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SCOTUS tells EPA its Good Neighbor Plan is “Arbitrary and Capricious;” Stays the Plan

The Clean Air Act spent some time in the headlines recently thanks to the U.S. Supreme Court’s decision to stay the EPA’s “Good Neighbor” plan, which would have required certain sources that emit oxides of nitrogen (NOx) in 23 states to reduce their emissions.  



Today, we want to share an explanation of how the Supreme Court may have decided as it did. But first some legal background to put things in context…


The Clean Air Act requires that EPA set National Ambient Air Quality Standards (NAAQS) for certain air pollutants. Once EPA sets or revises a NAAQS, the law requires that states submit State Implementation Plans (or SIPs) that provide for the “implementation, maintenance, and enforcement” of the NAAQS within their boundaries. 


The Clean Air Act also contemplates that the states, not EPA, will bear primary responsibility for determining how the NAAQS will be implemented, maintained, and enforced. 


However, it also requires that each SIP prohibit emissions that “contribute significantly to nonattainment in, or interfere with maintenance by, any other State” of a NAAQs; this is referred to as the Act’s “Good Neighbor Provision.”


If a state does not submit a SIP or submits a SIP that does not meet all applicable requirements, the Clean Air Act authorizes EPA to issue what’s known as a Federal Implementation Plan for the state after giving the state an opportunity to submit a valid SIP. 


Further, if the SIP initially submitted by a state is insufficient, EPA must give the state a chance to cure the deficiency by submitting a revised SIP, unless the deadline for doing so has passed.


Now, back to the “Good Neighbor” plan itself.


In 2022, EPA determined that some 23 states’ SIPs (including Pennsylvania’s) ran afoul of the Act’s Good Neighbor Provision because they did not adequately limit emissions from sources that contributed to high levels of ozone in downwind states (and either contributed to nonattainment of the 2015 ozone NAAQS or interfered with attainment of the 2015 ozone NAAQS).


However, rather than give those states the opportunity to revise their SIPs to fix their deficiencies, EPA imposed a single, uniform Federal Implementation Plan on all 23 of them. 


That Federal Implementation Plan, which is called the “Good Neighbor” plan, required that certain control measures be used by certain sources of NOx emissions. EPA determined that those control measures were cost-effective based on the premise that they would be applied to all subject sources in all twenty-three states and made no determination that the measures would be cost-effective if applied in fewer than all of the 23 states. 


The failure to make such a determination proved to be fatal to the “Good Neighbor” plan. After the plan was issued, it was successfully challenged in court by a number of states and thus did not go into effect in those states. 


Consequently, the Supreme Court found that the cost-effectiveness determination that EPA used to justify the plan was no longer valid because that determination depended on the plan going into effect in all twenty-three states. 


That rendered the plan itself – because it was based on an invalid determination – “arbitrary and capricious” and thus illegal and unenforceable.


“By trying to do an end run around the Clean Air Act provisions that give states the first and second cracks at imposing emission limits to attain the ozone NAAQS, EPA may have squandered an opportunity to get better controls in place, said GASP’s Senior Attorney John Baillie. 


He continued:


“However, even after the Supreme Court’s decision EPA is still left with the options of making the cost-effectiveness determinations necessary to justify the plan or giving the states the opportunity to revise their SIPs to reduce their emissions of ozone-forming pollutants as necessary to protect air quality in downwind states.”


GASP continues to follow this issue closely and will keep you posted.

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