CSAPR’s Triumphant Return

On April 29, 2014 the Supreme Court issued a ruling in EPA v. EME Homer City Generation, L.P. that has reinstated U.S. EPA’s Cross-State Air Pollution Rule (CSAPR).  This is the latest reversal that essentially overturns the August 2012 U.S. Court of Appeals for the District of Columbia Circuit vacatur ruling, which took CSAPR off the books, finding that U.S. EPA exceeded its authority in how it imposed the program.  CSAPR is a multi-state, cap-and-trade program intended to cut emissions that contribute to ozone and fine particle pollution in other states.   It is a program that will affect 28 states and is designed to curtail sulfur dioxide (SO₂) and nitrogen oxides (NO_x) emissions from “upwind” states that impact the ability of “downwind” states to meet the National Ambient Air Quality Standards (NAAQS).  CSAPR is targeting emission reductions specifically to comply with three NAAQS: (1) 1997 Ozone, (2) 1997 Annual PM_2.5, and (3) 2006 24-hour PM_2.5.  NO_x emissions can react in the atmosphere and are regulated to comply with the ozone NAAQS.  Both NO_x and SO₂ are precursors to the formation of PM_2.5 and are regulated to comply with PM_2.5 NAAQS.  CSAPR was proposed as U.S. EPA’s replacement to the Clean Air Interstate Rule (CAIR).

CAIR experienced its own regulatory legal hurdles which are summarized below in reverse chronological order.  On December 23, 2008, the U.S. Court of Appeals for the District of Columbia Circuit reversed its earlier (July 11, 2008) decision to vacate CAIR.  The Federal court decided, after considering comments from the appellants to the rule, to allow CAIR to remain in effect while U.S. EPA “fixes” the rule. In the July 11, 2008 decision, the Court had identified where the rule was not consistent with the Clean Air Act (CAA).  In its order for a rehearing the Court stated: “Here, we are convinced that, notwithstanding the relative flaws of CAIR, allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR.”     

At the heart of the April 29, 2014 CSAPR ruling are the “good neighbor” provisions of the Clean Air Act (CAA).  In this case, U.S. EPA appealed EME Homer City Generation, L.P. to the Supreme Court.  At question in the case was that the approach U.S. EPA used to assess each regulated states’ obligations to curb interstate air pollution and how to address a “good neighbor” provision of the air law that requires states to preserve other states’ attainment of air quality standards.  U.S. EPA imposed Federal Implementation Plans (FIPs) on states after it quantified the interstate pollution contributions of each state (addressing the “good neighbor” provisions).  This approach was challenged by the argument that U.S. EPA had overstepped its legal authority in imposing FIPs on states to implement the rule after quantifying interstate pollution contributions of each state, rather than allowing states to submit compliance plans to U.S. EPA. 

As the history writes itself, cross-state air pollution is a complex problem that presents both legal and regulatory challenges.  This ruling simply supports the presumption that U.S. EPA had the authority to implement the CSAPR.  Although this ruling is a giant step towards implementing a cross-state air pollution rule, there are significant technical challenges ahead.  For example, due to time that has elapsed (between court rulings), the underlying basis for creating and allocating the NO_x and SO₂ budgets to each of the states will likely need to be revisited.  CSAPR also contains implementation dates and budget allocations for dates which have long passed.  At the same time, there is pressure on lowering the existing NAAQS that CSAPR was originally based upon, potentially creating implementation considerations for states.  For example, the 1997 ozone standard of 80 parts per billion (ppb) versus the 2008 standard of 75 ppb.  From a state’s perspective, implementing a rule designed to cut emissions of ozone precursors considering older NAAQS may not be enough and have states looking for other reductions.  Both the 1997 and 2006 PM_2.5 NAAQS have already been considered by U.S. EPA.  At this point, there is not a specific inadequacy with respect to the PM_2.5 NAAQS analysis; however, if the rule is further challenged, additional consideration could be necessary.  While the exact future of CSAPR is uncertain, let’s hope that the next pair of flip flops that we see is on a sandy beach and not another court ruling.