First Blood: North Dakota Federal Court Strikes WOTUS Rule

Posted on August 31, 2015 by Rick Glick

With so many challenges filed in so many venues to EPA’s Waters of the United States or WOTUS rule, it seemed inevitable that some plaintiffs somewhere would find a sympathetic court.  And so it is that thirteen states found U. S. District Judge Ralph R. Erickson to preliminarily enjoin the “exceptionally expansive view” of the government’s reach under the Clean Water Act.

This case is interesting from a couple of perspectives.  First, Congress conferred original jurisdiction for challenges to EPA “effluent limitations or other limitations” and for permit decisions upon the Circuit Courts of Appeal.  In the past two days, district court judges in West Virginia and Georgia concluded they lacked jurisdiction over challenges to the WOTUS rule on that basis.  Judge Erickson, however, did not feel so constrained. 

The judge found that the WOTUS rule is simply definitional, and neither an effluent limitation nor an “other limitation” on states’ discretion.  Further, the judge found that the rule “has at best an attenuated connection to any permitting process.”   The conclusion states’ discretion is not affected is a bit odd in that the judge later concludes that the state plaintiffs satisfied all the criteria for a preliminary injunction, including irreparable harm caused by the rule. 

Second, Judge Erickson plays on an internecine dispute between EPA and the Army Corps of Engineers in an unusual way.   In my first sentence I refer to the WOTUS rule as EPA’s, although the rule was jointly adopted by EPA and the Corps.  However, recently leaked internal government memoranda indicate that the Corps disavows much of the technical support and policy choices underlying the rule.  Judge Erickson obliquely references these memoranda and seems to rely on them to conclude that plaintiffs are likely to succeed on the merits of their challenge. 

Typically, courts are loathe to rely on internal documents of uncertain provenance, as they prefer to leave the government room to openly discuss policies under development without fear its deliberations would be disclosed.  But in this case, Judge Erickson notes that he has not been presented with the full record for the WOTUS rulemaking, and so felt justified in citing the Corps memos. 

As Seth Jaffe has observed, it seems likely that Judge Erickson’s jurisdictional determination will not stand, and his reliance on the confidential exchanges between the Corps and EPA is a little disturbing.  However, his order highlights EPA’s poor management of this rulemaking, which has led to challenges from states, property rights advocates and environmentalists—a kind of anti-EPA trifecta. 

As previously noted, EPA released its draft WOTUS rule before the work of the Science Advisory Board was complete, thus raising questions as to the rule’s scientific objectivity.  Then EPA seemingly disregarded the technical concerns raised by its rulemaking partner, the Corps.  Any WOTUS rulemaking would be controversial, but EPA has unnecessarily raised the bar for public acceptance.

Two Days, Three Decisions, One Big Mess: Welcome to Judicial Review of the Waters of the United States Rule

Posted on August 28, 2015 by Seth Jaffe

On Wednesday, Judge Irene Keeley of the Northern District of West Virginia held that district courts do not have jurisdiction to hear challenges to EPA’s rule defining waters of the United States, because courts of appeal have original jurisdiction over “any effluent limitation or other limitation.”  Yesterday, Judge Lisa Wood of the Southern District of Georgia agreed.

Later yesterday, Judge Ralph Erickson of the District of North Dakota disagreed.  Finding that a definitional rule is not an effluent limitation and is not any “other limitation”, because it “places no new burden or requirements on the States”, Judge Erickson concluded that the district courts do have jurisdiction.  Addressing the merits, Judge Erickson concluded the states were likely to prevail, and would suffer irreparable harm in the absence of an injunction.  He thus enjoined enforcement of the rule in the 13 states involved in the case before him.

I’ll go out on a limb and assert that Judge Erickson’s decision is not likely to survive.  Why not?

