D.C. Circuit Denies Petitions for Full Court Review of Decision to Overturn CSAPR

The U.S. Court of Appeals for the D.C. Circuit last week declined petitions for rehearing en banc of the Cross-State Air Pollution Rule (CSAPR). The federal court’s denial of the petitions leaves in place the Clean Air Interstate Rule (CAIR)—a Bush-era rule that the court had formerly invalidated in July 2008 and then reinstated. It also could prompt environmental groups, 15 states, and the Environmental Protection Agency (EPA) to take their case to the U.S. Supreme Court.

The D.C. Circuit’s order was issued on the heels of a denial of an en banc rehearing from a large coalition of industry and states seeking to overturn the court’s June 2012 decision that upheld the EPA’s greenhouse gas endangerment finding.

A Dead End for CSAPR?

The EPA’s July 2011–finalized CSAPR would have required, by January 2012, 3,632 electric generating units at 1,074 coal-, gas-, and oil-fired facilities in 28 states to reduce nitrogen oxide (NOx), sulfur dioxide (SO2), and particulate emissions that cross state lines and contribute to ground-level ozone and fine particle pollution in other states. But the D.C. Circuit stayed that rule just two days before it was set to go into effect, ordering the EPA to continue administering the 2005-promulgated CAIR until a final decision could be made on the merits of CSAPR.

The D.C. Circuit then issued a landmark ruling on Aug. 21, 2012, that vacated CSAPR, finding that it violated federal law. The deeply divided three-judge panel of the federal court ruled in its 2-1 decision that the EPA could not force states to reduce their emissions by more than an amount determined to be their "significant contribution" to nonattainment in other states, and that the EPA violated the Clean Air Act by imposing federal implementation plans (FIPs) to implement emission reduction obligations at the state level. Judge Judith Rogers issued a lengthy dissent arguing that Judge Brett Kavanaugh’s opinion represented a “trampling on this court’s precedent on which the [EPA] was entitled to rely in developing the Transport Rule rather than be blindsided by arguments raised for the first time in this court.”

The Aug. 21 order stemmed from 45 separate appeals from several utilities, industry, environmental groups, and 15 states. Three petitions were subsequently filed asking the full court for a rehearing of the case, EME Homer City Generation v. EPA . One was filed by the Environmental Defense Fund (EDF), joined by the American Lung Association, Clean Air Council, Natural Resources Defense Council, and Sierra Club. A coalition of 15 states and cities (North Carolina, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New York, Rhode Island, Vermont, Baltimore, Bridgeport, Chicago, New York City, Philadelphia, and Washington, D.C.), also filed for petitions of review en banc. And on Oct. 5, 2012, the EPA also filed for a petition for an en banc rehearing, arguing that the court’s decision was inconsistent with court precedent and that the court lacked jurisdiction to make its ruling.

In its order on Jan. 24, however, the D.C. Circuit denied petitions for a full court rehearing. No judges dissented. "A majority of the judges eligible to participate did not vote in favor of the petitions," the one-page order says.

The court only grants a full review if a majority of its eight judges agree to rehearing. If the court had agreed to the rehearing, it may have decided the case on the current briefing, requested a new round of briefing, or requested a full en banc oral argument.

The EPA and other petitioners may now approach the U.S. Supreme Court for review of the case. However, "chances of success of such a petition seem small," says law firm Troutman Sanders LLP.

A Rehearing Denial with Complex Implications

CSAPR was adopted as a replacement to CAIR, which the D.C. Circuit struck down in 2008 in North Carolina v. EPA. But after vacating CAIR, the court was persuaded by all parties that the vacatur would pose crippling uncertainties for many state implementation plans (SIPs). The court then reversed its vacatur and left CAIR in place while the EPA developed a replacement rule.

The EPA must still replace CAIR—which has been declared "legally invalid," but in doing so, it will be required to "formulate a new transport rule that conforms to the court decisions overturning CAIR and CSAPR," says Troutman Sanders. "In the meantime, considerable uncertainty will prevail. For instance, some states had relied on emissions reductions under CAIR to meet [SIP] requirements for the ozone and fine particle matter (“PM2.5”) National Ambient Air Quality Standards (“NAAQS”) program. EPA recently approved these SIPs, but environmental groups this week appealed this EPA action on the ground that CAIR is legally invalid," the law firm says.

Meanwhile, the EPA recently adopted stricter PM 2.5 NAAQS and is planning to propose more stringent ozone NAAQS this year. "How these new NAAQS will affect EPA’s plans for a new transport rule is uncertain," Troutman Sanders adds.

This November, EPA Assistant Administrator Gina McCarthy issued a memo to EPA regional offices saying that it would be "appropriate to rely on CAIR emission reductions as permanent and enforceable for certain actions in certain circumstances. Specifically, we believe it will be appropriate to rely on those reductions either until [the EPA’s petition for an en banc rehearing] and any further proceedings in the CSAPR case are resolved or, if the decision vacating CSAPR is not changed, until a valid replacement rule is developed and implementation plans complying with any new rule are submitted by the states and acted upon by the EPA." McCarthy further advised EPA regional offices that pending action on a number of attainment SIPs, redesignation requests, and maintenance SIPs that relied on CSAPR to provide regional emission reductions for attaining ozone and PM2.5 NAAQS "may go forward."

Another issue left unresolved by the court’s denial of the rehearing petition is a determination made by the EPA before CAIR was legally overturned that states within the CAIR (and later, the CSAPR) region were not required to subject generators to best available retrofit technology (BART) requirements under the EPA’s regional haze program. The EPA said it would not address this regulatory aspect until the court acted on its petition for an en banc rehearing on its vacatur of CSAPR. "Now that such petition is denied, EPA must determine whether it will return to “CAIR=EGU BART” or whether EGUs in the East must now comply with regional haze BART requirements," says Troutman Sanders.

En Banc Rehearing for Endangerment Finding Denied

The D.C. Circuit on Dec. 20 denied petitions for a full court review from states like Texas and Virginia and industry groups including the U.S. Chamber of Commerce that sought to overturn the federal court’s June 2012 finding that the EPA was "unambiguously correct" in its interpretation of the Clean Air Act (CAA) to regulate carbon dioxide emissions.

In its decision of the case Coalition for Responsible Regulation v. EPA , a three-judge panel had ruled that the EPA’s December 2009 endangerment finding—a determination that greenhouse gases (GHGs), including carbon dioxide, are a threat to public health and welfare—and its decision to set limits for industrial and automotive emissions of GHGs, was "neither arbitrary nor capricious." The court said, however, that it lacked jurisdiction to review the timing and scope of the GHG rules that affect larger stationary sources, including new coal-fired power plants.

Experts had largely expected the court to deny the request for an en banc rehearing of that case. However, while the original panelists signed Chief Judge David Sentelle’s opinion concurring in the denial of rehearing, two judges—Judge Janice Rodgers Brown and Judge Brett Kavanaugh—wrote strong and colorful dissents to the denial of the reconsideration .

As legal experts noted, parties in both cases have 90 days to file a petition for certiorari to the Supreme Court.

Sources: POWERnews, EPA, D.C. Circuit, Troutman Sanders

—Sonal Patel, Senior Writer (@POWERmagazine)

This story was originally published on Jan. 29.

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