August 05, 2013 Articles

Supreme Court Grants Certiorari in CSAPR Case

It remains to be seen how this unpredictable Court will ultimately rule on the merits of the Transport Rule.

By David F. Williams and Sohair A. Aguirre – August 5, 2013

In a case closely watched by a wide array of industry, labor, environmental, and government stakeholders, on June 24, 2013, the U.S. Supreme Court granted the petition of the U.S. Environmental Protection Agency (EPA) for a writ of certiorari to review the August 2012 decision of the D.C. Circuit striking down the EPA’s far-reaching Cross-State Air Pollution Rule (CSAPR or the “Transport Rule”). EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), reh’g and reh’g en banc denied, No. 11-1302 (D.C. Cir. Jan. 24, 2013); EPA v. EME Homer City Generation, L.P.cert. granted (U.S. June 24, 2013) (No. 12-1182). The Court granted two separately filed petitions for writs of certiorari (EPA v. EME Homer City, No. 12-1182, and Am. Lung Ass’n v. EME Homer City, No. 12-1183) limited to the questions presented by the EPA’s petition in No. 12-1182. The Court consolidated the cases and allotted a total of one hour for oral argument.

A brief glance at the identity of the parties filing briefs supporting and opposing the EPA’s certiorari petition underlines the breadth of interest in the CSAPR and this litigation. Two groups of parties filed briefs in support of the EPA’s petition: a group of 15 states and cities and, in addition, Calpine Corp. and Exelon Corp. The Court granted the petition over the objections of two groups of parties that filed opposition briefs: a group of 34 utilities, power generators, coal companies, and labor organizations, and a group of 17 states and cities.

The EPA issued the CSAPR on July 6, 2011. See 76 Fed. Reg. 48,208 (Aug. 8, 2011). In brief, the CSAPR would have required significant reductions in emissions of sulfur dioxide and nitrogen oxide from power plants in 27 states in the eastern half of the United States that, according to the EPA, contribute to “downwind” ozone or fine-particle pollution in other states. The EPA estimates that the CSAPR would achieve a 73 percent reduction in sulfur dioxide and a 54 percent reduction in nitrogen oxide power-plant emissions from 2005 levels in the covered states. The CSAPR was the EPA’s attempt to replace the Clean Air Interstate Rule (CAIR), which the D.C. Circuit also struck down in 2008. North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), modified on reh’g, 550 F.3d 1176 (D.C. Cir. 2008).

On August 21, 2012, in a 2–1 decision, the D.C. Circuit vacated the CSAPR. Judge Kavanaugh wrote the majority opinion, joined by Judge Griffith. Judge Rogers filed a 45-page dissent. The D.C. Circuit ruled that the EPA had exceeded its statutory authority under the Clean Air Act by (1) requiring upwind states to reduce their emissions by more than their own significant contributions to a downwind state’s non-attainment; and (2) not giving states the opportunity to initially implement a system for reduction of emissions within their boundaries (i.e., by preparing a state implementation plan, or SIP) before issuing a federal implementation plan (FIP).

In its petition for a writ of certiorari, the EPA argued that the D.C. Circuit “committed a series of fundamental errors that, if left undisturbed, will gravely undermine the EPA’s enforcement of the Clean Air Act.” Petition for a Writ of Certiorari at 11, EPA v. EME Homer City Generation, L.P., No. 12-1182 (filed Mar. 29, 2013). The agency advanced three arguments (or sets of arguments) in support of its position that the Court should grant its petition.

The EPA’s first set of arguments related to prior SIP orders that it had issued in 2010 and 2011. As a threshold matter, the EPA argued that the D.C. Circuit exceeded its jurisdiction by addressing the CSAPR issue at all. The D.C. Circuit, the EPA pointed out, determined in its decision that “EPA could not pass judgment on SIPs until it had quantified States’ good neighbor obligations.” The EPA argued that this determination was, “in substance, a collateral invalidation of separate orders not before the court.” Prior to issuing the Transport Rule, the EPA had issued separate orders in 2010 and 2011 finding that certain state-issued SIPs inadequately addressed the good-neighbor provisions of the Clean Air Act. These provisions require states to adopt implementation plans that ensure the state will not emit pollutants in amounts that “contribute significantly” to other states’ National Ambient Air Quality Standards (NAAQS) nonattainment or inability to maintain compliance with NAAQS. According to the EPA’s petition, the proper avenue for challenging the EPA’s “good neighbor” findings would have been through direct petitions for review of those orders (a course the states chose not to pursue)—not through a collateral attack mounted through challenging the CSAPR.

The EPA went on to argue that, even if the D.C. Circuit was authorized to review the 2010 and 2011 orders on the merits, its determination (in effect) that the orders were invalid conflicted with the text of the Clean Air Act itself. The statute provides that within three years of the EPA issuing NAAQS, states must submit SIPs. If the states fail to do so or submit inadequate SIPs, then the EPA must make a finding of such failure. Within two years of the EPA’s finding, the EPA must issue FIPs. Because the EPA already had made a finding that the SIPs were inadequate, it was obligated to issue an FIP addressing the good-neighbor provisions of the Clean Air Act. According to the EPA, the D.C. Circuit’s conclusion that the EPA should not have promulgated FIPs because it was first obligated to define a state’s significant contribution (as a prerequisite to SIP issuance) contravenes the plain text of the statute. In addition, the EPA argued that those challenging the Transport Rule had also waived their right to challenge the EPA’s approach to “significant contribution” because they failed to raise that argument in the administrative proceedings below.

