Argument preview: Ill winds and good neighbors

At 10 a.m. Tuesday, the Supreme Court will hold ninety minutes of oral argument on two joined cases, testing the federal government’s authority to require states to take action to prevent their air pollution from fouling the air in neighboring states.  Defending the Environmental Protection Agency’s authority will be Deputy U.S. Solicitor General Malcolm L. Stewart, with forty-five minutes of time.  Arguing against the EPA will be Jonathan F. Mitchell, Texas’s state solicitor general, for state and local government parties, with twenty minutes, and Peter D. Keisler, of the Washington, D.C., office of Sidley Austin, for industry and labor parties, with twenty-five minutes.  The cases are EPA v. EME Homer City Generation and American Lung Association v. EME Homer City Generation.

Background

It is an undeniable fact of nature that polluted air, made dirty in one place by human activity, is carried by the wind to other places.  But it is a myth that the pollution is always scattered in only one direction — upwind to downwind.  The scientific reality is that polluted air swirls around, in several directions, so it is not easy to figure out just where it came from.

That is the puzzle that Congress and the federal government have been trying to figure out for most of the history of the Clean Air Act, at least for the past half-century.  The Environmental Protection Agency’s most recent effort to sort that out — never put into effect and ultimately nullified by a federal appeals court — is now up for review by the Supreme Court.

This case, at its most elementary level, is about assigning responsibility for the swirl of air pollution that does not respect the boundaries of states, especially in the eastern part of the United States.  But the most basic disagreement between the two sides is whether the EPA has authority on its own to assign responsibility, using computer modeling, or whether it must first show each state’s contribution to bad air in other states and then let the states have the first opportunity to work out how to remedy that through pollution controls, with the EPA having only backstop authority if the states falter.

The Clean Air Act was set up as a partnership between the federal and state governments to act jointly to protect public health by reducing harmful pollutants in the nation’s air supply.  The first task in the process is the EPA’s — to write air quality standards.  The states are then assigned the task of drafting their own plans to meet those standards.  If they don’t do so, or if their plans are inadequate, then EPA has the duty to write a federal plan.

One of the obligations that states have, in drafting implementation plans, is imposed by what is called the “good neighbor” policy.  It dates from 1963, in a more elemental form, but its most fully developed form requires each state to include in its plan the measures necessary to prevent the migration of their polluted air to their neighbors, if that would keep the neighbors from meeting EPA’s quality standards.

If a giant wind meter capable of detecting pollution could be set up at a state’s border, and it accurately measured the amount coming into the state, it would be easy to design a regulatory program that would impose obligations on the “upwind” state to take action to keep from harming air quality in the “downwind” state.

But that is not technically feasible, so some other means must be developed to implement the “good neighbor” policy — that is, to locate the sources of pollution that degrade air in other states.  The policy devised by EPA is formally known as the “State Air Pollution Rule,” but is more popularly known as the “Transport Rule.”  That is the rule that the agency and its supporters, including environmental groups, are asking the Supreme Court to revive.

The rule was completed in 2011, and was set to go into effect promptly.  It never has, because the federal court of appeals in Washington blocked it in late December 2011.  After review, the D.C. Circuit struck down the rule in August of last year.

What the Transport Rule sought to do is to set up a regime to limit cross-border movement of emissions of nitrogen oxides and sulfur dioxide.  Those substances, sent out from coal-fired power plants and other sources, get transformed into ozone and “fine particular matter” (basically, soot), and both are harmful to human health, contributing to asthma and heart attacks.  They also damage natural terrain such as forests, destroy farm crops, can kill fish, and create hazes that reduce visibility.

Both of those pollutants are carried by the wind, and they can be transported very large distances — a phenomenon that is mostly noticed in the eastern states.  The mid-Atlantic states, for example, have often complained that their air gets filled with ozone from states to their west, and one Maryland commentator has said that those states have “lost the ozone battle before the sun comes up,” because it drops from high altitudes as the mornings warm up.

