The Bush administration has sought to revise NSR several times since assuming power in 2001, each time with the backing of the electric utility sector. And each time, EPA has been sued by environmental groups and left-leaning states such as California and New York.
Some of EPA's revisions have survived legal challenges, while others have not. One of the biggest defeats for the administration and the power sector came in March 2006, when a federal appeals court in Washington struck down an NSR rule that EPA issued in October 2003. The rule would have exempted power plants from NSR if the cost of their modifications -- to old coal boilers, for example -- did not exceed 20% of the "replacement value" of brand-new units. EPA argued that such modifications were "routine maintenance" activities that should not trigger NSR. But a host of states, led by New York, sued EPA on the grounds that the rule would allow power plants to radically increase their emissions, which the states say would cause thousands of additional pollution-related illnesses and premature deaths annually.
EPA's rule never took effect, as it was stayed on Christmas Eve 2003 by the U.S. Circuit Court of Appeals in Washington. The court ruled then that the states and the environmental groups that intervened on their behalf would likely prevail on the merits of their lawsuit, and that EPA's rule could cause "irreparable harm" if it went into effect.
Last March, the US Court of Appeals for the District of Columbia Circuit struck down the rule for good, calling it "contrary to the plain language" of the federal Clean Air Act. The court, employing a colorful metaphor, said EPA's rule would only make sense in a "Humpty Dumpty world" in which EPA could disregard key parts of the Clean Air Act.
The Bush administration asked the Supreme Court to review the ruling, but the high court refused.
More cases being settled
Meanwhile, EPA is continuing to strike settlement agreements with utilities in some of the NSR cases that it inherited from the Clinton administration. Last April, for example, Alabama Power agreed to spend more than $200 million on pollution-control equipment and other measures in order to extricate itself from an NSR suit brought in the late 1990s. Also last spring, two North Dakota-based electric cooperatives also agreed to add pollution controls to some plants in order to settle an NSR case.
And just last month, East Kentucky Power Cooperative agreed to spend at least $650 million on new pollution controls and to pay $750,000 civil penalty to extricate itself from an NSR case. Notably, EKPC maintained that it did not violate NSR, and that it only agreed to settle the case to avoid the costs and uncertainties of litigation.
"We have worked diligently to bring about a settlement that allows our cooperative to continue to meet our members' future power needs while bolstering our commitment to the environment," said Bob Marshall, EKPC's president and CEO. The settlement "also removes the risks and high costs of this litigation so our cooperative can focus on serving its members," Marshall added.
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