States Successfully Challenge EPA Emissions Budgets, Requiring Re-Examination by EPA

In EME Homer City Generation, L.P. v. E.P.A., 795 F.3d 118 (D.C. Cir. 2015), the D.C. Circuit Court of Appeals ordered EPA to re-examine certain emissions budgets because they were unnecessarily stringent and were, therefore, invalid. The court, however, did not agree with other claims brought by petitioners challenging EPA’s current Cross-Air Pollution Rule (CSAPR).

The Clean Air Act requires EPA to set national ambient air quality standards (NAAQS) by which all states must abide. The traveling nature of air pollution and the fact that it can affect multiple states other than the one it originated from caused EPA to adopt CSAPR in 2011. CSAPR sought to address traveling air pollution by restricting the amount of air pollutants emitted from upwind states that could “contribute significantly to nonattainment” by a downwind state. 42 U.S.C. § 7410(a)(2)(D)(i). In other words, under CSAPR, EPA can force upwind states to take measures to limit their own air pollutants so that the downwind state can comply with NAAQS.  Only upwind states that contribute 1% or more of a downwind state’s relevant pollutant are subject to these measures because they are “linked” to the relevant downwind state.

When CSAPR was first promulgated by EPA, it was challenged in the D.C. Circuit Court of Appeals, because petitioners believed it led to over-control of the emissions of upwind states.  That is, EPA applied uniform regulations to upwind states, regardless of individual emissions. In EME Homer City Generation, L.P. v. E.P.A., 696 F.3d 7 (D.C. Cir. 2012), the D.C. Circuit vacated CSAPR, but the Supreme Court reversed two years later in E.P.A. v. EME Homer City Generation, L.P., 572 U.S. 489 (2014).

While the Supreme Court did not disagree with the D.C. Circuit’s analysis that CSAPR could lead to unnecessary emissions reductions, it concluded that CSAPR was not facially invalid. Consequently, a “particularized, as-applied challenge” was necessary to decide the question of over-control due to uniform restrictions. Id. at 524. The Supreme Court noted that EPA could not require a state “to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked.” Id. at 521-522.

Several states, including Texas, brought challenges to certain EPA 2014 emissions budgets. Based on the Supreme Court’s 2014 opinion, the D.C. Circuit now stated that the way to determine whether the emissions budgets are invalid is to look at whether the downwind states “would achieve attainment even if less stringent emissions limits were imposed on the upwind states linked to those locations.” EME Homer City Generation, L.P. v. E.P.A., 795 F.3d at 127. Applying this framework to the 2014 emissions budgets, the court decided emissions budgets were invalid because the downwind states could achieve attainment of NAAQS with less stringent emissions limits imposed on upwind states. The court remanded without vacatur, meaning the current standards will remain in place while EPA revises the relevant emissions budgets. The court also considered several arguments raised by the states related to CSAPR but rejected all of them.