HOUSTON (Reuters) - Efforts by U.S. regulators to cut air pollution from coal-fired power plants faced a setback on Friday when a federal appeals court issued a last-minute order delaying their January 1 implementation.
The U.S. District Court of Appeals granted a request to stay the Environmental Protection Agency's Cross-State Air Pollution Rule (CSAPR) pending further court review.
The EPA finalized the rule in July, setting much stricter limits on sulfur dioxide (SO2) and nitrogen oxide emissions from power plants in 27 states to protect the health of residents in states downwind from the emissions.
"The underlying rule was the subject of hasty process, poor technical support, unequal application, and substantial threat to jobs, power bills and reliability," said Scott Segal, director of the Electric Reliability Coordinating Council.
Power generators said the January 1 implementation date was too soon to allow the design and installation of pollution control equipment to meet the rule, forcing a number of units to shut or to run only part of the time.
"Stays are granted when there is a strong chance of success on the merits and when parties can be injured without preliminary relief," Segal said.
The Cross-State rule is among several EPA initiatives which have divided the power industry between companies, such as Exelon and NextEra that produce power from less polluting sources like nuclear and natural gas, and others, like American Electric Power Co and Southern Co that rely on coal to generate electricity.
The group responsible for keeping the U.S. power grid reliable has warned that the cumulative impact of the EPA's rules could create power problems in Texas and New England.
Proponents of stricter rules say the industry can adapt and maintain that the costs of implementing the rules will be offset by savings from reduced healthcare expenses.
"The pollution reductions at stake are some of the single most important clean air protections for children, families and communities across the eastern half of the United States," said Vickie Patton, general counsel for Environmental Defense Fund.
The EPA estimated that the Cross State rule will save up to 34,000 lives, prevent 15,000 heart attacks and prevent 400,000 asthma attacks each year, providing $120 billion to $280 billion in annual health benefits for the nation.
Texas challenged the EPA rule because the state was included in the final version without having an opportunity to provide input on its impact in Texas. State regulators who met later with EPA officials said the agency used faulty assumptions about the state's power grid.
The state's largest power producer, Dallas-based Luminant, said the court stay "recognizes the irreparable harm it would cause to our company and others," according to a statement.
Luminant had planned to suspend operations at two coal-fired units in North Texas January 1.
Now, Luminant plans to continue operating the two Monticello units while "closely evaluating business and operational decisions given that this stay does not invalidate the rule, but delays a decision on its implementation until a final court ruling is issued," the company said in a release.
Other states challenging the Cross State rule were Louisiana, Kansas, Nebraska, Alabama, Florida, Oklahoma, South Carolina, Virginia, Georgia, Indiana, Michigan, Mississippi, Ohio and Wisconsin.
(Reporting by Eileen O'Grady in Houston; additional reporting by Timothy Gardner in Washington; Editing by David Gregorio)