The US Supreme Court has decided to hear USEPA’s challenge to the invalidatition of the Cross State Air Pollution Rule (CSAPR) by the DC Circuit in EME Homer City Generation L.P., et al, v. EPA. The CSAPR requires 28 states to reduce power plant emissions that contribute to the “downwind” transport of ozone and fine particulate matter pollution in eastern states. Under CSAPR, utilities in covered states are subject to stringent requirements designed to reduce key ozone-producing pollutants through a regional emissions trading program. The DC Circuit rejected CSAPR on two primary bases: (1) USEPA exceeded its authority by requiring upwind states to reduce emissions that were a “significant contribution” to downwind states’ non-attainment of the National Ambient Air Quality Standards (NAAQS); and (2) USEPA improperly issued federal implementation plans (FIPs) to implement CSAPR without allowing the states an initial opportunity to implement the necessary reductions for sources within their borders

The Supreme Court’s review will be focused on the three issues raised in USEPA’s Petition for Certiorari: (1) whether the DC Circuit improperly addressed issues not raised during the comment period including whether USEPA has authority to define the measures for a state’s significant downwind contributions; (2) whether the DC Circuit’s conclusion that a state is not required to submit an implementation plan until USEPA establishes by rule the amount of the state’s interstate contribution is proper; and (3) whether the DC Circuit’s determination that the CSAPR unambiguously constrains USEPA to consider and regulate only the upwind state’s proportionate responsibility for each downwind air quality problem is appropriate.

The Supreme Court’s decision in this matter will have serious repercussions – both on the breadth of USEPA’s authority to establish emissions trading programs and on the fundamental issue of how the Clean Air Act balances power between USEPA and the states. It will also indirectly impact a variety of other air regulations since the reductions promised by CSAPR were relied upon in other contexts. For example, many states relied on CSAPR as the basis for their NAAQS and Regional Haze plans. The vacatur of CSAPR casts doubt on those subsequent determinations, creating substantial uncertainty regarding how to demonstrate compliance going forward. For the time being, the predecessor to CSAPR – the Clean Air Interstate Rule (CAIR) – remains in place, albeit grudgingly since the DC Circuit also rejected that rule in 2008 and had remanded it to USEPA for fixing. Despite the deficiencies in CAIR, the Court had allowed it to remain in place until such time that its replacement could be developed. With the vacature of CSAPR, CAIR’s life is being extended even further.

The Court’s grant of certiorari adds yet another twist to the tortured path of interstate air pollution regulation. While the Supreme Court could nail the coffin shut on CSAPR and require USEPA to design yet another replacement rule, it could also reinstate the Rule. If so, some degree of modification will still be in order since several of the Rule’s deadlines have already passed.

The cases are listed as EPA, et al. v. EME Homer City, et al., No. 12-1182, and American Lung Assn., et al. v. EME Homer City, et al., No. 12-1183. The Court’s Order can be found here. Oral argument is expected during the Supreme Court’s next term, which begins in October 2013.