June 9, 2015 / 3:00 PM / 5 years ago

UPDATE 2-U.S. court rejects early challenge to Obama power plant regulations

(Adds details of court decision, background)

By Lawrence Hurley and Valerie Volcovici

WASHINGTON, June 9 (Reuters) - A U.S. appeals court on Tuesday rejected an early challenge by industry groups and states to the Obama administration’s proposal to curb carbon dioxide emissions from existing power plants, saying the legal action was premature.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit said the various lawsuits objecting to the plan were filed too soon because the regulation has not yet been finalized.

West Virginia and more than a dozen other states and coal company Murray Energy Corp had urged the court to block the U.S. Environmental Protection Agency’s proposed Clean Power Plan. While the decision was in line with expectations, it is still a victory for the plan, which is central to President Barack Obama’s Climate Action Plan to fight climate change.

Writing on behalf of the court, Judge Brett Kavanaugh said that while the various challengers are “champing at the bit” to contest the regulation, they would have to wait until it is formally issued.

“They want us to do something that they candidly acknowledge we have never done before: review the legality of a proposed rule,” he wrote.

The challengers had argued, in part, that the Clean Air Act prohibits the federal government from regulating power plants as it has proposed because the facilities are already covered by a separate regulation.

They will get another chance to file lawsuits against the government when the regulation is issued. The EPA proposed the rule in June 2014 and is expected to issue a final version as soon as August.

Coal-reliant states and industry groups had justified their early legal action by saying they have already started incurring costs in preparation for the anticipated final rule and that they will not be able to be compensated fully for costs if they waited to challenge the rule.

In his decision, Kavanaugh said: “That reality has never been a justification for allowing courts to review proposed agency rules.”

The case attracted attention because Obama’s Harvard Law School mentor, Lawrence Tribe, represented co-petitioner Peabody Coal in the challenge.

Tuesday’s decision did not touch on the merits of the challenge.

The EPA said in a statement that its Clean Power Plan is legally sound - “a time-tested state-federal partnership established by Congress decades ago on the Clean Air Act.”

Some experts said the decision was a crucial first win for the administration in what will be the first of many challenges.

“A loss would was highly unlikely but it would have stopped the rule cold,” said Jody Freeman, a law professor at Harvard University.

Richard Revesz, director of the Institute for Policy Integrity, said the early lawsuit and comments received during the EPA’s public comment period will ensure the final rule is legally sound.

Industry groups said while they were disappointed by the decision, they had expected the outcome and are preparing for their next opportunity to block the EPA regulation. (Reporting by Lawrence Hurley and Valerie Volcovici; Editing by Doina Chiacu, Susan Heavey and Alan Crosby)

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