Oral arguments coming up on Feb. 25 over EPA’s Transport Rule

The U.S. Environmental Protection Agency, ahead of Feb. 25 federal appeals court oral arguments on remaining issues, filed Jan. 16 arguments on remanded aspects of its Clean Air Interstate Rule (CAIR) and the companion Transport Rule.

This matter is on remand at the U.S. Appeals Court for the D.C. Circuit in the case EME Homer City Generation LP v. EPA, which combines a number of appeals by coal-fired power generators. The Transport Rule addresses the complex and enduring problem of interstate transport of emissions of NOx and SO2 that affect the ability of some states to attain and maintain the National Ambient Air Quality Standards (NAAQS) for ozone and fine particulate matter (PM 2.5).

If EPA finds that a state fails to submit the required measures or disapproves a state’s submission, EPA is required to promulgate a federal implementation plan (FIP) within two years. EPA determined that the Transport Rule is necessary for downwind attainment and maintenance of the NAAQS and will result in dramatic health benefits for over 240 million people in the eastern United States.

Petitions for review of the Transport Rule were filed, and this appeals court first stayed and then vacated the rule. Although petitioners raised numerous issues, the panel addressed only two.

  • First, the court held that EPA’s methodology for determining the amount by which upwind states must reduce their emissions, which is based in part on emission reductions attainable through the use of highly cost-effective controls, did not adequately ensure that no upwind state would be required to eliminate more than its significant contribution to downwind states. The court found that the statute created three “red lines” that limited EPA’s authority: no state could be required to eliminate more than its own significant contribution to a downwind nonattainment area, each state’s required reductions must be proportional to its contribution to a downwind state, and reductions required of upwind states in the aggregate cannot be more than required for the downwind state to attain the NAAQS.
  • Second, the court held that EPA could not promulgate a FIP regarding interstate transport requirements until EPA determined the amount of reductions a state requires to eliminate its significant contribution to other states, and provided the state with an opportunity to implement those reductions through a state implementation plan (SIP).

The U.S. Supreme Court reversed on both issues. The court held that Congress delegated EPA authority to determine what constitutes significant contribution to nonattainment or interference with maintenance. The Supreme Court specifically rejected this appeals court’s holding that the statute imposed a requirement of proportionality based on air quality impacts, instead finding that “[t]he Agency has chosen, sensibly in our view, to reduce the amount easier, i.e., less costly, to eradicate, and nothing in the text of the Good Neighbor Provision precludes that choice.” With regard to other bright lines defined by this appeals court, the Supreme Court agreed with this court only to the extent that “[i]f EPA requires an upwind State to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked, the Agency will have overstepped its authority,” and that EPA cannot demand reductions that would drive an upwind state’s contribution to every downwind state to which it is linked below the point that constitutes a significant contribution.

“EPA properly fulfilled its obligation to issue the Transport Rule FIPs,” said the agency in the Jan. 16 brief. “First, the claim that EPA’s approval of SIPs allowing some States to implement CAIR abrogated EPA’s authority to promulgate the Transport Rule FIPs is meritless. EPA’s obligation to promulgate a FIP is terminated only if ‘the State corrects the deficiency, and the Administrator approves the plan or plan revision.’ While EPA approved SIPs for some States, this Court’s decision in North Carolina meant that those SIPs had not corrected the underlying deficiency, i.e., the States’ failure to promulgate adequate SIPs to address interstate transport. Because CAIR was invalid ab initio, EPA continued to have the obligation to promulgate FIPs to address interstate transport. Second, Petitioners’ claim that EPA disapproved SIP submissions for the 2006 PM2.5 NAAQS after promulgation of the Transport Rule FIPs is based on a fallacious comparison of the signature date of the Transport Rule to the publication date of the SIP disapprovals. Appropriately comparing the like dates demonstrates that all SIP disapprovals occurred before promulgation of the Transport Rule FIPs.”

EPA said the case now before the appeals court presents the following issues:

  • Did EPA lawfully promulgate Transport Rule FIPs for states with approved CAIR SIPs?
  • Did EPA act consistently with the Clean Air Act in signing Transport Rule FIPs for certain states after signature, but before publication, of SIP disapprovals?
  • Does the Transport Rule reasonably respond to North Carolina by determining whether sources in an upwind state interfere with maintenance in a downwind state independent of whether those sources significantly contributed to nonattainment in that downwind state?
  • Did EPA reasonably determine that a state’s obligation to control emissions that contribute significantly to nonattainment in other states includes areas that are projected to be in nonattainment but have not been formally designated nonattainment?
  • Did EPA provide interested parties with adequate notice and opportunity to comment on the Transport Rule?
  • Did EPA rely on reasonable assumptions and methodologies in its modeling of air quality impacts and for state emission budgets?
  • Does the Transport Rule establish emission budgets no more stringent than necessary for downwind areas to attain and maintain the relevant NAAQS?

Recent brief offers Texas-specific arguments

San Miguel Electric Cooperative and the Southeastern Legal Foundation filed a Dec. 12 brief in this case. San Miguel controls a 400-MW, lignite-fired plant located in Atascosa County, Texas, roughly 45 miles south of San Antonio.

The cooperative and the foundation wrote: “In the Clean Air Act (CAA), Congress gave States primary responsibility for crafting the means by which they would comply with national ambient air quality standards (NAAQS) requirements through State Implementation Plans (SIPs). Congress provided specific instructions regarding when EPA could initiate Federal Implementation Plans (FIPs) if States failed to meet their responsibilities. For 22 States with approved good-neighbor SIPs for the 1997 NAAQS, EPA has attempted to circumvent Congress’ scheme by rewriting the history of their previously approved SIPs to allow EPA to impose FIPs without the rulemaking required by 42 U.S.C. § 7410(k)(5). For 10 States that had submitted good-neighbor SIPs for the 2006 NAAQS, EPA short-circuited the SIP disapproval/FIP initiation process contemplated by Congress by proposing FIPs for States with pending SIP submittals.

“The Transport Rule overcontrols Texas electric generating units (EGUs) by imposing draconian emissions limitations on them. EPA’s sole ‘link’ justifying Texas’ inclusion in the annual SO2 program is Texas’ alleged ‘significant contribution’ to nonattainment of a single monitor in Madison, Illinois. This is a monitor located near a steel mill, in an area that EPA has found to be in attainment today and where relevant emissions – both in Texas and near the receptor – were projected to decrease under a base-case scenario, without the imposition of the Transport Rule. The data also demonstrates that the Transport Rule overcontrols Texas with regard to impacts on downwind states’ ozone concentrations, as the two areas EPA identified as having links to Texas have been found to have attained the relevant ozone NAAQS. EPA has failed to justify the burdensome emissions reductions the rule imposes, which have resulted in significant overcontrol in contravention of the CAA.

“EPA failed to provide CAA-required notice and comment opportunity to San Miguel or the State of Texas regarding Transport Rule requirements prior to finalization. Therefore, EPA may not impose any annual SO2 and NOX program requirements on Texas, until EPA has fulfilled the CAA’s notice and comment requirements.”

As for what they want out of this court, the two parties wrote: “If the Court does not vacate the Transport Rule in its entirety as requested by the State and Local Petitioners, the Court should remand the Transport Rule to EPA to recalculate emission budgets and EPA should not be allowed to maintain unlawful emission budgets indefinitely by delaying rulemaking on remand. Thus, if the Transport Rule is not vacated in its entirety, this Court should direct EPA to complete the necessary rulemaking before January 1, 2016, so that EPA can promulgate lawful emission budgets, and make any necessary adjustments to allowance allocations for 2016, before that year’s compliance period commences.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.