The D.C. Circuit Sends EPA Back to the Drawing Board to Fix Its Transport Rule Emissions Budgets

The Clean Air Act’s good neighbor national_good_neighbor_day_zps2a06b34b (1)provision prohibits upwind states from emitting air pollutants in amounts that will “contribute significantly to nonattainment” of a national ambient air quality standard in a downwind state.  On Wednesday, the D.C. Circuit Court of Appeals held that, while upwind states have to be good neighbors, EPA cannot force them to be extraordinarily super-special neighbors.  Just good enough will have to do.

Following the Supreme Court’s decision affirming EPA’s Transport Rule against facial challenges in EPA v. EME Homer City Generation, the Supreme Court remanded the case to the D.C. Circuit for consideration of as-applied challenges.  Various upwind states argued that the Transport Rule went too far, by requiring emissions reductions that were not necessary to attain compliance with NAAQS in downwind states.  The Court agreed.  As the Court noted, the opinion in EME Homer City stated that:

EPA may not require “an upwind State to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked.”

Since EPA did not defend the budgets on the ground that they were the minimum necessary to ensure NAAQS attainment in downwind states, the Court gave EPA short shrift in its policy arguments trying to justify the budgets.  The Court must have repeated the quote from EME Homer City about a half-dozen times.  It viewed EME Homer City as leaving EPA no room to deviate from the minimum necessary formulation.

EPA did win two small victories.  First, with respect to the 2014 emissions budgets, the Court remanded without vacatur, an approach becoming more and more common in these cases.  That leaves the 2014 budgets in effect, but EPA still has very little wiggle room.  It is pretty clear going forward that EPA’s emissions budgets under the Transport Rule are going to have to be the minimum required to result in NAAQS attainment in the downwind states.

The Court also rejected various remaining challenges to the Transport Rule.  This is certainly good news for EPA, but all of those challenges were doomed from the get-go, so EPA can’t be too excited.  This case was all about the emissions budgets on remand, and the loss has to hurt.

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