The split decision by the U.S. Court of Appeals for the District of Columbia Circuit to vacate the Environmental Protection Agency’s Cross-State Air Pollution Rule because of federal law violations is “great news” for Indiana, Gov. Mitch Daniels said.

The Circuit Court ruled Tuesday that the EPA’s rule, also known as the Transport Rule, exceeds the agency’s statutory authority. That rule defines emissions reduction responsibilities for 28 upwind states based on those state’s contributions to downwind states’ air quality problems. The rule targets two pollutants, sulfur dioxide and nitrogen oxides, which often come from coal- and natural-gas-fired power plants.  

Indiana joined 14 attorneys general from upwind states in opposing the rule in EME Homer City Generation L.P. v. Environmental Protection Agency, et al., 11-1302.

 The statutory text only grants the agency authority to require upwind states to reduce their own significant contributions to a downwind state’s nonattainment. But under the rule, upwind states may be required to reduce emissions by more than their own significant contributions to a downwind state’s nonattainment.

“EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind States without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA’s Transport Rule violates the statute,” Judge Brett Kavanaugh wrote.

He also pointed out the Clean Air Act allows states the initial opportunity to implement required EPA reductions under the good neighbor provision, but when the EPA quantified the states’ good neighbor obligations, it didn’t allow them the initial opportunity to implement the reductions with respect to sources within their borders.

“Instead, EPA quantified States’ good neighbor obligations and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the good neighbor provision and violated the Act,” Kavanaugh explained.

"This repudiation of EPA's overreaching regulation is great news for Hoosier ratepayers and job seekers,” Daniels said in a statement. “Indiana is in compliance with federal clean air limits for the first time ever, and our air quality is the best since measurement began.  This ruling means that our affordable energy costs can remain one of our best arguments in attracting new businesses."  
The majority sent the case to the EPA to continue administering Clean Air Interstate Rule, pending promulgation of a valid replacement.
Judge Judith Ann Wilson Rogers dissented because by vacating the Transport Rule, the majority disregarded the limits Congress placed on its jurisdiction, the plain text of the Clean Air Act, and the Circuit Court’s settled precedent interpreting the same statutory provisions at issue.

“The result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress’s vision of cooperative federalism between the States and the federal government in implementing the CAA based on the court’s own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court’s precedent on which the Environmental Protection Agency (“EPA”) was entitled to rely in developing the Transport Rule rather than be blindsided by arguments raised for the first time in this court,” she wrote.