## Facts

- The Clean Air Act’s “Good Neighbor Provision” requires each state implementation plan (SIP) to prohibit in-state emissions that significantly contribute to other states’ nonattainment or maintenance problems for national ambient air quality standards (NAAQS).
- After prior interstate pollution regulation was partially invalidated, the Environmental Protection Agency (EPA) issued the Cross-State Air Pollution Rule (CSAPR) in 2011 to reduce sulfur dioxide and nitrogen oxides from 27 upwind states affecting downwind states’ attainment and maintenance of NAAQS.
- CSAPR set state-specific emissions “budgets” and implemented them through federal implementation plans (FIPs).
- EPA’s approach identified covered upwind states using a threshold screen and then assigned reduction obligations using uniform cost thresholds to achieve reductions where controls were cheaper.
- Upwind states and industry challenged CSAPR; downwind states and environmental groups supported it.
- The D.C. Circuit vacated CSAPR, holding (among other things) that EPA could not issue FIPs without first giving states another opportunity to revise SIPs after EPA quantified each state’s interstate obligations, and that EPA’s cost-based allocation method was unlawful.
- The Supreme Court granted certiorari and reviewed EPA’s authority to issue the FIPs and to use cost considerations in allocating emissions reductions.

## Issues

1. Whether the Clean Air Act requires EPA to give states a second opportunity to submit revised SIPs after EPA quantifies their Good Neighbor obligations before EPA may issue FIPs.
2. Whether the Good Neighbor Provision requires EPA to apportion emissions reductions solely according to each upwind state’s measured, proportional physical contribution to downwind air-quality problems, or permits consideration of costs.
3. Whether the court of appeals could address certain objections in the initial judicial review proceeding under the Clean Air Act’s review scheme.

## Decision

- The Supreme Court reversed the D.C. Circuit and remanded.
- The Court held the Clean Air Act does not require EPA to provide a second SIP opportunity after EPA quantifies Good Neighbor obligations; a SIP disapproval triggers EPA’s duty to issue a FIP within the statutory timeframe.
- The Court held the Good Neighbor Provision does not mandate a purely proportional, contribution-only allocation; EPA may use a cost-effective method to allocate required reductions among upwind states.
- The Court upheld CSAPR as within EPA’s statutory authority on its face, leaving any remaining application-specific objections to be addressed as as-applied challenges.
- The Court concluded that objections characterized as challenges to the rule itself were properly before the D.C. Circuit in the initial review proceeding under the Clean Air Act’s judicial review provision.

## Legal Principles

- When the Clean Air Act requires a SIP to contain adequate Good Neighbor provisions, EPA may issue a FIP after determining a SIP is inadequate, without an additional, extra-statutory opportunity for states to revise their SIPs.
- The Good Neighbor Provision is ambiguous as to how to divide responsibility among multiple upwind states contributing to downwind nonattainment or maintenance problems; the statute does not specify a single apportionment method.
- Under Chevron deference, where Congress has not specified a method of apportionment, EPA may adopt a reasonable approach that considers costs to allocate emissions reductions, provided it implements the statutory objective of addressing significant interstate contributions.
- Facial invalidation is not required merely because some degree of excess reduction may occur in implementation; application-specific disputes may be addressed through as-applied challenges.

## Conclusion

The Supreme Court upheld EPA’s Cross-State Air Pollution Rule, ruling that EPA may issue federal implementation plans after SIP inadequacy findings without granting states a second post-quantification opportunity to revise their plans, and that EPA may use cost-based allocations to distribute emissions-reduction obligations among upwind states under the Clean Air Act’s Good Neighbor Provision.


Envtl. Prot. Agency v. EME Homer City Generation, L.P., 572 U.S. 489 (2014)