No ‘Carte Blanche’ at EPA on Downwind Air Pollution, Lawyers Say

The EPA won’t have unlimited leeway to rewrite a rule to tackle upwind sources of air pollution as it responds to a lower court ruling, despite the discretion the U.S. Supreme Court gave the agency six years ago, attorneys say.

The Environmental Protection Agency last week submitted for review a proposed rewrite of the Cross-State Air Pollution Rule to the White House Office of Management and Budget, with the goal of issuing a final rewrite by March 15. The air pollution rule updates a trading program for nitrogen oxides emissions designed to help 22 Eastern states meet federal ozone limits.

Attorneys say the EPA should be mindful of the 2014 Supreme Court decision when it rewrites the rule, in response to a more recent appellate ruling.

In 2014, the Supreme Court in a 6-2 ruling in EPA v. EME Homer City Generation L.P., penned by the late Justice Ruth Bader Ginsburg, upheld the EPA’s reading of the Clean Air Act to use a cap-and-trade program to control ozone-forming nitrogen oxide pollution from power plants.

More recently, the U.S. Court of Appeals for the District of Columbia Circuit in a 2019 decision ordered the agency to rework its 2016 update to the Cross-State Air Pollution Rule governing interstate transport of nitrogen oxides, a chemical precursor of ozone.

Cheryl Gonzalez, an Indianapolis-based Clean Air Act attorney with Barnes & Thornburg LLP, said courts may give the EPA discretion in its regulations when its response is well-reasoned and within the confines of the Clean Air Act.

But, “the deference the Ginsburg opinion afforded the agency in 2014 cannot be read as a ‘carte blanche’ to go beyond what the Clean Air Act requires,” Gonzalez told Bloomberg Law. She said the D.C. Circuit chose not to defer to the EPA because the 2016 rule exceeded the agency’s Clean Air Act authority.

Limited Discretion

The Clean Air Act requires states to develop plans to control emissions that cross state lines and prevent neighboring areas from meeting national air quality standards for ozone and other pollutants. If a state fails to develop a plan that is protective enough of public health, the EPA has the ability to reject it, and write its own federal plan for the state.

The EPA set nitrogen oxide emissions budgets for mostly coal-fired electric utilities to trade pollution credits in 22 states across the Eastern U.S. It had to ensure that downwind states could meet the 2008 ozone standard of 75 parts per billion no later than the July 2018 deadline.

However, the EPA conceded during oral arguments before the D.C. Circuit that upwind states wouldn’t be able to reduce pollution in time for downwind states to meet the 2008 ozone standards through the updated rule, and therefore set no deadlines for the upwind states to install controls.

The 2016 rule allowed upwind states like Ohio, Pennsylvania, and West Virginia to “continue their significant contributions to downwind air quality problems beyond the statutory deadlines by which downwind States must demonstrate their attainment of air quality standards,” the D.C. Circuit said in Wisconsin v. EPA.

Neil Gormley, a Clean Air Act attorney with the environmental nonprofit Earthjustice, who successfully argued the Wisconsin v. EPA case on behalf of conservation groups, agreed that the agency can get deference, as long as it makes a well-reasoned decision.

“The lesson we learn from EME Homer is that the EPA has discretion in how it spells out details, but that discretion is limited by the Clean Air Act,” Gormley said.

‘Not So Simple’

Ginsburg, who died Friday from complications arising from metastatic pancreatic cancer, essentially upheld the agency’s framework for interstate air pollution in EME Homer.

“The realities of interstate air pollution, however, are not so simple,” she wrote, noting most upwind states contribute pollution that blows across state lines “in varying amounts.”

The D.C. Circuit, citing EME Homer, also acknowledged this reality, but said the “EPA possesses a measure of latitude in defining which upwind contribution ‘amounts” count as ‘significant’ and thus must be abated.”

Kevin Minoli, who worked at the EPA from 2000 to 2018 and is now a partner at Alston & Bird LLP, said the Supreme Court gave the EPA discretion on which upwind states would have to reduce their pollution, and how much they must reduce pollution—"but the Court offered no similar flexibility with regard to when the reductions must be in place.”

Gormley said the EPA could easily tighten the nitrogen emissions budget for power plants in its rewrite of the 2016 regulation because the credits are so cheap now. The agency also could require some power plants that aren’t running pollution controls on a daily basis to start operating them.

The EPA declined to comment on how it’s rewriting the rule.

The Supreme Court’s ruling limited using cost in allocating pollution reductions among the 22 states that had to meet pollution reductions through the trading scheme contained in the rule, Gormley said. But EPA may try using cost as an excuse to allow pollution to continue, he said, adding that “Justice Ginsburg gave them an inch, and EPA may try to take a mile.”

Leaving a Stamp

Ginsburg left her stamp on EPA’s Clean Air Act obligations to address interstate transport of air pollution, Gormley said.

“Whenever cross-state air pollution is discussed, EME Homer comes up,” he said.

Ginsburg joined the majority in the 2007 Massachusetts v. EPA decision that laid the framework for greenhouse gas regulation under the Clean Air Act. But in American Electric Power v. Connecticut, Ginsburg, writing for the 8-0 majority in 2011, said states can’t invoke federal nuisance laws against electric utilities for their greenhouse gases when the Clean Air Act already directly speaks to that issue.

“Between Massachusetts v. EPA, EME Homer City, and American Electric Power v. Connecticut, Justice Ginsburg was a sort of a voice for the agency’s authority to tackle pressing environmental issues under existing law,” said Thomas Lorenzen, a Clean Air act attorney with Crowell & Moring LLP.