Supreme Court Revives Air Pollution Rule Affecting MN

Midwestern power companies had blocked a regulation that would reportedly cost them hundreds of millions of dollars a year—but the U.S. Supreme Court has now sided with regulators, reviving the rule.

The U.S. Supreme Court on Tuesday revived a regulation—which has been contested by Xcel Energy, Inc., and other power companies—that impacts Midwestern and Southern states whose polluted air flows into neighboring states.

The case stems from efforts by the Environmental Protection Agency (EPA) to curtail the issue of air pollution from upwind states causing harm outside their borders. The agency in 2011 introduced its Cross-State Air Pollution Rule, often called the “good neighbor” provision, which essentially requires power plants in upwind states to reduce emissions that drift to the east and north. The regulation, unveiled under the Obama administration, was reportedly drafted after a federal court threw out a different Bush-era rule.

After a group of state and local governments joined forces with industry and labor groups, a lower court invalidated the latest rule, determining that the EPA had acted outside the scope of its authority. The opponents of the rule had reportedly argued that they deserved the opportunity to determine how much they contributed to neighboring states' pollution prior to the EPA telling them how to alleviate the issue.

But the Supreme Court’s six-to-two ruling, issued Tuesday and outlined in a 32-page decision, determined that regulators acted within their powers when introducing the good-neighbor rule.

“EPA’s cost-effective allocation of emission reductions among upwind states is a permissible, workable, and equitable interpretation of the Good Neighbor Provision,” the ruling states.

The Wall Street Journal published a map of the states covered by the cross-state pollution rule, which notes that Minnesota is subject to controls over “fine particles.” The regulation could affect roughly 1,000 power plants in the eastern half of the United States that may need to adopt new pollution controls or cut back operations, the newspaper reported.

Minneapolis-based Xcel, which operates a couple of coal-fired power plants in Minnesota, is among those who opposed the EPA’s rule.

Frank Prager, Xcel’s vice president of policy and strategy, told Twin Cities Business in an emailed statement that his company is still reviewing the court’s ruling and “evaluating our options.” He said that, if Xcel is ultimately required to comply with the Cross-State Air Pollution Rule, the cost of compliance will be less dramatic than the company had estimated in 2011, based on the rule taking effect in 2012.

“One of our concerns is the rule provided little time for compliance and would have forced huge compliance and emission control costs on our customers in our Texas service territory,” Prager said. “Since the rule was finalized, we have taken steps that have reduced our emissions. We are continuing to evaluate our response to the ruling and will watch developments at the court and EPA carefully. In the meantime, we believe our environmental leadership strategy will result in a better environment for our communities at lower cost to our customers.”

The EPA has argued that its provision will cut down on hundreds of thousands of tons of smokestack emissions that threaten the health of residents in downwind states, pointing out that those states are home to 240 million Americans and suggesting the move would save hundreds of billions of dollars in health care costs.

The Associated Press, citing EPA estimates, said the new rule may cost power plant operators $800 million in 2014. Read the AP's in-depth coverage of the Supreme Court decision here.