On December 10, 2013, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments in White Stallion Energy Center LLC v. EPA and Utility Air Regulatory Group v. EPA, involving challenges to the Mercury and Air Toxics Standards (MATS) and the new Utility New Source Performance Standards (NSPS), respectively. Both cases will be decided by Judges Garland, Rogers, and Kavanaugh. The general consensus of observers following oral argument is that the court is unlikely to vacate either rule.

A significant portion of the oral arguments focused on whether EPA had properly determined that it is “appropriate and necessary” to regulate hazardous air pollutant emissions from power plants under Section 112 of the Clean Air Act. Industry challengers, lead by UARG, highlighted flaws in the limited studies EPA relied upon in making its appropriate and necessary finding. The state petitioners also argued that EPA’s failure to consider costs in making its appropriate and necessary determination was unreasonable because it had the effect of reading the term “appropriate” out of the statute. The petitioners further emphasized that although MATS imposes $9.6 billion in annual compliance costs, the anticipated benefits from the control of air toxics is only $5 million. EPA argued that the Clean Air Act does not require it to consider costs in making its appropriate and necessary determination and emphasized that MATS will result in significant health benefits from reduced PM2.5 emissions.

The petitioners also challenged the methodology EPA used to set the MACT floor, arguing that EPA had cherry-picked the best performing sources for each category of pollutants, rather than looking at the best performing 12 percent of sources overall. UARG argued that EPA’s so-called Frankenplant approach had resulted in a more stringent standard than is allowed under the Clean Air Act. EPA defended its methodologies, arguing that it appropriately identified the best performing sources and that its data was not skewed.

Although some states and industry groups argued  that EPA should have set separate standards for major sources and area sources, other industry groups supported EPA’s approach to establish one standard for both types of sources. In particular, owners of well- controlled area sources argued that setting separate standards would result in significantly more stringent standards for area sources. EPA defended its decision to establish a single set of standards, emphasizing that the Clean Air Act does not require it to set separate standards.

While environmental groups generally supported the MATS rule, they challenged the emissions averaging provision, arguing that it would allow individual sources to exceed the MATS emission limits. EPA emphasized that the emissions averaging provision would not result in additional emissions and provided important flexibility for regulated sources. Environmentalists also challenged provisions allowing sources to demonstrate compliance with the MATS emission limits through stack testing, rather than CEMS.

In the challenge to the Utility NSPS, UARG argued, among other things, that the requirement to use  both PM CEMS and Method 9 opacity testing to demonstrate compliance with PM emission limits was arbitrary and capricious.