## Facts

- EPA promulgated the Cross-State Air Pollution Rule (CSAPR) in 2011 to address interstate transport of air pollution under the Clean Air Act’s “good neighbor” provision.
- CSAPR identified upwind states as “significant contributors” to downwind nonattainment using a numerical contribution threshold tied to the NAAQS.
- EPA set state emission budgets using a cost-effectiveness approach and distributed emission allowances among in-state sources.
- EPA issued federal implementation plans (FIPs) for covered states as part of the same regulatory action.
- Power producers and multiple state and local governments petitioned for review, challenging CSAPR and the associated FIPs.

## Issues

1. Whether EPA exceeded the Clean Air Act’s good neighbor provision by requiring reductions that could surpass (a) an upwind state’s own significant contribution, (b) what was necessary for downwind attainment and maintenance, and by allocating obligations based on cost rather than proportionate contribution.
2. Whether EPA violated the Act’s state-first structure by issuing FIPs without first giving states an opportunity to revise their state implementation plans (SIPs) using EPA’s newly articulated method for quantifying significant contribution.

## Decision

- The court granted the petitions for review and vacated CSAPR and the associated FIPs.
- The court held EPA exceeded its statutory authority by using a cost-based methodology that could:
  - require a state to reduce emissions beyond its own significant contribution to downwind nonattainment,
  - impose aggregate reductions beyond what was necessary for downwind attainment, and
  - allocate reduction responsibilities disproportionately among contributing sources.
- The court held EPA acted unlawfully by promulgating FIPs without first providing states an initial opportunity to implement necessary reductions through SIPs.

## Legal Principles

- Under the good neighbor provision, an upwind state’s required emission reductions are limited to its own significant contribution to downwind nonattainment and cannot be set to cause collective over-control beyond what downwind attainment requires.
- EPA may not allocate state emission-reduction obligations in a manner that departs from contribution-based limits by imposing disproportionate reductions based primarily on cost.
- The Clean Air Act’s cooperative framework requires that states receive the initial opportunity to address SIP deficiencies before EPA imposes a FIP, and EPA may not bypass that sequencing by issuing FIPs in tandem with a newly formulated compliance methodology.

## Conclusion

The D.C. Circuit invalidated CSAPR as exceeding statutory limits in both substance and process, concluding that EPA’s cost-driven allocation could compel reductions beyond measured interstate contribution and that EPA unlawfully displaced states’ initial role by imposing FIPs without first allowing SIP revisions tailored to EPA’s approach.


EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012)