WASHINGTON In a victory for environmentalists
and a setback for big U.S. coal-burning utilities, a federal
court ruled on Friday that the Environmental Protection Agency
must fundamentally rework its mercury rules for utilities.
The U.S. Court of Appeals for the District of Columbia
ruled that the EPA violated the Clean Air Act in 2005 when it
exempted coal plants from the strictest emission controls for
mercury and other toxic substances like arsenic, lead and
The EPA's "Clean Air Mercury Rule" would have created a
"cap-and-trade" program to allow utilities to swap rights to
emit mercury to comply with overall limits that would reduce
nationwide emissions by 70 percent by 2018.
Some 14 states, including New York and California, sued the
EPA over the rules, along with environmental and public health
The court ruling means that big coal-burning utilities like
Atlanta-based Southern Co and American Electric Power of
Columbus, Ohio, will have to install expensive
mercury-reduction equipment at more of their power plants
rather than rely on a fleet-wide trading program.
The ruling adds to the U.S. backlash against building
coal-fired power plants, which are also a major source of
heat-trapping carbon dioxide emissions.
Wall Street banks including Citigroup Inc, JP Morgan Chase
& Co and Morgan Stanley this week issued standards that weigh
carbon dioxide and mercury emissions when determining whether
to lend money for new power plants.
"This adds to the momentum against building new coal-fired
power plants," said John Walke, attorney with the Natural
Resources Defense Council, which participated in the lawsuit.
"This immediately changes the landscape and adds to the
argument against new pulverized coal plants."
It could be years before the EPA can enact new rules on
mercury. In the meantime, regulating mercury emissions will
likely be left to states, which in many cases have set their
own strict limits on utilities.
The nation's 1,100 coal-burning units emit about 48 tons of
mercury each year, the largest unregulated U.S. source. The EPA
rule vacated by the court would have set the cap at 38 tons per
year by 2010 and 15 tons per year in 2018.
Mercury contaminates water and fish and has been linked to
neurological disorders in young children.
The court found that the EPA's justification for the
program "deploys the logic of the Queen of Hearts," and said
the agency must propose new rules for new and existing power
Environmental groups applauded the ruling.
"The EPA recklessly ignored the law and the science," said
Vickie Patton, an attorney for Environmental Defense. "Now,
each coal plant in America must clean up its own toxic mercury
The Edison Electric Institute, which lobbies on behalf of
most investor-owned utilities, called the court ruling a "major
setback," which will delay federal rule-making efforts for
Separate federal rules already require utilities to cut
mercury emissions, so "air quality will continue to improve" in
the meantime, said Dan Riedinger, a spokesman for the group.
Utilities had said the cap-and-trade system gives them
flexibility to reduce emissions without spurring a switch to
natural gas, which is cleaner but more expensive than coal.
(Reporting by Chris Baltimore, editing by Matthew Lewis)