The Environmental Protection Agency’s implementation of the 2015 National Ambient Air Quality Standards “Good Neighbor Plan” (GNP) was met with a fury of legal challenges (see ELM’s previous coverage of EPA’s GNP here).   

Then, on June 27, the Supreme Court in Ohio v. EPA (Ohio) issued a 5-4 opinion granting a temporary stay of EPA’s implementation of its Good Neighbor Plan (see ELM’s recent coverage of Ohio v. EPA here). However, in another landmark 5-4 decision that same day, the Supreme Court in Loper Bright Enterprises, et al. v. Raimondo Secretary of Commerce, et al. (Loper), held that federal courts must exercise independent judgment in deciding whether a federal agency has acted within its statutory authority, upending 40 years of precedent set forth by the court’s prior finding in Chevron v. Natural Resources Defense Council (see ELM’s recent coverage of Loper here).

Not surprisingly, both historic decisions are now taking center stage in the GNP battle, particularly in the U.S. Court of Appeals for the Fifth Circuit wherein the EPA decided to impose a federal GNP because it found the state plans lacking. As a result, Texas, Louisiana and Mississippi are asking the court to overturn the EPA’s decision to deny their plans to comply with federal ozone standards. Although the Fifth Circuit has stayed the implementation of the federal plan, it has not ruled on the merits of the states’ legal challenges.

Immediately following the Supreme Court’s ruling in Ohio, Texas filed a letter to the Fifth Circuit advising of supplemental authorities, stating that “Ohio confirms that States possess ‘primary responsibility’ for deciding how to demonstrate compliance with the Good Neighbor Provision.” In particular, EPA’s grounds for disapproving Texas’s state plan are contrary to Ohio because “EPA has ‘no authority to question the wisdom of a State’s choices of emission limitations,'” because “States decide how to measure ambient air quality.”

On the other hand, the EPA argues that Ohio does not impact its decision to reject the state plans submitted by Texas. Louisiana, and Mississippi because the underlying issues are not comparable. Ohio involved EPA’s federal plans for states where the underlying state plan disapproval action was not stayed. In addition, the Supreme Court did not opine on the validity of the state plan disapproval action. Therefore, Ohio did not address the scope of EPA’s state plan review authority or whether the EPA reasonably disapproved the state plan submissions at issue. Moreover, the EPA noted that no challenge to the state plan disapproval action at issue in the Ohio case has been decided. Therefore, the state plan disapproval action may well be upheld.

With respect to Loper, Texas argues this decision reaffirms that the EPA subverted the law’s cooperative-federalism intent by disapproving Texas’s plan to reach federal ozone standards.  In other words, “EPA disapproved Texas’s [State Implementation Plan] — not because the [State Implementation Plan] did not meet an applicable requirement of the Act, but because it did not conform to EPA’s non-statutory and non-regulatory 4-step framework or use EPA’s non-statutory and non-regulatory one-percent contribution threshold.” Therefore, Loper “confirms that EPA may not salvage its unlawful [State Implementation Plan] disapproval with the incantation of Chevron deference.”

In response, EPA argues in its submission to the court on July 22, that the Loper decision does not impact its authority to reject the states’ plans. 

“Under Loper’s framework — determining the best reading of the statute without deference — EPA explained that the best reading of [the Clean Air Act] obligates EPA to independently determine whether State Implementation Plans ‘meet all applicable requirements,’ including the Good Neighbor Provision.” Additionally, the Fifth Circuit, “applying its own judgment,” should recognize that the EPA has a “longstanding, consistent view” of its duty to independently review state plans for compliance with the law. Thus, “Loper provides no reason to invalidate EPA’s disapproval” of the state plans because Clean Air Act clearly gives it the authority to develop frameworks to evaluate state plan submissions to determine whether they are “adequate” to prohibit harmful interstate emissions.

Although the Supreme Court’s decision in Ohio and Loper may have cooled the Good Neighbor Plan, for now, it appears that the EPA’s defense of its state plan denials is just beginning to heat up. Therefore, it is likely that the EPA will make similar arguments in other cases where states like West Virginia are urging courts to vacate EPA’s state plan denials.