Federal Courts Need to Allow the EPA to Clear the Air

Summary:  Smog kills over 200,000 Americans every year; that means that almost one out of every twelve deaths in the United States is from smog.  The EPA’s cap-and-trade program to control smog in the Central and Eastern United States is lawful and wise, and the Supreme Court should overturn the D.C. Circuit’s decision to vacate the program.

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By Dr. Albert Monroe 

Every year, about 200,000 Americans die from smog, which is a mix of ozone and fine particulates (PM2.5), mostly from fossil fuel consumption.  This means that almost one out of every twelve deaths in the United States is from smog.

The Clean Air Act (CAA) regulates smog, setting National Ambient Air Quality Standards (NAAQS) for ozone and PM2.5.  Many cities in the Northeast fail ozone and PM2.5 NAAQS because of pollutants emitted from Midwestern power plants.  The CAA expressly forbids pollution from one state “significantly contributing” to another state’s nonattainment of its air quality standards, and in recent years, the EPA has promulgated rules using regional cap-and-trade programs to control the interstate transport of smog precursors from power plants.

In 2012, in EME Homer City Generation v. EPA, the D.C. Circuit struck down the Cross-State Air Pollution Rule (CSAPR), which was the EPA’s latest attempt to regulate smog in the Central and Eastern United States.  In December, the Supreme Court heard the EPA’s appeal of the D.C Circuit’s decision.  The Supreme Court should overrule the D.C. Circuit and reinstate CSAPR.  CSAPR is both lawful under the CAA and good policy.  If the Supreme Court does not reverse the D.C. Circuit’s decision in Homer City, it will lead to thousands of additional deaths per year from air pollution and leave the EPA without a clear way to control smog in the Eastern half of the United States.

The interstate transport of air pollution is a longstanding problem.  In the 1990 Amendments to the CAA, Congress strengthened provisions of the CAA intended to limit the interstate transport of air pollution.  Attempts to facilitate interstate compacts to limit the interstate transport of air pollution failed, and in 1998 the EPA promulgated the NOx SIP Call to control ozone in the Eastern half of the United States.

Under the NOx SIP Call, the EPA distributed allowances to power plants and other large industrial polluters on the basis of cost of pollution control.  To do this, the EPA first determined what were the least expensive types of pollution controls would lead to all areas in the Eastern half of the United States attaining their ozone air quality standards.  The EPA then assumed that each polluter in the NOx SIP Call used those controls.  The EPA then distributed allowances to each polluter based on that assumption and polluters could then trade allowances with any other polluter in the program.  Polluters with high costs of control could trade with those polluters with low cost of control, increasing efficiency.  At the end of every year, each polluter had to have enough allowances to cover its ozone season (May-September) NOx emissions. In Michigan v. EPA (2000), the D.C. Circuit ratified the EPA’s approach, stating that the cost of pollution control could be used to help determine significant contribution under the CAA.

Later research found that PM2.5 was an even greater threat to human health than ozone.  The EPA then created a separate NAAQS for PM2.5 and promulgated the Clean Air Interstate Rule (CAIR) to make sure that no state in the Eastern half of the United States significantly contributed to nonattainment of PM2.5 and ozone NAAQS in any other state.  CAIR had the same design as the NOx SIP Call; the most significant difference was that both NOx and sulfur dioxide (SO2) were controlled by CAIR in order to control both ozone and PM2.5.

The D.C. Circuit essentially overturned Michigan in North Carolina v. EPA (2008).  In North Carolina, the D.C. Circuit stated that CAIR was unlawful because there was no guarantee that any one plant or set of plants reduced their emissions.  In other words, power plants in Alabama that significantly contributed to nonattainment in North Carolina could purchase allowances from other power plants and continue to significantly contribute to nonattainment in North Carolina.

As a response to North Carolina, the EPA promulgated the Cross-State Air Pollution Rule (CSAPR), a new cap-and-trade program for NOx and SO2.  CSAPR differed from CAIR because it had assurance provisions; those provisions limited the amount of pollution released form any one state.  Even with those assurance provisions, the D.C. Circuit vacated CSAPR in Homer City.

In Homer City, the D.C. Circuit stated that the EPA had to distribute allowances among states in a proportional manner.  That means that if (for example) Alabama and Mississippi contribute equally to nonattainment North Carolina, pollution reductions have to be equal in both states.  Homer City was appealed to the U.S. Supreme Court, which granted cert and heard the case on December 10, 2013.

North Carolina and Homer City are deeply unwise and make it impossible for the EPA to develop a program to eliminate smog in the Eastern half of the United States.  In North Carolina, the EPA didn’t need to vacate CAIR; instead, it should have waited to see if Alabama actually significantly contributed to nonattainment in North Carolina after the imposition of CAIR.  In Homer City, the D.C. Circuit should not have mandated a “proportional” solution that was (and is) essentially impossible to enforce.  CSAPR covers 27 states (and DC), where a state may significantly contribute to pollution in many states and many different states can significantly contribute to pollution in a particular state.  In such a circumstance, there is no way to ensure that each state’s contribution is proportional. Furthermore, efficient pollution reduction implies that wide variations in cost of pollution reduction should only be used to reduce pollution in especially polluted areas; Homer City would have resulted in wide variations in the cost of pollution reduction that had little to do with cleaning up especially polluted areas.

Furthermore, Homer City rules out most reasonable solutions to the problem of the interstate transport of air pollution.  Any such solution needs to divide responsibility for pollution among states.  Since CSAPR covers 27 states, Homer City’s proportional approach is such that it is almost impossible to know whether any distribution of allowances is actually proportional, especially since no distribution of allowances can be exactly proportional for 27 states and the Homer City court did not say how proportional is proportional enough.

The Supreme Court should overturn Homer City and rule that the EPA can use cost to distribute allowances among states in a multi-state cap-and-trade program.  Furthermore, future courts should show greater deference to agency interpretations of complex statutes.  In these cases, courts should interpret regulation in line with its purposes, making sure that the agency regulates sources Congress wanted regulated and protects who Congress wanted to protect.  To do otherwise is to limit agencies’ ability to adjust to changing circumstances and adequately protect us against threats to our health and safety.

Dr. Albert Monroe is Visiting Assistant Professor at the Quinnipiac University School of Law.  Last year, he taught at the Thomas Jefferson School of Law.  Dr. Monroe earned a doctorate in economics from Harvard University in 2002 and a law degree from Yale Law School in 2012.  Dr. Monroe’s research is focuses on environmental and administrative law issues, especially both climate change and conventional air pollution.  While in law school, Dr. Monroe served as Vice-President of the Connecticut Network to Abolish the Death Penalty when the death penalty was abolished in Connecticut.