The Nickel Report

As we have discussed previously, the federal Clean Air Act (CAA) addresses what is often termed “interstate transport.” That is the phenomenon in which emissions from factories, power plants, motor vehicles and many other emission sources are transported by prevailing winds across state lines, sometimes over great distances. The CAA looks to states, first and foremost, to include control measures in implementation plans to reduce emissions that travel into other states. The statutory objective is to prohibit “significant contributions” by upwind states to violations of national ambient air quality standards (NAAQS) in downwind states. Although states have primary responsibility, EPA sometimes has invoked its CAA authority to establish federally enforceable requirements to address significant contributions when it concludes upwind states have not taken sufficient steps. In 2016, EPA adopted its most recent set of regulatory interstate transport controls in a rulemaking action called the “Cross-State Air Pollution Rule Update”—or the “CSAPR Update” for short. On September 13, the US Court of Appeals for the DC Circuit issued a decision in closely-watched litigation involving challenges to the CSAPR Update. (The case is Wisconsin v. EPA, No. 16-1406.) While upholding this EPA regulation in most respects, the court ruled in favor of a challenge that concerns the timing of upwind-state emission controls.

The CSAPR Update requires fossil fuel-burning electricity-generating plants located in 22 states in the eastern half of the US to reduce and limit emissions of nitrogen oxides that, EPA found, contribute significantly to violations or potential violations of the NAAQS for ground-level ozone in downwind states. (The ozone NAAQS at issue is the one EPA adopted in 2008, not a more stringent NAAQS adopted in 2015.) When EPA established the CSAPR Update’s emission limits in late 2016, its plan was to have emission controls in place in upwind states by May 2017, the beginning of the next annual “ozone season”—the warm-weather months of the year when atmospheric conditions are most conducive to ozone formation.

In light of this abbreviated compliance timeframe, EPA calculated the CSAPR Update’s emission reduction requirements based on only those control measures the agency determined could be implemented within a period of several months. At the time, EPA said the CSAPR Update constituted a “partial” remedy for significant contributions—“partial” in the sense that, as EPA explained, it would have to undertake further analysis before it could determine whether, and to what extent, there was a need for more controls than those required by the CSAPR Update itself. Any potential future additional controls could perhaps include controls on emissions from other categories of sources, such as certain manufacturing plants, or additional controls on electricity-generating facilities where those controls would take more time to design, build and install.

Environmental organizations and the State of Delaware challenged this aspect of the CSAPR Update in litigation in the DC Circuit. They argued EPA had an obligation under the CAA to require all control measures needed to fully remedy upwind states’ significant contributions in advance of a July 2018 “attainment” deadline for the NAAQS in certain downwind areas. In the DC Circuit’s September 13 decision, a three-judge panel of the court agreed that EPA had failed to show it had satisfied its obligation to align the timeframe for upwind states’ emission reductions with downwind areas’ NAAQS attainment deadlines. In light of language in the CSAPR Update characterizing its emission limits as providing only partial relief for downwind areas pending further analysis by EPA, the court remanded the rule to the agency for further consideration. At the same time, the court rejected arguments challenging other aspects of the rule, including arguments by Delaware and environmental groups that its emission limits are too lenient in several respects, as well as challenges by other states and by industry parties that argued the rule is unlawfully stringent. The DC Circuit did not “vacate”—or make legally invalid—the CSAPR Update; instead, the court left the rule in place pending further action by EPA on remand. And the court declined a request by Delaware and environmental groups to impose a six-month deadline for EPA action on remand. EPA and other parties have until October 28 to file petitions for rehearing if they want the panel or the full court to reconsider the September 13 decision.

At this early date, it is difficult to gauge the ramifications of the DC Circuit’s decision for possible future EPA (and state) actions addressing interstate transport under the CAA. For one thing, parts of the decision (including passages on pages 26 and 27 of its opinion) discuss ways in which EPA “retains some flexibility in administering” the statute’s interstate transport provisions, including, in some respects, in connection with implementation deadlines. Second, as noted, there remains the possibility of rehearing of the court’s decision.

Moreover, any evaluation of the decision’s effects must account for the fate of a separate but related EPA rule issued in December 2018—the “CSAPR Close-Out Rule.” In that rule, EPA announced a determination, as a result of additional analysis, that the CSAPR Update had in fact fully satisfied interstate transport obligations (with respect to the 2008 ozone NAAQS) for the upwind states subject to the CSAPR Update. Separate DC Circuit litigation is pending in which environmental groups, New York and other northeastern states challenge that EPA determination. (That case is New York v. EPA, No. 19-1019.) The DC Circuit originally scheduled oral argument in that case for September 20, before a different three-judge panel than the one in the CSAPR Update litigation. Shortly after the CSAPR Update decision came out on September 13, the panel in the Close-Out Rule case issued an order notifying the parties that they should plan to discuss at the oral argument their views on the decision’s effects on the Close-Out Rule challenges. The court also ordered the parties to submit supplemental briefs addressing that question. The parties filed those briefs on September 17 and 18. In its brief, EPA—emphasizing that it was only beginning to analyze the decision’s impacts and might seek rehearing by the DC Circuit—requested that the court cancel the September 20 oral argument. The court quickly granted that request.

Whatever that development may portend, it’s clear that any assessment of the CSAPR Update decision’s effects will have to be informed by what transpires in the CSAPR Close-Out Rule case. It seems equally apparent that the future direction of interstate transport policy under the CAA will remain uncertain while additional litigation, and perhaps regulatory, proceedings play out over the coming months.