EMERGENCY DOCKET

February oral argument scheduled for “good neighbor” pollution rule challenges

The Supreme Court will hear oral argument in February on whether to freeze a plan created by the Environmental Protection Agency to reduce ozone levels across the United States while litigation over the plan continues in a federal appeals court. The EPA maintains that the plan “provides important public benefits.” But the challengers, which include three states and companies affected by the plan, call the plan a “failed experiment” that could strain the nation’s electrical grid, and they had asked the justices to put the plan on hold immediately. In a relatively rare move, the justices declined to do so and instead ordered oral argument on the challengers’ request early next year.

The brief, unsigned order deferring a decision on the challengers’ applications for a stay and setting the case for oral argument came over two months after the first three requests were filed (and nearly two months after the fourth request was submitted), suggesting that the justices were trying to decide how to handle the requests.

Under the Clean Air Act, the EPA sets national air quality standards for the levels of some pollutants, including ozone, an air pollutant that can trigger asthma and exacerbate other respiratory conditions like bronchitis and emphysema when it is present in high levels. States must then create and submit a plan to ensure that they comply with those levels. To address the problems caused by pollution that travels from one state to another, the act’s “good neighbor” provision requires a state’s plan to limit emissions that will cause a state downwind from it to run afoul of the federal air quality standards. If the EPA concludes that a state’s plan fails to do so, it is required to reject the plan and instead issue a federal plan.

The dispute before the court arose from the EPA’s decision in 2015 to revise the standards for ozone. In 2023, the EPA did not approve plans submitted by 21 upwind states to address their role in ozone pollution in downwind states. That disapproval triggered the EPA’s obligation to issue a plan for those states – the rule at the center of this litigation.

The EPA issued that rule, known as the “good neighbor plan,” earlier this year. In setting emissions levels for “upwind” states, the EPA assumed that power plants and other industrial sources of pollutants that form ozone could reduce those pollutants. The EPA also used a program, already in existence, that allowed power plants and other sources to trade emissions credits.

Three states – Ohio, Indiana, and West Virginia – went to D.C. Circuit to challenge the federal plan, where they (along with trade associations and companies affected by the plan) argued that it is arbitrary and capricious – that is, unreasonable or without regard to the facts or the law.

On Sept. 25, a divided panel of the D.C. Circuit denied the challengers’ request to put the rule on hold while the litigation continued. Judge Justin Walker indicated that he would have granted the challengers’ request.

The challengers then came to the Supreme Court, asking the justices to intervene and put the plan on hold while they challenge it in the D.C. Circuit.

The challengers emphasize that because, in different lawsuits, other courts of appeals have put the EPA’s decisions rejecting 12 states’ plans on hold, the EPA’s plan now only applies to 11 of the 23 states that it was originally intended to target, representing less than 25% of the emissions that the plan sought to regulate. This signals, writes U.S. Steel, one of the challengers, that the plan “is legally and factually unsound and likely to be vacated in its entirety. It was built on the premise that EPA could impose the Plan on every State that contributes significantly to downwind ozone concentrations. This was a foundation of sand that has now washed away.”

Another group of challengers note that the EPA’s plan also regulates the gas-fired engines used to transport natural gas along pipelines. But the targets that the plan requires pipeline engines to achieve by 2026, those challengers tell the justices, are “flat-out impossible.” If the plan remains in effect, they caution, it could cause “disruption to a reliable supply of natural gas for customers throughout the country, including for heating and cooking in homes and businesses, as a fuel for electric power generation, and as a critical input in industrial processes.”

The EPA urges the justices to stay out of the dispute. Decisions by other courts of appeals putting the EPA’s disapprovals of state plans on hold do not undermine the federal plan, it asserts, when “the validity of those disapprovals is not the subject of this suit and has not been finally determined by any court.”

The challengers have not shown, the EPA argues, that they will be permanently harmed if the plan remains in effect while litigation continues – a key factor in the court’s decision whether to grant temporary relief. Many aspects of the plan will not affect the challengers until 2026, the EPA contends. But by contrast, putting the plan on hold “would delay efforts to control pollution that contributes to unhealthy air in downwind States.”

The justices opted for a third path, setting the challengers’ request for a stay for oral argument in February but declining to put the case on hold in the D.C. Circuit – where opening briefs are due on Jan. 26, 2024 – while they consider that request. The court presumably could have treated the applications as petitions for review and granted review of the case. By instead only holding oral argument on the stay applications, the justices allowed proceedings in the D.C. Circuit to continue.

The justices instructed lawyers for both sides to be ready to discuss at oral argument, among other things, “whether the emissions controls imposed by the Rule are reasonable regardless of the number of States subject to the Rule.”

The court has not yet released its calendar for the February 2024 argument session, which begins on Feb. 20 and runs through Feb. 20. In recent years, the court has released that calendar in late December.