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U.S. appeals court rejects states' challenge over climate rules

By Lawrence Hurley

WASHINGTON (Reuters) - A federal appeals court on Friday rejected a legal challenge by Texas and Wyoming to the U.S. Environmental Protection Agency's efforts to curb greenhouse gas emissions.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit, in a 2-1 vote, said the states and various industry groups did not have standing to sue because they could not show that they had suffered an injury or that a ruling throwing out the EPA plan would benefit them.

The decision comes after the same court upheld the EPA's first wave of greenhouse gas regulations in 2012, and is another win for the EPA, which has a strong track record in the courts in challenges to its rules, particularly those targeting greenhouse gas emissions.

"The states and industry groups trying to block EPA from curbing carbon pollution under the Clean Air Act are on a long losing streak," said David Doniger, climate policy director for the Natural Resources Defense Council.

Friday's decision concerned a challenge to the EPA's efforts to make states include carbon dioxide and other greenhouse gases when they issue permits to industrial facilities setting limits on various types of pollution they emit.

Under the Clean Air Act, states have a cooperative relationship with the EPA in regulating air pollution.

Texas and Wyoming objected in part to the tight deadlines the EPA imposed on them for coming up with new regulations to include greenhouse gases. The agency said in December 2010 that it would have to intervene, effectively taking over the issuing of greenhouse gas permits in the affected states, because the states had failed to act.

Texas in particular regularly fights the EPA over regulatory actions. Greg Abbott, the Republican attorney general now running for governor, has been an outspoken critic of the Obama administration and the EPA.

In Friday's decision, Judge Judith Rogers said the states had failed to show how voiding the rules in question would "redress their purported injuries."

Without the states updating their permitting programs, "construction of a major emitting facility could not proceed," Rogers said, adding that the Clean Air Act is clear that states have to issue permits "for each pollutant subject to regulation under the act."

STATES COULD DRAG HEELS

The Texas Commission on Environmental Quality called the ruling "disappointing" and said it will consider future action.

"The EPA has effectively re-written the Clean Air Act to impose its new standards, imposed severely restrictive timelines on the states to implement its new requirements, and then twisted the Act to immediately impose its agenda on Texas," TCEQ Chairman Bryan Shaw said in an emailed statement.

In a landmark 2007 ruling, the Supreme Court said carbon dioxide was a pollutant that could be regulated under the Clean Air Act.

Judge Brett Kavanaugh wrote a dissenting opinion to the latest case, saying states should have been able to use their old regulatory schemes, which do not take into account greenhouse gases, until they had time to update them.

In other notable rulings in recent years, the Supreme Court has upheld the EPA's authority to use the Clean Air Act to regulate greenhouse gas emissions in two high-profile cases, while the D.C. Circuit has turned away at least four challenges.

Frank O'Donnell, president of the non-profit group Clean Air Watch, said Friday's ruling strengthens the hand of the EPA as it starts to implement President Barack Obama's climate action plan. Obama in June directed the agency to write rules to curb carbon emissions from the country's fleet of existing power plants.

But O'Donnell said Texas and other states opposed to federal environmental regulations are likely to drag their heels when forced to comply with EPA timelines.

"I predict they will be late filing their plans, due in 2016 under the scenario the president set forth, and will dare the federal government to intervene," O'Donnell said.

Texas has sued the EPA many times, most recently in a bid to challenge a practice in which environmental groups sue the agency to force it to issue or speed up regulations.

(Reporting by Lawrence Hurley; Additional reporting by Valerie Volcovici; Editing by Ros Krasny, Vicki Allen, Bill Trott and Eric Beech)

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