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Federal appeals court tells US EPA to rework 2016 update to interstate smog rule

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Federal appeals court tells US EPA to rework 2016 update to interstate smog rule

A federal appeals court on Sept. 13 ordered the U.S. Environmental Protection Agency to revise an interstate smog rule because it failed to require power plants in upwind states to curb emissions by a certain date.

However, the U.S. Court of Appeals for the District of Columbia Circuit declined to completely vacate the regulation at issue: a 2016 update to the U.S. Environmental Protection Agency's Cross-State Air Pollution Rule, or CSAPR.

Upheld by the U.S. Supreme Court in 2014, the first CSAPR established nitrogen oxide, or NOx, emissions budgets for 22 states in the eastern half of the country designed to bring them into compliance with the National Ambient Air Quality Standards, or NAAQs, for ground-level ozone.

Ozone is formed in the atmosphere through a reaction between sunlight, NOx and volatile organic compounds emitted from sources such as cars, power plants and industrial facilities. Exposure to elevated levels of ozone has significant negative health effects, including throat irritation, lung tissue damage, and aggravation of existing conditions such as asthma, bronchitis, heart disease and emphysema.

Under the CSAPR trading program, allowances to emit NOx are allocated to affected sources such as coal-fired power plants based on state emissions budgets. In 2008, the EPA reduced the ozone NAAQS from 80 parts per billion to 75 ppb. That eventually led the EPA in 2016 to issue an update to CSAPR addressing the strengthened ozone standard. Approximately 36 million people in 49 counties in eastern states and Texas suffer from ozone levels that exceed the 2008 ozone standard, according to EPA data.

In its update, the EPA established federal implementation plans that prescribed emissions reductions the affected states had to undertake to aid their neighbors under the Clean Air Act's "good neighbor" requirements. However, the EPA declined at the time to affirm that the update would be the final action required of 20 of the states under that provision of the statute.

Ruling carries implications for related case

In its Sept. 13 decision, the D.C. Circuit sided with a coalition of environmental petitioners in finding that the rule illegally failed to require upwind states to eliminate their significant contributions to downwind ozone pollution by July 2018, the same date downwind states were required to meet the 2008 NAAQS for ozone.

The three-judge panel also rejected the state of Delaware's claim that it should have been designated a nonattaining downwind state, which would have triggered good-neighbor obligations from upwind states.

The court also rejected what it described as a "smörgåsbord of arguments" submitted by industry petitioners including Duke Energy Corp. subsidiaries Duke Energy Progress LLC, Duke Energy Carolinas LLC, Duke Energy Ohio Inc., AEP Generation Resources, Western Farmers Electric Cooperative and the now-disbanded Utility Air Regulatory Group. Those companies were joined by states including Wisconsin and Texas in arguing that the EPA failed to rationally analyze whether the rule's environmental benefits justified its $1,400-per-ton control level.

"To make [a] long story short, all of the industry petitioners' state- and unit-specific arguments fail," the court said in a per curiam opinion.

The ruling effectively means the EPA needs to rework the regulation in a way that addresses the Clean Air Act's requirement for upwind states to eliminate their substantial contributions to downwind nonattainment in concert with the attainment deadlines. But the court declined to set a specific date for the EPA to do so, rejecting environmental petitioners' request to impose a six-month time frame on the promulgation of a revised rule.

"We're exploring what our legal options would be to compel EPA to act quickly," Earthjustice attorney Neil Gormley said in a Sept. 13 interview. Gormley also noted that the ruling has major implications in a related case before a different D.C. Circuit panel with oral arguments scheduled for Sept. 20.

In that case State of New York v. EPA (No. 19-1019) a coalition of environmental groups and states have argued that the Trump administration's "CSAPR closeout" rule, which extended the compliance deadline for the 2008 ozone standard to 2023, plainly violates the Clean Air Act's good-neighbor provision. States should only have until 2021 to demonstrate compliance under the requirements of the statute, they said. "Given that the legal rationale is the same, the Trump administration rule is illegal, as well," Gormley said.

The D.C. Circuit's Sept. 13 opinion was delivered by Judges Sri Srinivasan, Patricia Millett and Robert Wilkins. State of Wisconsin v. EPA (No. 16-1406)