In a split decision, the U.S. Supreme Court last month temporarily halted a Biden administration plan designed to reduce air pollution from natural gas and coal power plants that crosses state borders. Industry groups cheered.
The Environmental Protection Agency (EPA), which began the program in March 2023, is using a “Good Neighbor Plan” (GNP) in the Clean Air Act to enforce the rulemaking. However, opponents, which included Republican-led states, have fought to strike it down.
The attorneys general of Indiana, Ohio and West Virginia argued that the EPA rule imposed an undue burden on utilities and would force coal-fired plants into early retirement.
Justice Neil M. Gorsuch, writing for the majority in the 5-4 decision, said the Biden administration had not adequately explained how the GNP would work if all of the states subject to the rulemaking objected to participating. The opinion is Ohio et al v. Environmental Protection Agency et al, No. 23A349.
Some of the states’ concerns were posed to EPA during the notice and comment period, Gorsuch noted. However, federal officials “offered no reasoned response.” Federal decisions have to be “reasonably explained,” he wrote. Otherwise, he said, “applicants are likely to prevail on their arbitrary-or-capricious claim.
“An agency action qualifies as ‘arbitrary’ or ‘capricious’ if it is not ‘reasonable and reasonably explained.’ Thus, the agency must offer ‘a satisfactory explanation for its action…including a rational connection between the facts found and the choice made’ and cannot simply ignore ‘an important aspect of the problem.’”
There may be “some explanation why the number and identity of participating states does not affect what measures maximize cost-effective downwind air quality improvements,” Gorsuch wrote. “But if there is an explanation, it does not appear in the final rule.”
In the dissenting opinion, Justice Amy Coney Barrett expressed skepticism about the timing of the case as the circuit court still has the case before it. She was joined in her dissent by Justices Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson.
Coney Barrett said challenges would not be won on the merits of the opponents’ case. The high court also has not recognized that EPA’s state implementation plan approvals “may, in fact, be valid.”
‘Adverse Impacts’ On Natural Gas
The Interstate Natural Gas Association (INGAA) and the American Petroleum Institute (API) were among the groups responding favorably to the opinion.
INGAA CEO Amy Andryszak said members were encouraged by the court’s decision to stay implementation of the rulemaking.
In writing the GNP, EPA “failed to consider potential adverse impacts of the rule on natural gas reliability,” Andryszak said. “The scope and timeframe of implementation would result in natural gas service disruptions during times of year when downstream users, including homes, businesses, and electric power plants, need energy the most.
“These anticipated service disruptions were particularly concerning to the INGAA membership, considering the increased energy demand driven by a move toward greater electrification of transportation and other end uses, plus the growth of data centers.”
The Energy Information Administration has reported that “more than 40% of all electricity in the U.S. is generated by natural gas,” the INGAA chief noted. The GNP “would take critical pipeline infrastructure offline at a time when demand for electricity is already increasing, compounding negative consequences of this bad policy on our country’s electrical grid.”
API general counsel Ryan Meyers said the high court’s decision “prevents the risk of electric power outages and crippling delays to industrial supply chains for now.”
Bracewell LLP partner Jeff Holmstead, a former EPA Air Office administrator, also weighed in on the ruling. He serves as an adviser to Energy Forward, a coalition of utilities that works on clean air and climate issues.
“The GNP was promulgated to ensure compliance with the 2015 ozone national ambient air quality standard by imposing an inflexible and costly plan on industry in certain upwind states,” Holmstead said. “The court’s majority agreed that irreparable damage was likely to occur in the absence of a stay.”
The decision, he said, “demonstrates forcefully that the Supreme Court is watching carefully the analysis proffered by EPA, and is not afraid to enter a stay when appropriate.”
EPA Administrator Michael Regan said “we’re disappointed in the decision, especially now, during the middle of the summer ozone season, where we have so many people across the country that are impacted by pollution that is crossing state lines.”
