The liberal justices of the U.S. Supreme Court weighed in strongly on EPA’s side in oral arguments over the statutory strength of the Agency’s Cross-State Air Pollution Rule (Transport Rule).  Limited rebuttal by the conservative justices, and particularly a muted endorsement by Justice Kennedy of the approach taken by the EPA, suggest that the Transport Rule may receive a second life.  In past cases, Justice Kennedy has been the swing vote that makes the difference in challenges to EPA regulations that are opposed by industry, and, in this case, by states that must implement EPA’s requirements.

The Supreme Court agreed to hear the case after the EPA appealed a decision by the U.S. Court of Appeals for the D.C. Circuit, which vacated the Transport Rule because it did not specify the specific amounts of air pollution each upwind state contributes to downwind states.  Instead, in its federal implementation plan (FIP), the EPA specified that each upwind state requires that sources of air pollution undertake cost-effective measures to control cross-state air pollution.   The Agency issued the FIP after the upwind states failed to develop state implementation plans (SIPs) to address cross-state pollution as required in the Transport Rule. 

‘Overcontrol’ significant contributions

Justice Scalia opened the questioning by stating that it is “very difficult to think that all Congress wanted was the most efficient reduction of pollution no matter where that pollution came from. That's simply not what the statute envisions.”  Effectively, this means that some states are forced to overcontrol their air pollution because the EPA could not tell them specifically what their “significant contributions” to downstate pollution are. 

But Malcolm M. Stewart, deputy solicitor general with the U.S. Department of Justice, pointed out that there are different ways of determining what a state's fair share is. “That is, one way would be to determine which states had been the greatest polluters in the past and say that the more pollution that had previously flowed from your borders, the greater your reduction obligation in the future,” said Stewart. “But another way would be to say in order to ensure that each of the states that have shared responsibility for the problem in the past bears its fair share, we will ask each state to undertake commensurate efforts as measured by the cost threshold.”

The SIP option

Much discussion centered on the roles of FIPs and SIPs.  Jonathan F. Mitchell, solicitor general of Texas, who represented the states in the oral arguments, argued that EPA “cannot impose a good neighbor FIP on the states when EPA has left the states completely in the dark about the meaning of the phrase ‘contribute significantly.’”  But at least four justices (Kennedy, Kagan, Breyer, and Sotomayor) still thought the states could overcome EPA’s action with SIPs. 

“You're not prevented from giving a counter SIP,” said Sotomayor.   “You can counter, is what the government is saying, and so it's not clear to me that they've estopped you from doing your own SIP.”

Justice Breyer appeared sympathetic to the difficulty of allocating specific pollution contributions to individual states.  “Well, [the EPA doesn’t] know exactly how to do it,” Breyer told Mitchell.  “[The EPA] wanted to see what the states would come up with.  The States haven't come up with enough in [the EPA’s] opinion; and so now we go to the federal process and [the EPA puts] out our thing.  And you comment on that.  And then if you feel that their thing is no good, propose your own solutions again. …it's supposed to advance the ball.  So there is a procedure for the states to come in if they can come up with a better plan, that's what you've just heard, and so do it. So what's—what’s arbitrary or capricious about such a system?”

Critical agreement also appeared to come from Justice Kennedy.  “If you've adopted a SIP or proposed a SIP, you've given reasons, you have a rational plan, and the EPA then must give a reasoned response to it,” said Kennedy.  “Whereas, if the EPA is the first one, they're writing on a blank slate; and it seems to me that in some respects, the EPA is more constrained under this process to which you object.”

Allocation variables

Justice Breyer also touched on the extreme difficulty of specifying allocations for individual states.  “There's six States that contribute to the seventh state's pollution, and how much each state can cut back depends,” Breyer said to Mitchell.  “It depends on what it costs.  It depends on how much they contribute.  It depends upon what the other states will do.  It depends upon where the wind blows, and that changes all the time.  It sounds to me as if you're asking them to do the impossible.  I don't know anything in the law that tells them that this statute was meant to force them to proceed in a way that would either be hugely more expensive and perhaps impossible.”   

Deference

Apart from the D.C. Circuit’s opinion, the oral arguments contain few references to previous cases, an indication that EPA’s action may be an original interpretation of the Clean Air Act (CAA).  In such cases, judiciaries have tended to defer to the “expert agency,” a point made by EPA’s Stewart, who adds that “absent extraordinarily clear statutory language,” there is no reason to turn back EPA’s rulemaking authority.  Justice Kagen appears to agree, noting that the CAA is “a statute on which EPA gets substantial Chevron deference.”

Supreme Court justices tend to be a bit freewheeling in oral argument, and what they say sometimes does not survive in the final opinions.  However, in this case, the wind does appear to be blowing in EPA’s direction. 

A transcript of the oral argument in EPA et al. v. EME Homer City Generation et al.