D.C. Circuit rules against Cross-State Air Pollution Rule

In a 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit has thrown out the Environmental Protection Agency’s Cross-State Air Pollution Rule (CSAPR).

The rule that was vacated is also referred to as the “Transport Rule,” a prior name that the D.C. Circuit frequently used in its 100-page decision. The court also often referred to it as the “Good Neighbor” standard. The rule is designed to prevent emissions from one state from causing significant pollution levels in another.

In a nutshell, the court ruled that the EPA rule exceeded statutory authority on two fronts. It forced “upwind states” with a heavy concentration of coal and other fossil fuel power plants to sometimes reduce their emissions “by more than their own significant contributions to a downwind state’s nonattainment.”

Secondly, the court said EPA erred by not first giving the affected states the initial opportunity to implement the required air pollution reductions within their own borders.

The three-judge panel returned the decision Aug. 21. The case had been argued in April. Cross-state is the Obama administration’s replacement for the George W. Bush administration’s Clean Air Interstate Rule, which was also thrown out by the federal courts.

Ironically, the D.C. Circuit said that CAIR, a rule it once deemed fundamentally flawed, will continue in effect until EPA develops a suitable replacement.

Majority says EPA overstepped its bounds

The rule that EPA rolled out in August 2011 defined emission reduction responsibilities for 28 upwind states based on those states’ contributions to downwind states air quality problems. The Cross-State rule targets pollution from sulfur dioxide (SO2) and nitrogen oxides (NOx).

“Although the facts here are complicated, the legal principles that govern this case are straightforward: Absent a claim of constitutional authority (and there is none here), executive agencies may exercise only the authority conferred by statute, and agencies may not transgress statutory limits on that authority,” the appeals court held.

“Our decision today should not be interpreted as a comment on the wisdom or policy merits of EPA’s Transport Rule,” the court said.

Judge Judith Rogers, one of the three judges who heard the case, dissented. The dissent argued that petitioners’ challenge to EPA’s approach to the significant contribution issue is not properly before the appeals court because that issue was not sufficiently raised before the agency in the rulemaking proceeding. The dissent also claims that petitioners’ challenge to EPA’s issuance of the federal implementation plants (FIPs) was not properly before the court because the affected states should have raised such a challenge earlier in the process.

The two-judge majority, however, disagreed on both counts.

Court says states needed a greater role

The D.C. Circuit said the Clean Air Act sets air quality standards but states retain the primary responsibility for choosing how to attain the standards within their borders. EPA is supposed to provide a federal backstop if the states provide inadequate plans, the court said.

In the Cross-State rule, however, state plans have only a “limited, secondary role” that can modify some elements of federal plans, the court said.

The Cross-State rule contains two basic components. First, the Rule defines each state’s emissions reduction obligations under the good neighbor provision. Second, the Rule prescribes Federal Implementation Plans to implement those obligations at the State level.

At one stage in this process, EPA used a cost-based standard. EPA determined how much pollution each upwind State’s power plants could eliminate if the upwind state’s plants applied all controls available at or below a given cost per ton of pollution reduced.

The court said states could only get their implementation plans approved if they made a “successful stab in the dark” on what emissions level EPA will require them to meet.

An array of power companies, coal companies, labor unions, trade associations and state governments petitioned for review of the EPA rule.

Organizations who filed arguments on behalf of upholding the rule included Sierra Club, along with the Environmental Defense Fund, Clear Air Task Force, American Lung Association, the Natural Resources Defense Council and others, as well as over a dozen US states and cities.

The Sierra Club urged EPA to seek a rehearing on the issue before the full D.C. Circuit Court of Appeals.

An EPA spokesperson said the agency is reviewing its legal options. “When that review is complete, EPA will determine the appropriate course of action,” the spokesperson said.

The court case is No. 11-1302, EME Homer City Generation petitioner versus the Environmental Protection Agency.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.