In March 2023, an industry challenge to the EPA’s April 2021 Revised Cross-State Air Pollution Rule (CSAPR) Update Rule was rejected by the D.C. Circuit Court of Appeals. The rule required “power plants in 12 upwind states to reduce nitrogen oxide (NOx), an ozone precursor, emissions such that those states did not inhibit downwind states’ ability to comply with the 2008 Ozone National Ambient Air Quality Standard (NAAQS),” according to law firm Sidley Austin LLP.

The CSAPR Update Rule was issued in September 2016 to address the 2008 ozone NAAQS Good Neighbor obligations. The EPA estimates that the revised CSAPR update will reduce NOx emissions from power plants in 12 states in the eastern United States by 17,000 tons in 2021 compared with projections without the rule, yielding public health and climate benefits that are valued, on average, at up to $2.8 billion each year from 2021 to 2040.

“The D.C. Circuit remanded the CSAPR Update Rule back to the Agency and vacated EPA’s subsequent ‘CSAPR Close-Out’ Rule,” the Sidley article continues. “The court ultimately ordered EPA to finish the revised rule ahead of the July 20, 2021, serious attainment deadline for downwind states.”

In the petition before the D.C. Circuit, the Midwest Ozone Group (MOG) contended that the revised rule is arbitrary and capricious and that the EPA failed to conduct a legally and technically appropriate assessment, as required by the Good Neighbor Provision of the Clean Air Act (CAA).

Members of the MOG include Ameren, American Electric Power, Associated Electric Cooperative, Buckeye Power, Duke Energy, East Kentucky Power Cooperative, and FirstEnergy, Utility Dive says.

The MOG’s stated goal is to “to work with policymakers in evaluating air quality policies by encouraging sound science.”

Under the CAA, each state is required to submit a state implementation plan (SIP) that provides for the implementation, maintenance, and enforcement of each primary or secondary NAAQS. Section 11O(a)(1) requires each state to make this new SIP submission within 3 years after promulgation of a new or revised NAAQS. This type of SIP submission is commonly referred to as an " infrastructure SIP."

The EPA has developed a consistent framework for addressing interstate transport with respect to the fine particulate matter (PM 2.5) NAAQS in several previous federal rulemakings. The four basic steps of that framework include:

• Identifying downwind receptors that are expected to have problems attaining or maintaining the NAAQS;
• Identifying which upwind states contribute to these identified problems in amounts sufficient to warrant further review and analysis;
• For states identified as contributing to downwind air quality problems, identifying upwind emissions reductions necessary to prevent an upwind state from significantly contributing to nonattainment or interfering with maintenance of the NAAQS downwind; and
• For states that are found to have emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS downwind, reducing the identified upwind emissions through adoption of permanent and enforceable measures.

“Among other arguments, MOG contended that EPA deviated from past air quality modeling practices in Step 1, used existing modeling data rather than conduct new modeling for Step 2, and arbitrarily determined control requirements for the units subject to the rule in Step 3,” Sidley adds. “The court rejected MOG’s contentions and upheld the rule, holding that EPA had adequately explained its techniques and operated reasonably under tight deadlines and that MOG had failed to demonstrate states would have been regulated differently under other analytical methods.

“Under the Revised CSAPR Update Rule, EPA required emissions reductions from power plants in the following 12 upwind states through the 2024 ozone season: Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia.”

In a separate rulemaking, the EPA also proposed strengthening its regional ozone transport rule, which is expected to speed the rate of retiring power plants.  Industry analysts predict that picking up this pace could threaten grid reliability.

“Beginning in the 2023 ozone season, EPA is proposing to include these states in a revised and strengthened [CSAPR] ‘NOx Ozone Season Group 3 Trading Program,’” states an EPA Fact Sheet on the proposed rule. “The proposed emissions budgets would initially be set at the level of reductions achievable through immediately available measures, including consistently operating emissions controls already installed at power plants. Starting in 2026, the budgets would be set at levels achieved by the installation of modern and cost-effective selective catalytic reduction (SCR) controls at the approximately 30 percent of large coal-fired power plants in the covered states that do not now have them. By 2026, EPA projects that the program would result in a 29 percent reduction in ozone-season NOx emissions from power plants in the 25 covered states.”

Since the D.C. Circuit Court issued its ruling, the EPA has issued a Final Good Neighbor Plan for the 2015 Ozone NAAQS.

Source types impacted by the rule include:

• Reciprocating internal combustion engines in pipeline transportation of natural gas;
• Kilns in cement and cement product manufacturing;
• Reheat furnaces in iron and steel mills and ferroalloy manufacturing and furnaces in glass and glass product manufacturing;
• Boilers in iron and steel mills and ferroalloy manufacturing; metal ore mining; basic chemical manufacturing; petroleum and coal products manufacturing; and pulp, paper, and paperboard mills; and
• Combustors and incinerators in solid waste combustors and incinerators.

The present values of the monetized health benefits associated with this final rule are estimated at about $200 billion, with an equivalent annualized value (EAV) of about $13 billion, according to the published version of the Final Good Neighbor Plan for the 2015 Ozone NAAQS.