  • Both the Georgia and West Virginia opinions cogently explain why the WOTUS rule is an “other limitation under existing CWA cases.
  • Judge Erickson was clearly trying to have his cake and eat it, too. It is, to put it mildly, internally inconsistent for Judge Erickson to conclude that he had jurisdiction to hear the case, because the “rule places no new burden or requirements on the States”, while ruling on the merits that the States will suffer irreparable harm if the rule goes into effect.  If they will suffer harm, it is precisely because the rule will limit them in new ways – which is pretty much what his own opinion says. 
  • As Judge Keeley noted, providing consolidated jurisdiction over all challenges to the rule in one court of appeals furthers

“the congressional goal of ensuring prompt resolution of challenges to EPA’s actions.”  That scheme would be undermined by … a “patchwork quilt” of district court rulings.

Based on these three decisions in just the last two days, it would seem that truer words were never spoken.

 

Now Driving Urban Design — Driverless Vehicles

Posted on August 26, 2015 by Robert Uram

Autonomous vehicles will almost certainly supplant people-driven vehicles, the horse-and-buggies of the 21st century. Given the pace of technological change, that day is closer than you may think.

As recently as 2004, the Department of Defense’s research arm sponsored a race for self-driving vehicles over a 142-mile desert course. That year, 15 self-driving vehicles entered the race, but none made it to the finish line. The following year, four autonomous vehicles successfully completed a 132-mile desert route within the required 10-hour limit. A short 10 years later, Google’s autonomous cars have traveled nearly 2 million miles and its cars legally drive the roads of Mountain View. Testing centers for autonomous vehicles have been established in Michigan, Sweden and Japan.

Our land-use planning and zoning regimes, however, are tailored to meeting the needs of driven cars. Land-use plans and standards will need to be changed to maximize the benefits of shifts from the two-car family to the shared-driverless-car community. As many people as possible need to share his or her vision of the future as part of this process for change.

Planning rules for housing, stores and offices require parking areas. Roads and streets are sized to accommodate a flow of traffic based on models of driven cars. The needs of cars dominate cities and suburbs, and have done so for decades. Everywhere you look you see vehicles: Not just the hordes of cars moving on streets and highways, but the endless rows of cars parked at the curbs and road shoulders, and vast parking lots that envelop shopping centers, business parks, sports stadiums and other destinations. In some cities, parking makes up a quarter of the land use.

As autonomous vehicles begin displacing the ones requiring a human at the wheel, people will no longer need to keep a car parked near where they live. The parking space will no longer be a valued office perk. Parking areas around shopping centers and stadiums will begin to disappear because autonomous cars can be stored (or used) elsewhere and just come to pick up the passengers when needed. Our land-use standards do not contemplate a traffic pattern where picking up and dropping off passengers is a dominant feature of the transportation landscape and where parking is almost an afterthought.

Over time — perhaps decades, perhaps sooner — as more people turn to autonomous cars for transport from home to work, school and play, it will no longer be necessary for each person or family to own a car. The overall fleet of vehicles can be managed more efficiently to serve more people, much like what is happening with the increased use of car-sharing services and chauffeured services. Fewer personal vehicles will also reduce the need to require parking areas.

It will take a concerted effort over many years by planners, engineers, social advocates and affected communities to decide how to best address changes that will occur. Transit and social service agencies should see the development of autonomous vehicles as a laboratory for experimentation. I see great opportunities for positive change:

  • Reduced housing costs and increased capacity by eliminating the need for high rises and homes to build expensive parking garages.
  • Land for other, more productive uses as shopping centers give up vast parking areas to areas designed for efficient passenger pick-up and drop-off.
  • Improved water quality, as land now covered with concrete for parking is converted to grass.
  • More biking and walking paths as street lanes formerly used for parking are converted to these uses, and for lanes for bus rapid transit.
  • Enhanced transportation for low-income and underserved communities through use of autonomous microbuses, subsidized access to autonomous cars and other means.

Collective brainstorming will develop ideas that can be discussed, refined and eventually implemented as we enter the era of autonomous vehicles. Everyone has a stake. What are your thoughts on how to adopt land-uses to autonomous vehicles? 

______________

This article was originally published in the San Francisco Chronicle on August 16, 2015.

