By Lawrence Hurley and Valerie Volcovici
WASHINGTON (Reuters) - The U.S. government's authority to regulate air pollution nationwide, often against the wishes of Republican-leaning states, could face new curbs when the Supreme Court takes on two high-stakes cases in coming months.
The cases focus on the broad-ranging power wielded by the Environmental Protection Agency (EPA) under the landmark Clean Air Act, first enacted in 1970.
The law was envisioned as a cooperative effort between the federal government and states in which the EPA sets standards but states have to set plans to comply.
That flexibility has allowed states which favor looser regulations, like Texas and Kansas, to resist - with the support of industry groups like the U.S. Chamber of Commerce and the National Association of Manufacturers - when the agency wants to impose more stringent standards.
In both cases before the conservative-leaning Supreme Court, mainly Republican-led states and industry groups have challenged different EPA regulations, in the hope of weakening the agency's authority. The EPA has support from Democratic-leaning states, like Massachusetts and New York, and from environmental groups.
"It would be both a big deal and somewhat unsurprising if EPA loses both Clean Air Act cases," said Richard Frank, an environmental law professor at the University of California at Davis School of Law. Such rulings would reflect a dilution of the deference that courts generally show government agencies in interpreting statutes, he added.
The cases do not challenge whether the EPA can regulate pollutants, such as greenhouse gases, but instead how it uses the Clean Air Act to regulate a wide range of them.
The EPA's authority to interpret the statute broadly is vital to its mission in the face of resistance from Republicans and a handful of Democrats in Congress and some state governments. In the climate change context in particular, the Clean Air Act is the EPA's main tool for tackling greenhouse gas emissions after the U.S. Senate rejected a cap-and-trade bill in 2010.
The Supreme Court rulings are unlikely to have a direct impact on President Barack Obama's sweeping Climate Action Plan, which was unveiled in June, legal experts say, in part because the EPA will be using its authority under parts of the law not at issue in the cases. But decisions against the EPA could pose obstacles to the way it rolls out its rules.
In the first case, to be argued on December 10, the nine justices will consider the legality of a rule that regulates air pollution that crosses state lines.
The second case, expected to be scheduled for oral argument in February, concerns a challenge to the Obama administration's first wave of regulations targeting heat-trapping greenhouse gases.
The court is due to issue rulings in both cases by the end of June.
The EPA's Cross-State Air Pollution Rule, meant to take effect in January 2012, would have set limits on nitrogen oxides and sulfur dioxide from coal-fired power plants in 28 states that emit pollutants in the eastern part of the country that directly affect air quality in other states, generally referred to as "upwind states."
An alliance of industry groups and 15 states, in addition to companies like Southern Co, Peabody Energy Corp and American Electric Power Inc, challenged the rule, and it was never implemented. The U.S. Court of Appeals for the District of Columbia Circuit determined in August 2012 that the rule was invalid on multiple grounds.
Under the worst-case scenario for the government, the Supreme Court could weaken the EPA's power to bring recalcitrant states into line, legal experts said.
In the Obama administration's petition asking for Supreme Court review of the cross-state rule, Solicitor General Donald Verrilli said that if the D.C. Circuit decision stood, it would "gravely undermine" enforcement of the Clean Air Act, delaying the ability of downwind states to comply with air standards and making it nearly impossible for those states to meet deadlines.
A ruling against the EPA could also encourage states to resist other EPA proposals.
"If the Supreme Court pushes back against the EPA and says the EPA has to give the states the first chance to address the problem, that gives the states more leverage," said Jonathan Martel, a partner at law firm Arnold & Porter LLP, who represents business interests in air pollution cases.
CLIMATE CHANGE RULES
In the climate change case, the Supreme Court agreed last month to consider a single question of the many raised by nine different coalitions of industry groups, such as the American Petroleum Institute, and 16 states, including Texas and Virginia. They appealed a June 2012 ruling by the appeals court in Washington upholding the first suite of EPA rules aimed at tackling climate change.
The justices will weigh only whether the agency has authority to regulate greenhouse gases under a permitting program for stationary sources of pollution.
A loss for the EPA could remove a whole category of pollutants, not just greenhouse gases, from the so-called "prevention of serious deterioration" or PSD program, which requires any new or modified major polluting facility to obtain a permit before any new construction is done if it emits "any air pollutant."
Under the program, the operators have to show that they are using the best available technology available to reduce emissions of the covered pollutants.
It may not be all bad news for the EPA. The court passed up a chance to review the agency's determination that greenhouse gases, the driving force behind climate change, are a pollutant that needs to be regulated under the Clean Air Act.
Wins for the EPA in both cases would not, however, lead to any major shift in the law in its favor, experts say.
"Everything continues to be hard work" for the EPA, said Sean Donahue, an attorney who represents the Environmental Defense Fund. "There's tremendous resistance at every turn."
(Reporting by Lawrence Hurley and Valerie Volcovici; Editing by Ros Krasny, Howard Goller and Nick Zieminski)