Outlook Cloudy for EPA’s ‘Good Neighbor’ Rule

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NEW YORK - MAY 20: The Statue of Liberty is blurred by the exhaust from a Canadian Navy ship in the Hudson River at the start of Fleet Week May 20, 2009 in New York City. Fleet Week, which annually brings an array of warships to New York City's harbors on Memorial Day weekend, is being celebrated this year with the smallest flotilla of ships since the event began 22 years ago, as budgets have been hampered by the current economic crisis. (Photo by Chris Hondros/Getty Images)
National Journal
Clare Foran
Dec. 10, 2013, 4:35 p.m.

A key piece of Pres­id­ent Obama’s plan for cur­tail­ing air pol­lu­tion has been in leg­al limbo for more than a year, and a Su­preme Court hear­ing Tues­day did little to cla­ri­fy wheth­er the so-called “good neigh­bor” rule is headed up or down.

The justices bat­ted around the ques­tion of wheth­er the En­vir­on­ment­al Pro­tec­tion Agency’s Cross-State Air Pol­lu­tion Rule over­steps the au­thor­it­ies spelled out in the Clean Air Act, as in­dustry groups and some states con­tend in a law­suit against the rule, which was aimed at pro­tect­ing down­wind areas from soot- and smog-form­ing pol­lu­tion from power plants in up­wind east­ern states.

The plaintiffs won a round in Au­gust 2012, when the U.S. Court of Ap­peals for the D.C. Cir­cuit ruled that EPA had ex­ceeded its au­thor­ity in re­quir­ing up­wind states, such as those in the Mid­w­est, to make emis­sion re­duc­tions great­er than pre­scribed by the Clean Air Act in or­der to pro­tect areas down­wind, mostly in the North­east.

At is­sue is wheth­er EPA was jus­ti­fied in factor­ing the cost-ef­fect­ive­ness of emis­sions-con­trol tech­no­lo­gies in­to pro­posed tar­gets for pol­lu­tion re­duc­tion rather than re­ly­ing solely on air-qual­ity thresholds pre­scribed un­der the Clean Air Act. The court will also de­cide wheth­er the agency ac­ted ap­pro­pri­ately in im­pos­ing fed­er­al im­ple­ment­a­tion plans on up­wind states.

Justice Ant­on­in Scalia ap­peared to take up the side of states and in­dustry groups, which have cri­ti­cized EPA’s meth­od­o­logy in set­ting the re­duc­tions tar­gets. “What the ap­plic­a­tion of the cost factor [in de­term­in­ing state emis­sions tar­gets] means is that some states that can more ef­fi­ciently make the changes will be re­quired to do more than merely ac­count for their pro­por­tion of the down­wind harm,” Scalia said dur­ing the ar­gu­ments.

Deputy So­li­cit­or Gen­er­al Mal­colm Stew­art, ar­guing on be­half of the EPA, pushed back, say­ing that the rule was more likely to pre­vent states from shoul­der­ing an un­fair emis­sions-re­duc­tion bur­den than do the op­pos­ite.

“If you ad­op­ted an air-qual­ity-only threshold, then it would be more likely to be the case that states that had already done a lot to con­trol air pol­lu­tion would have to take ad­di­tion­al steps [to rein in pol­lu­tion],” Stew­art countered.

Justice Elena Kagan’s line of ques­tion­ing was more sym­path­et­ic to the EPA.

“I think, you know, most people, every­body, thinks that it’s bet­ter to reg­u­late with at­ten­tion to costs than to reg­u­late without at­ten­tion to costs,” she said dur­ing the ar­gu­ments.

Kagan also raised the point that the Clean Air Act’s good-neigh­bor pro­vi­sion, which provided the leg­al basis for EPA to write the rule, con­tains a sig­ni­fic­ant amount of am­bi­gu­ity, which could mean EPA had the abil­ity to in­ter­pret the stat­ute as it did.

“There are lots of dif­fer­ent choices for what we can al­loc­ate [the emis­sions-re­duc­tions tar­gets] on the basis of,” Kagan said. “We can just di­vide, you know, and do it all pro­por­tion­ally. We can take in­to ac­count per-cap­ita. We can take in­to ac­count a state’s pop­u­la­tion if we wanted to. Or we can take in­to ac­count, as the EPA did here, costs — on the un­der­stand­ing that costs re­flect how much of an in­vest­ment a state has already made in pol­lu­tion tech­no­logy.”

After sit­ting through the ar­gu­ments, one en­vir­on­ment­al at­tor­ney said the fate of the Obama ad­min­is­tra­tion’s good-neigh­bor rule is still up in the air.

“There could be a full af­firm­a­tion of the D.C. Cir­cuit’s ori­gin­al rul­ing, which would mean that the rule would con­tin­ue to be over­turned,” Gra­ham Mc­Ca­han of the En­vir­on­ment­al De­fense Fund told Na­tion­al Journ­al. “Or there could be a full af­firm­a­tion of EPA’s ap­proach, say­ing that the D.C. Cir­cuit got it wrong.”

But even if the Su­preme Court over­turns the ap­pel­late court’s rul­ing, that doesn’t mean the trans­port rule would im­me­di­ately take ef­fect, Mc­Ca­han said. “It’s not com­pletely clear, but what could hap­pen would be that the Su­preme Court might send the rule back to the D.C. Cir­cuit with in­struc­tions de­tail­ing which pro­vi­sions of the rule they de­cided to up­hold and which they did not, if they de­cide not to af­firm all of the ori­gin­al pro­vi­sions, and then they could leave it up to the D.C. Cir­cuit to en­force the law and pos­sibly set a timeline for its im­ple­ment­a­tion.”

Un­til the Court rules, which could hap­pen by June, a less-strin­gent rule en­acted un­der the George W. Bush ad­min­is­tra­tion will re­main in ef­fect.

The or­al ar­gu­ments in the Su­preme Court oc­curred on the same day that the D.C. Cir­cuit Court heard ar­gu­ments in a case chal­len­ging EPA’s mer­cury and air-tox­ics stand­ards for power plants. Giv­en the stakes, that case could well end up be­fore the Su­preme Court too.

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