Ruminations on the Transition to a Low Carbon Economy

Posted on August 24, 2015 by Christopher Davis

Amid the controversy around the just released EPA Clean Power Plan rule, the impacts of climate change are becoming apparent with a proliferation of heat waves, droughts, floods, wildfires and other extreme weather events and trends, both in the U.S. and globally.  While many climate scientists (and world governments in the 2010 Cancun Agreements) have agreed that it is necessary to limit average global temperature rise to 2 degrees Celsius to avoid potentially catastrophic and irreversible effects of climate change, the impacts we’re now witnessing result from a temperature rise of just under 1 degree C. We are currently on a trajectory toward a 3 to 4 degree (or more) increase, which has sobering implications.

In preparation for the COP 21 negotiations in Paris, world governments are engaged in a “bottom up” process of submitting proposed national emission reduction pledges poetically called Intended Nationally Determined Contributions (INDCs).  These are not expected to get us to a 2 degree future, but will hopefully form the basis for an international agreement that sets the world on a path toward that target or something close.

The U.S. INDC calls for reducing our emissions by 26-28 percent below 2005 levels by 2025, which will require additional measures beyond those currently proposed or in place (including the EPA Clean Power Plan, CAFÉ and truck efficiency standards, methane and HFC controls). All of these measures are controversial and under attack from various quarters. As the world’s second largest emitter, the U.S. must implement credible and effective emission reduction strategies to convince other major emitters in the developing world (China, India, et al) to control their emissions and to help avoid the worst effects of climate change.

Solving climate change clearly poses huge challenges, but it also presents huge economic opportunities. As highlighted in Ceres’ 2014 Clean Trillion report, International Energy Agency analyses show that the world needs an average of more than $1 trillion in additional annual investment in clean energy technologies (renewable energy, energy efficiency, efficient transport, etc.) beyond 2012 levels of about $250 billion. This creates a massive need for capital, and presents a huge economic and investment opportunity to finance the necessary low carbon, clean energy economy.

A global transition to a low carbon economy is in progress and accelerating, but too slowly.  Policies that put a meaningful price on carbon emissions and eliminate fossil fuel subsidies are needed to scale up clean energy investment. Fortunately there is growing business and investor support for such actions, as evidenced by the Global Investor Statement on Climate Change and recent letters from more than 350 companies supporting EPA’s Clean Power Plan. More such voices are needed to make the business and political case for solving climate change, before it is too late.

Castor and Pollux – the Strange Case of the Twin MOAs between EPA and California’s DOGGR

Posted on August 20, 2015 by Patrick Dennis

For those of you who, like me, are becoming more confident as the years go by that you have “seen it all” in the field of environmental law, this strange current event will change your mind.

California’s oil and gas production industry has been on a roll for the past decade.  Aided by the price of crude oil in the $100 per barrel range and new technologies, including hydraulic fracturing among others, industry has increased production from previously written-off reservoirs.  During this time, the California Division of Oil, Gas and Geothermal Resources (“DOGGR”) has been the lead agency for that industry, issuing the key environmental permits for its regular operations.  Those include the underground injection permits that allow the industry to take the wastewater typically produced along with crude oil from subsurface production zones and reinject it underground into other water bearing zones.  For nearly thirty years, the issuance of such permits proceeded without major interruption or controversy, but as of the start of this year all that changed.

The story begins in 1982 with California’s application for primacy to implement the Underground Injection Control (“UIC”) program of the federal Safe Drinking Water Act.  Historically, in California most crude oil producing formations are comprised of over 90% water.  Produced water, generally of poor quality, has been disposed as Class II wastes through underground injection wells often located near the production wells.  California’s application for UIC primacy identified those underground aquifers where injection of produced water from oil and gas production was already taking place.  These aquifers were exempt from the prohibition on underground injection of Class II wastes either because they contained greater than 3,000 mg/l of total dissolved solids (“TDS”) and as a result were considered to be unfit as drinking water, or they contained less than 3,000 TDS but met stringent standards of the UIC program.

