Unless the successor of U.S. Environmental Protection Agency (EPA) Administrator Lisa Jackson wants to try the ultimate judicial option—an appeal to the U.S. Supreme Court—the Agency will indeed have to follow the directions of the U.S. Court of Appeals for the D.C. Circuit and rewrite its July 2011 Cross-State Air Pollution Rule (CSAPR).  The CSAPR was one of the major environmental actions of the Obama administration’s first term.

Those are the two choices the new administrator will face after the D.C. Circuit announced that the full court would not rehear EME Homer City Generation, L.P. v. EPA et al.  That case resulted in an August 2012 opinion in which the majority of the D.C. Circuit’s three-judge panel found that the EPA had failed to adhere to the Clean Air Act (CAA) provisions when the CSAPR dictated actions upwind states must take to mitigate their significant contributions to air pollution that make it unreasonably difficult for downwind states to come into compliance with certain national ambient air quality standards. 

Specifically, the majority vacated CSAPR and directed the EPA to continue to implement the Clean Air Interstate Rule (CAIR)—an action taken by the G.W. Bush EPA, which the CSAPR was meant to supplant—until a valid replacement could be developed.  Upon the D.C. Circuit’s announcement of its denial to rehear, the EPA said it would deliberate on the next step it will take. 

Significant contributions

The CSAPR was challenged by an assortment of power companies, coal companies, labor unions, trade associations, and local governments.  In its 2-to-1 opinion, the D.C. Circuit panel said it found two critical flaws with the Obama EPA’s approach to controlling interstate air pollution. 

First, the court found that the EPA had exceeded CAA’s direction that only significant contributions from upwind states may be subject to federal regulation.  The court agreed with petitioners who stated that the CSAPR does address those significant contributions, but then the CSAPR goes on to require that upwind states control nonsignificant pollution.  The EPA had argued that it was merely requiring that states compel major sources of air pollution to install air pollution controls that are cost effective.  But the petitioners said that this was EPA’s backdoor attempt to force control of pollution that would never reach downwind states.  The D.C. Circuit was persuaded by this argument.

Federal implementation plan

Second, the petitioners claimed that the EPA violated the CAA by not providing the states with the first opportunity to address interstate air pollution through the state implementation plan (SIP) process.  Instead, the EPA promulgated a federal implementation plan (FIP) simultaneously with the CSAPR.  FIP required power plants in covered upwind states to make the sulfur dioxide (SO2) and nitrogen oxides (NOx) reductions needed to satisfy each state’s emissions budget, as defined by the EPA.  FIP also created an interstate emissions allowance trading program.  Much of EPA’s argument was based on the contention that upwind states have historically delayed undertaking actions to control transported air pollution, and this delay necessitated the development of a FIP.  But the majority insisted that FIP unlawfully displaced the rights of states to develop individual approaches to meeting emissions standards. 

The dissenting judge in the case mounted a long and vigorous defense of the CSAPR, but the decision not to rehear was a majority decision by the full court.  The strength of that opposition will be a key factor in EPA’s deliberations on whether to rewrite the CSAPR (or CAIR) or to try to repeat its defense of the CSAPR before the Supreme Court. 

Click here for The D.C. Circuit’s opinion in EME Homer City Generation, L.P. v. EPA et al.