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July 17, 2013
Court sides with EPA in transport case

A legal strategy by industry to invalidate emissions limits that the EPA imposed on a power plant outside the state implementation plan (SIP) process failed to win the approval of a three-judge panel of the U.S. Court of Appeals for the 3rd Circuit (GenOn Rema, LLC v. EPA).  In a unanimous opinion, the court upheld the Agency’s authority to respond to a petition from a state seeking relief from cross-boundary air pollution from another state that did not adequately address the problem in its SIP. 

While the ruling recognizes the critical role of federalism (cooperation between the federal government and the states in implementing the Clean Air Act (CAA)), the court says the CAA also gives the EPA explicit authority to respond to a state petition independent of the SIP process. 

500 feet from New Jersey border

The case involves emissions of sulfur dioxide (SO2) from the 427 MW Portland Generating Station in Bethel Township, Pennsylvania.  The plant is on the banks of the Delaware River and only 500 feet from Knowlton Township, New Jersey, on the opposite bank.  In September 2010, the New Jersey Department of Environmental Protection (NJDEP) filed a petition under CAA Section 126(b), stating that emissions from Portland were crossing into New Jersey and were significantly contributing to nonattainment of the 1-hour SO2 National Ambient Air Quality Standards (NAAQS) in four New Jersey counties.  The EPA responded by proposing and then finalizing a rule that required Portland to reduce its SO2 emissions by 81 percent over a 3-year period. 

Infringement on federalism?

GenOn REMA Energy, the owner and operator of Portland, filed suit challenging EPA’s rule as inconsistent with the agency’s authority under the CAA.  Primarily, GenOn argued that Section 110 of the CAA provides any state the first right to meet CAA requirements for any source of pollution within its borders through the SIP process.  SIPs are plans individual states develop in response to federal air standards.  SIPs and SIP revisions are subject to EPA approval, but the overall process was developed by Congress to ensure that states are empowered to manage their sources of pollution in ways that are best suited to each state’s special circumstances.  But GenOn argued that in issuing a Section 126(b) rule, the EPA offended the cooperative federalism structure of the CAA by depriving Pennsylvania of the power to determine how to regulate air pollution from its in-state industries. 

Plain language

The 3rd Circuit focused on the plain language of the petition process described in Section 126(b):
“Any State or political subdivision may petition the [EPA] for a finding that any major source or group of stationary sources emits or would emit any air pollutant in violation of the prohibition of section 7410(a)(2)(D)(ii)3 of this title or this section.  Within 60 days after receipt of any petition under this subsection and after public hearing, the [EPA] shall make such a finding or deny the petition.”  

According to the 3rd Circuit, the meaning of Section 126(b) is unambiguous.  “The plain language of the relevant portions of the statute and the context in which such language is used convey that Congress intended Section 126(b) as a means for the EPA to take immediate action when downwind states are affected by air pollution from upwind sources,” said the court.

The critical phrase is “60 days,” the 3rd Circuit adds.  The clear intention here is that Congress did not intend for the EPA to wait the “potential several years” it would take a state to develop a SIP or SIP revision to address a transboundary pollution problem, the court adds.  Also, notes the court, the legislative history of Section 126(b) demonstrates that Congress viewed the federal government as continuing to play an essential role in the fight against interstate pollution despite the fact that the states are the primary actors for implementing the NAAQS and formulating SIPs.

EME Homer not applicable

This is not the first case at the appeals court level to uphold EPA’s authority under Section 126(b).  However, the plaintiffs supported their case with new arguments contained in EME Homer City Generation v. EPA, which the D.C. Circuit ruled on in August 2012.  But the 3rd Circuit emphasizes that the EME Homer case involved only Section 110; specifically, the D.C. Circuit found that the EPA exceeded its authority by issuing federal implementation plans (FIPs) without first giving states the opportunity to implement the required reductions through SIPs or SIP revisions. 

“Section 126(c) gives EPA discretion to impose severe sanctions, including ‘emission limitations and compliance schedules,’ on a source for which a finding has been made,” stated the D.C. Circuit.  “The fact that Congress explicitly authorized EPA to use direct federal regulation to address interstate pollution suggests it did not contemplate direct federal regulation in Section 110(a)(2)(D)(i)(I).” 

Click here for the 3rd Circuit’s opinion in GenOn Rema, LLC v. EPA.

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