By Valerie Volcovici
WASHINGTON (Reuters) - The U.S. environmental regulator argued in court on Tuesday that its rule limiting mercury and hazardous air pollutants is "appropriate and necessary," not an improper interpretation of the federal Clean Air Act as industry groups and some states contend.
The U.S. Court of Appeals for the District of Columbia Circuit, the second most powerful court in the country behind the Supreme Court, heard two cases challenging the Environmental Protection Agency's first rules to crack down on mercury from the country's fleet of electric generating units.
The EPA's Mercury and Air Toxics Standard (MATS) applies to 1,400 of the country's largest power plants and would come into force in 2015, or in some cases, 2016.
The MATS rule was finalized in December 2011 but has been subject to several petitions for reconsideration from groups ranging from pollution control equipment vendors to power plant developers. The EPA has said that MATS could prevent up to 11,000 premature deaths, and generate $90 billion in health benefits, each year.
The three-judge panel asked a number of detailed questions to the dozen or so lawyers representing the EPA, green groups, the energy industry and states. The judges appeared skeptical of industry's argument that the agency did not take the proper steps to determine that it was "appropriate and necessary" to regulate those pollutants.
Neil Gordon, Assistant Attorney General for the state of Michigan, which opposes MATS, said the EPA's interpretation of the word "appropriate" was unlawful since the agency did not weigh regulatory costs in its decision to regulate the pollutants.
But Chief Judge Merrick Garland, a Democratic appointee, questioned Gordon's argument, saying, "nowhere does Congress require (the EPA) to evaluate cost" in its determination for the need to curb mercury and other toxic substances to protect public health.
Arguments at the hearing, held even though the court was closed for a snow day in Washington DC, lasted nearly four hours. That was longer than planned and longer than arguments in similar regulatory cases, observers said.
"The panel was well versed in the case and thoroughly read the briefing. The questions were really probing around the salient issues," said John Suttles, a lawyer for the Southern Environmental Law Center who represented the American Lung Association as an environmental intervener in the case.
He said the EPA made a strong case that it was within its rights in regulating the pollutants and that he "didn't really see an indication that court disagreed with EPA."
But Eric Groten, an industry lawyer specializing in the Clean Air Act for Vinson & Elkins, said he would be surprised if the MATS was affirmed in its entirety.
"There were so many issues argued that it increases the chance the EPA got something wrong," he said.
Groten noted that some judges questioned whether the EPA "artificially skewed the data" used to set mercury limits by basing them on the best performing power plants rather than a wider sample.
The judges, which also included Democratic appointee Judith Rogers and Republican appointee Brett Kavanaugh, are expected to take a few months to deliberate and could reach a decision by February or March.
A conclusion to the case will end years of "pingponging" between the EPA and the DC Circuit court.
"If the EPA prevails in the MATS case, that moves this set of standards forward and brings finality, stability and predictability to the reduction of mercury and other air toxics for coal plants," said Howard Learner, an attorney and executive director of the Environmental Law and Policy Center.
Coal industry groups said they hope that the DC Circuit and the Supreme Court, which heard another air pollution case Tuesday, strike down both laws, which they claim hurts jobs and the economy.
"EPA's overreaching and overzealous rulemaking is crippling the nation's coal-fueled electric sector and is a threat to our nation's economy," said Laura Sheehan, a spokeswoman for the American Coalition for Clean Coal Electricity.
(Reporting by Valerie Volcovici, editing by Ros Krasny and David Gregorio)