In a memorandum of agreement (“MOA”) between US EPA and DOGGR executed in September 1982, the two agencies memorialized their agreement to allow DOGGR to implement the federal UIC program in California.  A list of both exempt and non-exempt aquifers is attached to the MOA.  Just a few months later, in December 1982 a second version of the MOA was circulated that transferred 11 of the aquifers from the non-exempt list to the exempt list.  Then, in one of the stranger administrative developments I’ve seen, the September 1982 signature page was affixed to the end of the changed MOA and attachment.  Thus, there were two MOAs – MOA1 drafted and executed in September 1982 and MOA2 apparently drafted and agreed upon in December 1982,  both using the same signature page from September.  The 11 aquifers that went from non-exempt aquifers into which there could be no Class II discharge to exempt aquifers allowed to receive Class II discharges included some of the more critical subsurface aquifers used by the oil and gas industry.                  

As a result of the 1982 MOAs and the transfer of the administration of the UIC program to DOGGR, California’s oil and gas industry was able to secure a much closer (geographically and philosophically) regulatory agency.  UIC permits have been routinely issued to oil and gas producers for injection into exempt aquifers – as recognized in MOA2.  Today there are approximately 50,000 produced water and enhanced recovery oil and gas injection wells in California.  The oil and gas industry has invested hundreds of millions, more likely billions, of dollars in infrastructure and hardware for these wells based in substantial part on the authorizations in their DOGGR permits.

Now we come to the punchline and the strange situation we find ourselves in today. 

Beginning in about 2012, US EPA took a hard look at DOGGR’s implementation of the UIC program and concluded that DOGGR may have issued UIC permits for injection into underground formations that either were not, or should not have been, exempt under the standards set forth in the UIC program. That audit culminated this year in a series of letters issued by both EPA and DOGGR setting forth an ad hoc program to re-evaluate many of the underground formations that had been treated as exempt by DOGGR for decades, including the 11 aquifers that had been “switched” from non-exempt to exempt status by MOA2.  EPA and DOGGR contend that industry must prove that some of these long-held exempt aquifers really qualify for their exemptions, even though industry received permits from DOGGR based upon the 1982 MOA.  This complete reversal of long-held assumptions has caused a substantial amount of angst and uncertainty in the industry.

But perhaps the most astonishing development is the publication of analyses of the validity of the two competing MOAs for the 11 aquifers that appeared on the California EPA website and the dissemination of the competing MOAs on the DOGGR website.  In a March 2, 2015 memorandum authored by Matthew Rodriguez, the Secretary of Cal EPA, the strange procedural history of the competing MOAs, with identical signature pages, is detailed and includes a relatively candid admission that “DOGGR and U.S. EPA agreed to exempt the 11 aquifers, but may not have followed regulatory procedures.” 

Cal EPA and DOGGR seem to agree that they assumed and treated the 11 aquifers as exempt for 30 years and that MOA2 appears to be the real, and final, MOA.  However, US EPA has not issued a final opinion on that issue and continues to leave open the prospect that the 11 aquifers, among others, were never somehow officially exempt under the UIC.  They have even adopted a moniker for the 11 and calling them the “11 historically-exempt aquifers.”  

The final conclusion to this story is yet to be written.  Assuming that re-consideration of the  status of the exempt aquifers does not result in the removal of their exemption, then it may not be necessary to determine what legal significance the competing MOAs enjoy, or which one is “right.”  But if EPA or DOGGR change the status of aquifers from exempt to non-exempt, their actions may shut down injection operations, thereby imperiling ongoing oil and gas operations.  In that event, one or more of the affected industry companies may challenge the validity of MOA1 and seek to compel validation of MOA2.

If that happens, then as an oil and gas industry lawyer, I’m hoping that as between the twin MOAs, MOA2 is Pollux[1] and MOA1 is Castor.                            

 


   [1]   For those unfamiliar with Greek mythology, Pollux and Castor were twins with ambiguous parentage, but only Pollux was immortal and Castor was not.  

