On December 10, 2013, the Supreme Court heard oral arguments in EPA’s appeal from the vacatur of the Cross-State Air Pollution Rule (CSAPR) in EPA v. EME Homer City Generation, L.P. The general consensus of observers is that the oral argument went well for EPA. As expected, Justice Alito recused himself from the case, leaving only eight justices to decide the case. Justice Scalia appeared to be persuaded by the respondents’ arguments against the rule, while Justices Breyer, Ginsburg, Kagan, and Sotomayor appeared to favor EPA. Chief Justice Roberts and Justice Kennedy were harder to pin down, although both appeared to be at least partially receptive to EPA’s arguments. As usual, Justice Thomas asked no questions at oral argument.

Although the Court granted certiorari on a jurisdictional question, the parties did not address the issue during oral argument, instead focusing on the merits. On the question of whether a state is excused from adopting an interstate transport SIP until after EPA has quantified the state’s good neighbor obligations, EPA answered in the negative, emphasizing that the Clean Air Act places the initial burden on the state to ascertain whether its emissions contribute significantly to downwind nonattainment with the NAAQS. Justice Roberts noted that “EPA has an easier job” quantifying each state’s good neighbor contributions than the individual states who have “no possible way to know . . . the burden [EPA] expect[s] them to address.” The state respondents, lead by Texas, argued that EPA had directed the states in the 1998 NOx SIP Call not to submit interstate transport SIPs until after EPA had quantified each state’s good neighbor obligations, which excused the states from the requirement to adopt a SIP until after EPA completed its quantification.

The Court also heard arguments on whether EPA permissibly defined each upwind state’s significant contribution based upon the cost-effective emission reductions achievable in the state, rather than each state’s proportionate responsibility for downwind nonattainment. The industry petitioners argued that EPA’s interpretation was arbitrary and capricious because it would force certain states to make greater emissions reductions than their proportionate contributions would require simply because it is less costly for them to do so. Justice Scalia appeared to agree, noting that Congress’s intent was not for EPA impose a plan upon the states that achieves “the most efficient reduction of pollution no matter where that pollution came from.” EPA argued that its interpretation of the statute is permissible because an overriding policy objective of the Clean Air Act is to achieve emissions reductions in the most cost-effective manner possible. EPA also emphasized that it is “impossible” to implement the straight proportionality approach the D.C. Circuit instructed EPA to follow when vacating CSAPR. Justice Kennedy appeared to be sympathetic to the Agency’s argument, stating that “the word ‘significantly’ does import a judgmental component.”

The Court’s decision is expected by June 2014. If the Court splits 4-4, the effect would be to uphold the D.C. Circuit’s vacatur of CSAPR.