DC Circuit Rejects EPA Good Neighbor Rule

By Robyn Hagan Cain on August 22, 2012 | Last updated on March 21, 2019

The DC Circuit Court of Appeals struck down the Environmental Protection Agency's "Good Neighbor" rule this week, reports the Los Angeles Times.

The appellate court, in a 2-1 decision, concluded that the EPA had overstepped its authority by issuing federal pollution standards before states had a chance to develop their own and by calling for greater-than-necessary emissions reductions.

As Judge Brett Kavanaugh explains for the court:

Some emissions of air pollutants affect air quality in the states where the pollutants are emitted. Some emissions of air pollutants travel across State boundaries and affect air quality in downwind states. To deal with that complex regulatory challenge, Congress did not authorize EPA to simply adopt limits on emissions as EPA deemed reasonable. Rather, Congress set up a federalism-based system of air pollution control. Under this cooperative federalism approach, both the Federal Government and the states play significant roles. The Federal Government sets air quality standards for pollutants. The states have the primary responsibility for determining how to meet those standards and regulating sources within their borders.

In August 2011, the EPA promulgated the Good Neighbor rule, (officially, the Cross-State Air Pollution Rule). The Rule defines emissions reduction responsibilities for 28 upwind states based on the states' contributions to downwind states' air quality problems. The Rule limits emissions from upwind states' coal- and natural gas-fired power plants, (SO2 and NOx reductions), among other sources.

The panel concluded that the Good Neighbor rule exceeded the EPA's statutory authority in two ways.

First, the statutory text grants EPA authority to require upwind states to reduce only their own significant contributions to a downwind state's non-attainment. Under the Transport Rule, upwind states may be required to reduce emissions by more than their own significant contributions to a downwind state's non-attainment. The EPA had used the Good Neighbor provision to impose massive emissions reduction requirements on upwind states without regard to the limits imposed by the statutory text.

Second, the Clean Air Act affords states the initial opportunity to implement reductions required by EPA under the Good Neighbor provision. Here, when EPA quantified states' Good Neighbor obligations, it did not allow the states the initial opportunity to implement the required reductions with respect to sources within their borders. Instead, EPA quantified states' Good Neighbor obligations and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the Good Neighbor provision and violated the Act.

Judge Judith Rogers strongly disagreed with majority, stating in a lengthy dissent that the ruling will result in "a redesign of Congress's vision of cooperative federalism between the States and the federal government in implementing the [Clean Air Act] based on the court's own notions of absurdity and logic that are unsupported by a factual record," reports Politco.

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