EPA v. EME Homer City Generation, L. P.
572 U.S. ___ (2014)

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Justia Opinion Summary
The Clean Air Act (CAA) requires national ambient air quality standards (NAAQS) for pollutants at levels that will protect public health, 42 U.S.C. 7408. Once EPA establishes NAAQS, it designates “nonattainment” areas; each state must submit a State Implementation Plan, (SIP), within three years of any new or revised NAAQS. From the date EPA determines that a SIP is inadequate, EPA has two years to promulgate a Federal Implementation Plan (FIP). SIPs must comply with a Good Neighbor Provision, and “contain adequate provisions ... prohibiting .. . any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will ... contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to” NAAQS. In response to flaws in its 2005 Clean Air Interstate Rule, identified by the D. C. Circuit, EPA promulgated the Cross-State Air Pollution Rule (Transport Rule), curbing nitrogen oxide and sulfur dioxide emissions in 27 upwind states to achieve downwind attainment of three NAAQS and providing that an upwind state contributed significantly to downwind nonattainment if its exported pollution produced at least one percent of a NAAQS in a downwind state and could be eliminated cost-effectively. EPA created an annual emissions “budget” for each upwind state and contemporaneously promulgated FIPs allocating each state’s budget among its pollution sources. The D.C. Circuit vacated the rule as exceeding EPA’s authority. The Supreme Court reversed. The CAA does not require that states be given another opportunity to file a SIP after EPA has quantified interstate pollution obligations. Disapproval of a SIP, without more, triggers EPA’s obligation to issue a FIP within precise deadlines. That EPA had previously accorded upwind states a chance to allocate emission budgets among their sources does not show that it acted arbitrarily by refraining to do so in this instance. The Good Neighbor Provision does not dictate a method of apportionment, so EPA had authority to select from among reasonable options; nothing precludes the final calculation from relying on costs. By imposing uniform cost thresholds on regulated states, the rule is efficient and is stricter on states that have done less pollution control in the past and does not amount to “over-control.”

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .

SUPREME COURT OF THE UNITED STATES

Syllabus

ENVIRONMENTAL PROTECTION AGENCY et al. v. EME HOMER CITY GENERATION, L. P., et al.

certiorari to the united states court of appeals for the district of columbia circuit

No. 12–1182. Argued December 10, 2013—Decided April 29, 2014[1]

Congress and the Environmental Protection Agency (EPA or Agency) have, over the course of several decades, made many efforts to deal with the complex challenge of curtailing air pollution emitted in upwind States, but causing harm in other, downwind States. As relevant here, the Clean Air Act (CAA or Act) directs EPA to establish national ambient air quality standards (NAAQS) for pollutants at levels that will protect public health. 42 U. S. C. §§7408, 7409. Once EPA settles on a NAAQS, the Agency must designate “nonattainment” areas, i.e., locations where the concentration of a regulated pollutant exceeds the NAAQS. §7407(d). Each State must submit a State Implementation Plan, or SIP, to EPA within three years of any new or revised NAAQS. §7410(a)(1). From the date EPA determines that a State SIP is inadequate, the Agency has two years to promulgate a Federal Implementation Plan, or FIP. §7410(c)(1). Among other components, the CAA mandates SIP compliance with the Good Neighbor Provision, which requires SIPs to “contain adequate provisions . . . prohibiting . . . any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will . . . contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any . . . [NAAQS].” §7410(a)(2)(D)(i).

          Several times over the past two decades, EPA has attempted to delineate the Good Neighbor Provision’s scope by identifying when upwind States “contribute significantly” to nonattainment downwind. The D. C. Circuit found fault with the Agency’s 2005 attempt, the Clean Air Interstate Rule, or CAIR, which regulated both nitrogen oxide (NOX) and sulfur dioxide (SO2) emissions, the gasses at issue here. The D. C. Circuit nevertheless left CAIR temporarily in place, while encouraging EPA to act with dispatch in dealing with problems the court had identified.     

