits on soot and ozone, a major component of smog. The agency proposed tightening the smog standard to 0.08 ppm from 0.12 ppm and requiring states to regulate particulate matter down to 2.5 microns.

The proposals were challenged by industry groups, and in May 1999 a federal appeals court in Washington, DC, blocked the EPA from concurrent implementation of the more stringent 0.08 ppm standard, while the existing 0.12 ppm standard was not being met.

The appeals court ruled the EPA violated the Constitution by overreaching in writing the ozone and soot regulations. But Tuesday the high court overturned the appeals court finding that the agency usurped Congress's authority in interpreting the 1970 Clean Air Act.

Implementation of the 8-hr standard will be delayed, but "it's coming," Cindric warned. In the short-term the Supreme Court ruling will have no impact on industry, but, Cindric said, the electric power industry along with every other industry needs "to pay attention to how EPA rewrites implementation of the 8-hr standard."

He speculated the EPA could divide the country into categories, for example, in which the 8-hr standard is temporarily waived until a region complies with the 1-hr standard. Because power plants emit ozone precursors nitrogen oxide and volatile organic compounds, the electric power industry has been critical of the cost of complying with the 8-hr proposal.

Thomas Donohue, president and CEO of the US Chamber of Commerce, said, "EPA cannot enforce its new rules until the agency proves to the Court of Appeals that the EPA rules are reasonable rather than arbitrary and capricious�and in this case, three will be our lucky number," said.

Failing to understand the link between a strong economy and a clean environment will depress future economic growth and curtail opportunities for businesses and workers alike, according to the Chamber. "While the Supreme Court ruled they cannot compel the EPA to consider the link between regulatory cost and regulatory benefit, the Congress can," said Donohue.

"We will continue this fight in the new administration and with lawmakers, warning of the crushing blow these multibillion dollar rules will have on the economy, businesses and jobs�with no scientifically proven benefit to health. The government's own estimates for the ozone standard alone show that the total cost of compliance for business would rival the gross national product of Canada�$720 billion," Donohue said.

Industry dismayed
The National Association of Manufacturers expressed dismay in the court's opinion.

Michael Baroody, NAM's executive vice- president, said, "We are disappointed in the Court's decision not to find a constitutional problem where we thought one was clearly presented. We had hoped that the court would find that the EPA had usurped the power of Congress to make law when it substantially and arbitrarily lowered air quality standards.

"NAM is determined to work with the White House and Congress to rein in regulatory excess by the EPA and other agencies. The public deserves a legislative branch that does not enact overly broad statutes. It also deserves an executive branch that acts openly, with restraint and clarity, and that bases its regulatory decisions on sound science and cost-benefit analyses.

"Since the Court also rejected the argument that the EPA should consider costs when setting air quality standards, the NAM plans to work with lawmakers on potential legislation addressing costs and benefits as well as health and safety factors. The overall climate for rulemaking must be improved, and we must redouble our efforts to ensure that agencies do not regulate in the dark.

"Finally, since the court rejected the EPA's implementation schedule for ozone limits in so-called 'nonattainment areas,' sending the case back to the lower court for clarification, the NAM has reason to remain optimistic that the ozone and particulate matter rules will be voided. In addition, we expect the new administration to use an open process for resolving this issue, with the full involvement of all affected parties."

The American Trucking Associations, one of the lead plaintiffs, said, "The objective of these lawsuits was to work to obtain clear, understandable legal standards to promote clean air in a sensible fashion.

"The ruling that EPA exceeded its authority in attempting to impose a new ozone standard, coupled with the lower court's unchallenged decision that the beneficial health effects of ozone should have been considered, are significant developments toward this objective."

The group Environmental Defense praised the decision. Senior attorney Vickie Patton said, "When implemented, these standards will protect 125 million Americans from the serious health effects of smog and soot. Unfortunately, industry's legal attacks have delayed by several years fundamental steps to begin implementing these standards."