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EPA Policy on SIP Actions and Redesignation Requests in the Wake of Court Decision Vacating CSAPR and Potential Impact of Subsequent Denial of EPA’s Petition for Rehearing

02.11.2013

By Larry Kane, Attorney, Bingham Greenebaum Doll LLP

The August 2012 decision of the U.S. Court of Appeals for the District of Columbia in EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), invalidating and vacating EPA’s Cross-State Air Pollution Rule (CSAPR) has, for the second time, left the nation without a regulatory framework to address the interstate transport of nitrogen oxides (NOx) and sulfur dioxide (SO2).1

Among the ramifications of the EME Homer City decision was the uncertainty created for various State Implementation Plans (SIPS) for attaining National Ambient Air Quality Standards (NAAQS) for ozone or PM2.5 that were dependent in part on reductions of emissions of NOx or SO2 to be achieved under CSAPR and had already been approved or were pending for approval at the time of the decision.   Similarly impacted are pending requests by states for redesignation of nonattainment classifications that also were predicated in part on the emission reductions to come from implementation of CSAPR.

EPA filed a petition for rehearing of the EME Homer City case with the Court of Appeals but recognized a need to continue to take action on pending regulatory filings while awaiting a decision on the rehearing petition.  To that end, EPA’s Assistant Administrator for the Office of Air and Radiation, Gina McCarthy, issued a policy memorandum dated November 19, 2012, directed to the agency’s Regional Air Division Directors describing how EPA intends to proceed.  This policy memorandum is referred to for purposes of this article as the “Interim CSAPR Policy”.  Acting with alacrity, the Court of Appeals, en banc, denied the pending petitions for rehearing on January 24, 2013.  The remainder of this article will address the elements of the EPA’s interim policy and explore what impact the denial of the rehearing petition may have on policy implementation.

The first element of the Interim CSAPR Policy builds upon the Court’s decision to reinstate CAIR as an interim measure for mitigation of interstate pollution transport.  EPA will rely on NOx and SO2 emission reductions required by CAIR as “permanent and enforceable” in reviewing and acting upon pending requests by states for approval of attainment SIPs, redesignation requests, and maintenance SIPs that, as designed, were dependent, at least in part, upon pollutant emission reductions to be achieved through CSAPR.   EPA’s OAR staff are directed to work with Regional offices to “identify, prioritize, and act promptly” on any pending redesignation requests and SIP submittals that rely upon CSAPR reductions.  According to the Interim CSAPR Policy, this reliance by EPA upon CAIR emission reductions in making decisions on pending state requests may continue  until a valid rule replacing CSAPR is adopted and SIPs complying with any such new rule are submitted by states and acted upon by EPA.  It does not appear that the denial of the rehearing petitions will have any significant impact on this aspect of the Interim CSAPR Policy.

Second, the Interim CSAPR Policy references a pending action on an unidentified state plan that relies on CAIR reductions in emissions as the basis of satisfying regional haze program requirements and indicates that it will be appropriate to approve the submitted state plan.

A third component of the Interim CSAPR Policy provides that, pending a decision on EPA’s petition for rehearing, EPA will defer reconsideration of certain  categories of actions taken by EPA on regional haze plans prior to the EME Homer City decision.

As the fourth point of the Interim CSAPR Policy,  EPA announced that, during the pendency of its rehearing petition, EPA will refrain from making findings that a SIP is deficient for failing to meet the good neighbor obligations of Section 110(a)(2)(D)(i)(I) of the Clean Air Act.   This aspect of the Interim CSAPR Policy is effectively mooted by the Court’s denial of the petition for rehearing since EPA now will have no option but to comply with the Court’s holding that a SIP cannot be considered deficient for failing to fulfill the good neighbor obligation until EPA first quantifies the obligation and affords the state an opportunity to act upon it.  The interim continuation of CAIR’s provisions under the EME Homer City decision seems to suggest that pollutant reductions required under that statute may be utilized as a means of addressing the good neighbor obligations.

In sum, the Interim CSAPR Policy would appear to be unaffected by denial of rehearing with respect to the approach outlined for proceeding with SIP reviews that involve reliance on reductions of NOx and SO2 emissions required under CAIR.  In contrast, it is unclear what effect the denial of rehearing may have on EPA’s approach toward reconsideration of certain past agency decisions on regional haze reduction plans.  Finally, the Interim CSAPR Policy’s provisions relating to EPA’s past approach on implementing the Clean Air Act’s good neighbor obligations has been mooted by the Court’s denial of rehearing petitions and EPA will have to revise its approach to comport with the EME Homer City Generation decision.

More importantly, however, uncertainty will continue to plague the issue of interstate pollution transport for many years to come.  States proceeding with SIPs relying on CAIR reductions are confronted with the prospect of yet another round of SIP development and implementation once (if) a replacement for CSAPR and CAIR is developed and adopted.  Power plant owners contemplating decisions on controls for NOx and SO2 to address emission reductions required by SIPs relying on CAIR will have to wrestle and, perhaps, gamble with problematic considerations over whether those decisions will be cost-effective and compatible with requirements of an eventual replacement rule.


1 The first EPA rule to address interstate transport of air pollutants, the Clean Air Interstate Rule (CAIR) adopted by the agency in 2005, was previously invalidated by the same U.S. Court of Appeals several years earlier.  Recognizing the significant regulatory gap resulting from its decision in EME Homer City, the Court of Appeals took the unusual step of resuscitating CAIR from the regulatory ash heap as an interim measure to fill the gap.

To view a complete PDF of the Fourth Quarter 2012 issue of the Air Quality Letter, click HERE.

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