The Supreme Court today reversed the D.C. Circuit and affirmed EPA’s Transport Rule (known more formally as the Cross-State Air Pollution Rule). Whatever the hopes and dreams of the upwind states and the industry opponents, the decision does not surprise me. EPA pretty much did what it was told when the Bush era CAIR rule was struck down. Moreover, EPA crafted a rule that seems to me fully within its discretion under the Clean Air Act and which, in fact, took cost into account as much as allowed under the CAA.
There were two issues on appeal. One was whether, having found that upwind states do “contribute significantly to nonattainment” in downwind states, EPA was required to give states time to amend their state implementation plans or whether, instead, EPA could immediately issue federal implementation plans requiring the necessary emission reductions in the upwind states. To EPA – and to the Supreme Court – the question was not difficult.
The CAA gives states three years to amend their SIPs after EPA issues a new National Ambient Air Quality Standard. However, that isn’t what happened here. The NAAQS were already in place. Instead, EPA determined that upwind states were causing a violation of the previously-issued NAAQS in the downwind states. In such situations, the statute provides that EPA may issue a FIP anytime within two years of determining that a SIP does not satisfy the statutory criteria – which of course include assurance of compliance with NAAQS. While the D.C. Circuit concluded that, in the absence of direction from EPA, upwind states cannot possibly know how they are supposed to amend their SIPs, Justice Ginsberg, describing the D.C. position as finding “an unwritten exception” in the Act, concluded that the:
practical difficulties cited by the Court of Appeals do not justify departure from the Act’s plain text.
The second issue relates to how EPA actually set the budget for reductions required from each upwind state. EPA first set a screening threshold, determining that states were significant contributors to downwind NAAQS violations if they contributed at least one percent of the NAAQS at a downwind receptor. In the second, control analysis, step, EPA performed cost analysis, looking at the cost per ton for various levels of emissions control, and the resulting impacts on the downwind states. EPA then set the upwind state budgets based on this form of cost-effectiveness analysis.
The upwind states and industry opponents argued that the CAA requires EPA to set the emissions budgets based on “proportionality”, i.e., each state’s proportional contribution to downwind NAAQS exceedances. To Judge Ginsburg (and a Court majority that included Justices Roberts and Kennedy), the Act does not require such proportionality, and EPA reasonably applied its discretion to utilize the cost-based approach instead. This is particularly so where there are multiple upwind and downwind states. As Justice Ginsberg pointed out, one state could be proportionally more responsible than another upwind state for a NAAQS exceedance at one downwind receptor, but less responsible at another receptor.
Ultimately, the Court found this to be a fairly simple Chevron question:
We routinely accord dispositive effect to an agency’s reasonable interpretation of ambiguous statutory language.
We conclude that the Good Neighbor Provision delegates authority to EPA at least as certainly as the CAA provisions involved in Chevron. The statute requires States to eliminate those “amounts” of pollution that “contribute significantly to nonattainment” in downwind States. … The statute therefore calls upon the Agency to address a thorny causation problem: How should EPA allocate among multiple contributing upwind States responsibility for a downwind State’s excess pollution?
Obligated to require the elimination of only those “amounts” of pollutants that contribute to the nonattainment of NAAQS in downwind States, EPA must decide how to differentiate among the otherwise like contributions of multiple upwind States. EPA found decisive the difficulty of eliminating each “amount,” i.e., the cost incurred in doing so. Lacking a dispositive statutory instruction to guide it, EPA’s decision, we conclude, is a “reasonable” way of filling the “gap left open by Congress.”
The bottom line? The Supreme Court seemed to acknowledged today just how extraordinarily complex a task EPA has been given by Congress in implementing the CAA, particularly its Good Neighbor provisions. When challenges are made to EPA’s decisions in implementing those complex provisions, there remains a heavy weight on the scale in EPA’s favor. As troubling as I sometimes find particular decisions by EPA, and as tempting as the non-delegation doctrine sometimes seems, this is probably as it should be.