Homer’s Odyssey Redux in the DC Circuit

Posted on August 3, 2015 by Paul Seals

In the latest chapter of Homer’s Odyssey, the DC Circuit, on remand from the Supreme Court, determined that EPA had exceeded its statutory authority by imposing uniform emissions reductions under the Transport Rule also known as the Cross-State Air Pollution Rule.  On July 28, 2015, the DC Circuit held in EME Homer City Generation, L.P v. EPA that the 2014 sulfur dioxide (SO2) emissions budgets for Alabama, Georgia, South Carolina, and Texas, as well as the 2014 ozone-season nitrogen oxide (NOx) budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia are invalid.  The court remanded without vacatur to EPA for reconsideration.

A brief history of Homer’s voyage so far.

In 2011, EPA promulgated the Transport Rule to address emissions from upwind States that contribute to nonattainment of National Ambient Air Quality Standards (NAAQS) in a downwind State under the Clean Air Act’s “good neighbor provision”.  42 U.S.C. Sec. 7410(a)(2)(D)(i).  Upwind States challenged the Rule, contending that it would lead to over-control of emissions in the upwind States.  The Rule imposed uniform pollution reductions on upwind States regardless of the actual amount of pollution that individual upwind States contributed to the downwind States.

In 2012, the DC Circuit considered these over-control challenges, agreed with the petitioners, and vacated the Rule.   See EME Homer City Generation, L.P. v. EPA, 696 F/3d 7 (D.C. Cir. 2012)

On review, the Supreme Court reversed, holding that the potential for over-control did not require invalidation of the Rule on its face.  To address potential over-control in an upwind State, the Court recognized that requiring emissions reductions by more than is necessary to achieve attainment in every downwind State to which it is linked would be impermissible.  The Court explicitly authorized an upwind State to contest the emissions reductions under the Rule through “particularized, as-applied challenges.”  EPA v. EME Homer City Generation, L.P., 134 S.Ct. 1584 (2014).

On remand, the DC Circuit considered the “as-applied challenges” as informed by the Supreme Court decision.   The DC Circuit evaluated the challenges by determining whether a downwind location would still attain its NAAQS if linked upwind States were subject to less stringent emissions limits.   Based on the record, the Court determined that EPA’s uniform cost thresholds have required States to reduce pollutants beyond the point necessary to achieve downwind attainment, which violated the Supreme Court’s clear mandate.

Although invalidating the 2014 emissions budgets, the DC Circuit remanded without vacatur.   The Court stated that on remand, the parties may provide new evidence, data, or calculations for EPA to consider in establishing emissions budgets.

What will be the next chapter in this Odyssey?  What effect will the decision have on the emissions trading market developed around the 2014 emissions budget?  Will there be further appeals?  How and when will EPA reconsider the emissions budgets?

The voyage is not over!

Homer's Odyssey Continues Without Cooperative Federalism

Posted on April 30, 2014 by Paul Seals

On April 29, 2014, Justice Ginsburg delivered the opinion of the Supreme Court in EPA v. EME Homer City Generation, L.P., 572 U.S._(2014) reversing the DC Circuit’s decision regarding the Transport Rule, also known as the Cross-State Air Pollution Rule (CSAPR), a rulemaking designed to address the significant contribution of upwind States to nonattainment of National Ambient Air Quality Standards in downwind States under the Good Neighbor Provision of the Clean Air Act (CAA).   In addition to upholding EPA’s cost-effective allocation of air pollutant emission reductions among upwind States as a permissible interpretation of the Good Neighbor Provision, the majority held that the CAA does not compel EPA to provide States with an opportunity to file a SIP after EPA has quantified the State’s interstate pollution obligations.  This opinion is a severe blow to cooperative federalism.

In the majority opinion, cooperative federalism was relegated to a single footnote, which was surprising given the issues for which certiorari was granted.  The second issue addressed in the briefs and argument – whether states are excused from adopting state implementation plans prohibiting emissions that “contribute significantly” to air pollution problems in other states until after the EPA has adopted a rule quantifying each state’s inter-state pollution obligations – provided the Supreme Court with an opportunity to address the relative health of cooperative federalism and whether the federalism bar should be raised or lowered in the context of the CAA. 

Justice Ginsburg’s footnote addressed Justice Scalia’s dissenting opinion in which he criticized the majority for “making hash of the Clean Air Act, transforming it from a program based on cooperative federalism to one of centralized federal control.”  EPA’s promulgation of federal implementation plans without providing the States with a meaningful opportunity to perform the emissions reductions through state implementation plans is inconsistent with the core principle and regulatory strategy of cooperative federalism embedded in the CAA – air pollution control at its source is the primary responsibility of States and local governments.   

Homer’s Odyssey continues.  For the next chapter, his ship will not sail under the fair winds of cooperative federalism.

Waiting for Godot . . . Oops! The Decision’s Finally Out

Posted on August 29, 2012 by Andrea Field

The Cross-State Air Pollution Rule (Transport Rule) [76 Fed. Reg. 48208] adopted by EPA in mid-2011 -- requires sources in the eastern U.S. to reduce their emissions substantially.  Numerous states and industry groups challenged the rule in the D.C. Circuit, and many of the petitioners asked the court to stay the rule pending litigation.  One motions panel of the court stayed the Transport Rule in late 2011, and then a subsequent panel directed that all briefing in the case be completed -- and oral argument be held -- within approximately 100 days after the stay was issued.     

