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EPA Ordered by D.C. Circuit to Redo Upwind State Ozone Rule (3)

Sept. 13, 2019, 3:02 PMUpdated: Sept. 13, 2019, 7:20 PM

The EPA will have to rework its rule to ensure that upwind states reduce air pollution so that their downwind neighbors can meet federal ozone standards, the D.C. Circuit said Sept. 13.

The U.S. Court of Appeals for the District of Columbia Circuit, however, stopped short of vacating the 2016 update to the Cross-State Air Pollution Rule, a nitrogen oxides emissions trading program designed to help 22 Eastern states meet federal ozone limits.

Tossing out the updated regulation would be inappropriate as it would disrupt the trading regime already in effect among utilities to reduce nitrogen oxides, the court’s three judges wrote in a collective opinion.

The Environmental Protection Agency’s 2016 regulation set nitrogen oxide emissions budgets for mostly coal-fired electric utilities in 22 states across the eastern U.S. to meet the 2008 ozone standards of 75 parts per billion by July 2018.

Power plants are the largest sources of nitrogen oxides—a precursor to ozone—which causes respiratory problems, especially in children, the elderly, and people with asthma.

The court noted that the rule, though lawfully crafted, fell short of including any deadlines by which upwind states like Pennsylvania, Ohio and others—home to a slew of coal-fired power plants—must halt excess ozone-forming pollution that drifts downwind.

“We agree with Environmental Petitioners that the Rule is inconsistent with the Act’s attainment deadlines,” the court’s three judges, Sri Srinivasan, Patricia A. Millett, and Robert L. Wilkins, wrote.

But the judges rejected the environmental groups’ petition to give the EPA six months to revise their rule to make the upwind states curb power plant pollution of nitrogen oxides.

EPA Acted Lawfully and Rationally

The updated rule remains in effect while the EPA acts to revise the rule to add deadlines for upwind states to stop significant ozone emissions.

Meanwhile, the federal court rejected myriad other challenges from a variety of states, environmental, and industry groups to the 2016 regulation, ruling the EPA otherwise acted lawfully and rationally.

The rule was challenged by a coalition of states led by Wisconsin and including Alabama, Arkansas, Ohio, and Wyoming that argued the EPA imposed its own nitrogen oxide reduction budgets instead of reviewing state plans.

Their challenge was backed by various national and regional electricity generating companies and groups, including AEP Generation Resources Inc., Duke Energy Carolinas LLC, and the now-defunct Utility Air Regulatory Group. Also involved in the lawsuit were the state of Texas, Murray Energy Corp., the Western Farmers Electric Cooperative, and the Texas Commission on Environmental Quality.

A group of states led by Maryland backed the regulation, while Delaware challenged the update because it doesn’t do enough to help the state meet the federal ozone standards.

‘No More Excuses’

Environmental groups represented by the Sierra Club and Earthjustice challenged the update, because they say it gives the power sector too much leniency in meeting the nitrogen oxides emissions limits.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Environment is operated by entities controlled by Michael Bloomberg.

Responding to the ruling, Earthjustice attorney Neil Gormley said the court rejected a legal argument that the EPA has made over and over again that “EPA doesn’t have to follow the Clean Air Act’s deadlines for achieving clean air.”

“This is a big win for millions of people who will get to breathe cleaner air,” Gormley wrote in a Sept. 13 statement, adding that “we already have the technology we need to end this dangerous pollution and save lives; today’s decision means no more excuses.”

Implications for Other Rulings

Gormley said the ruling has implications for pending challenges in the same court, including a case scheduled for oral argument on Sept. 20 in which environmental groups and downwind states led by New York are jointly challenging the Trump administration’s refusal to reduce cross-state air pollution.

In that case, a different panel of D.C. Circuit judges ordered the EPA and all parties to be prepared to discuss the Sept. 13 ruling’s effect on the latest iteration of the Cross-State Air Pollution Rule, which published Dec. 21 also addresses upwind sources of pollution.

Specifically, the judges ordered the EPA counsel to be prepared “to discuss remedy and the likely timing for promulgation of a revised rule.”

“This directive means the court already is thinking about a remedy for EPA’s illegal action in refusing to address upwind sources of control because the ruling today has already established that the EPA cannot brush off nonattainment deadlines,” Gormley told Bloomberg Environment.

Maryland Environment Secretary Ben Grumbles was pleased with the D.C. Circuit’s decision, even though the state backed the agency’s rule.

Upcoming cases “will identify other issues where EPA has not followed the Clean Air Act to [ensure] that air pollution from upwind sources is adequately addressed,” Grumbles told Bloomberg Environment.

Separately, the D.C. Circuit upheld the updated ozone standard of 70 parts per billion against a challenge by Murray Energy and other manufacturing industries in the Aug. 23 Murray Energy Corp. v. EPA decision. The court required the EPA to consider strengthening the standard to better protect ecosystems and agriculture.

The court made it clear that the EPA has to eliminate significant smog-forming pollution by the deadlines for all national ambient air quality standards for ozone, including the 2015 limits.

“This means EPA not only needs to do something about upwind pollution causing violations of the 2008 standards, but the agency also needs to do a better job of implementing the 2015 limits by making sure that cross-state air pollution isn’t causing the violation of the 2015 limits after the deadlines for nonattainment areas have passed,” Gormley said.

The D.C. Circuit’s ruling was issued in Wisconsin v. EPA, D.C. Ct. App., No. 16-1406, 9/13/19.

To contact the reporters on this story: Porter Wells in Washington at pwells@bloomberglaw.com; Amena H. Saiyid in Washington at asaiyid@bloombergenvironment.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Steven Gibb at sgibb@bloombergenvironment.com; Anna Yukhananov at ayukhananov@bloombergenvironment.com