The D.C. Circuit Does It Again! Why Should EPA Even Bother to Propose CAA Rules?

Posted on August 10, 2015 by Richard G. Stoll

Last year I published an article in Bloomberg BNA entitled “Protection of Judicial Review Watered Down in D.C. Circuit.”  I focused on a recent D.C. Circuit ruling (UARG) I hoped would “turn out to be an unfollowed – and eventually forgotten – glitch.”  The effect of the “glitch” is to delay interminably judicial review of final Clean Air Act (“CAA”) rule provisions that EPA never hinted might be included in a final rule – even though the un-foreshadowed provisions go into full force and effect.

            The Court’s judges must have missed that BNA edition, because they have followed the same rationale at least twice more now – in their Mexichem opinion of May, 2015 and their “Transport Rule” (EME Homer) decision last week.

            This regrettable situation arises from the Court’s new interpretation of a CAA provision (§307(d)(7)(B)) which is quoted in full in my BNA article.  It begins with the hornbook proposition that you can’t attack a rule’s provision on judicial review on grounds that were not raised during the comment period.  It then provides for a process known as a “petition for reconsideration.”  If a party can show that it could not have raised an argument during the comment period, EPA must conduct a “reconsideration” process.  EPA’s actions in response to the petition are then subject to judicial review.  This provision has often been used where EPA supports a final rule with facts or rationale not included in the record when the public comment period was open.

Now consider the following hypothetical.  Assume EPA proposes a CAA rule requiring boilers to install a certain type of control device.  EPA’s final rule drops the control requirement and simply prohibits boilers from combusting coal, effective two years from the final rule’s issuance.  EPA’s proposal never mentioned coal prohibition as an option, and no one suggested it in their comments.  So most would assume that boiler owners could then file D.C. Circuit petitions for review and have slam-dunk arguments for vacatur.

As shown in my BNA article, the D.C. Circuit has on many occasions (as recently as December, 2013) done just that.  But since then, EPA and DOJ lawyers have advanced what I think is a ludicrous position: when a party believes a final CAA rule provision was issued in violation of notice-and-comment requirements, it cannot pursue judicial review on that issue unless and until it first files a petition under §307(d)(7)(B) and waits for EPA to take final action on that petition. 

Unfortunately, the D.C. Circuit has bought this position three times now.  Here is how the D.C. Circuit summarized the point in EME Homer last week:

[P]etitioners argue that EPA violated the Clean Air Act’s notice and comment requirements by significantly amending the Rule between the proposed and final versions without providing additional opportunity for notice and comment. Because that argument is an objection to the notice and comment process itself, petitioners obviously did not and could not have raised it during the period for public comment. Under Subsection 7607(d)(7)(B), however, the only appropriate path for petitioners to raise this issue is through an initial petition for reconsideration to EPA.

Note the opinion in effect concedes just how absurd this is.  The petitioners “obviously did not and could not” have raised this objection.  How can one object to EPA’s failure to propose something that EPA failed to propose?

EPA almost always delays action on §307(d)(7)(B) petitions for years so in the hypothetical above, the coal prohibition would go into effect before judicial review could even begin.  Boiler owners would either have to shut down operations or convert to non-coal burning facilities, at which point judicial review would become pointless.  The effect:  EPA stops coal burning at boilers by declining to propose such a requirement in the first place!

If you think EPA or the D.C. Circuit would out of fairness suspend application of rules in such situations, see the examples to the contrary in my BNA article and read the Mexichem opinion.  If you think I am exaggerating about how long it takes for a §307(d)(7)(B) petition to be processed, see the examples in my BNA article.  And consider that in last week’s EME Homer opinion, the Court concluded its discussion above by noting that at least one party had filed such a petition but that EPA had not yet acted upon it.  That petition was filed in 2011.

