A Look at EPA’s Good Neighbor Plan Ahead of the SCOTUS Ruling

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A Look at EPA’s Good Neighbor Plan Ahead of the SCOTUS Ruling

A Look at EPA’s Good Neighbor Plan Ahead of the SCOTUS Ruling

Published :

Published :

More than a year after EPA’s latest update to EPA’s Cross-State Air Pollution Rule (CSAPR), dubbed the ‘Good Neighbor Plan’ (GNP), was finalized and due to come into effect, a momentous ruling by the Supreme Court of the United States (SCOTUS) looms large. The ruling in the case of Ohio vs. EPA, expected this June, could potentially reshape the landscape of environmental regulations. This article delves into the history of this rule in the context of the upcoming ruling and the impact of a continued stay on emissions from the states in question.

CSAPR and its newest iteration, the Good Neighbor Plan, represent a significant effort by the EPA to address the persistent issue of cross-border air pollution from smog-forming emissions from point sources. This comprehensive approach aims to reduce SO2 and NOx emissions, which contribute to ground-level ozone and fine particulate pollution in downwind states.

Pre-GNP Context

The journey towards addressing interstate air pollution, a complex and ongoing process, began with the Clean Air Act Amendments of 1990. This landmark legislation established the framework for managing air quality across state boundaries and laid the foundation for the Good Neighbor Plan. This effort was furthered by the ‘NOx SIP Call in 1998,’ a regulatory action that required 22 states and the District of Columbia to reduce NOx emissions. These early steps set the stage for the development of the Good Neighbor Plan and its subsequent iterations.

In 2011, EPA finalized the first version of CSAPR. This rule targeted the transport of air pollution across state lines, necessitating SO2 and NOx emission reductions from power plants. These emission reductions, a key component of the Good Neighbor Plan, are crucial for improving air quality in downwind states. States were divided into two groups based on their emission reduction obligations, marking a significant step forward in the EPA’s efforts to address cross-border air pollution.

Despite its comprehensive scope, CSAPR faced significant legal challenges. In August 2012, the U.S. Court of Appeals for the D.C. Circuit vacated the rule, citing EPA’s overreach. However, the U.S. Supreme Court reversed this decision in April 2014, reinstating CSAPR. This legal back-and-forth underscores the contentious nature of the rule and its implications. This led to a supplemental rule in October 2014, adjusting the implementation timeline. January 2015 marked the beginning of Phase 1 of CSAPR, imposing significant emission reductions. By January 2017, Phase 2 commenced with even stricter requirements.

Updates and Good Neighbor Plan

EPA issued the CSAPR Update Rule in 2018 to address remaining interstate pollution. The Revised CSAPR Update was finalized in April 2021, setting new NOx emission reduction requirements for the 2021 ozone season, with updated NOx ozone season limits of 0.53 million tons, down from the 2017 baseline of 0.56 million tons.

Below is the summary of all CSAPR Updates:

CSAPR Initial Implementation (2011) – Was Initially formed to include states required to reduce annual and ozone season NOx emissions based on their contributions to downwind air quality issues. These were Group 1 states.

CSAPR Update (2015)—The 2015 CSAPR Update refined the groupings, explicitly focusing on ozone season NOx emissions. Group 2 states were added, which were identified for reductions in ozone season NOx emissions, expanding the program.

CSAPR Update (2017) – This update focused on further reducing NOx emissions during the ozone season to help states meet the 2008 ozone NAAQS. States continued to follow the updated budgets and requirements based on the 2015 groupings.

Revised CSAPR Update (2021) – This update, a key milestone in the evolution of the Good Neighbor Plan, introduced additional requirements to meet the 2015 ozone NAAQS. A new group (Group 3) was formed to require further ozone season NOx reductions for states significantly impacting downwind ozone levels. This update marked a significant step forward in the EPA’s efforts to address cross-border air pollution and set the stage for the Good Neighbor Plan.

The Good Neighbor Plan: Detailed Insights

The Good Neighbor Plan, a crucial element of the EPA’s strategy, took another significant step forward on March 15, 2023, when the EPA announced the final plan for the 2015 Ozone National Ambient Air Quality Standards (NAAQS). This plan builds on the progress made under CSAPR and aims to ensure that states meet their obligations to prevent their emissions from contributing significantly to air quality problems in downwind states. Notably, the GNP includes dynamically updated allowance budgets for states in tandem with power plant retirements.

The GNP expanded the program to include more states to reduce seasonal NOx emissions. The rule previously required states to develop a State Implementation Plan (SIP), which the EPA would assess based on their modeling and comments and whether the states could successfully achieve the required emission curtailments. EPA disapproved 19 SIP submissions and partially approved and partially disapproved 2 SIP submissions that were submitted under the 2021 Revised CSAPR Update. Upon these disapproval actions, EPA’s overarching Federal Implementation Plan (FIP), which included the GNP provisions, went into effect in these states in June 2023.

Legal Conflicts and Possible Outcomes

EPA’s SIP disapproval faced backlash and legal action from most states. 12 states were granted stays in regional courts, but the rule is still in effect and under implementation in 11 states. The litigations challenging SIP disapprovals are still ongoing in regional courts. The U.S. Court of Appeals for the D.C. Circuit has upheld the rule, rejecting attempts by states and industry groups to block its implementation, following which the case was escalated to the Supreme Court.  Those opposing the rule argue that this partial roll-out of the rule makes the regulation invalid.

Additionally, petitioners emphasize the financial burden of implementing the GNP on the electric grid and other industries in the states. This burden includes the costs of upgrading or retiring power plants, implementing new emission control technologies, and complying with the new emission limits. During oral arguments, the Supreme Court appeared skeptical of EPA’s approach to the GNP. The final ruling is expected to be released before the current SCOTUS term ends in June.

Given that the program’s implementation has been stayed in various regional courts across the country, a Supreme Court ruling in favor of the GNP would not overturn those decisions. This means the GNP will remain stayed in states with stays currently in place. However, it also implies that the rule’s implementation continues in states where the GNP is not stayed. Conversely, a decision against the rule could potentially lead to the rule being stayed entirely and indefinitely for all 23 states covered by the GNP.

Impact of Litigation and Stays on the States

The following map showcases the various states within the jurisdiction of CSAPR and the Good Neighbor Plan and their status in the program.

 

All states in Group 3 and those with stays make up the jurisdiction of the GNP.  Currently, all the states with a stay on GNP follow the emission budgets set by the previous version of the rule, the Revised CSAPR Update. In these states, the 2024 GNP emission limits would have been significantly lower than the emission limits currently in effect. Furthermore, emissions from these states (except Missouri) in 2023 fall between the GNP budget and the current applicable emission limits. With these relatively relaxed limits from the previous version of the rule, there is no further incentive to reduce emissions and invest in additional emission control equipment.

a bar chart showing actual seasonal NOX emissions vs GNP and previous CSAPR limits by state

Conclusion

The Supreme Court’s imminent decision on the Good Neighbor Rule will have significant implications for EPA’s current interstate air pollution trading program. A ruling in favor of the GNP could re-establish EPA’s significant efforts to mitigate cross-state air pollution, while a decision against it could halt the GNP’s implementation indefinitely.

The legal battles surrounding the GNP highlight the ongoing struggle between state sovereignty and federal environmental regulations and could provide a preview for future state versus EPA legal battles, including the recently finalized EPA Greenhouse Gas Rule.

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