          EPA’s response to that decision is the Cross-State Air Pollution Rule (Transport Rule), which curbs NOX and SO2 emissions in 27 upwind States to achieve downwind attainment of three NAAQS. Under the Transport Rule, an upwind State “contribute[d] significantly” to downwind nonattainment to the extent its exported pollution both (1) produced one percent or more of a NAAQS in at least one downwind State and (2) could be eliminated cost-effectively, as determined by EPA. Upwind States are obliged to eliminate only emissions meeting both of these criteria. Through complex modeling, EPA created an annual emissions “budget” for each regulated State upwind, representing the total quantity of pollution an upwind State could produce in a given year under the Transport Rule. Having earlier determined each regulated State’s SIP to be inadequate, EPA, contemporaneous with the Transport Rule, promulgated FIPs allocating each State’s emissions budgets among its in-state pollution sources.

          A group of state and local governments (State respondents), joined by industry and labor groups (Industry respondents), petitioned for review of the Transport Rule in the D. C. Circuit. The court vacated the rule in its entirety, holding that EPA’s actions exceeded the Agency’s statutory authority in two respects. Acknowledging that EPA’s FIP authority is generally triggered when the Agency disapproves a SIP, the court was nevertheless concerned that States would be incapable of fulfilling the Good Neighbor Provision without prior EPA guidance. The court thus concluded that EPA must give States a reasonable opportunity to allocate their emission budgets before issuing FIPs. The court also found the Agency’s two-part interpretation of the Good Neighbor Provision unreasonable, concluding that EPA must disregard costs and consider exclusively each upwind State’s physically proportionate responsibility for air quality problems downwind.

Held:

     1. The CAA does not command that States be given a second opportunity to file a SIP after EPA has quantified the State’s interstate pollution obligations. Pp. 13–18.

          (a) The State respondents do not challenge EPA’s disapproval of any particular SIP. Instead, they argue that, notwithstanding these disapprovals, the Agency was still obliged to grant upwind States anadditional opportunity to promulgate adequate SIPs after EPA had set the State’s emission budget. This claim does not turn on the validity of the prior SIP disapprovals, but on whether the CAA requires EPA do more than disapprove a SIP to trigger the Agency’s authority to issue a FIP. Pp. 13–14.

          (b) The CAA’s plain text supports the Agency: Disapproval of a SIP, without more, triggers EPA’s obligation to issue a FIP. The statute sets precise deadlines for the States and EPA. Once EPA issues any new or revised NAAQS, a State “shall” propose a SIP within three years, 42 U. S. C. §7410(a)(1), and that SIP “shall” include, inter alia, provisions adequate to satisfy the Good Neighbor Provision, §7410(a)(2). If the EPA finds a SIP inadequate, the Agency has a statutory duty to issue a FIP “at any time” within two years. §7410(c)(1). However sensible the D. C. Circuit’s exception to this strict time prescription may be, a reviewing court’s “task is to apply the text [of the statute], not to improve upon it.” Pavelic & LeFlore v. Marvel Entertainment Group, Div. of Cadence Industries Corp., 493 U. S. 120 . Nothing in the Act differentiates the Good Neighbor Provision from the several other matters a State must address in its SIP. Nor does the Act condition the duty to promulgate a FIP on EPA’s having first quantified an upwind State’s good neighbor obligations. By altering Congress’ SIP and FIP schedule, the D. C. Circuit allowed a delay Congress did not order and placed an information submission obligation on EPA Congress did not impose. Pp. 14–17.

          (c) The fact that EPA had previously accorded upwind States a chance to allocate emission budgets among their in-state sources does not show that the Agency acted arbitrarily by refraining to do so here. EPA retained discretion to alter its course provided it gave a reasonable explanation for doing so. Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29 . Here, the Agency had been admonished by the D. C. Circuit to act with dispatch in amending or replacing CAIR. Endeavoring to satisfy that directive, EPA acted speedily, issuing FIPs and the Transport Rule contemporaneously. Pp. 17–18.

