Tuesday, August 21, 2012

EME Homer City Generation, L.P v. U.S. EPA

Aug 21: In the U.S. Court of Appeals, D.C. Circuit, Case No. 11-1302, consolidate with 44 additional cases. In this high-profile, split decision, dealing with U.S. EPA's controversial Cross State Air Pollution Rule (CSAPR) the Appeals Court indicates that some emissions of air pollutants affect air quality in the States where the pollutants are emitted. Some emissions of air pollutants travel across State boundaries and affect air quality in downwind States. In its conclusion, the majority Appeals Court rules, "We vacate the Transport Rule and the Transport Rule FIPs and remand this proceeding to EPA. EPA must continue administering CAIR [Clean Air Interstate Rule, the Transport Rule] pending the promulgation of a valid replacement." This lengthy, highly complex and split decision is sure to turn the air pollution world on its head. WIMS will include reactions from various parties in tomorrow's report.
    The Appeals Court explains that to deal with that complex regulatory challenge, Congress did not authorize EPA to simply adopt limits on emissions as EPA deemed reasonable. Rather, Congress set up a federalism-based system of air pollution control. Under this cooperative federalism approach, both the Federal Government and the States play significant roles. The Federal Government sets air quality standards for pollutants. The States have the primary responsibility for determining how to
meet those standards and regulating sources within their borders.
    In addition, and of primary relevance here, upwind States must prevent sources within their borders from emitting federally determined "amounts" of pollution that travel across State lines and "contribute significantly" to a downwind State's "nonattainment" of federal air quality standards. That requirement is sometimes called the "good neighbor" provision.
    In August 2011, to implement the statutory good neighbor requirement, EPA promulgated the rule at issue in this case, the Transport Rule, also known as the Cross-State Air Pollution Rule. The Transport Rule defines emissions reduction responsibilities for 28 upwind States based on those States' contributions to downwind States' air quality problems. The Rule limits emissions from upwind States' coal- and natural gas-fired power plants, among other sources. Those power plants generate the majority of electricity used in the United States, but they also emit pollutants that affect air quality. The Transport Rule targets two of those
pollutants, sulfur dioxide (SO2) and nitrogen oxides (NOx).
    Various States, local governments, industry groups, and labor organizations have petitioned for review of the Transport Rule. 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 majority rules, "Here, EPA's Transport Rule exceeds the agency's statutory authority in two independent respects. First, the statutory text grants EPA authority to require upwind States to reduce only their own significant contributions to a downwind State's nonattainment. But under the Transport Rule, upwind States may be required to reduce emissions by more than their own significant contributions to a downwind State's nonattainment. EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind States without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA's Transport Rule violates the statute. Second, the Clean Air Act affords States the initial opportunity to implement reductions required by EPA under the good neighbor provision. But here, when EPA quantified States' good neighbor obligations, it did not allow the States the initial opportunity to implement the required reductions with respect to sources within their borders. Instead, EPA quantified States' good neighbor obligations and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the good neighbor provision and violated the Act. For each of those two independent reasons, EPA's Transport Rule violates federal law. Therefore, the Rule must be vacated."
    In light of its ruling the majority notes that ". . .this Court has affirmed numerous EPA clean air decisions in recent years when those agency decisions met relevant statutory requirements and complied with statutory constraints. . . In this case, however, we conclude that EPA has transgressed statutory boundaries. Congress could well decide to alter the statute to permit or require EPA's preferred approach to the good neighbor issue. Unless and until Congress does so, we must apply and enforce the statute as it's now written. Our decision today should not be interpreted as a comment on the wisdom or policy merits of EPA's Transport Rule. It is not our job to set environmental policy. Our limited but important role is to independently ensure that the agency stays within the boundaries Congress has set. EPA did not do so here."
    The majority also comments on the disssenting opinion and says, "The dissent argues that petitioners' challenge to EPA's approach to the significant contribution issue is not properly before us because that issue was not sufficiently raised before the agency in the rulemaking proceeding. We fundamentally disagree with the dissent's reading of the record on that point. The dissent also claims that petitioners' challenge to EPA's issuance of the FIPs is not properly before us because the affected States should have raised such a challenge earlier in the process. We again disagree. The dissent's analysis on the FIPs issue conflates (i) EPA's rejection of certain States' SIPs and (ii) EPA's decision in the Transport Rule to set States' "good neighbor" obligations and emissions budgets and simultaneously issue FIPs."
    In the lengthy dissenting opinion, the Justice indicates, "To vacate the Transport Rule, the court disregards limits Congress placed on its jurisdiction, the plain text of the Clean Air Act (CAA), and this court's settled precedent interpreting the same statutory provisions at issue today. Any one of these obstacles should have given the court pause; none did. The result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress's vision of
cooperative federalism between the States and the federal government in implementing the CAA based on the court's own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court's precedent on which the Environmental Protection Agency (EPA) was entitled to rely in developing the Transport Rule rather than be blindsided by arguments raised for the first time in this court. . ."
    Access the complete 104-page opinion and dissent (click here, dissent begins on pp. 61). [#Air, #MIAir]
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