EPA v. EME Homer City Generation, LP
572 U. S. ____ (2014) (2014)
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Rule of Law:
The Clean Air Act's Good Neighbor Provision, which requires states to prohibit emissions that "contribute significantly" to air pollution problems in downwind states, is ambiguous and thus permits the Environmental Protection Agency (EPA) to reasonably consider costs when allocating emission reduction responsibilities among upwind states.
Facts:
- Pollution, specifically nitrogen oxides (NOx) and sulfur dioxide (SO2), emitted from sources in upwind states is transported by air currents across state lines.
- This transported pollution chemically transforms into ozone and fine particulate matter, causing or contributing to downwind states' inability to meet National Ambient Air Quality Standards (NAAQS) set by the EPA.
- The Clean Air Act's Good Neighbor Provision requires states to prohibit in-state emissions that "contribute significantly" to nonattainment or interfere with maintenance of NAAQS in any other state.
- Interpreting this provision, the EPA promulgated the Cross-State Air Pollution Rule (the "Transport Rule") to address the interstate pollution problem.
- The Transport Rule established a two-step process: first, it screened out states contributing less than 1% to any downwind state's pollution.
- Second, for the remaining states, it required emission reductions that could be achieved at a uniform, cost-effective threshold, effectively allocating a larger reduction burden to states that could reduce emissions more cheaply.
Procedural Posture:
- A group of state and local governments, along with industry and labor groups (Respondents), petitioned for review of the EPA's Transport Rule.
- The petitions were filed in the U.S. Court of Appeals for the D.C. Circuit.
- A divided panel of the D.C. Circuit vacated the Transport Rule in its entirety.
- The D.C. Circuit held that the EPA exceeded its statutory authority by imposing Federal Implementation Plans without first giving states a reasonable opportunity to implement the standards and by creating a rule that was not based on each state's proportional physical contribution to downwind pollution.
- The EPA (Petitioner) sought and was granted a writ of certiorari from the U.S. Supreme Court.
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Issue:
Does the Clean Air Act's Good Neighbor Provision require the EPA to disregard costs and mandate emission reductions based solely on each upwind state's physically proportionate contribution to a downwind state's air pollution?
Opinions:
Majority - Justice Ginsburg
No. The Clean Air Act's Good Neighbor Provision does not require the EPA to disregard costs and consider only an upwind state's physically proportionate contribution to downwind pollution. Because the statutory phrase "contribute significantly" is ambiguous regarding how to allocate responsibility among multiple polluting states, the EPA's cost-based interpretation is entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. The Court found the EPA's approach to be a reasonable and permissible construction of the statute, as it provides an efficient and equitable solution to a complex, multi-state problem. A strict proportionality requirement would be practically unworkable, as a single upwind state often affects multiple downwind states in varying proportions. The EPA's cost-conscious method efficiently achieves emission reductions and equitably prevents states that have historically done less to control pollution from free-riding on the efforts of others.
Dissenting - Justice Scalia
Yes. The Clean Air Act's text requires states to eliminate specific "amounts" of pollutants that "contribute significantly" to downwind nonattainment, which points to a quantitative, physical-based measurement, not a cost-based one. The majority invents a statutory "gap" where none exists; the logical way to apportion responsibility for physical "amounts" of pollution is based on the relative physical "amounts" each state contributes. The EPA's interpretation impermissibly rewrites the statute to substitute its preferred policy of cost-effectiveness for the clear congressional command to focus on the physical quantity of pollution. Furthermore, the EPA's imposition of Federal Implementation Plans before giving states a meaningful opportunity to meet the newly defined obligations undermines the Clean Air Act's core principle of cooperative federalism.
Analysis:
This decision significantly strengthens the EPA's authority to regulate complex, multi-state environmental problems by affirming its discretion to use cost-effective, market-based mechanisms. By upholding the EPA's interpretation under Chevron deference, the Court endorses regulatory flexibility over rigid, formulaic approaches, which is critical for addressing issues like interstate air pollution. The ruling allows the agency to prioritize efficiency and to penalize states that have lagged in pollution control, thereby influencing future state-level environmental policy and investment. This precedent will likely be invoked in future challenges to broad, complex federal regulations, reinforcing the power of administrative agencies to fill statutory gaps with reasonable, technical, and policy-driven solutions.
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