Those are the kind of cross-state problems EPA said it was confronting with its 2011 initiative.  That plan, it said at the time, “will help assure that all but a handful of areas in the eastern part of the country achieve compliance” with the current air quality standards for ozone and fine particles by officially imposed deadlines.

The EPA was reacting to changes that Congress had made in the Clean Air Act in 1990, strengthening the “good neighbor” mandate.  That is the origin of a specific command that states not “contribute significantly” to other states’ inability to meet air quality goals; the quoted phrase, though, is not defined, so that could leave a lot to EPA’s discretion.

As a D.C. Circuit opinion commented, this requirement can be understood as requiring “upwind states to bear responsibility for their fair share of the mess in downwind states.”

This 1990 requirement led the EPA to write a series of rules:  first, in 1999 to reduce nitrogen oxide emissions with their negative impact on ozone layers; then in 2005, to do so for fine particulate matter; and, finally, in August 2011, the rule that the Supreme Court is ready to confront.

The EPA identified twenty-eight “upwind” states supposedly failing to avoid contributing significantly to downwind woes.  EPA concluded, for each of those states, that they had either failed to submit a plan to obey the “good neighbor” mandate, or had submitted an inadequate one.

EPA came to its list of twenty-eight states by a two-step process, focusing on air quality and on costs of dealing with pollution.  First, it identified the states that potentially were subject to the mandate, using computer modeling of air quality to determine if a state exceeded a threshold level in at least one neighboring area.  Second, it laid out emission-control duties for each upwind state.  Each state’s duty was defined by the amount of reduction of pollution that could be achieved for no more than a cost threshold — that is, what it would cost a given state to remedy the downwind effect on air quality.

EPA said it took that approach because of scientific findings about the swirling generation of dirty air — some flowing downwind from a source, others stirred up locally.   Some states, it said, are both “upwind” and “downwind” in this perception, with overlapping movements of the pollution.

A group of states, targeted for new “good neighbor” duties, joined by local governments, industry groups, and labor organizations, challenged the Transport Rule in the D.C. Circuit.  In a divided decision, a panel of that court ruled that EPA had not faithfully applied the 1990 mandate.

EPA, it said, was handed the duty of requiring upwind states to reduce only their own “significant contributions” to downwind states, but the agency instead would require upwind states to reduce emissions more than their own contributions to foul air downwind.

In addition, the D.C. Circuit majority found, the Act gives states the first opportunity to devise ways to meet their “good neighbor” obligations, but EPA denied them that chance, and instead determined on its own the scope of each upwind state’s duties and then laid out the pollution-reduction measures they must take.

“Congress,” the majority remarked, “could well decide to alter the statute to permit or require EPA’s preferred approach to the good neighbor issue.  Unless and until Congress does so, we must apply and enforce the statute as it’s now written…..Our limited but important role is to independently ensure that the agency stays within the boundaries Congress has set.  EPA did not do so here.”

In March, the EPA and a group of environmental groups took the case on to the Supreme Court.

Petitions for certiorari

The EPA asked the Court to review three issues — one a procedural question that would wipe out the D.C. Circuit decision without ruling on it directly.  That question was whether the appeals court had jurisdiction to decide the case.  Beyond that, the agency petition asked whether states are free to avoid the “good neighbor” mandate until each state’s pollution share was quantified, and whether the Act absolutely required the EPA to fix each upwind state’s share of each downwind air quality problem.

On the procedural point, the agency argued that the D.C. Circuit should not have ruled on challenges that, EPA said, involved EPA orders that were not even before the court.  And it should not have heard any of the challengers’ complaints, because all of them had failed to object to the Transport Role when it was under study at the EPA.

On the merits, the EPA said the D.C. Circuit was wrong because it reached outside the Act to find obligations that the EPA supposedly had failed to fulfill, and thus threatened EPA’s duty — spelled out explicitly in the law — to devise a federal remedy if states were found to have failed to carry out the “good neighbor” mandate.

The D.C. Circuit’s approach, the petition argued, will delay the “good neighbor” policy for years and, indeed, may make it impossible for some downwind states to ever meet air quality goals.  EPA told the Court that it had planned to use the Transport Rule for dealing with other threats to air quality.

