Supreme Court Decision on Major Clean Air Act rule Impacts Michigan

Air pollution is transient, heedless of state boundaries. Pollutants generated by upwind sources are often transported by air currents, sometimes over hundreds of miles, to downwind States. As the pollution travels out of state, upwind States are relieved of the associated costs. Those costs are borne instead by the downwind States, whose ability to achieve and maintain satisfactory air quality is hampered by the steady stream of infiltrating pollution.”

EPA v EME Homer City Generation (J. Ginsburg).

The Supreme Court affirmed an EPA rule that prevents air pollution from upwind states from causing downwind states to fail to meet air quality standards. While the concept that one state should not be forced to clean up the air pollution created from an upwind state’s industrial activity seems naturally equitable, the devil, as it always is, is in the details. EPA and lower courts have gone around and around on how to achieve this incredibly technical task in a way that approximates fairness to all parties.

Under the Clean Air Act (CAA), states must control air pollution so that ambient air contaminant levels for certain pollutants do not exceed National Ambient Air Quality Standards (NAAQS). Areas that meet their NAAQS are considered to be in “attainment,” while those that do not are considered to be “nonattainment.” If an area is considered nonattainment, state and local governments may be forced to require sources to put often expensive controls in place that would allow an area to meet attainment status.

But, what does a state do if its efforts at controlling pollution in its jurisdiction are hampered by pollution migrating from an upwind state? The CAA requires states to control pollutants from any source within its borders that contributes to another state’s nonattainment. This is known as the Good Neighbor Rule.

EPA tried to develop regulations that would effectuate the Good Neighbor Rule with limited success. The Bush-era Clean Air Interstate Rule, failed to meet judicial muster. EPA’s second attempt, which is the subject of the Supreme Court decision here, is known as the Transport Rule.

Various states (including Michigan), local governments and industry groups challenged the Transport Rule. The D.C. Circuit Court of Appeals found the Transport Rule did not comply with the CAA. Under the CAA, after EPA establishes NAAQS for specific pollutants, states then have a chance to regulate sources within their borders, known as State Implementation Plans, or SIPs. If EPA determines the state’s SIP is inadequate to meet the NAAQS, EPA then may promulgate its own rules, known as Federal Implementation Plans (FIPs). EPA prepared FIPs to meet Transport Rule requirements at the same time it released the Transport Rule, which the appeals court determined did not allow the upwind states enough time to prepare their own SIPs.

The appeals court also ruled that EPA's Transport Rule could potentially require upwind states to reduce their emission levels below that which would represent the particular state's actual contribution to a downwind state’s NAAQS exceedences. The Good Neighbor Rule requires upwind states to reduce their "significant contributions" to downwind states' nonattainment. The appeals court said that EPA could not require upwind states to "exceed the mark." Each state, whether upwind or downwind "must bear its fair share" and in the appeals court opinion, EPA’s rule could possibly require a state to do more than its fair share.

On appeal, the Supreme Court made quick work of the first issue by finding there is nothing in the plain language of the CAA that required EPA to give the states a chance to prepare their own SIPs, so the EPA appropriately issued its own FIPs. As for the meat of the Transport Rule, the Supreme Court determined that EPA’s rule was a reasonable and permissible interpretation of ambiguous provisions of the CAA.

The Supreme Court recognized the complex scientific and administrative problems that EPA faced. One troubling area was what to do with states that had addressed their pollution issues differently. How does EPA equitably allocate the costs of complying with the Good Neighbor Rule between states, some of which aggressively required emissions limitations, while others were not so strict? In such a case, if each state were required to reduce pollution in an equal amount, the states with weaker regulations would have an easier time finding “low hanging fruit” to reduce their overall emissions, while states with stricter regulations would have to require even more strict and costly controls.

Instead, EPA established emission “budgets” for each state on a proportional basis, because multiple states provide downwind pollution at different levels. First, EPA looks to see if an upwind state’s contribution is one percent or greater towards a downwind state’s nonattainment. If so, then EPA looks at the cost to reduce the amounts necessary to reach attainment, requiring the most cost-effective ways across regulated sources and states.

According to the Supreme Court:

“Eliminating those amounts that can cost-effectively be reduced is an efficient and equitable solution to the allocation problem the Good Neighbor Provision requires the Agency to address. Efficient because EPA can achieve the levels of attainment, i.e., of emission reductions, the proportional approach aims to achieve, but at a much lower overall cost. Equitable because, by imposing uniform cost thresholds on regulated States, EPA’s rule subjects to stricter regulation those States that have done relatively less in the past to control their pollution. Upwind States that have not yet implemented pollution controls of the same stringency as their neighbors will be stopped from free riding on their neighbors’ efforts to reduce pollution. They will have to bring down their emissions by installing devices of the kind in which neighboring States have already invested.”

So, what is the practical effect of the Transport Rule? The rule’s implementation will require significant reductions in ozone-creating chemicals, sulfur dioxide (SO2) and nitrogen oxide (NOX), which cross state lines. EPA estimates that it will lead to reduction of eight million tons of SO2 and NOX emissions, reducing the potential for acid rain and removing fine particulates that result in chronic illnesses and death.

As for Michigan, it is considered an “upwind” state for SO2 and NOX emissions. One report on the Transport Rule’s impact on Michigan is that it will create jobs related to achieving compliance. Other reports indicate the Transport Rule will result in power plant shutdowns, including several in Michigan, and that along with other EPA CAA regulations, Michigan could lose one gigawatt of power generation. At least in part due to the Transport and other EPA rules, Consumers Energy reported it would spend $1.6 billion to cut pollution from coal-fired plants, stop its plans for a low-emission coal plant, and expand use of natural gas-powered plants.

Tags: Clean Air
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