Cross-State Air Pollution Rule Thrown Out by Federal Appeals Court

Today, the U.S. Court of Appeals for the District of Columbia threw out a high-profile clean air rule from the EPA by a vote of 2-1. The judges ruled that the EPA exceeded its statutory authority under the Clean Air Act when imposing the Cross-State Air Pollution Rule (CSAPR), which was challenged by more than a dozen states, several utilities, and other industry and labor groups. 

As a result of today's ruling, the Clean Air Interstate Rule - which was developed in 2005 by the Bush Administration - would be put back in place which covered 27 eastern states and created a cap and trade program to cut emissions of sulfur dioxide (SOx) and nitrogen oxide (NOx) by 70 percent. The CAIR Rule was vacated in 2008 by the DC Circuit, siding with plaintiffs that argued the standards were not stringent enough to protect public health. The result of that court ruling guided the EPA's decision to develop the Cross-State Air Pollution Rule (CSAPR or 'Transport Rule'), which the Obama Administration argued would more quickly reduce air pollutants as well as provide $280 billion in public health benefits by helping to avoid 13,000 to 34,000 premature deaths per year. The rule was finalized in July 2011 and it would require 28 eastern states to reduce power plant emissions that contribute to pollution from ozone and fine particulate matter (PM2.5) in other down-wind states. 

Several utility and industry groups opposed CSAPR, arguing it would unduly impact energy prices and lead to significant job losses in states that are reliant on fossil fuel generation, primarily through coal-fired electricity units. Critics of the rule point to a study conducted by National Economic Research Associates (NERA), which estimated that the new rule would lead to average electricity bill increases of nearly 11.5 percent. Another study commissioned by a consulting organization, called the Brattle Group,estimated that utilities will spend upwards of $130 billion by 2015 to comply with the rule - with many of those costs being passed on to consumers. Texas, along with several other states, raised objections with the compliance time and emission reduction levels imposed by the CSAPR Rule as too stringent and that it does not provide reasonable time allotted by the Clean Air Act for the development of State Implementation Plans (SIPs). For example, the final CSAPR rule was issued in July 2011 but states were only given till 2012 to begin compliance.Historically, states were given time (usually  a few years) to develop SIPs for new proposed Clean Air rules. Under CSPAR, a Federal Implementation Plan would have been put into effect without an opportunity for states to develop or revise their SIP. 

The majority opinion issued in today's ruling by Judge Brett Kavanaugh essentially agreed with the arguments brought by the states. In his 60-page opinion, Judge Kavanaugh opined:

"Although the facts here are complicated, the legal principles that govern this case are straightforward: Absent a claim of constitutional authority (and there is none here), executive agencies may exercise only the authority conferred by statute, and agencies may not transgress statutory limits on that authority.

Here, EPA’s Transport Rule exceeds the agency’s statutory authority in two independent respects. First, the statutory text grants EPA authority to require upwind States to reduce only their own significant contributions to a downwind State’s nonattainment. But under the Transport Rule, upwind States may be required to reduce emissions by more than their own significant contributions to a downwind State’s nonattainment. EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind States without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA’s Transport Rule violates the statute. Second, the Clean Air Act affords States the initial opportunity to implement reductions required by EPA under the good neighbor provision. But here, when EPA quantified States’ good neighbor obligations, it did not allow the States the initial opportunity to implement the required reductions with respect to sources within their borders. Instead, EPA quantified States’ good neighbor obligations and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the good neighbor provision and violated the Act."