Is 'CSAPR' A Ghost? U.S. Circuit Court Vacates U.S. EPA's Sweeping Cross-State Air Emission Rule

In a landmark ruling, the U.S. Court of Appeals for District of Columbia struck down U.S. EPA's Cross-State Air Pollution Rule (CSAPR) on Aug. 21, 2012. As proposed, CSAPR would have required emission reductions through installation of additional emission controls at power plants and an interstate "cap and trade" system for 28 eastern states. The rule was ostensibly designed to reduce emissions from power plants in up-wind states that potentially impact the ambient air standard attainment status of down-wind states.

In EME Homer City Generation L.P. v. EPA, various states and industry petitioners challenged the CSAPR rule on grounds that EPA had exceeded its Clean Air Act authority in promulgating the rule. Two of the three judges on the panel sided with petitioners, holding that EPA's rule exceeded its statutory authority and violated the Clean Air Act's structure of "cooperative federalism" in which the federal government sets air quality standards but allows the states to implement those standards.

First, the D.C. Circuit rejected EPA's claim that CSAPR's stringent standards are authorized by the Clean Air Act's Section 110(a)(2)(D), often referred to as the Clean Air Act's "good neighbor provision." The Court of Appeals found that the "good neighbor provision" of the Clean Air Act was not a "blank check" for EPA to regulate interstate pollution on a regional basis. Slip Op. at p. 24. Instead, the good neighbor provision limits EPA's authority for regulating pollution from an upwind state only if it that caused "significant" contribution to a down-wind state's nonattainment status. Id. Even then, EPA could only require reductions relative to the specific upwind state's contribution to the downwind state's nonattainment status. EPA may not require any upwind State to 'share the burden of reducing other upwind states' emissions.'" Id. at 25 quoting North Carolina v. EPA, 531 F.3d 896, 921 (D.C. 2008).

Finding that EPA's interpretation stretched "far beyond" the statute, the court also held that EPA's interpretation was not supported by the statutory context. Regarding what it called an "ancillary provision" the Court explained:

It seems inconceivable that Congress buried in Section 110(a)(2)(D)(i)(I) – the good neighbor provision – an open-ended authorization for EPA to effectively force every power plant in the upwind States to install every emissions control technology EPA deems "cost effective." Such a reading would transform the narrow...