Cross-State Air Pollution Rule (CSAPR) Update (US)

The Cross-State Air Pollution Rule (CSAPR, 2011) replaced and strengthened the 2005 Clean Air Interstate Rule (CAIR), which the U.S. Court of Appeals for the D.C. Circuit ordered EPA to revise in 2008. The court had allowed CAIR to remain in place temporarily while EPA worked to finalize the replacement rule.

EPA information on the CSAPR and CAIR is here.

December 10, 2013 – the Supreme Court heard oral arguments in EPA’s appeal from the vacatur (order to set aside or annul a proceeding) of the Cross-State Air Pollution Rule (CSAPR) in EPA v. EME Homer City Generation, L.P.

Background – In 1963, in response to growing concerns of pollution, the US Congress passed the Clean Air Act (CAA). The CAA requires the Environmental Protection Agency (EPA) to set certain air quality standards for harmful pollutants, and includes a “Good Neighbor” provision requiring states to adopt plans that prohibit pollution that would “contribute significantly” to other states’ nonattainment of these standards. However, the CAA does not define “significant contribution.”

Specifically – the Clean Air Act, 42 U.S.C. 7401 et seq. (Act of CAA), requires the EPA to establish National Ambient Air Quality Standards (NAAQS) for particular pollutants at levels that will protect the public health and welfare. 42 U.S.C. 7408, 7409. “[W]ithin 3 years” of promulgation of a [NAAQS],” each State must adopt a state implementation plan (SIP) with “adequate provisions” that will, inter alia, “prohibit” pollution that will “contribute significantly” to other States’ inability to meet, or maintain compliance with, the NAAQS. 42 U.S.C. 7410(a)(1), (2)(D)(i)(I). If a State fails to submit a SIP or submits an inadequate one, the EPA must enter an order so finding. 42 U.S.C. 7410(k). After the EPA does so, it “shall promulgate a [f]ederal implementation plan” for that State within two years. 42 U.S.C. 7410(c)(1).

In 2011, the EPA finalized a rule known as the “Transport Rule”, the CSAPR. Mirroring the language of the “good neighbor” provision, the Transport Rule defines emission reduction obligations for several upwind states that “contribute significantly” to downwind states’ nonattainment of the EPA’s air quality standards. In determining what constitutes a significant contribution, the EPA balanced achievable emission reductions against the cost of achieving those reductions.

However, in EME Homer City Generations v. EPA, the D.C. Circuit struck down the Transport Rule and rejected the EPA’s analysis for determining what constitutes a significant contribution in this context.

In December 2013, the Supreme Court was presented with questions about the EPA’s interpretation of its statutory grant of authority under the CAA as well as questions about the jurisdiction of the D.C. Circuit to hear the challenges presented. This case also raises concerns about federal intervention in state affairs and public health concerns posed by the EPA’s interpretation of the CAA. Should the Supreme Court decide this case on the merits, the Court’s decision will significantly affect the EPA’s grant of authority to regulate interstate pollution.

The information set out below is informed by the article by Stephanie Sebor, Winston & Strawn LLP, here.

On the question of whether a state is excused from adopting an interstate transport SIP until after EPA has quantified the state’s good neighbor obligations, the EPA answered in the negative, emphasizing that the Clean Air Act places the initial burden on the state to ascertain whether its emissions contribute significantly to downwind nonattainment with the NAAQS. Justice Roberts noted that “EPA has an easier job” quantifying each state’s good neighbor contributions than the individual states who have “no possible way to know . . . the burden [EPA] expect[s] them to address.”

The state respondents, lead by Texas, argued that the EPA had directed the states in the 1998 NOx SIP Call not to submit interstate transport SIPs until after EPA had quantified each state’s good neighbor obligations, which excused the states from the requirement to adopt a SIP until after EPA completed its quantification.

The Court also heard arguments on whether EPA permissibly defined each upwind state’s significant contribution based upon the cost-effective emission reductions achievable in the state, rather than each state’s proportionate responsibility for downwind nonattainment. The industry petitioners argued that EPA’s interpretation was arbitrary and capricious because it would force certain states to make greater emissions reductions than their proportionate contributions would require simply because it is less costly for them to do so. Justice Scalia appeared to agree, noting that Congress’s intent was not for EPA impose a plan upon the states that achieves “the most efficient reduction of pollution no matter where that pollution came from.” EPA argued that its interpretation of the statute is permissible because an overriding policy objective of the Clean Air Act is to achieve emissions reductions in the most cost-effective manner possible. EPA also emphasized that it is “impossible” to implement the straight proportionality approach the D.C. Circuit instructed EPA to follow when vacating CSAPR. Justice Kennedy appeared to be sympathetic to the Agency’s argument, stating that “the word ‘significantly’ does import a judgmental component.”

The Court’s decision is expected by June 2014. If the Court splits 4-4, the effect would be to uphold the D.C. Circuit’s vacatur of CSAPR.

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