SUPREME COURT AGREES TO HEAR ‘GOOD NEIGHBOR’ CASE

High Court to Review Ruling That Threw Out EPA Reg Limiting SO2, NOx Emissions

Tamar Hallerman
GHG Monitor
6/28/13

The U.S. Supreme Court said this week that it plans to review a lower court ruling that vacated the Environmental Protection Agency’s ‘good neighbor’ standards for power plants. In a surprise announcement that represented a big win for EPA and environmental and public health advocates, the high court announced June 24 that it would hear the case surrounding EPA’s Cross-State Air Pollution Rule (CSAPR) during its next term, which begins in October and stretches until June 2014.

EPA said it was “pleased” with the news. “The Cross-State Rule was promulgated to address pollution that crosses state lines and implementation of the rule would lead to significant benefits for human health and the environment,” the Agency said in a statement, but clarified that the Supreme Court’s decision “is not a decision on the merits but instead a decision to review the case on the merits.” Environmental and public health groups said they were also pleased with the announcement. “For too long, ozone smog and particle pollution have traveled far from their sources, threatening lives and health across far away state borders. If the Court upholds the Cross State Air Pollution Rule, these protections would save up to 34,000 lives each year,” the American Lung Association said in a statement.

Meanwhile, industry groups said they hope the high court would side with the lower court’s decision. “When the EPA takes liberties with its legal authority, the result is higher prices for consumers, businesses, schools and hospitals. At a time of economic recession, the country cannot afford sloppy rulemaking of this sort. The EPA can and should do better,” said Scott Segal, director of the industry-funded Electric Reliability Coordinating Council and partner at the law firm Bracewell & Giuliani. In the aftermath of the Supreme Court announcement Monday, paired with notice from the White House that it would release its national climate change plan June 25, the value of coal company stocks sharply declined. Alpha Natural Resources’ shares dipped 8 percent, Peabody Energy’s slid 7.2 percent and Consol Energy’s by 5.8 percent on Monday.

Rule Aims to Limit SO2, NOx Emissions

Finalized in summer 2011 but stayed six months later, CSAPR aimed to curb the emissions of fine pollutants like sulfur dioxide (SO2) and nitrogen oxide (NOx), which are spewed from tall smokestacks at power plants and contribute to soot and smog, which are easily transported across state lines and harm air quality in downwind states. The rulemaking would have compelled 28 Eastern and Midwestern states to reduce SO2 and NOx emissions by 73 percent and 54 percent below 2005 levels, respectively, beginning in January 2012. CSAPR would have set up a trading system where states could buy, sell and trade pollution credits tied to reductions in emissions, where ultimately the cleanup work would be done where it is cheapest and easiest to do so.

However, the rule, a key part of the Obama Administration’s efforts to clean up power plants, had long been an area of contention between EPA, fossil fuel-reliant upwind states and the courts. After a group of 16 upwind states, utilities and coal companies sued the agency, the U.S. Court of Appeals for the District of Columbia ruled 2-1 last August that EPA exceeded its statutory authority under the Clean Air Act with CSAPR. In its order, the majority wrote that EPA did so by requiring some upwind states to clean up more than their contribution to the increased pollution in downwind states. “EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind states without regard to the limits imposed by the statutory text,” Judge Brett Kavanaugh wrote for the majority, arguing that upwind states should make emissions reductions in proportion to the size of their contributions to the downwind states’ extra pollution. The ruling also said EPA was at fault for not allowing states the opportunity to first submit their own compliance plans to meet the SO2 and NOx limits as required under the Clean Air Act before stepping in to offer a federal plan.

In throwing out CSAPR, the court required EPA to go back to the drawing board and draft a new rulemaking—since a ‘good neighbor’ standard is required under the Clean Air Act—which would likely take several years to finalize. In the meantime, it made EPA revert to enforcing a weaker George W. Bush-era standard, the Clean Air Interstate Rule, which the same court threw out in 2008 for not doing enough to protect public health.

‘Disregarding’ CAA Precedents?

Meanwhile, in a strongly-worded dissent, Judge Judith Rogers said the majority “disregards” precedents set by Congress, the Clean Air Act and the court in previous rulings. “The result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress’s vision of cooperative federalism between the states and the federal government in implementing the Clean Air Act based on the court’s own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court’s precedent on which the Environmental Protection Agency was entitled to rely in developing the [CSAPR] rather than be blindsided by arguments raised for the first time in this court,” Rogers wrote.

EPA had filed a petition for a rehearing with an eight-judge panel on the U.S. Court of Appeals—instead of the typical three-person bench—a request that was ultimately denied. The agency, backed by a coalition of environmental and public health groups including the Environmental Defense Fund and the American Lung Association, then petitioned the Supreme Court earlier this spring. In its petition, EPA said the federal appeals court “committed a series of fundamental errors that, if left undisturbed, will gravely undermine the EPA’s enforcement of the Clean Air Act.” The EPA said the lower court ruled on several elements of the rulemaking that it did not have the authority or the scope to look at. “If not corrected, the decision … will have serious adverse consequences,” the appeal stated.