     2. EPA’s cost-effective allocation of emission reductions among upwind States is a permissible, workable, and equitable interpretation of the Good Neighbor Provision. Pp. 18–31.

          (a) Respondents’ attack on EPA’s interpretation of the Good Neighbor Provision is not foreclosed by §7607(d)(7)(B), which provides that “[o]nly an objection to a rule . . . raised with reasonable specificity during the period for public comment . . . may be raised during judicial review.” Even assuming that respondents failed to object to the Transport Rule with “reasonable specificity,” that lapse is not jurisdictional. Section 7607(d)(7)(B) is a “mandatory,” but not“jurisdictional,” rule, see Arbaugh v. Y & H Corp., 546 U. S. 500 , which speaks to a party’s procedural obligations, not a court’s authority, see Kontrick v. Ryan, 540 U. S. 443 . Because EPA did not press this argument unequivocally before the D. C. Circuit, it does not pose an impassable hindrance to this Court’s review. Pp. 18–19.

          (b) This Court routinely accords dispositive effect to an agency’s reasonable interpretation of ambiguous statutory language. The Good Neighbor Provision delegates authority to EPA at least as certainly as the CAA provisions involved in Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 . EPA’s authority to reduce upwind pollution extends only to those “amounts” of pollution that “contribute significantly to nonattainment” in downwind States. §7410(a)(2)(D)(i). Because a downwind State’s excess pollution is often caused by multiple upwind States, however, EPA must address how to allocate responsibility among multiple contributors. The Good Neighbor Provision does not dictate a method of apportionment. Nothing in the provision, for example, directs the proportional allocation method advanced by the D. C. Circuit, a method that works neither mathematically nor in practical application. Under Chevron, Congress’ silence effectively delegates authority to EPA to select from among reasonable options. See United States v. Mead Corp., 533 U. S. 218 .

     EPA’s chosen allocation method is a “permissible construction of the statute.” Chevron, 467 U. S., at 843. The Agency, tasked with choosing which among equal “amounts” to eliminate, has chosen sensibly to reduce the amount easier, i.e., less costly, to eradicate. The Industry respondents argue that the final calculation cannot rely on costs, but nothing in the Good Neighbor Provision’s text precludes that choice. And using costs in the Transport Rule calculus is an efficient and equitable solution to the allocation problem the Good Neighbor Provision compels the Agency to address. Efficient because EPA can achieve the same 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 less in the past to control their pollution. Pp. 20–28.

          (c) Wholesale invalidation of the Transport Rule is not justified by either of the D. C. Circuit’s remaining objections: that the Transport Rule leaves open the possibility that a State might be compelled to reduce emissions beyond the point at which every affected downwind State is in attainment, so-called “over-control”; and that EPA’s use of costs does not foreclose the possibility that an upwind State would be required to reduce its emissions by so muchthat the State would be placed below the one-percent mark EPA set as the initial threshold of “significan[ce].” First, instances of “over-control” in particular downwind locations may be incidental to reductions necessary to ensure attainment elsewhere. As the Good Neighbor Provision seeks attainment in every downwind State, however, exceeding attainment in one State cannot rank as “over-control” unless unnecessary to achieving attainment in any downwind State. Second, the EPA must have leeway in fulfilling its statutory mandate to balance the possibilities of over-control and “under-control,” i.e., to maximize achievement of attainment downwind. Finally, in a voluminous record, involving thousands of upwind-to-downwind linkages, respondents point to only a few instances of “unnecessary” emission reductions, and even those are contested by EPA. Pp. 28–31.

696 F. 3d 7, reversed and remanded.

     Ginsburg, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Breyer, Sotomayor, and Kagan, JJ., joined. Scalia, J., filed a dissenting opinion, in which Thomas, J., joined. Alito, J., took no part in the consideration or decision of the cases.

Notes

1  Together with No. 12–1183, v. also on certiorari to the same court.

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