On January 24, 2013, the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") denied a request for rehearing en banc of the decision to vacate the Cross-State Air Pollution Rule (the "Transport Rule"), in EME Homer City Generation, LP v. Environmental Protection Agency, et. al, Case No. 11-1302.

As previously discussed in this blog, the United States Environmental Protection Agency ("EPA") promulgated the Transport Rule to address air pollution (specifically sulfur dioxide ("SO2") and nitrogen oxide ("NOx")) that crosses state lines. EPA identified 28 States that had air pollution sources which negatively impacted air pollution levels in downwind States. EPA targeted coal and gas-fired power plants as the primary sources of air pollution which was traveling to downwind states and set standards for emission reductions at these power plants. In addition, EPA issued Federal Implementation Plans ("FIPs"), which specified how the emission reductions would be implemented.

In striking down the Transport Rule, the D.C. Circuit held that EPA exceeded its authority by (1) mandating specific air pollution reductions in upwind States that may require the upwind States to reduce emissions by more than their own contribution to a downwind State's air pollution problem and (2) not giving States the initial opportunity to design State Implementation Plans ("SIPs") as a means to achieve the standards set by EPA. In its petition for rehearing en banc, EPA claimed that the case dealt with issues of "exceptional importance" due to the enormous public health and regulatory significance of the Transport Rule. EPA argued that the three-judge panel that decided to vacate the Transport Rule acted inconsistent with D.C. Circuit precedent and in violation of the Clean Air Act.

With the D.C. Circuit's denial of EPA's petition for rehearing en banc, EPA will continue to administer its previous cross-state air pollution rule, the Clean Air Interstate Rule ("CAIR"). Although the D.C. Circuit has previously held that CAIR was also an improper rule, it did not vacate CAIR. Thus CAIR will remain in place while EPA considers whether to pursue further appeal to the United States Supreme Court or to begin working on new regulations to address cross-state air pollution.