A federal appeals court on Tuesday struck down an environmental rule that would have required coal-fired power plants in Kentucky and 27 other states to cut pollution that drifts downwind and contributes to air-quality problems elsewhere.
The 2-1 decision from the appeals panel in Washington, D.C. overturned what was known as the cross-state air pollution rule.
When the U.S. Environmental Protection Agency announced the rule last year, utility companies said their costs to comply would drive up electricity rates in Kentucky and other states.
Environmentalists embraced the standard, and the EPA estimated cleaning up the air would prevent 13,000 to 34,000 premature deaths annually; 15,000 non-fatal heart attacks; hundreds of thousands of asthma attacks; and 1.8 million lost school and work days.
The agency said the health savings from the rule would far outweigh the cost to industry to comply. The appeals panel, however, said the rule exceeded EPA's authority.
The court faulted the agency for imposing "massive emissions reduction requirements" on states without regard to limits imposed by law.
The rule was scheduled to go into effect in January, but several states, large power companies and others sued to stop it.
Two Republican appointees to the appeals court ruled to strike down the regulation, while a Democratic appointee said the majority erred.
Judge Brett Kavanaugh, in a decision joined by Judge Thomas Griffith, said the decision should not be interpreted as a comment on the merits of the rule.
The court said the EPA was authorized to set rules requiring states to bear their fair share of "the mess in downwind states," the New York Times reported.
But the EPA improperly required states "to reduce their emissions by more than their own significant contribution" to a downwind state's inability to meet air-quality standards, according to the opinion.
The EPA's rule also violated the federal Clean Air Act because it failed to let the states submit their own plans to comply and imposed a federal plan instead, the court said.
In a dissent, Judge Judith Rogers said the court had disregarded limits Congress placed on its jurisdiction, as well as "the plain text of the Clean Air Act" and court precedent.
The utility industry applauded the ruling.
"When the EPA takes liberties with its legal authority, the result is higher prices for consumers, businesses, schools and hospitals," said Scott Segal, director of the Electric Reliability Coordinating Council, a coalition of utilities and energy companies.
Pat D. Hemlepp, spokesman for American Electric Power, said utilities have made significant cuts in emissions under an earlier, Bush-era standard that will remain in place.
Hemlepp said it's too soon to say how Tuesday's ruling will affect AEP's decision on what to do with its huge Big Sandy power plant in Lawrence County.
AEP, which has 173,000 Kentucky customers, once planned to spend nearly $1 billion to upgrade pollution controls at the plant so it could keep burning coal — much of it produced in Kentucky — but withdrew that plan.
The cross-state emissions rule was not the only regulation affecting decisions on whether to retire coal-fired plants or take other measures such as switching them to natural gas, Hemlepp said.
The East Kentucky Power Cooperative, which supplies electricity to member co-ops with a total of 520,000 customers, joined the challenge to the cross-state pollution rule.
One reason was that because of how the rule allocated emissions allowances, the co-op's newest generating plant would have been unfairly penalized, said spokesman Nick Comer.
Environmental groups bemoaned Tuesday's decision and called on the EPA to appeal.
The Clean Air Task Force said that the ruling "will mean that American lives will continue to be needlessly lost."
Mary Anne Hitt, director of the Sierra Club's Beyond Coal Campaign, said the cross-state emissions rule was needed to help clean up the nation's air. An EPA spokeswoman said the agency was reviewing the decision and will figure out what steps to take.
The rule scuttled Tuesday was aimed at cutting emissions of sulfur dioxide and nitrogen oxide that come from power plants, refineries and industries in 28 states, but can be carried long distances to other states.