In the second petition, the American Lung Association, Clean Air Council, Environmental Defense Fund, National Resources Defense Council, and Sierra Club also sought to raise three questions, including one on procedure.

The challengers’ failure to make their objections known to EPA during a time when the agency was allowing the public to comment on its plans, this petition argued, should never have been decided by the D.C. Circuit.

In addition, the environmental groups asked the Court to find that the D.C. Circuit had misused its judicial power by devising its own method for carrying out the “good neighbor” policy, and to find that a state must meet its obligations under that policy whether or not its specific contribution to downwind pollution has been quantified.

Those questions were similar to the ones that EPA had argued, but contained some subtle differences.

On June 24, the Court agreed to rule on both petitions, but it limited its review to the version of the issues presented in EPA’s petition.

Supreme Court review of both petitions was urged in a brief for nine states, the District of Columbia, and five cities.   They contended that the D.C. Circuit had eliminated “the independent obligation of states to remedy” the impact they have on downwind states.  The Act itself clearly imposes that obligation on the states, this brief asserted.

A group of fourteen other states, along with two Louisiana state agencies and two cities, urged the Court to leave the D.C. Circuit’s decision intact. Their strongest complaint was that EPA had cut the states out of implementation of the “good neighbor” policy, violating the Act’s goal of a partnership between federal and state governments.

A long list of energy companies and electric power-sharing alliances, along with local utilities and one labor union — the International Brotherhood of Electrical Workers — also opposes review, arguing that the “good neighbor” policy was intended to be state specific, and yet EPA had claimed for itself the power to impose “whatever collective upwind reductions it deemed ‘reasonable.'”

EPA’s analytical method was flawed, this brief also asserted, because it compared the supposed benefits of the Transport Rule to “a hypothetical world” with no good-neighbor emissions controls.  This filing also disputed EPA’s claim that, without this Rule, there will be serious harms to public health; an earlier EPA policy on cross-state transport of emissions remains in effect.

Briefs on the merits

EPA’s brief on the merits divided its arguments into two categories.  Its first general objection was that the D.C. Circuit had found that the agency had acted prematurely, and to that the brief argued first that the agency had no authority to consider that complaint because the challengers had not brought their grievances to the agency, and then it contended that the appeals court was wrong because EPA was legally obligated to issue federal plans whether or not it first quantified each state’s pollution responsibility.

Its second broad objection was that the appeals court had misread the Clean Air Act, and to that it again contended that the lower court had gone beyond its authority because the objections it considered were not properly raised, and then it argued that the appeals court wrongly substituted its own view of what a “significant contribution” to downwind pollution was, rather than accepting EPA’s approach.

More generally, the EPA filing contended that the D.C> Circuit simply did not understand the technical complexity of interstate air pollution, and that led it to devise a mechanical “proportional approach” to state obligations that would be more expensive and less effective than the EPA approach.

The merits brief of the environmental groups, led by the American Lung Association, put heavy stress on the claim that the D.C. Circuit was obliged to defer to the expertise of the EPA, and yet understood to impose “its own detailed judicial requirements” for good neighbor rules — requirements that simply are “unsuited to the realities of the air pollution problems” that the good neighbor policy is intended to address.

The D.C. Circuit decision, that brief asserted, “would force EPA to follow unworkable judicial algorithms that Congress never enacted, make interstate transport regulation an endless cycle of delay and failure, and thwart timely attainment of the nation’s health-based air quality standards.

Both the EPA brief and that of the environmental groups reminded the Court that it ruled as long ago as 1906 — decades before the Clean Air Act was passed — that downwind states had a right to be protected from the export to them of bad air originating upwind from them.

The state and local governments’ merits brief insisted that they and others had a right to put their challenges before the D.C. Circuit, because they were contesting only the Transport Rule, not any antecedent rules or policies that EPA had put into effect earlier.  That Rule, they noted, did not exist at the time the EPA took what it may regard as preliminary steps toward the Rule.

