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Utilities, EPA Both Winners in Supreme Court GHG Ruling

The Supreme Court has ruled unanimously against the states in AEP v. Connecticut, ruling that they can’t invoke federal law to force utilities to cut greenhouse-gas emissions, Bloomberg reports.

The six states –  California, Connecticut, Iowa, New York, Rhode Island, and Vermont – along with New York City and three environmental groups, had sued five major utilities, arguing that the carbon dioxide emitted by power plants is a public nuisance.

American Electric Power Co., Cinergy Corp., Southern Co., Xcel Energy and the Tennessee Valley Authority (TVA), an independent federal corporation with millions of electricity customers, were all named in the 2004 suit, which invoked both state and federal law. The Supreme Court case focused on the federal law claim.

The justices said yesterday that the Environmental Protection Agency was in a better position than federal judges to assess the costs and benefits of reducing greenhouse gases. “It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse-gas emissions,” Justice Ruth Bader Ginsburg said for the court.

In the ruling, the justices confirmed the scepticism that they had aired in a hearing on the case back in April.

The ruling is being seen by some as a boost to the EPA at a time when its regulations have come under attack in Congress.

“The most important thing about this decision is that it buttresses the foundation for EPA to do its job,” Environmental Defense Fund President Fred Krupp said. “The Supreme Court strongly underscored EPA’s responsibility under the law to address climate pollution that threatens the health and well-being of our nation.”

The agency has ordered states to begin issuing GHG permits to big emitters such as oil refineries, coal-burning power plants, cement factories and glass makers. Those rules took effect January 2, although the EPA decided to defer application of the GHG rules to biomass facilities for three years, and states have struggled with the federal government over the permitting process.

And so far, the rules affect only new and modified plants, not the existing ones targeted by the states in AEP v. Connecticut, Bloomberg said.

The EPA plans to propose GHG emissions limits this year, and finalize the rules next year. This second round of rule-making will affect existing plants and may prove more costly for industry, according to a Bloomberg Government study released this week.

In the meantime, large emitters and fuel suppliers must report their 2010 GHG data to the EPA by September 30, 2011.

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