Supreme Court to Consider Request to Stay EPA’s Good Neighbor Interstate Air Pollution Rule

Supreme Court to Consider Request to Stay EPA’s Good Neighbor Interstate Air Pollution Rule

Legal Sidebari

Supreme Court to Consider Request to Stay
EPA’s Good Neighbor Interstate Air Pollution
Rule
Updated January 24, 2024
On February 21, 2024, the Supreme Court is scheduled to hear argument on applications to postpone
implementation of the U.S. Environmental Protection Agency’s (EPA’s) “Good Neighbor Plan,” a rule
addressing interstate transport of ozone pollution. The Good Neighbor Plan is intended to satisfy the
Clean Air Act’s (CAA’s) “Good Neighbor” provision (42 U.S.C. § 7410(a)(2)(D)), which requires upwind
states to ensure that their emissions do not interfere with the ability of downwind states to meet federal
air-quality standards. After EPA revised the federal standards for ozone, states were required to submit
updated plans showing how they would comply with the new standard. In 2023, EPA disapproved 21 of
those state plans and issued the Good Neighbor Plan in their place. The Good Neighbor Plan covers 23
states, establishes an emissions trading program for power plants, and imposes requirements on certain
other industrial sources.
Various parties have filed lawsuits challenging EPA’s disapproval of states’ plans as well as the Good
Neighbor Plan. While regional courts of appeals have stayed EPA’s disapprovals of 12 state plans, the
U.S. Court of Appeals for the D.C. Circuit declined to stay the Good Neighbor Plan while litigation is
pending. No court has issued a final ruling on the validity of EPA’s state plan disapprovals or its Good
Neighbor Plan, and the Supreme Court has taken the case following the stay applications and without
briefing on the merits. The complicated posture of the case raises difficult questions regarding the
appropriate standard for the Supreme Court to grant emergency relief and how that analysis might be
affected by the partial stay of EPA’s actions in the lower courts.
The Clean Air Act’s Good Neighbor Provision
The CAA directs EPA to issue national ambient air quality standards (NAAQS) for several air pollutants,
including ozone. Section 110 of the CAA requires states to adopt state implementation plans (SIPs) to
attain or maintain each NAAQS. States must then submit their SIPs to EPA for approval. SIPs must
specify what mix of federal, state, and local air pollution control measures the state will implement in
order to reach or maintain the NAAQS. The CAA requires a SIP to include a long list of elements,
including enforceable emission limitations, timetables for compliance, and air quality monitoring. If EPA
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determines that a SIP does not meet applicable requirements, it must disapprove the SIP in full or in part.
If EPA disapproves a SIP or finds that a state failed to submit a complete SIP, it must issue a federal
implementation plan (FIP) within two years.
In many states, air quality is so affected by emissions from other states that it is difficult or impossible for
the downwind state to attain federal standards. In particular, some pollutants can remain in the atmosphere
and travel long distances from the point of emission. These pollutants include nitrogen oxides (NOX) and
volatile organic compounds, which react in sunlight to form ground-level ozone, the main component of
smog. Ozone precursor emissions as well as ozone can travel hundreds of miles through the atmosphere
and, when transported, can constitute a significant fraction of the concentrations of those pollutants in
downwind states, particularly in the eastern United States.
The CAA contains several provisions to address transported air pollution. Section 110(a)(2)(D), the
“Good Neighbor” provision, requires that a state prohibit stationary sources within its borders from
emitting air pollutants in amounts that will “contribute significantly” to NAAQS nonattainment or
“interfere with maintenance” of a NAAQS in any other state. States must include such measures in the
SIPs they submit to EPA. When EPA determines that existing SIPs must be revised to satisfy the Good
Neighbor provision (or other CAA requirements), it issues a “SIP call,” sometimes to many states at once.
Since the 1990s, EPA and states have implemented Good Neighbor requirements in compliance with each
revised federal ozone standard. Prior EPA rules addressing states’ Good Neighbor obligations have
included the 1998 NOX SIP Call, which the D.C. Circuit largely upheld and the Supreme Court declined
to review; the 2005 Clean Air Interstate Rule, which the D.C. Circuit remanded; and the 2011 Cross-State
Air Pollution Rule (CSAPR), which the Supreme Court largely upheld in 2014, and which has been
updated several times.
In general, EPA follows a four-step framework for implementing the CAA’s Good Neighbor provision.
The agency (1) identifies downwind areas that are expected to have trouble attaining or maintaining the
relevant air quality standard, (2) determines which upwind states contribute more than a threshold fraction
of the air quality standard to ambient concentrations of the relevant pollutant in those downwind areas, (3)
identifies emissions in those upwind states that significantly contribute to downwind nonattainment or
interfere with downwind maintenance of the air quality standard, and (4) imposes enforceable control
measures to bring about compliance with the CAA’s Good Neighbor obligations. The Supreme Court
approved EPA’s use of this framework in 2014.
EPA’s 2023 SIP Disapprovals and Good Neighbor Regulations
In 2015, EPA revised the ozone NAAQS. States were then required to submit revised SIPs by 2018 to
comply with the new, more stringent standards. EPA took two actions in 2023 to address states’ Good
Neighbor obligations under the 2015 NAAQS. First, in February 2023, EPA disapproved 21 states’
submissions. Each of those states proposed to take no action to revise their SIPs, having concluded that
existing controls were adequate or that they did not contribute significantly to nonattainment or interfere
with maintenance of federal ozone standards in other states. Second, on March 15, EPA issued a FIP—the
Good Neighbor Plan—covering those 21 states, as well as two additional states that had not submitted
any revisions to their plans.
The Good Neighbor Plan applies the same four-step framework used in previous rules and imposes
requirements on fossil fuel-fired power plants in 22 states and other industrial sources in 20 states. As in
previous rules, the Good Neighbor Plan establishes an allowance-based NOX emissions trading program
for power plants. Beginning in 2024, each covered state is to receive a budget of permissible emissions.
Individual power plants are not subject to specific emissions limits under the Good Neighbor Plan but are
instead allocated allowances that authorize emissions at a given level. The total allowances across all

