The Nickel Report

On November 16, 2017, the D.C. Circuit heard oral argument in the cases challenging EPA’s 2012 rule allowing states to rely on compliance with the Cross-State Air Pollution Rule (CSAPR) to satisfy electric generating units’ “best available retrofit technology” (BART) requirements for emissions of nitrogen oxides and sulfur dioxide under the Clean Air Act (CAA). The cases are UARG v. EPA, No. 12-1342­ and consolidated cases (D.C. Cir.).

The Clean Air Act visibility provisions establish a “national goal” of eliminating any visibility impairment in certain National Parks and wilderness areas that is caused by “manmade air pollution.” The Act requires states to evaluate measures to achieve “reasonable progress” toward the national goal and, for a specified class of facilities, to identify “best available retrofit technology” or BART requirements. The statute sets out factors for states to consider in determining what requirements are appropriate to achieve reasonable progress and to satisfy BART.

In addition to source-by-source BART, EPA’s rules recognize that states may develop “BART alternatives” to stand in the place of BART. These alternatives are typically less costly to undertake than BART, and thus are often attractive to industry. The rules require any alternative to achieve greater reasonable progress than BART would achieve, i.e., that the alternative is better than BART. In a 2012 rulemaking, EPA determined that compliance with CSAPR would achieve greater reasonable progress than source-by-source BART, and that CSAPR could serve as a better-than-BART alternative.

Petitions for review of the CSAPR-for-BART rule were filed by environmental groups, states and industry, and argument took place nearly five and a half years after those petitions were filed. Much of the delay was due to the shifting status of CSAPR itself: the D.C. Circuit stayed that rule in December 2011 and vacated it on August 21, 2012; on April 29, 2014, the Supreme Court reversed and remanded the D.C. Circuit’s decision; and, on July 28, 2015, the D.C. Circuit issued its decision on remand, leaving CSAPR in place, but remanding the CSAPR emission budgets for a number of states.

Environmental groups’ challenge to the CSAPR-for-BART rule is not dissimilar to the challenge that one of those groups brought to EPA’s earlier rule allowing states to rely on the Clean Air Interstate Rule (CAIR) to satisfy BART requirements, i.e., the “CAIR-for-BART” rule. That case, also captioned UARG v. EPA, resulted in a 2006 D.C. Circuit decision affirming the right of states to rely on programs required under other CAA provisions to satisfy BART requirements and upholding CAIR—which remained in effect until the end of 2014, when it was superseded by CSAPR—as a valid “better-than-BART” alternative. Judge Stephen Williams, who authored the 2006 UARG decision, was a member of the panel that heard the CSAPR-for-BART rule petitions. He was joined on the CSAPR-for-BART panel by Judges Thomas Griffith and Cornelia Pillard.

First, National Parks Conservation Association and Sierra Club (Environmental Petitioners) challenged the CSAPR-for-BART rule, arguing that (1) changes to the geographic scope of the CSAPR interstate emission allowance trading programs that have occurred since promulgation of the CSAPR-for-BART rule render EPA’s CSAPR-for-BART determination arbitrary; (2) EPA improperly used presumptive BART emission limits to demonstrate that CSAPR is better than BART; (3) EPA improperly assumed, for purposes of its analysis, that CSAPR would not be implemented; (4) EPA arbitrarily rejected alternative means of assessing visibility impacts on a regional or state-by-state-basis; and (5) the foundation for the CSAPR-for-BART rule, as upheld by the D.C. Circuit in 2006, is inconsistent with the CAA.

Second, Industry and State Petitioners argued that EPA had no basis for disapproving the state implementation plans (SIPs) that relied on EPA’s CAIR-for-BART rule because the CAIR-for-BART rule was in place when states submitted those SIPs and because EPA has stated that CAIR emission reductions are permanent and enforceable.

CSAPR-for-BART Arguments
A few weeks before the oral argument, on September 29, EPA published a rule reaffirming its CSAPR-for-BART determination, taking into account changes to the CSAPR program resulting from the D.C. Circuit’s remand of a subset of the CSAPR state emission budgets. The Environmental Petitioners filed a letter with the court on October 30 stating that, in light of that new rule, their first argument was moot. That argument was based on an assertion that the CSAPR-for-BART rule was rendered invalid by the D.C. Circuit’s 2015 remand of CSAPR budgets for a number of states.

