US court reinstates EPA power plant pollution rule

By Deborah Zabarenko, Environment Correspondent

WASHINGTON, Dec 23 (Reuters) - A U.S. appeals court on Tuesday reinstated a Bush administration rule to reduce air pollution from power plants and help states downwind from the facilities meet federal clean air standards.

A top broker in emissions allowances said trading in some pollutants soared on the news. One environmental advocate called the ruling a "holiday gift to breathers."

Tuesday's ruling reversed a decision the same court, the U.S. Court of Appeals for the District of Columbia, made in July to reject the so-called Clean Air Interstate Rule, known as CAIR.

The court found on July 11 that the U.S. Environmental Protection Agency went beyond its authority to create a trading scheme among utilities to cut emissions of sulfur dioxide and nitrogen oxides at power plants in the East and Midwest.

But the current ruling vacates that earlier decision and leaves the interstate rule in place while the Environmental Protection Agency fixes flaws in the plan.

The court said it was persuaded by arguments by the EPA and others, including environmental advocates, that "allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR."

The earlier ruling effectively vacated the entire CAIR program, which regulates interstate emissions that contribute to acid rain and smog.

The original decision drew sharp criticism from the EPA, environmental groups and members of Congress who represent states that suffer from power plant pollution blown in from other states.