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sources authorize emissions up to the covered states’ combined budgets. Power plants can buy, sell, and
bank emissions allowances by trading with sources in any covered state.
The initial budgets are based on the level of reductions that were achievable through immediately
available measures, including consistent use of emissions controls that are already installed at power
plants. The budgets then become more stringent over time based on the level of reductions that are
achievable through phased installation of additional emissions controls. The Good Neighbor Plan’s
trading program also includes some new elements, which EPA describes as “enhancements,” to maintain
the stringency of the program. EPA is to annually recalibrate the size of the unused emissions allowance
bank to limit the accumulation of allowance surpluses. In the future, EPA is also to annually update
emissions budgets through a dynamic procedure to account for changes in the composition of the power
plant fleet. The rule also imposes unit-specific emissions limitations that apply in certain circumstances
based on the overall emissions of that unit and the state in which it is located.
The Good Neighbor Plan also imposes industry-specific NOX emissions requirements for specific
industries that EPA found were significantly contributing to nonattainment or interfering with
maintenance of the ozone NAAQS in downwind states. The industry-specific requirements apply to new
and existing sources in several categories, including natural gas pipelines, cement kilns, steel industry
reheat furnaces and boilers, solid waste combustors and incinerators, paper industry boilers, and boilers in
certain manufacturing and mining industry sectors. Some of these categories were not explicitly subject to
emissions limits under previous interstate transport rules.
EPA stated when it issued the Good Neighbor Plan that it intended to further assess its modeling for six
states to determine if it needed to address those states’ Good Neighbor obligations through additional
federal regulation. In December 2023, EPA approved Wyoming’s SIP and found that the state did not
significantly contribute to air quality problems in downwind states. In January 2024, the agency released
a supplemental proposal to address remaining interstate transport obligations and add Arizona, Iowa,
Kansas, New Mexico, and Tennessee to the Good Neighbor Plan.
Recent Litigation
Various parties have filed lawsuits challenging the SIP disapprovals, the Good Neighbor Plan, or both.
The CAA provides for review of locally or regionally applicable SIP disapprovals and FIPs in the U.S.
Court of Appeals for the appropriate circuit and for review of rules with nationwide scope or effect
exclusively in the U.S. Court of Appeals for the D.C. Circuit. The lawsuits challenging the SIP
disapprovals are currently proceeding in regional circuit courts, and the suits challenging the Good
Neighbor Plan are proceeding in the D.C. Circuit.
A significant question is whether EPA’s SIP disapprovals and the Good Neighbor Plan will go into effect
while the various cases are pending or whether they will be stayed (maintaining the status quo) until the
courts reach a final decision. If a lower court denies a stay, the party seeking the stay can often seek
review of that decision in a higher court. Meanwhile, the lower court retains jurisdiction to make a final
decision on the merits, although the higher court’s ruling on the stay issue can sometimes influence the
subsequent litigation. Only the applications to stay the Good Neighbor Plan, which arose out of
challenges to that rule, are currently before the Supreme Court.
Lawsuits Challenging EPA’s SIP Disapprovals
Lawsuits challenging the SIP approvals are currently pending in the Fourth, Fifth, Sixth, Eighth, Ninth,
Tenth, and Eleventh Circuits. EPA has sought to transfer the petitions for review of the SIP disapprovals
to the D.C. Circuit. Four courts have denied EPA’s motions to transfer or dismiss the SIP disapproval
petitions. The remaining courts have not ruled on the motions.

