D.C. Circuit Vacates Clean Air Interstate Rule Citing "Fatal Flaws"

Jul 11: In the case of State of North Carolina v. U.S. EPA, in the U.S. Court of Appeals, D.C. Circuit, Case Nos. No. 05-1244 consolidated with 31 other cases involving scores of attorneys. These consolidated petitions for review challenge various aspects of the Clean Air Interstate Rule (CAIR). The Appeals Court said, "Because we find more than several fatal flaws in the rule and the Environmental Protection Agency (EPA) adopted the rule as one, integral action, we vacate the rule in its entirety and remand to EPA to promulgate a rule that is consistent with this opinion."

By way of background the Court explains that like the NOx SIP Call, the Clean Air Interstate Rule -- Rule To Reduce Interstate Transport of Fine Particulate Matter and Ozone (Clean Air Interstate Rule); Revisions to Acid Rain Program; Revisions to the NOx SIP Call, 70 Fed. Reg.25,162 (May 12, 2005) (CIR”) -- is the rule at issue in these consolidated petitions for review. At issue in much of this litigation is the definition of the term “contribute significantly.” In other words, in order to promulgate CAIR, EPA had to determine what amount of emissions constitutes a “significant contribution” to another state’s nonattainment problem.

Recognizing that its actions will result in significant disruption of EPA Clean Air Act activities, the D.C. Circuit said, ". . . the threat of disruptive consequences cannot save a rule when its fundamental flaws 'foreclose EPA from promulgating the same standards on remand,' [citing Natural Res. Def. Council v. EPA, 489 F.3d 1250, 1261–62 (D.C. Cir. 2007).]

" We must vacate CAIR because very little will “survive[ ] remand in anything approaching recognizable form.” Id. at 1261. EPA’s approach -- regionwide caps with no state-specific quantitative contribution determinations or emissions requirements -- is fundamentally flawed. Moreover, EPA must redo its analysis from the ground up. It must consider anew which states are included in CAIR, after giving some significance to the phrase 'interfere with maintenance' in section 110(a)(2)(D), 42 U.S.C. § 7410(a)(2)(D). It must decide what date, whether 2015 or earlier, is as expeditious as practicable for states to eliminate their significant contributions to downwind nonattainment. The trading program is unlawful, because it does not connect states’ emissions reductions to any measure of their own significant contributions. To the contrary, it relates their SO2 reductions simply to their Title IV allowances, tampering unlawfully with the Title IV trading program. The SO2 regionwide caps are entirely arbitrary, since EPA based them on irrelevant factors like the existence of the Title IV program. The allocation of state budgets from the NOx caps is similarly arbitrary because EPA distributed allowances simply in the interest of fairness. It is possible that after rebuilding, a somewhat similar CAIR may emerge; after all, EPA already promulgated the apparently similar NOx SIP Call eight years ago. But as we have explained, the similarities with the NOx SIP Call are only superficial, and CAIR’s flaws are deep. No amount of tinkering with the rule or revising of the explanations will transform CAIR, as written, into an acceptable rule. Of course the Federal Implementation Plan EPA imposed is intimately connected to CAIR, and we vacate the FIP as well.

The Appeals Court notes that, ". . .in the absence of CAIR, the NOx SIP Call trading program will continue, because EPA terminated the program only as part of the CAIR rulemaking. CAIR, 70 Fed. Reg. at 25,317 (codified at 40 C.F.R. § 51.121(r)). The continuation of the NOx SIP Call should mitigate any disruption that might result from our vacating CAIR at least with regard to NOx. In addition, downwind states retain their statutory right to petition for immediate relief from unlawful interstate pollution under section 126, 42 U.S.C. § 7426."

In its summary of the decision, the Appeals Court indicates, "To summarize, we grant the petitions of Entergy, SO2 Petitioners, and Minnesota Power. We grant North Carolina’s petition with respect to the 'interfere with maintenance' language, CAIR’s 2015 compliance date, and the unrestricted trading of allowances; we deny it with respect to EPA’s definition of 'will' in 'will contribute significantly,' and the PM2.5 contribution threshold. We deny the petitions of the Florida and Texas petitioners, and the Florida Association of Electric Utilities. Accordingly, we vacate CAIR and its associated FIP and remand both to the EPA."

In a release from Environmental Defense Fund (EDF) summarizing the ruling they said, “The government should take immediate corrective action to protect the millions of Americans hard hit by power plant pollution. Power plants must do their part to cut the smog that blankets our cities, the mercury that threatens our children’s development and the greenhouse gases that are recklessly warming the planet. Cost-effective solutions are at hand to protect human health and the environment from power plant pollution while ensuring the steady flow of affordable electricity. . .

"The court agreed with North Carolina that EPA must consider faster reductions that better reflect states’ obligations to restore healthy air and making pollution cuts that help prevent states from backsliding into non-compliance with health-based standards. The court also agreed with North Carolina that EPA must tailor pollution cuts in upwind states with the level of impacts wrought on downwind jurisdictions. The court also agreed with industry litigants that EPA erred in relying on or otherwise interfering with the allowance trading system established to address acid rain while affirming EPA’s broad remedial powers to require interstate air pollution abatement to protect human health. The court agreed with gas-based utilities that EPA unfairly credited coal-based utilities in designing the program. Finally, the court rejected utility claims seeking to exclude Florida and West Texas from the program."

Access the complete 60-page opinion (click here). Access a release from EDF (click here).