That the case was put on such a tight briefing schedule led many litigants to speculate that the court wanted to resolve the case quickly and would issue its decision within 60 days of the April 13, 2012 oral argument.  When mid-June came and went with no decision, many of those same litigants then predicted the decision would come by mid-July so as not to interfere with the judges’ summer vacations.  In support of their mid-July prediction, they also claimed that the head of EPA’s Air Office, Gina McCarthy, agreed with them.  In early July, Ms. McCarthy had indeed told some state regulators that the court would issue its decision on Friday, July 13, but she had quickly added that her prediction should not be taken too seriously because she had been wrongly predicting the imminent issuance of the decision for the past thirty days.  Nonetheless, several in the media reported her prediction as gospel, prompting all involved to stay glued to the D.C. Circuit’s website on Friday, July 13. 

As one of those waiting for the court to issue its opinion on the Transport Rule, I was reminded of a similar waiting game in which I was involved in 1997.  In May of that year, I had argued a case before a three-judge panel in the Fourth Circuit, where I had found one judge to be sympathetic to my argument, one judge to be antagonistic (but nicely so, because this was the Fourth Circuit after all), and the third judge to be a cipher.  As soon as oral argument ended, my client started bombarding me daily with the same question:  when would the court issue its decision?  I couldn’t answer that question (no matter how often I was asked), but I thought retired Fourth Circuit Judge James Marshall Sprouse might have insights into the court’s decision-making process.  He had been gracious enough  – and patient enough -- to help me prepare for oral argument in my case (and to help me persuade the client to eliminate some of the more bombastic points from the argument).   

Gamely consulting his crystal ball and taking into account that the case had been argued so late in the term, Judge Sprouse suggested that (1) if there was no dissent, then the court might issue its decision by the end of July; (2) if one judge dissented, then there might be a delay of another one to two months; and (3) if each of the three judges wrote a separate opinion or if one of the jurists was trying to be Solomon-esque -- finding areas of agreement and areas of disagreement with each of the other two judges on the panel -- then there might not be a decision until well into the fall.  Judge Sprouse was spot on in my case:  the decision -- which fell into Category 3 -- was issued in late October 1997.

Back to the present now.  The D.C. Circuit issued its decision on the Transport Rule on August 21, 2012.  In an opinion by Judge Brett Kavanaugh, joined by Judge Thomas Griffith, the court held that the Transport Rule exceeds EPA’s statutory authority in two respects, by (1) requiring upwind states to reduce emissions by more than their own significant contributions to nonattainment in other states, and (2) failing to allow states the initial opportunity to implement the emission reductions required by the Transport Rule.  Judge Rogers wrote a stinging dissent.

I leave it to my ACOEL colleague Dave Flannery and his more detailed description of the decision below.  I will add only that although Judge Sprouse passed away eight years ago, the timing of the decision was just what he might have predicted.

Climate Legislation Is Dead (For Now): Long Live Conventional Pollutants

Posted on July 28, 2010 by Seth Jaffe

Climate change legislation is dead for now. I won’t pretend it’s not depressing, even though I avoid the political channels and ignore the rhetoric. For those of us who haven’t refudiated climate change science, it’s a victory for the pessimists and evidence that Congress has a hard time addressing long-range problems, even if consequential.

With respect to regulation of GHG, it’s the worst of both worlds and no one should be happy (which is why I held out hope until the end that cooler heads would prevail). We’re still going to have regulation of GHG, the mechanism being EPA’s recently promulgated Tailoring Rule for GHG. One word. Ugh. Does this really make climate skeptics happy? Do they really think that they will somehow succeed in rolling back the Tailoring Rule? I don’t think so. On the other hand, we don’t have an economy-wide cap-and-trade or carbon tax regime. Are environmentalists happy? I still don’t think so. 

I’m left feeling a little like Rodney King. Certainly, the issue isn’t going to go away before the next Congress is sworn in.

As I have noted before, however, problems with climate change legislation don’t mean that Congress can’t enact legislation further regulating traditional pollutants. The three-pollutant bill now before the Senate already has a Republic co-sponsor, Lamar Alexander. Now, according to a report in E&E Daily, even Senator Inhofe is stating that he’s interested in working with Democrats to move three-pollutant legislation. Given the failure to move GHG legislation, hell is likely to get hotter before freezing over, but if Inhofe can really be brought on board, there’s no reason why legislation couldn’t pass.

Three-pollutant legislation shares one significant feature with the GHG issue. Like GHG regulation, efficient regulation is hampered by limitations in existing law, as we saw with the D.C. Circuit’s rejection of the trading regime in the CAIR regulations, and EPA’s much more limited trading program in the Transport Rule. Senator Voinovich, another Republican that three-pollutant legislation supporters would like to have with them, noted as much, saying that the transport rule would be a "stringent and inflexible regime." New legislation could provide for a more robust trading regime. We’ll see if that’s enough to bring Republicans on board.

I sure hope so. Right now, all we’ve got is a GHG regulatory program that won’t do much for climate change, but will cause my clients endless headaches, and a Transport Rule that’s probably the best EPA can do on traditional interstate pollution, but not nearly as cost-effective as it might be with new legislative authority. I remain an optimist, but sometimes it’s difficult.