CERCLA Financial Assurance Update: Section 108(b) Remains Stalled, But New EPA Guidance for Settlement Agreements and UAOs

Posted on August 7, 2015 by Charles Efflandt

Earlier this year, I posted in this blog a discussion of EPA’s 35 year – and still unfinished – journey toward full implementation of the financial assurance (“FA”) mandate of CERCLA Section 108(b). Section 108(b) obligates EPA to identify “classes of facilities” that will be required to demonstrate financial ability to respond to future releases of hazardous substances and to promulgate rules establishing those FA requirements. Inexplicably, Section 108(b) remained dormant for 28 years. Litigation initiated by NGOs in 2009 and 2010 prompted the agency to identify the hardrock mining and several other industries as priority targets for regulation. The task of developing the FA requirements for those industries, however, remained a work-in-progress.

Ever vigilant, environmental advocacy groups filed a Petition for Writ of Mandamus in August 2014 taking EPA to task for its delays and inaction. The theme of the litigation is that (1) Section 108(b) is a critical component of CERCLA’s overall scheme, (2) EPA’s failure to issue FA rules has resulted in cleanup delays, funding shortfalls and increased public health risks, and (3) EPA’s inaction cannot be justified by competing priorities within the agency. In May of this year, the D.C. Circuit Court of Appeals issued an order requiring EPA to expedite implementation of Section 108(b) to the greatest extent possible, update its rulemaking schedule for the identified industries, and disclose to the litigants the regulatory “framework” for the hardrock mining industry, which EPA acknowledged had been completed. EPA’s website suggests that it will publish the hardrock mining rule in August 2016.

In short—the more things change, the more they stay the same. Perhaps the low priority assigned to this CERCLA provision suggests that the cleanup response track-record of even the priority industries may not justify a need to regulate under Section 108(b) - a process that will involve complex issues with significant financial consequences. Nevertheless, Section 108(b) remains the law of the land. Congress must either follow-through with its periodic efforts to amend Section 108(b) or EPA must finish this long journey. No benefit inures to the public, affected industries or the agency from the existing uncertainties and delays.

EPA’s foot-dragging in implementing Section 108(b) is in contrast with its recent action emphasizing FA as an enforcement priority in CERCLA settlement agreements and UAOs. The agency’s April 2015 Guidance to Regional Counsel is touted as the first comprehensive document issued by EPA to assist with the development of FA requirements and provide transparency in the use of its Superfund authority. Space limitations do not permit a detailed review of this 22 page guidance, which includes modified model FA language and sample documents. Some take-aways from a first read of the guidance:

  • The Guidance does not address future Section 108(b) requirements.
  • It is suggested that the EPA Regions have flexibility to include or exclude certain FA mechanisms at specific sites, BUT headquarters consultation and approval is often necessary.
  • The financial test and corporate guaranty mechanisms are perceived by EPA as having a higher risk of not achieving FA objectives and imposing increased administrative burdens on the Agency; therefore, it is suggested that those mechanisms should be used with caution.
  • The Guidance recognizes the complications arising at sites involving numerous, dissimilar PRPs, with a preference for requiring jointly-funded versus separate FA mechanisms.
  • The Guidance emphasizes the need for agency diligence in the ongoing evaluation of site conditions and costs, with increases in the initial FA amount to be required as appropriate.
  • Practical considerations for evaluating the financial test and guaranty FA options are addressed in an appendix.

Notwithstanding suggestions of flexibility in the use of FA tools on a site-by-site basis, this comprehensive new guidance does not appear to include much good news for the settling PRP. In fact, EPA’s stated concerns on the use of the financial test, corporate guaranty and insurance policy FA mechanisms could further complicate an already contentious issue in CERCLA settlement negotiations. What impact the guidance may have on FA negotiations as new sites arise, of course, remains to be seen.

I’m tired of waiting, says another judge

Posted on August 5, 2015 by Rodney Brown

On June 23, 2015, a Superior Court judge in Seattle ordered the Washington State Department of Ecology to reconsider its decision denying a petition for rulemaking on climate change issues. Ecology had earlier decided to deny the petition and instead wait to see if the international community makes progress at the upcoming Paris climate talks. The judge, however, found Ecology’s reasoning inadequate and was especially put off by Ecology’s decision to wait for the outcome of the conference of the parties scheduled to take place in December, 2015 in Paris. The judge ordered Ecology to reconsider its decision, and to report back to the court by August 7. The court presumably hopes the parties will engage in settlement negotiations in the meantime.

