On August 21, 2012, the D.C. Circuit Court overturned the E.P.A.’s proposed Cross-State Air Pollution Rule. The ruling could impact many distressed power plants, particularly coal-fired plants, by reducing environmental burdens (and the CAPEX required to address those burdens).

Today, in a 2-1 decision, the U.S. Court of Appeals for the D.C. Circuit issued its decision vacating the Environmental Protection Agency’s (EPA) Cross-State Air Pollution Rule (CSAPR), which requires significant reductions in emissions from power plants in certain states that contributed to “downwind” ozone or fine particle pollution in other states. For more information on CSAPR, please see our previous Clients and Friends Memo available here.

Judge Kavanaugh wrote the majority opinion, joined by Judge Griffith (both appointed by President George W. Bush) ruling that the EPA, in promulgating CSAPR, exceeded its statutory authority under the Clean Air Act by: (1) requiring upwind states to reduce their emissions by more than their own significant contributions to a downwind state’s nonattainment; and (2) not giving states the opportunity to initially implement a system for reductions for sources within their boundaries before imposing an EPA-designed Federal Implementation Plan. The majority explicitly rules that EPA must continue to administer CAIR pending EPA’s issuance of a new replacement rule in conformance with the court’s decision.

Please see full alert below for more information.