SCOTUS Stays Enforcement of EPA's "Good Neighbor" Air Pollution Rule (Updated)

In the first of his two opinions today, Justice Gorsuch wrote for a five-member Supreme Court majority in Ohio v. EPA, granting the applications for a stay of the Environmental Protection Agency's regulation protecting downwind states from upwind emissions of smog precursors under the Clean Air Act's "Good Neighbor Provision" by protecting downwind. Justice Gorsuch was joined by the other male justices. Justice Barrett dissented, joined by the other female justices.

The Court's decision in Ohio v. EPA was simultaneously modest and aggressive. It was modest insofar as imposed the longstanding administrative law requirement that agencies adequately respond to comments during the rulemaking process. According to the majority, the EPA failed to explain whether and how it would have to modify the regulation to account for the possibility that some states initially subject to the rule could drop out. The EPA rule at issue imposed limits on emissions of nitrogen oxide (NOx) in 23 upwind states, but some states obtained temporarily relief from the rule's requirements by challenging the EPA's disapproval of their respective state implementation plans.

As Justice Gorsuch saw it, the EPA was well aware of the possibility that not all 23 states would ultimately be subject to the rule, but did not provide an adequate explanation of whether and how this could affect the respective emission reduction requirements imposed on the states that remain, and that this issue had been flagged in the comment period. In this regard, the decision imposed the traditional requirement that agencies respond to comments submitted during the rulemaking process and fully explain the bases for its actions. It faulted the EPA for a procedural failings–a lack of fulsome explanation in response to a relevant comment–and not for the substance of the rule.

While the Court's decision was narrow in this respect, the Ohio v. EPA decision was also quite aggressive in that it came to the Court on the "shadow docket" in the form of emergency applications for a stay of the rule's enforcement during the pendency of lower court proceedings. Typically the Supreme Court waits for lower courts–in this case the U.S. Court of Appeals for the D.C. Circuit–to resolve challenges of this sort on the merits before even considering whether to take the case, but not here.

Although not emphasized by the majority, I suspect one reason the Court intervened is a concern by some of the justices that the EPA not be allowed to impose regulatory burdens on firms (utilities in particular) before legal challenges to the regulations are resolved. The Court is sensitive to this concern because some years ago, the EPA effectively forced utilities to control their mercury emissions under a rule that was later voided by the Supreme Court, and once utilities and other firms make investments in emission controls, they rarely turn back. Once plant modifications are made to comply with a rule, it would add insult to injury to then invest in additional plant modifications after a rule is invalidated. As I have noted before, this is the best way to understand why the Court stayed the EPA's Clean Power Plan back in 2016. Thus, Justice Gorsuch emphasized that the "harms and equities" were "very weighty on both sides."

Whereas the majority was concerned that the EPA might be able to impose a regulation without fulfilling its obligation to adequately respond to comments, Justice Barrett worried that the EPA would be prevented from enforcing a lawful regulation on air pollution due to an unduly stringent application of administrative law requirements. As she opened her dissent:

The Court today enjoins the enforcement of a major Environmental Protection Agency rule based on an underdeveloped theory that is unlikely to succeed on the merits. In so doing, the Court grants emergency relief in a fact intensive and highly technical case without fully engaging with both the relevant law and the voluminous record. While the Court suggests that the EPA failed to explain itself sufficiently in response to comments, this theory must surmount sizable procedural obstacles and contrary record evidence. Applicants therefore cannot satisfy the stringent conditions for relief in this posture.

Justice Barrett is surely correct that the majority applies the reasoned explanation requirement in a particularly unforgiving manner and that it is quite unusual for the Supreme Court to intervene in a case like this before lower courts have had the chance to hash out all the technical details. She also notes (correctly) that it is far from clear that the EPA would have changed anything about the rule even if it had addressed the challengers' concerns more thoroughly. I might quibble, however, that one can argue the challenge is still "unlikely to succeed on the merits," as at this point it seems clear that five justices believe otherwise, and (if need be) they will be the final arbiters of that question.

My biggest objection to Justice Barrett's opinion is her treatment of Section 307 of the Clean Air Act (42 U.S.C. section 7607), in particular the provision requiring parties to file a petition for reconsideration with the Agency before seeking judicial review where it was "impracticable" to raise the objection during the comment period. As read by Justice Barrett, this provision requires parties to file such a petition before suing the EPA for failing to adequately explain a final rule, as such an objection could not be raised during the comment period. As far as I can tell, this provision has never been applied this way in this context, and the example she cites involves is not quite on point. Were her interpretation to prevail, it would effectively foreclose many such challenges to Clean Air Act rulemakings, as the same provision bars staying any rule subject to reconsideration for more than three months.

The bottom line is that enforcement of the EPA's rule will be stayed while the D.C. Circuit considers various challenges to the rule's legality. And while the Supreme Court's decision will make it hard for the D.C. Circuit to conclude that the EPA complied with the relevant procedural requirements, that does not mean the rule cannot be imposed. The Clean Air Act contains a "harmless-error rule" that instructs courts not to invalidate a regulation due to "procedural errors" unless "the errors were so serious and related to matters of such central relevance to the rule that there is a substantial likelihood that the rule would have been significantly changed if such errors had not been made." So stay tuned.

[UPDATE: This error has now been fixed.] One little amusing note: Justice Gorsuch's opinion repeatedly refers to "nitrous oxide" instead of nitrogen oxide. This is an error that I assume will be corrected. Nitrous oxide (aka laughing gas or NOs), is N2O. The EPA regulation governs nitrogen oxide (NOx), which is the collective term for nitric oxide (NO) and nitrogen dioxide (NO2), both of which are subject to EPA regulation under the Clean Air Act.

For additional commentary on this decision (from slightly different perspectives), see these posts by Dan Farber and Dan Deacon.