Tag: U.S. Supreme Court

1
High Court Grants Stay of Clean Power Plan
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Supreme Court “Not Willing to Stand on the Dock and Wave Goodbye” as EPA Explores How It Can Regulate Greenhouse Gases from Every Possible Source
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EPA Survives Challenge to Cross Border Air Pollution Rule

High Court Grants Stay of Clean Power Plan

On February 9, 2016, in an historic and unprecedented decision, the U.S. Supreme Court blocked the U.S. Environmental Protection Agency (“EPA”) from implementing the Clean Power Plan (“CPP”) while the rule is challenged in lower courts. The decision is a victory for twenty-nine states and state agencies, along with several industry and trade groups (the “Petitioners”), who appealed the D.C. Circuit’s January 21, 2016 decision not to stay the CPP.

The Petitioners argued to the Supreme Court that the EPA does not have the Clean Air Act authority to implement the CPP, which they assert would reorganize the entire electric power sector of the U.S. economy. The petitioners persuaded the U.S. Supreme court that there was a reasonable probability that four justices would agree to hear the case, that there was a fair prospect that the majority of the court would find that the CPP was unlawful, and that irreparable harm would have resulted from the denial of the stay.

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Supreme Court “Not Willing to Stand on the Dock and Wave Goodbye” as EPA Explores How It Can Regulate Greenhouse Gases from Every Possible Source

In 2007, the Supreme Court told the U.S. Environmental Protection Agency (EPA) it was wrong to conclude that it lacked the authority to regulate greenhouse gases (GHGs) emitted from vehicles, because GHGs are an “air pollutant.” Since then, the energy and power industries in particular have watched as the EPA took that ruling and developed regulations focused on limiting GHG emissions from stationary sources. EPA not only regulated GHGs from utilities, but expanded the program to almost any source of GHGs (landfills, electronics manufacturers, office buildings), and then “tailored” the rule to limit what everyone agreed were onerous and unnecessary impacts. In a 5-4 decision, the Supreme Court again reversed the EPA, this time telling it that it cannot regulate entities’ GHG emissions if they do not otherwise need a Clean Air Act (CAA) permit. While the decision provides relief to building owners, hospitals, bakeries, dry cleaners, many manufacturers, and just about every other type of business that uses heating and air conditioning, the power industry itself (meaning those that need CAA permits anyway) did not fair as well because the Court upheld EPA’s authority to require them to implement “best available control technology” (BACT) to limit GHGs. This alert describes the decision, and addresses the question most relevant to the regulated community: How much will this decision matter? Read More

EPA Survives Challenge to Cross Border Air Pollution Rule

Yesterday the U.S. Supreme Court upheld the U.S. Environmental Protection Agency’s (“EPA”) regulation of cross border air pollution.  In a 6-2 ruling,[1] the Supreme Court reversed the D.C. Circuit, holding that EPA’s cross border air pollution rule (the “Transport Rule”)[2] did not violate the Clean Air Act (“CAA”) by establishing a new federal scheme for regulating upwind emissions that drift over state lines.  The decision likely will impact those power plants in “upwind states” that contribute to cross border air pollution by imposing more stringent air emissions limits for those facilities.  However, the decision may also spur an increase in development of renewable energy and lower emission natural gas fired plants.

The Transport Rule establishes good neighbor obligations among 28 states for three primary pollutants: NOX, SO2, and ozone, and EPA has established National Ambient Air Quality Standards (“NAAQS”) for each of these pollutants.[3]  Any state whose ambient air quality exceeds the NAAQS is considered in “non-attainment.”  The CAA requires that upwind states, whose emissions cause or contribute to exceedances of NAAQS standards in downwind states, control their emissions to the extent required to avoid such contribution.  The Transport Rule is made up of two basic components: it quantifies each state’s emissions reduction levels under the good neighbor provision and imposes Federal Implementation Plans (“FIPs”) to implement those reductions at the state level.