In that brief, moving on to the merits, the governmental entities contended that they had earlier EPA approval for implementation plans, and that the EPA, by the Transport Rule, was seeking to retroactively undo them by claiming that it acted because of deficiencies it had discovered.   Separately, that brief reiterated its earlier argument that the EPA had left the states — before it adopted the Transport Rule — in the dark about what kinds of obligations they had under the good neighbor policy.  Then, the brief added, the EPA sprung those obligations on them without their input.   Under the Act, this filing said, the EPA cannot use a federal plan to announce and impose new requirements that came as a surprise to the states.

The industry and labor organizations’ merits brief put primary emphasis upon their renewed claims that the Transport Rule put greater-than-justified emission control obligations on the upwind states, and that the EPA had no authority to use cost-based formulas to impose those controls rather than first defining each state’s share of the downwind pollution problem.  The good neighbor policy, this filing said, focuses on the effect of emissions downwind, not on the cost of eliminating them.

The EPA has never shown, the industry-labor brief said, that it would be impossible for it to actually fulfill the Act’s obligation that it first determine each state’s share of the downwind pollution generation.

Arguing that the usual rule that a challenger must first take its complaint to a regulatory agency before challenging it in court, the industry-labor brief said that is not a jurisdictional limit on the appeals court’s power to review agency action, and so — given the importance that the EPA agrees the issue has, and given the EPA’s plan to use the model of the Transport Rule in other contexts — the Court should go ahead and decide the merits of the EPA’s authority under the Act.

EPA and the environmental groups again have the support of a group of states and cities, and of two energy companies that are regulated by the Transport Rule — two firms that also had supported the grant of review in the first place.  Those two corporations argued that the EPA was right in using a cost-based analysis in devising control strategies for the upwind states.

For a case as important as this one is to federal regulatory law, this one has drawn only a minimal response from amici.   A half-dozen support the EPA’s approach, including health organizations, air quality experts, and law professors.  The challengers gained the support of nine other states, complaining of a “power grab” by the EPA, and by the U.S. Chamber of Commerce.   A group known as “APA Watch,” supporting neither side, filed a brief to discuss the issue of when challengers to a government policy may go to court with their protest.

Analysis

Like many major regulatory disputes that reach the Supreme Court, this fight over the “good neighbor” policy on downward flow of upwind air pollution has layer upon layer of legal, scientific, economic, and mathematical complexity.  The Court’s chore, though, is basically focused on just what Congress meant in 1990 when it toughened the “good neighbor” policy.

That is a task of interpreting the language of the statute, and determining whose interpretation of that should be treated as controlling.  The crucial phrase that needs to be interpreted is the mandate that states may not “significantly contribute” to their neighbors’ inability to meet air quality standards.  Since Congress did not define those words, the Court must initially decide whether it is the EPA’s power, in the first instance, to do so, or whether a reviewing court has a largely open-ended option of deciding what it means.   And that is something that the Court probably has to do before it might move on to the merits.

If the Court were to view that mandate as the EPA does, it would see the 1990 revision as a considerable enhancement of the EPA’s authority to decide (1) whether a state plan to control downwind pollution is adequate, and, (2), if a state plan is flawed, the scope of the EPA’s duty — to require the states to revise their plans, or to devise one on its own.

If, however, the Court were to view it as the challengers to the EPA do, the phrase must not be read to disrupt the basic approach of the Clean Air Act — that is, sequential roles for the EPA, to devise air quality standards, and then for the states, having been given notice if they fall short, to draft the necessary revisions.  The Act, the challengers have insisted, surely did not allow the EPA to find fault with upwind states, and then fail to let them respond before asserting a right to resolve the matter on its own, fudging each state’s responsibility.

The arguments for and against the authority of the D.C. Circuit to have decided the issues that are now before the Court have some of the appearance of a fallback option for the Court.  If the process of interpreting the statute winds up being a doomed pursuit, one incapable of resolution without undertaking to write something into the Act that is not there, the Court might be tempted to find that the D.C. Circuit acted prematurely in taking on the protest case.  That, of course, probably would leave the Transport Rule in effect — but it might also be a signal that perhaps Congress should be the one to sort out the EPA’s role.

 

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