GenOn REMA, LLC owns Portland Generating Station, (collectively “GenOn”), a Pennsylvania electricity generating facility, run by coal, located across the Delaware River from New Jersey. A mere 500 feet away, New Jersey suffered from high levels of sulfur dioxide emissions resulting from GenOn.
Pursuant to the Clean Air Act, New Jersey filed a claim with the EPA. Finding that GenOn’s emissions of sulfur dioxide contributed to interstate air pollution, the EPA issued a ruling (“Portland Rule”), that required GenOn to decrease emissions. GenOn challenged the EPA’s Portland Rule on two grounds: (1) the EPA did not have the authority to issue the rule; and (2) the rule was arbitrary and capricious. The Third Circuit did not agree.
The issues revolved around the interpretation of two sections of the Clean Air Act. Section 110, also known as the "good neighbor provision," requires states to create state implementation plans (SIPS) to meet national ambient air quality standards (NAAQS). SIPS are then submitted to the EPA for approval, no more than three years after the EPA sets NAAQS. Once the SIPS are approved, they are enforceable as federal law under cooperative federalism.
Under Section 126 downwind states are permitted to petition the EPA for a finding that the upwind state, due to its air pollution, is interfering with the downwind state's ability to meet the NAAQS. If the EPA finds that the upwind state is violating the good neighbor provision, it must act within three months by having the source of emissions cease operation, or by limiting the source's emissions.
First, the Third Circuit determined whether the EPA had to wait for Pennsylvania to establish its own SIP to meet the new sulfur dioxide NAAQS, or whether it had the authority to make a finding under Section 126. The Third Circuit found that the language of Section 126 was unambiguous -- the EPA could issue a finding "without regard to the Section 110 SIP process."
Next, the court determined whether the EPA's finding, and subsequent Portland Rule, was arbitrary and capricious. After examining the facts and giving deference to the scientific findings of the EPA, the court found that there was "a rational connection between the facts that if found and the choice that it made [the Portland Rule]."
This case is significant because last year the DC Circuit struck the EPA's good neighbor rule, now creating a circuit split. This issue may eventually be posed to the U.S. Supreme Court - until then, we'll have to wait and see.
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