Environmental Update

D.C. Circuit Court Issues Order Remanding MATS Rule to EPA Without Vacatur

By Lesly A.R. Davis

On December 15, 2015, the United States Court of Appeals for the District of Columbia Circuit issued an Order that will  leave in place the United States Environmental Protection Agency’s (EPA) Mercury and Air Toxics Standards final rule while the agency works to issue final findings as ordered by the United States Supreme  Court.  In  White Stallion Energy Center, LLC, et al. v.  United States Environmental Protection Agency, et al.,  No. 12-1100 (Dec. 15, 2015), the D.C. Circuit directed  that the proceedings be remanded to the EPA without vacatur of the MATS final rule.  The D.C. Circuit  also noted that EPA has represented that it is on track to issue a final finding by April 15, 2016.

The MATS rule has  a very lengthy and controversial history.  On February 16, 2012, the EPA issued national emission standards for hazardous air pollutants (NESHAP) for coal and oil-fired electric generating  units (EGUs),  known as the Mercury and Air Toxics Standards (MATS).   The MATS rule finalized standards to reduce emissions of toxic air pollutants including mercury, arsenic and heavy metals.   EPA proposed to regulate these emissions under Section 112 of the Clean Air Act (CAA).   Industry, states and environmental groups challenged many aspects of the EPA’s underlying appropriate and necessary findings as well as the final MATS rule in the D.C. Circuit litigation, White Stallion Energy Center, LLC, et al. v. United States Protection Agency, 748 F.3d 1222 (D.C. Cir. 2014).

Although the D.C. Circuit upheld the rule,  it was appealed to the U.S. Supreme Court.  In Michigan v. United States Environmental Protection Agency, 135 S. Ct. 2699 (2015), the high court  considered whether the EPA erred when it concluded that the appropriate and necessary finding under CAA Section 112 could be made without the consideration of costs.   On June 29, 2015, the U.S. Supreme Court ruled that EPA acted unreasonably when it determined that cost analysis was irrelevant to the appropriate and necessary finding supporting the  MATS rule.  The rule was returned to the D.C. Circuit Court to examine the costs issue.  Twenty-three  states and industry groups asked that the D.C. Circuit Court to vacate the rule while EPA conducts the mandated cost analysis. On the other hand, the EPA and other litigants requested that the MATS rule be remanded without vacatur.   Today’s  D.C. Circuit Court Order, while brief in analysis, finds that the rule will not be vacated while EPA conducts its cost analysis due in mid-April of 2016.

The D.C. Circuit Court’s  decision is viewed as a disappointment to challengers to the  MATS rule  which imposes massive compliance costs upon  industry totaling into the billions of dollars.  Others note that due to impending MATS rule deadlines and associated uncertainty, many coal fired EGUs have already been retired or  converted to natural gas.  These changes, however, do not forestall on-going recordkeeping, monitoring, equipment  and reporting costs associated with the MATS rule for remaining impacted EGUs.   Thus, the D.C. Circuit Court’s decision allowing a remand  of the MATS rule without vacatur is a critical development to impacted EGUs.   A copy of the D.C. Circuit’s December 15, 2015 Order may be found here.