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All seven circuit courts with pending cases have stayed EPA’s SIP disapprovals for a total of twelve
states: Alabama, Arkansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nevada, Oklahoma,
Texas, Utah, and West Virginia. To date, no court has ruled on the merits of the SIP disapprovals. Because
an effective SIP disapproval is required before EPA can implement the Good Neighbor Plan in a state,
EPA issued an interim final rule on July 31 to stay the Good Neighbor Plan’s requirements for emissions
sources in states that were subject to stay orders at that time. On September 29, EPA issued another
interim final rule extending its stay of the Good Neighbor Plan to several states for which courts stayed
EPA’s SIP disapprovals after the first interim final rule.
The Good Neighbor Plan’s requirements for power plants are currently in effect in ten states that are not
subject to judicial stays or EPA’s interim final rules (Illinois, Indiana, Maryland, Michigan, New Jersey,
New York, Ohio, Pennsylvania, Virginia, and Wisconsin). The requirements for non-power plant
industrial sources are slated to take effect in the 2026 ozone season in those ten states as well as
California, which was not subject to the power plant requirements in the rule as EPA issued it in March
2023.
Lawsuits Challenging the Good Neighbor Plan
Several states, trade associations, and individual companies challenged the Good Neighbor Plan in the
D.C. Circuit. Some states and industry groups also challenged the federal rule in the regional circuits, two
of which—the Sixth Circuit and the Seventh Circuit—transferred those suits to the D.C. Circuit. Groups
of litigants including nine downwind states, the District of Columbia and other local governments, and
environmental organizations intervened in support of EPA in the D.C. Circuit proceedings. The Good
Neighbor Plan cases have not yet been briefed on the merits or argued in the D.C. Circuit.
Various petitioners asked the D.C. Circuit to stay the federal Good Neighbor Plan pending judicial review.
On September 25, 2023, a divided panel of the court denied the stay motions without analysis. The court
later unanimously denied an additional motion by a separate industry petitioner.
Supreme Court Proceedings
After the D.C. Circuit denied their stay motions, the states, natural gas pipeline companies, various
industry associations, and a steel producer sought an emergency stay from the Supreme Court. The
parties’ arguments focus on the four factors courts consider in deciding whether to issue a stay pending
judicial review: (1) whether the stay applicant has made a strong showing that it is likely to succeed on
the merits, (2) whether the applicant would be irreparably injured absent a stay, (3) whether issuance of
the stay would substantially injure the other parties interested in the proceeding, and (4) where the public
interest lies.
The applicants argue that the Good Neighbor Plan is no longer valid because it was conditioned on the
participation of all 23 covered upwind states. According to the applicants, the regional circuits’ stays of
EPA’s SIP disapprovals and EPA’s interim final rules partially staying implementation of the Good
Neighbor Plan undermined EPA’s authority to impose a FIP as to the states that are covered by a stay. The
applicants also contend that the SIP disapprovals underlying the FIP, as well as several features of the
Good Neighbor Plan itself, were flawed. These errors, the applicants argue, result in unlawful “over-
control” of emissions by requiring states to reduce their outputs of pollution by more than is necessary to
eliminate their significant contributions to downwind pollution. In addition to these technical arguments,
some stay applicants also argue that the Good Neighbor Plan violated the Administrative Procedure Act’s
notice and comment requirements. The applicants identify numerous ways in which the implementation
of the rule would harm them, including by imposing significant compliance burdens, destabilizing
electricity generation and power grids, interrupting natural gas supplies, and impeding state sovereignty.

