Court Sends EPA Back to the Drawing Board Again as States are Left Waiting for Relief

On August 21, 2012, the D.C. Circuit Court vacated EPA’s Cross State Air Pollution Rule (CSAPR), arguing that EPA overstepped its authority, in part, by using an approach that could require too much of states whose pollution blows into neighboring states.

The 2-1 court ruling sends EPA back to the drawing board for a second time to address power plant SO2 and NOX emissions that create excessive levels of ozone and particulate matter in downwind states, and cause those states to violate federal air quality standards established under the Clean Air Act of 1990. EPA’s attempts to implement the “good neighbor provisions” of the Clean Air Act (CAA) are beginning to sound like the tale of Goldie Locks and the Three Bears. The first attempt was rejected for requiring too little of some states; the second attempt was overturned for requiring too much. Will EPA ever get it just right to the satisfaction of the court?

In the meantime, EPA’s first attempt under the Bush Administration—the Clean Air Interstate Rule (CAIR)—remains in place, even though the court previously overturned its emissions trading approach as “fundamentally flawed.”

Implications for Downwind States

If it survives its own legal challenges, another power sector rule — the Mercury and Air Toxics Standards (MATS) — will eventually ensure the SO2 reductions sought by CSAPR, as a co-benefit (because the same pollution controls remove multiple pollutants). However, a remaining concern for impacted downwind states will be the blown-in NOX emissions that lead to ground-level ozone and their associated health impacts.

Facing a long slow process if EPA starts over on the same regulatory path, downwind states will likely look for other options to force reductions from upwind states. Downwind states may petition EPA under CAA Section 126 for direct EPA regulation through a more cumbersome and less flexible regulatory pathway. But this alternative does not magically remove the complex technical challenges involved with apportioning responsibility for transported pollution and it gives the states even less of a role in crafting the solution.

EPA may request a rehearing to appeal the decision. Such a request would likely promote the arguments in the third judge’s dissenting opinion, which claims that the two-judge majority both misread the Clean Air Act and overstepped their jurisdiction in barring EPA’s regulation. Whether a rehearing or appeal could revive CSAPR is unclear, but there are some different interpretations of the authorizing law that could be considered and precedential implications at stake. For example, who bears responsibility for initiating action to address drifting pollution?

The Clean Air Act establishes a combined federal and state approach, with defined but inter-related federal and state responsibilities for achieving National Ambient Air Quality Standards (NAAQS). The recent decision has implications for these roles and for the deadlines that are triggered throughout the process. The ruling puts the remedy for drifting pollution on a slower timeline than for pollution originating in-state, even though a downwind state may face consequences if their neighbor’s emissions cause them to exceed the standards.

As the majority decision acknowledges, “Congress established the upwind State’s [State Implementation Plan] as the vehicle for implementing the upwind State’s good neighbor obligation.” The majority opinion implies that upwind states only bear responsibility for downwind pollution after EPA first quantifies each state’s significant contribution. On the other hand, the dissenting opinion challenges this view:

the court rewrites a decades-old statute whose plain text and structure establish a clear chronology of federal and State responsibilities. Nowhere does the CAA place a requirement on EPA to quantify each State’s amount of “significant contribution” to be eliminated pursuant to the “good neighbor” provision, let alone include any provision relieving States of their “good neighbor” SIP obligations in the event EPA does not first quantify emission reduction obligations.

Is There a Workable Solution?

The two rulings in four years and under two different administrations on EPA’s attempts to implement the good neighbor provisions illustrate the legal challenges of implementing this part of the Act. Assigning obligations to a variety of states to reduce their specific contribution to the downwind impacts of pollution crossing state lines is an exceedingly complex and difficult technical task. It is made even more challenging by the legal pitfalls of implementing the ambiguous statutory text of the Act’s good neighbor provision.

Although the court did not comment on the “wisdom or policy merits” of the rule, it indicated that “Congress could well decide to alter the statute to permit or require EPA’s preferred approach to the good neighbor issue.” Bipartisan bills have been introduced over the years to address this issue, but none have been able to gain traction in Congress and even surgical amendments to the decades-old law seem to conjure up a can of worms. So, as EPA starts “take three”, downwind states and their citizens are left holding their breath as they continue to wait for a remedy.

Related Posts

• Projected Impact of Changing Conditions on Electricity Generation
  July 30, 2012
• EPA’s New Regulation: Bold, Modest, or Both?
  March 30, 2012

Read more blog posts from BPC’s Energy Project here.