A federal court on Tuesday ruled that the Environmental Protection Agency (EPA) exceeded its authority when it established a screening tool that could allow some new power plants to be exempted from certain requirements under the EPA’s October 2010-finalized rule aimed at curbing emissions of particulate matter less than 2.5 micrometers in diameter.

The EPA’s Prevention of Significant Deterioration (PSD) for Particulate Matter Less than 2.5 Micrometers rule was finalized in October 2010. It essentially ordains the states and the EPA to determine if emissions of the regulated pollutant from a new source (which must apply for a permit to emit that regulated pollutant) will cause "significant" deterioration in air quality. The October 2010 final rule, however, also established several criteria for making PSD permitting determinations for fine particle pollution. These include those that address air quality modeling and monitoring provisions, such as increments, significant impact levels (SILs), and a significant monitoring concentration (SMC).

SILs, specifically, are a screening tool used to determine whether a proposed source’s emissions will have a "significant" impact on air quality in the area. If an individual facility projects an increase in air quality impacts less than the corresponding SIL, the rule exempts permit applicants from being required to perform a more comprehensive, cumulative modeling analysis. Another screening tool, the SMC, may be used to determine if a source must submit to the permitting authority one year of preconstruction air quality monitoring data before building or modifying a facility. The rule established that if a proposed source’s predicted impact was less than the SMC, the reviewing authority could exempt the applicant from the preconstruction monitoring requirement.

But the EPA’s fine particulate rule was legally challenged in federal court by environmental group The Sierra Club, which argued that the EPA lacked authority to establish SILs and asked that court vacate and remand the EPA’s SILs provisions. The EPA was backed by the Utility Air Regulatory Group (UARG), a coalition of power companies and generator trade associations. After the Sierra Club filed its petition, the EPA conceded that it needs to revise some of the SIL provisions, but it asserted that portions of its rule establishing the SMC were valid.

On Tuesday, in an opinion filed for the U.S. Court of Appeals for the D.C. Circuit by Judge David Sentelle, the court declined to decide whether the EPA had the authority to promulgate SILs because it would require it to "answer a question not prudentially ripe for determination." It let stand rules codifying SILs, but it remanded other portions of the EPA’s rule addressing SILs because the court said "they allow permitting authorities to automatically exempt sources with projected impacts below the SILs from having to make the demonstration required under 42 U.S.C. § 7475(a)(3), even in situations where the demonstration may require a more comprehensive air quality analysis."

The court also granted the Sierra Club’s petition challenging parts of the PM 2.5 SMC and vacated them because it deemed they exceeded the EPA’s statutory authority.

Environmental law group EarthJustice, which represented the Sierra Club in the case, hailed the court’s decision as a victory that closed what it called the an "EPA-created loophole" that allowed new plants to be built "without even checking whether they would cause or contribute to unhealthy levels of soot pollution."

"According to the EPA’s own estimates, soot pollution leads to tens of thousands of deaths and hospitalizations every year. It’s especially dangerous to kids, seniors, and people with heart and lung problems," said David Baron, the EarthJustice attorney who argued the case. "We’re pleased the court has scrapped EPA’s attempt to weaken vital protections against this deadly pollutant."

The case is Sierra Club v. EPA, No. 10-1413.

Sources: POWERnews, D.C. Circuit, EPA, EarthJustice

—Sonal Patel, Senior Writer (@POWERmagazine)