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EPA and the intervenor-respondents oppose the stay applications. The agency argues that the applicants
have not established that they are entitled to “extraordinary relief” following a lower court’s denial of a
stay, in part because the Supreme Court is unlikely to grant certiorari if the D.C. Circuit upholds the Good
Neighbor Plan and because the applicants’ fact-specific challenges to the rule do not merit Supreme Court
review. EPA and the intervenor state and local governments also argue that the applicants’ merits
arguments amount to an improper collateral attack on EPA’s SIP disapprovals. On the merits of the Good
Neighbor Plan, EPA argues that its analysis was reasonable. EPA and the intervenor-respondents argue
that the regional circuits’ stays of EPA’s SIP disapprovals did not retroactively invalidate the entire Good
Neighbor Plan, that the rule did not become arbitrary by virtue of its implementation in a more limited
number of states, and that the Good Neighbor Plan is severable and can continue to be implemented in
states where it has not been stayed.
With respect to harm and the public interest, EPA and the intervenor-respondents argue that compliance
deadlines that would require retrofits or the installation of new control technologies are far enough into
the future that short-term compliance costs would not result in irreparable harm. They also argue that
delays in implementation would unfairly shift economic burdens to downwind states and would delay
emissions reductions, resulting in harms to the environment and public health.
On December 20, 2023, the Supreme Court issued an order setting the stay applications for oral argument
and deferring a decision on the applications. The Court particularly directed the parties to be prepared to
address at argument “whether the emissions controls imposed by the Rule are reasonable regardless of the
number of States subject to the Rule.” Oral argument is scheduled for February 21. The Supreme Court’s
December order did not pause the lower court’s merits briefing schedule, but on January 4, the D.C.
Circuit extended the parties’ filing deadlines until after the Supreme Court hears argument on the stay
applications.
Considerations for Congress
The Supreme Court’s decision to hold argument on the Good Neighbor Plan stay applications represents a
somewhat unusual use of the Court’s non-merits or motions docket, which some commentators call the
“shadow docket.” The Court typically decides matters on its non-merits docket after limited briefing and
without argument, often in a summary order without legal analysis or information about how the Justices
voted. For the Court to hear oral argument on such an application is unusual: The most recent prior
instance was in January 2022, when the Court considered argument on applications to stay two agency
rules related to COVID-19 vaccination and issued a decision within a week.
The significance of the case will likely depend on how much reasoning the Supreme Court reveals when
making its decision on the stay applications. The Court’s ruling may be of interest to Congress in three
main areas.
First, the Court’s ruling could clarify the standard for obtaining emergency relief, including whether a
stay applicant must establish that the Court would be likely to grant certiorari, which is a matter of dispute
among the parties. The intervenor state and local governments have argued that the stay applications
constitute an improper use of the Supreme Court’s non-merits docket to obtain a preview of the Court’s
views of the merits outside the normal course of judicial review. (For additional information on the non-
merits docket, see CRS Report R47382, Congressional Control over the Supreme Court, by Joanna R.
Lampe.)
Second, the Court’s decision could influence the process of judicial review of complex rulemaking,
particularly when an agency takes several related actions. Although the CAA provides a single forum in
the D.C. Circuit for “nationally applicable” rules such as the Good Neighbor Plan, the legal predicate for
that action was EPA’s SIP disapprovals, which are being litigated in regional circuit courts. This case
therefore provides an opportunity for the Court to evaluate the continued viability of a partially stayed or

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vacated rule, whether a partial stay can itself invalidate a rule as a whole, and when courts may allow an
agency to treat a rule as severable.
Finally, EPA’s regulation of interstate air pollution has been a frequent topic of interest to Congress. The
Senate Committee on Environment and Public Works held a hearing on the Good Neighbor Plan, and
some Members have issued statements supporting or opposing EPA’s approach. Some Members in both
chambers introduced joint resolutions of disapproval of the Good Neighbor Plan under the Congressional
Review Act.
The Good Neighbor Plan is part of a larger effort to regulate emissions from power plants and comes at a
time when those emission levels are shifting. According to EPA, NOX emissions decreased in 2023 both
in the states implementing the Good Neighbor Plan and nationwide. This decrease was driven largely by a
reduction in coal-fired power generation unrelated to the Good Neighbor Plan, leading some to speculate
that court rulings limiting the reach of the Good Neighbor Plan may not significantly affect air quality. To
address concerns regarding the scope of the interstate transport problem or the impact of new regulations
on industry, Congress could provide additional direction to EPA, such as how to identify which states
significantly contribute to downwind air pollution or how to weigh cost-effectiveness of emissions
reductions. Regardless of the outcome of the SIP disapproval and Good Neighbor Plan litigation,
however, numerous other proposed and final CAA regulations address both emissions of additional
pollutants from sources covered by the Good Neighbor Plan and NOX emissions from sources not covered
under the plan.

Author Information

Kate R. Bowers

Legislative Attorney

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