The EPA’s second set of arguments had to do with the agency rulemaking process for the Transport Rule. The EPA argued that the D.C. Circuit should not have ruled that the EPA’s significant-contribution analysis was foreclosed by the language of the Clean Air Act because this argument was not raised during the public-comment period of the administrative proceeding. In addition to the procedural argument, the EPA argued that the D.C. Circuit read into the statute a statutory requirement that the emission reductions required for each state be proportional to its modeled amount of downwind-air-quality contribution. However, the EPA asserted that the Clean Air Act does not set forth such a standard and that the EPA’s construction of the ambiguous term “significant contribution” was reasonable. According to the EPA, under these circumstances, the court was required to defer to the EPA’s judgment: “This is a classic delegation of gap-filling authority warrantingChevron deference in a highly technical area that demands specialized expertise.” EPA Petition at 24 (citing Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 843 (1984), and Nat’l Cable & Telecomms. Ass’n v. Gulf Power Co., 534 U.S. 327, 339 (2002)).

Finally, the EPA made policy arguments that the D.C. Circuit’s decision would disrupt the EPA’s implementation of the Clean Air Act and threaten serious harm to the public health.

The industry and labor respondents argued that the Supreme Court should not grant certiorari for several reasons. First, they asserted that the D.C. Circuit’s decision does not conflict with other circuit-court decisions and does not present any broadly recurring legal issues. On the merits, the industry and labor respondents argued that the Transport Rule requires upwind states to make emission reductions that are reasonable and cost-effective without regard to whether those amounts contributed significantly to nonattainment in downwind states; and that the D.C. Circuit properly rejected this approach as inconsistent with the statute. They also asserted that the EPA’s petition does not address the D.C. Circuit’s ruling that the Transport Rule imposed emission reductions greater than necessary for downwind states to attain NAAQS. The industry and labor respondents also argued that the EPA exaggerates the effects of vacating the Transport Rule because downwind states have attained NAAQS under current standards that are enforced under CAIR, which has less stringent requirements than the Transport Rule. Therefore, according to the industry and labor respondents, the Transport Rule is not necessary to achieve NAAQS in downwind states.

The state and city respondents’ opposition brief focused on the EPA’s FIP authority. They argued that the EPA’s untimeliness argument fails because it assumed a question different from the one these respondents were asking. The state and city respondents argued that they did not challenge the EPA’s SIP finding in the Transport Rule; instead, they challenged the simultaneous identification of states that are subject to the Transport Rule, the determination of their significant contribution, and implementation of FIPs. According to these respondents, the issue is not whether the EPA can issue FIPs if states fail to submit SIPs, but rather that the EPA was only authorized to issue FIPs to address requirements of the older programs (CAIR), not requirements of the new Transport Rule. Furthermore, they argued that even if the EPA’s analysis was right, for at least eight states, the first SIP disapproval determination came in the Transport Rule itself.

In its reply brief, the EPA rebutted the “no circuit split” argument by pointing out that because the D.C. Circuit has exclusive jurisdiction to review nationally significant rules, such as CSAPR, under the Clean Air Act, it is highly unlikely that there would be a circuit split. In response to the argument that the D.C. Circuit’s decision does not present broadly recurring legal issues, the EPA argued that the D.C. Circuit misconstrued core provisions of the Clean Air Act that apply broadly to every state. Finally, the EPA responded that it is true that many areas have achieved attainment with 1997 eight-hour ozone NAAQS and the 1997 annual PM2.5 NAAQS (the standards addressed in CAIR and two standards addressed in the Transport Rule). However, according to the EPA, there are multiple regions under the Transport Rule Regions with ozone levels above the 1997 eight-hour ozone NAAQS. In addition, the EPA has issued more stringent NAAQS than those under the 1997 NAAQS. Furthermore, the EPA reasoned that attainment by downwind states does not relieve upwind states from their good-neighbor obligations because the statute also requires states to regulate emissions that interfere with maintenance by states that are currently in attainment.

Although the EPA and its allies are celebrating the Supreme Court’s grant of certiorari on the CSAPR challenge, it only takes four justices to grant a writ of certiorari. It remains to be seen how this unpredictable Court (which, as we have recently seen in several landmark rulings, is prone to 5–4 decisions) will ultimately rule on the merits of the Transport Rule and the D.C. Circuit’s decision to vacate it. One thing is clear, however: The table is set in the Supreme Court’s next term for a battle royal on the EPA’s sweeping Transport Rule.

Keywords: environmental litigation, CSAPR, Transport Rule, FIP, SIP, CAIR, NAAQS

David F. Williams is a partner and Sohair A. Aguirre is an associate at Cadwalader, Wickersham & Taft LLP, in its Washington, D.C., office. David F. Williams is a cochair of the Bankruptcy/Environmental Claims Subcommittee of the Environmental Litigation Committee.

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