A federal appeals court Tuesday rejected the Environmental Protection Agency's latest effort to limit soot- and smog-forming air pollution that blows across state lines, providing a short-term lifeline for aging coal-fired power plants and removing a significant accomplishment from the Obama administration's environmental resume.
In a 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit said the rule targeting emissions from coal-fired power plants "exceeds the agency's statutory authority" by requiring some states to clean up more than their fair share of pollution.
The ruling, which was lauded by coal-plant owners and criticized by environmental groups, offers new fodder for the presidential candidates, who have frequently clashed over energy policy. Presumptive Republican nominee Mitt Romney has suggested President Barack Obama doesn't "believe in coal" and has also said he would review EPA regulations. Mr. Obama has said he is open to clean coal and has criticized Mr. Romney for not supporting government incentives to spur alternative-energy sources.
Tuesday's decision vacates a rule that would have required plants to cut emissions of nitrogen oxide and sulfur dioxide, both associated with higher rates of heart attacks and respiratory illnesses.
The EPA regulation, known as the Cross-State Air Pollution Rule, covered about 1,000 power plants in more than two dozen states in the eastern half of the U.S. To comply, companies with older coal-fired plants would have had to run them less often, shut them down or pay for credits to offset the pollution. The rule would have required emissions cuts as soon as this year.
The EPA said it was reviewing the decision and "remains committed to working with states and the power sector to address pollution transport issues as required by the Clean Air Act."
The 1970 Clean Air Act leaves air-pollution enforcement to states, but states on the East Coast have said for years that pollution from upwind neighbors causes them to exceed federal air-quality standards.
In 2005, the Bush administration sought to address that problem by imposing a trading system under which power plants in states with excess pollution buy credits from cleaner plants. The same federal appeals court found problems with that rule, but it left it in place while the EPA made revisions. Tuesday's decision again leaves the Bush rule in effect but sends the EPA back to the drawing board on how to share the cleanup work among states.
Even after Tuesday's ruling, many coal-fired plants still may close in the next few years because of competition from low-price natural gas and a separate EPA rule that takes effect in 2015 limiting emissions of mercury and other toxic substances.
Luminant, a unit of Energy Future Holdings Corp. that is the largest power generator in Texas, said it would continue running two coal-fired generating units at its Monticello Power Plant, east of Dallas, that it had previously planned to idle as soon as the rule took effect.