At oral argument, the Environmental Petitioners focused on their second and third arguments. Those arguments dealt with the manner in which EPA applied the two prong better-than-BART test in 40 C.F.R. § 51.308(e)(3), which provides that visibility modeling can demonstrate that a BART alternative is better than BART if: (1) visibility does not decline in any Class I area (the “no degradation” prong); and (2) there is an overall improvement in visibility, determined by comparing the average differences between BART and the alternative over all affected Class I areas (the “overall improvement” prong).

The Environmental Petitioners argued that EPA had improperly assessed visibility improvements under CSAPR and under BART by looking at average improvements across all affected Class I areas. They argued that EPA should have adopted a regional or state-by-state approach instead. Although the judges did not appear to be dismissive of these arguments, the Environmental Petitioners face a difficult standard challenging EPA’s technical decisions. The Environmental Petitioners also appeared to argue that, contrary to EPA’s longstanding interpretation, the first prong of the test requires no degradation relative to BART, rather than relative to baseline visibility conditions.

EPA’s response described the technical and legal bases for its modeling decisions. The Department of Justice explained that EPA’s longstanding interpretation of its BART rules requires a “no degradation” finding relative to baseline conditions, not relative to BART, and that the Environmental Petitioners’ interpretation would allow the no degradation prong to swallow the overall improvement prong.

Industry and State Intervenor-Respondents argued that the court lacked jurisdiction to hear some of the Environmental Petitioners’ challenges to the CSAPR-for-BART rule. (Hunton & Williams LLP argued on behalf of the intervenor-respondents.) First, those parties argued that the Environmental Petitioners’ challenge to EPA’s use of the presumptive BART limits in its better-than-BART analysis was time-barred under the CAA because EPA decided that issue in a 2006 rule, and the time for challenging EPA’s decision on that issue was long past. Second, because the Environmental Petitioners previously litigated the same issue before the Tenth Circuit, they were precluded from raising the issue again.

CAIR-for BART Arguments
Industry and State Petitioners focused their argument on the fact that EPA had on numerous occasions stated that CAIR’s emission reductions were permanent and enforceable and that EPA’s approval in 2014 of Connecticut’s CAIR-for-BART SIP demonstrated that EPA’s 2012 disapprovals of similar SIPs for other states was arbitrary. (Hunton & Williams LLP also argued on behalf of these petitioners.) Judge Williams noted that the difference between how EPA treated Connecticut and the other states was the “most dramatic” part of Industry and State Petitioners’ briefs. Those parties further emphasized that at the time EPA published its final action in July 2014 approving Connecticut’s CAIR-for-BART SIP, the Supreme Court had overturned the D.C. Circuit’s vacatur of CSAPR, and it was known that Connecticut would not be subject to CSAPR. Other states whose CAIR-for-BART SIPs were disapproved by EPA in 2012—well before the Supreme Court’s April 2014 decision—thus had, if anything, even stronger arguments for relying on CAIR emission reductions than Connecticut did.

EPA focused its argument on “mootness,” explaining that CAIR-for-BART couldn’t offer any state regulatory relief because CAIR no longer exists. Judges Williams and Pillard asked, however, if there wasn’t the possibility of contingent relief if the court were to strike down CSAPR-for-BART. EPA maintained that CAIR’s status was determinative of this issue and appeared to suggest that CAIR’s emission reductions were only permanent and enforceable in states that became subject to CSAPR, a position that is at odds with EPA’s approval of Connecticut’s CAIR-for-BART SIP.

Environmental Intervenor-Respondents argued that the challenge to EPA’s disapprovals of CAIR-for-BART SIPs was moot for reasons similar to those advanced by EPA.

What Comes Next
A decision in these cases has been a long time in the making, and one might think we could expect a full judicial resolution soon. Although the court may well decide the case argued on November 16 in the next few months, the Environmental Petitioners already have filed a petition for review in the D.C. Circuit challenging EPA’s September 29, 2017, rule reaffirming its CSAPR-for-BART determination. The course of this newly filed case is unclear at this point. But it raises the prospect that litigation over issues surrounding the CSAPR-for-BART rule—and lingering uncertainty over whether CSAPR states and CSAPR-regulated electric generators will be able to continue to rely on that rule—may not be fully and finally resolved for some time.