D.C. Circuit Vacates EPA's Cross-State Air Pollution Rule

On August 21st, the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit" or "Court"), in a 2-1 split decision, vacated the U.S. Environmental Protection Agency's ("EPA") Cross-State Air Pollution Rule ("CSAPR" or the "Transport Rule"), which regulates emissions from upwind states that contribute to air quality problems in downwind states. EME Homer City Generation v. EPA, No. 11-1302 (D.C. Cir. Aug. 21, 2012). The Court, in an opinion written by Judge Brett Kavanaugh and joined by Judge Thomas Griffith, held that EPA exceeded its statutory authority under the federal Clean Air Act ("CAA" or the "Act") because the Transport Rule required emissions reductions beyond what is required to attain the relevant National Ambient Air Quality Standards ("NAAQS"). In addition, the D.C. Circuit held that, by simultaneously promulgating Federal Implementation Plans ("FIPs") applicable to all upwind states for the Transport Rule, EPA impermissibly denied states the opportunity to implement CSAPR. Based on these two independent flaws, the Court vacated and remanded CSAPR. The Court also ordered EPA to continue administering the Clean Air Interstate Rule ("CAIR"), which EPA has been implementing since the D.C. Circuit stayed CSAPR in December 2011 and which CSAPR was designed to replace due to the flaws in CAIR identified by the D.C. Circuit in North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).

EPA's Significant Contribution Analysis Ran Afoul of the Good Neighbor Provision by Requiring Some States to Exceed the Mark

Under the Act's "good neighbor" provision, each state is required, as part of its State Implementation Plan ("SIP"), to prevent sources within its borders from emitting "amounts" of pollution that travel across state lines and "contribute significantly" to a downwind state's attainment of the NAAQS. 42 U.S.C. § 7410(a)(2)(D). To implement the good neighbor provision in light of the D.C. Circuit's vacatur and remand of its predecessor rule in North Carolina, EPA promulgated CSAPR, which defines emissions reduction responsibilities for 28 upwind states based on those states' contributions to downwind states' air pollution. In particular, CSAPR requires reductions in sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from upwind states' electric generating units.1

In the first stage of EPA's analysis, EPA determined which upwind states were contributing significantly to downwind nonattainment and maintenance...