Key Takeaways
The Supreme Court has put a hold on the EPA’s so-called “good neighbor” rule, which overrides state plans to regulate ozone-producing gasses that may cross state lines.
Ohio, Indiana and West Virginia and some affected industries had asked for enforcement to be suspended while the rule is adjudicated in lower courts.
EPA’s rule comes despite a 29 percent reduction in ozone concentrations since 1980, against a backdrop of a doubling of vehicle miles traveled and tripling of GDP.
The challengers argued that the EPA rule threatened jobs and the reliability of the electric grid in their regions.
Lower courts had already paused the rule in 12 of the 23 states affected by it, but the D.C. Circuit refused to block implementation, which meant it would only be enforced in the remaining 11 states.
The Supreme Court temporarily put on hold an Environmental Protection Agency (EPA) plan to curtail emissions that drift across state lines. Three states and the steel and fossil-fuel industries challenged the rule. The 5-4 decision granted requests by Ohio, Indiana and West Virginia, as well as U.S. Steel Corp., pipeline operator Kinder Morgan, regional electricity generators and energy trade associations, to halt enforcement of the EPA’s “Good Neighbor” plan restricting ozone pollution from upwind states, while they contest the rule’s legality in a lower court. In their suit in the U.S. Court of Appeals for the District of Columbia Circuit, the challengers argued that the EPA violated a federal law aimed at ensuring agency actions are reasonable. The EPA issued the rule in March 2023 targeting gases that form ozone from power plants and other industrial sources in 23 upwind states whose plans EPA ruled did not satisfy the “Good Neighbor” provision of the Clean Air Act, requiring additional steps to reduce emissions that drift into states downwind. Between 1980 and 2022, national ozone concentrations dropped 29 percent despite a doubling of vehicle miles travelled and near tripling of GDP.
Separate challenges in the lower courts have paused enforcement in 12 of them, including West Virginia. The EPA also paused the federal plan requirements for those dozen states: Alabama, Arkansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nevada, Oklahoma, Texas, Utah and West Virginia. In the 11 other states covered by the good neighbor plan, the requirements remained in place. The D.C. Circuit refused to block the rule pending its review, which prompted the challengers to ask the Supreme Court to intervene. The challenge followed a 2022 ruling by the Supreme Court imposing limits on EPA’s authority under the Clean Air Act to reduce coal- and gas-fired power plant carbon dioxide emissions. In May 2023, the Supreme Court curtailed EPA’s authority to regulate certain wetlands under the 1972 law.
Background
At issue to the court’s decision is EPA’s lack of explanation for how the plan could work when it regulates just 11 states instead of 23 as intended. That is, EPA’s rule fails to “reasonably explain” how its ozone plan would work without the states that are temporarily exempt from the program. The contested rule is made up of two parts: a rejection of state air plans that do not adequately meet the new limits, and the implementation of a federal replacement. The Supreme Court decision freezes the second part of the rule. Under the Clean Air Act, states are allowed to implement their own plans, subject to approval by EPA. In February 2023, the agency concluded that 23 states had not produced adequate plans to comply with its revised ozone standards. The agency then issued its own, which precipitated litigation. Seven federal appeals courts blocked the EPA’s disapproval of plans submitted by a dozen states, leaving 11 states subject to the federal rule.
According to Justice Gorsuch, who wrote for the majority. “Together, these 12 states accounted for over 70 percent of the emissions EPA had planned to address.” The question, he said, was what happens “when many of the upwind states” are no longer governed by the federal plan “and it may now cover only a fraction of the states and emissions EPA anticipated?” The Supreme Court’s stay would remain in place while a federal appeals court in Washington considered the matter and, after that, until the Supreme Court acts on any appeal
Opponents said the rule would impose unreasonable costs, destabilize power grids, put an undue burden on utility operators and force the early retirement of increasingly crucial coal-fired plants. Some of the industry requests were specific. Kinder Morgan asked the justices to block the regulation as it applies to natural gas pipeline engines and U.S. Steel sought to prevent its enforcement against iron and steel mill reheating furnaces and boilers.
On January 16, EPA issued a proposed rule to enforce the “Good Neighbor” plan in five additional states: Arizona, Iowa, Kansas, New Mexico and Tennessee.
Conclusion
Under the EPA rule, known as the “good neighbor” plan, factories and power plants in Western and Midwestern states must reduce ozone emissions that drift into Eastern states. The Supreme Court was asked on an emergency basis to put a stay on the rule since 12 states already had stays from lower courts and the D.C. Circuit would not grant a stay for the remaining 11 states while the case was being considered. In a 5 to 4 decision, a temporary stay was granted by the Supreme Court. According to the challengers, consisting of states, industry and trade organizations, the rule would impose unreasonable costs, destabilize power grids, put an undue burden on utility operators and force the early retirement of crucial coal-fired plants. Many saw the policy as a “backdoor” way to implement President Biden’s “all of government” approach to his climate promises as it would have heavily affected the fragile electric grid by forcing generating plants to close that currently account for about 60 percent of the nation’s electricity.
