EPA Petitions DC Circuit For Rehearing Of EME Homer City Generation, L.P. Decision

On Friday, October 5, 2012, the United States Environmental Protection Agency petitioned the full U.S. Court of Appeals for the D.C. Circuit for rehearing en banc of the decision in August 2012 by a three-judge panel of the Court to vacate the Agency's Cross-State Air Pollution Rule (CSAPR) in EME Homer City Generation, LLP v. EPA, No. 11-1302 ("EME").

CSAPR would have required significant reductions in emissions from power plants in certain states that contributed to "downwind" ozone or fine particle pollution in other states. In a 2-1 decision, the panel majority (in an opinion filed by Judge Kavanaugh, joined by Judge Griffith) ruled that EPA, in promulgating CSAPR, had exceeded its statutory authority under the Clean Air Act by: (1) requiring upwind states to reduce their emissions by more than their own significant contributions to a downwind state's nonattainment; and (2) not giving states the opportunity to initially implement a system for reductions for sources within their boundaries (i.e., by preparing a State Implementation Plan, or SIP) before imposing an EPA-designed Federal Implementation Plan (FIP). Judge Rogers filed a lengthy dissent. For more information about the D.C. Circuit panel's decision, please see our previous Clients & Friends Alert available here.

In its petition for rehearing, EPA (relying heavily on Judge Rogers' dissent) advanced four arguments. First, EPA argued that the panel lacked jurisdiction to hold that EPA had no authority to promulgate FIPs, because any such challenge had either been previously waived or was not before the panel. EPA cited statutory authority as well as case law demanding "strict adherence" to this jurisdictional limit. Second, and as a related matter, EPA argued that the panel ignored the plain language of the Clean Air Act requiring states to submit SIPs by a certain date (within three years of promulgation of a National Ambient Air Quality Standard, or NAAQS) or else be subject to an EPA-designed FIP. Third, EPA argued that the panel's "significant contribution" analysis relied on arguments made by the challengers to the Rule for the first time in their D.C. Circuit case (rather than in the extensive administrative proceedings pre-dating the court challenge), thereby violating well-settled waiver and exhaustion principles. And fourth, EPA argued that the panel wrongfully chose its own construction of the ambiguous statutory term "contribute significantly" over EPA's...