EPA calculated the necessary emissions reductions in a two stage approach.  The first stage screens from its requirements all upwind states that contribute less than 1% of any downwind state’s nonattainment.[4]  The second stage applies a multi-factor assessment to set reductions in those upwind states on a cost-per-ton reduction basis (which relied on the costs to install pollution reduction technology) that was distributed across all power plants in the upwind states.[5]  Finally, the Transport Rule proposed to achieve cost-per-ton reductions over multiple years, beginning in 2012 and relying on a maximum budget for each pollutant that a state’s power plants may collectively emit through 2014.[6]  Since EPA found that many State Implementation Plans (“SIPs”) did not properly provide for these emissions budgets, EPA invalidated those SIPs and instead required those states to comply with new state-specific FIPs.  It did so without giving the states an opportunity to correct their SIPs based upon EPA’s objections, and (at least according to some) without giving the states guidance on how to address those objections.

The Supreme Court reviewed the D.C. Circuit Court’s conclusion that the Transport Rule exceeded EPA’s statutory authority to impose more stringent air quality requirements through the good neighbor provisions of the CAA.  First, the D.C. Circuit Court determined that the Transport Rule exceeded CAA authority because the good neighbor provision could impose emissions reductions on upwind states that could go beyond those states’ significant contribution to downwind air pollution in other states.  Second, the D.C. Circuit concluded that the Transport Rule failed to provide states with the first opportunity to implement the good neighbor reductions through their own SIPs.  Instead, EPA quantified the states’ good neighbor reductions and simultaneously set forth EPA-designed FIPs to implement those obligations at the state level without first providing the states an opportunity to correct their SIPs.

The Supreme Court overturned the D.C. Circuit Court decision, concluding that EPA reasonably interpreted the good neighbor provision and that the CAA did not required EPA to give states  a grace period to file revised SIPs.

It is still uncertain how the Supreme Court’s decision will ultimately affect the implementation of and reductions required under the Transport Rule.  Significant issues lie ahead for EPA related to regulatory impacts and the legal implications for the Transport Rule.  For example, since EPA is already several years behind the start date for the rule—January 1, 2012—the agency will likely have to issue new regulations to modify implementation dates.  Likewise, EPA may need to adjust the Transport Rule to address revisions and updates to air quality standards for ozone and particulate matter.  And finally, EPA may face further litigation that was stayed since the D.C. Circuit decision, or litigation related to technical revisions to the Transport Rule during the stay.[7]

Despite these issues, the Supreme Court decision presents two significant implications. First, by agreeing that EPA may foreclose a state’s ability to determine how emission reductions are to be achieved and allocated among sources, the decision may have changed the fundamental federal/state regulatory relationship under the CAA.  Second, the decision demonstrates the broad deference to EPA on substantive and technical issues, and reaffirms the Court’s view that when reasonable minds differ on technical issues, EPA’s interpretation will prevail as long as it is rational and supported by the record. Both points support EPA’s continuing efforts to impose greater regulation on the fossil fuel industry, which may accelerate the adoption of new pollution control technologies or the replacement of fossil fuel energy production with alternatives that do not emit, or emit less of, these criteria pollutants.

For additional information on the decision underlying the Supreme Court’s decision, see:


[1] Justice Alito did not participate.  Justices Scalia and Thomas joined in dissent.

[2] Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and Ozone and Correction of SIP Approvals, 76 Fed. Reg. 48,208 (Aug. 8, 2011).

[3] For additional details on the regulated pollutants, see 76 Fed. Reg. 48,208.

[4] EME Homer City Generation LP v. EPA, 696 F.3d 7, 11 (D.C. Cir. Aug. 21, 2012).

[5] Id. at 11-12.

[6] Id. at 12.

[7] Utility Air Regulatory Group v. EPA, D.C. Cir., No. 12-1346, 9/27/12; Wisconsin Public Service Corp. v. EPA, D.C. Cir., No. 12-1163, 4/6/12.

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