A group of eight young people filed the petition for rulemaking in 2014. As the judge noted, they are “[f]rustrated by an historical lack of political will to respond adequately to the increasingly urgent and dire acceleration of global warming.” Their petition asked Ecology to adopt a proposed rule recommending to the Legislature that it update the state’s existing 2007 climate change statute to reflect the most recent science on greenhouse gas reductions. (The most recent science calls for larger reductions than does the statute.) 

More important, the petition does not specify particular actions Ecology should take. Instead, it tells Ecology to achieve the reductions science calls for by using all its statutory authorities. This might include new rulemaking under the Clean Air Act, new permits under all Ecology’s programs, broader use of Ecology’s land use and EIS authorities, and perhaps more.

It’s notable that this decision came just two days before a similar one in the Netherlands that John Dernbach discussed July 21 in his blog post

Looks as though judges all over the world are getting tired of waiting on the other branches of government.

Homer’s Odyssey Redux in the DC Circuit

Posted on August 3, 2015 by Paul Seals

In the latest chapter of Homer’s Odyssey, the DC Circuit, on remand from the Supreme Court, determined that EPA had exceeded its statutory authority by imposing uniform emissions reductions under the Transport Rule also known as the Cross-State Air Pollution Rule.  On July 28, 2015, the DC Circuit held in EME Homer City Generation, L.P v. EPA that the 2014 sulfur dioxide (SO2) emissions budgets for Alabama, Georgia, South Carolina, and Texas, as well as the 2014 ozone-season nitrogen oxide (NOx) budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia are invalid.  The court remanded without vacatur to EPA for reconsideration.

A brief history of Homer’s voyage so far.

In 2011, EPA promulgated the Transport Rule to address emissions from upwind States that contribute to nonattainment of National Ambient Air Quality Standards (NAAQS) in a downwind State under the Clean Air Act’s “good neighbor provision”.  42 U.S.C. Sec. 7410(a)(2)(D)(i).  Upwind States challenged the Rule, contending that it would lead to over-control of emissions in the upwind States.  The Rule imposed uniform pollution reductions on upwind States regardless of the actual amount of pollution that individual upwind States contributed to the downwind States.

In 2012, the DC Circuit considered these over-control challenges, agreed with the petitioners, and vacated the Rule.   See EME Homer City Generation, L.P. v. EPA, 696 F/3d 7 (D.C. Cir. 2012)

On review, the Supreme Court reversed, holding that the potential for over-control did not require invalidation of the Rule on its face.  To address potential over-control in an upwind State, the Court recognized that requiring emissions reductions by more than is necessary to achieve attainment in every downwind State to which it is linked would be impermissible.  The Court explicitly authorized an upwind State to contest the emissions reductions under the Rule through “particularized, as-applied challenges.”  EPA v. EME Homer City Generation, L.P., 134 S.Ct. 1584 (2014).

On remand, the DC Circuit considered the “as-applied challenges” as informed by the Supreme Court decision.   The DC Circuit evaluated the challenges by determining whether a downwind location would still attain its NAAQS if linked upwind States were subject to less stringent emissions limits.   Based on the record, the Court determined that EPA’s uniform cost thresholds have required States to reduce pollutants beyond the point necessary to achieve downwind attainment, which violated the Supreme Court’s clear mandate.

Although invalidating the 2014 emissions budgets, the DC Circuit remanded without vacatur.   The Court stated that on remand, the parties may provide new evidence, data, or calculations for EPA to consider in establishing emissions budgets.

What will be the next chapter in this Odyssey?  What effect will the decision have on the emissions trading market developed around the 2014 emissions budget?  Will there be further appeals?  How and when will EPA reconsider the emissions budgets?

The voyage is not over!