Washington court stays EPA’s cross-state air pollution rule

9 January 2012


On 3 January, with just 48 hours remaining until the rule would take effect, the Court of Appeals for the District of Columbia Circuit ('D.C. Circuit') granted a stay of the US EPA's Cross-State Air Pollution Rule pending completion of the court’s review of the rule’s validity.

In its per curiam order in the case of EME Homer City Generation L.P. v. EPA, the court makes clear that it expects the Environmental Protection Agency to continue administering the previously-promulgated Clean Air Interstate Rule (CAIR) until completion of the review. The order also expedites review of the CSAPR; it directs the parties to submit a briefing plan in January 2012 that would allow oral argument to occur by April 2012. Under such a schedule, a final decision is likely in summer or early autumn this year.

The CSAPR is intended to address interstate air pollution transport, which impairs the ability of certain downwind states to attain National Ambient Air Quality Standards for ozone and fine particulate matter. EPA promulgated the CSAPR as the successor to the CAIR, which the agency issued in 2005. A 2008 D.C. Circuit decision remanded the CAIR but allowed it to remain in effect until EPA replaced it with a valid regulation.

The CSAPR establishes emission allowance budget” for sulphur dioxide (SO2) and nitrogen oxides (NOx) for 28 states in the Eastern United States, and requires power plants in those states to hold allowances to cover their emissions. Phase I of the programme was slated to start in 2012; some states have tighter SO2 budgets due to take effect in 2014. The rule provides for unlimited intrastate allowance trading, and limited interstate trading. To effect these requirements, the CSAPR imposes Federal Implementation Plans on the covered states.

EPA finalized the CSAPR in August. Since then, the agency has undertaken a series of further CSAPR-related rulemaking actions. On December 16, the agency finalised a rule adding ozone-season CSAPR NOx budgets for five states. EPA also proposed “technical adjustments” to CSAPR that would increase the SO2 emission budgets for Texas and some other states. As of the end of 2011, however, EPA had not finalised the technical adjustments rule. Therefore, if the D.C. Circuit had not stayed the CSAPR, the rule would have gone into effect in 2012 with substantial modifications still pending.

Forty-five parties, including several power companies and fifteen states, petitioned for review of the CSAPR in the D.C. Circuit. Nineteen of those parties filed motions for stay. Six states and a few power companies have intervened in support of the EPA.

The petitioners have raised several arguments against the legal validity of the CSAPR, including that EPA impermissibly bypassed state authorities by imposing Federal Implementation Plans. Petitioners also have challenged the methodology for and accuracy of the state emission budgets.

The court’s December 30 per curiam order provides for a stay order on the CSAPR pending completion of the court’s review, and an expectation that EPA continues administering the Clean Air Interstate Rule during this period. An EPA motion to dismiss the petition for review filed by the State of Texas is consolidated with other CSAPR petitions and will be heard by a different panel judges than those that issued the stay order.

Prominent analysts Van Ness Feldman commented that the stay order suggests that the court has at least some concerns about the legal validity of at least some aspects of the CSAPR. Though the panel did not explain its decision, one of the requirements to obtain a stay is a showing of “substantial likelihood of succeeding on the merits.” However, a stay does not necessarily foretell invalidation. In 1999, the D.C. Circuit stayed a predecessor to the CAIR and the CSAPR – the NOx SIP Call rule – but ultimately upheld the essential components of the rule. The order is a victory for states and companies that had concerns about meeting their CSAPR obligations in 2012. Although the implementation schedule for the CSAPR is now uncertain, it appears that the court’s stay will push back the start of the CSAPR programme by at least one year – and perhaps more if the court reverses EPA on core elements of the rule. During this delay, however, most companies and states will remain subject to the extended CAIR limits. EPA itself will get some benefit from the stay in that it will make it possible for the agency to finalise its “technical adjustments” rulemaking before the rule goes into effect.




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