Washington (Platts)--11Jul2008

A US appeals court on Friday threw out an Environmental Protection Agency
rule that would have required 28 states and the District of Columbia to limit
downwind emissions of sulfur dioxide and nitrogen oxides.

The US Circuit Court of Appeals for the District of Columbia Circuit also
granted petitions of Entergy, Minnesota Power and other petitioners opposed to
the emissions trading structure offered under the EPA's two-year-old Clean Air
Interstate Rule. Further, the court vacated EPA's federal implementation plan
related to the CAIR regulation.

"The trading program is unlawful because it does not connect states'
emissions reductions" to existing programs designed to curb the same
pollutants, the court said in sending the rule back to EPA.

The court also said the rule's SO2 reductions tamper "unlawfully" with
the long-established emissions trading program created by the federal Acid
Rain Program to limit SO2 pollution from coal-fired power plants.

Further, CAIR does not jibe with EPA's eight-year-old NOx state
implementation plan rule, known as the NOx SIP Call, the court said, noting
that "CAIR's flaws are deep."

"No amount of tinkering with the rule or revising of the explanations
will transform CAIR, as written, into an acceptable rule," the court said.

The court said that the continuation of the NOx SIP Call "should
mitigate any disruption" that might result from its order vacating CAIR. In
addition, "downwind states retain their statutory right to petition for
immediate relief from unlawful interstate pollution" under the Clean Air Act,
the court said.
--Cathy Cash, cathy_cash@platts.com