EPA V. EME Homer City Generation, L.P., 134 S. Ct. 1584 (2014)

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EDS | EDS Cases in the Supreme Court

In EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584 (2014), the Supreme Court upheld key aspects of the Cross-State Air Pollution Rule (“CSAPR”), a regulation promulgated pursuant to the Clean Air Act by the Environmental Protection Agency (“EPA”). Specifically, the Court held (1) that EPA could utilize the cost of emission controls in determining the appropriate level of emission reductions to require of upwind States that contribute to air pollution problems in downwind States and (2) that EPA has the authority to require States to require the necessary level of emission reductions by federal regulation without having to first give the States an opportunity to promulgate their own regulations.

The Clean Air Act requires each State to develop a State Implementation Plan (“SIP”) that must, among other requirements, prohibit emission sources within the State from contributing significantly to nonattainment of the National Ambient Air Quality Standards in other States or interfering with maintenance of attainment of those standards in other States. If a State either does not submit a SIP to EPA, or if EPA disapproves the submitted SIP, the Act authorizes EPA to promulgate a Federal Implementation Plan (“FIP”) to implement the statutory requirements in that State.

Because of the complexity and regional nature of the ozone and fine particulate matter pollution problems in the eastern United States, EPA has created a program that sets emission budgets for all States that contribute beyond a threshold amount to pollution problems in other States. The emission budgets are implemented through the issuance of tradable allowances to sources in the affected States. EPA establishes each State’s budget on the basis of the level of emissions that would result from the use of controls that are cost-effective and sufficient to address the downwind air quality problems. CSAPR is the third iteration of this program.
CSAPR was challenged in the D.C. Circuit by industry groups and some of the affected upwind States. The D.C. Circuit vacated the rule, holding (1) that EPA’s cost-based methodology for determining the amount of emission reductions required of upwind States did not ensure that no State would have to reduce its emissions below its proportional contribution to downwind air pollution problems and (2) that after calculating the required level of emission reductions EPA was required to give States the opportunity to develop and submit SIPs before EPA could promulgate a FIP.

The Supreme Court reversed on both grounds. It held that EPA’s use of a uniform cost of control to determine the necessary level of required emission reduction (as opposed to a methodology based solely on the amount of pollutant an upwind State contributes to a downwind area) was a reasonable interpretation of the Clean Air Act given the complexity of the interstate transport problem where most States both contribute pollutants to, and receive pollutants from, numerous other States and a reasonable way to allocate the burden of emission reductions among the upwind States. The Supreme Court also held that the D.C. Circuit’s holding regarding EPA’s FIP authority was inconsistent with the plain language of the Act, which requires EPA to promulgate a FIP whenever it finds that a State has failed to submit a required SIP or EPA disapproves a submitted SIP.

 

Updated May 13, 2015

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