CSAPR: What Will EPA Do Now?

On Aug. 21, the U.S. Court of Appeals for the D.C. Circuit ruled that the U.S. Environmental Protection Agency (EPA) violated the Clean Air Act in its Cross State Air Pollution Rule (CSAPR). In a 2-1 decision, a panel of judges said the rule, which aimed to set stricter limits on sulfur dioxide (SO2) and nitrogen oxide (NOX) emissions from power plants in 28 states, usurped states’ responsibilities by issuing a Federal Implementation Plan (FIP).

Now, the EPA has until Oct. 5 to file a petition for rehearing with the three-judge panel that vacated CSAPR earlier this month. EPA’s other option is to seek review “en banc,” which would require the case to be heard before the full D.C. Circuit.

Jane Montgomery, partner at Schiff Hardin LLP, said that the court could choose to reconsider en banc if it recognizes that EPA took “the unusual FIP step” largely because of the D.C. Circuit’s prior ruling about the Clean Air Interstate Rule (CAIR). However, the court could decide that EPA had seemingly ignored the prior court’s ruling and subsequently allow the panel decision to stand.

If the court denies a rehearing, EPA may then appeal the decision to the Supreme Court. However, the risks of an adverse ruling – agreeing with the current opinion – are so high that it’s unlikely EPA will appeal to the Supreme Court, Montgomery said.

“The most likely outcome will be that EPA will go back to the drawing board, using its current modeling but taking into account current state attainment designations, and will come up with a new SIP (State Implementation Plan) call, requesting states to implement a state NOX budget in a way that makes sense within each state,” Montgomery said.

One challenge in the aftermath of CSAPR being vacated could come in the form of states filing petitions against individual upwind sources through Section 126 of the Clean Air Act.

“In the absence of a permanent, comprehensive federal interstate trading program, individual states are free to file Section 126 petitions against individual upwind sources that are alleged to be causing significant contribution to non-attainment areas within their borders,” said Todd Palmer, partner with Michael Best & Friedrich LLP.

However, the Section 126 statute places the burden on the filing state to prove exactly how much of its air pollution is attributable to other states. Therefore, Montgomery said, the burden and cost of putting the petition together would be too great for states to pursue.

However, Section 126 has been used successfully in the past. In 2004, North Carolina pinpointed emissions from 13 states in a petition the EPA rejected. The state then sued EPA over its denial of the petition and won in 2009, leading the agency to reconsider its original filing.

When a Section 126 petition is filed, EPA has 60 days to respond. “It would appear that the vacature of CSAPR could result in an increase in these Section 126 filings,” Palmer said.

Meanwhile, the D.C. Circuit has extended the effectiveness of CAIR while EPA crafts a permanent replacement rule. EPA will likely take its time in creating a new rule, Palmer said. “It is almost certain that any regulatory response will take years to develop.”

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