Some States were having problems meeting the goals set by
the Clean Air Act because pollution emitted in other States was
floating over the border and polluting their air.
In response, Congress added §110 to the Clean
Air Act, which gives the EPA the authority to call for a revision of
any State Implementation Plan (SIP) whenever EPA determines that the
current plan is "substantially inadequate to attain or maintain the
relevant national ambient air quality standard (NAAQSs), or to mitigate
adequately the interstate pollutant transport."
Basically, EPA was given the authority to reduce a
States' emissions not based on the air quality in that State, but based
on the air quality in downwind States.
EPA invoked §110(k)(5), and told 22 States that
they needed to reduce their ozone and NOx emissions by
installing all controls that would cost less than $2k to prevent each ton
of NOx emitted.
A number of States sued, making a number of arguments:
EPA acted contrary to past precedent.
§110(a)(2)(D)(i)(I) required EPA to act when an
upwind State 'contributed significantly' to a downwind State's
pollution. Previously, EPA had interpreted that phrase to mean
"prevent attainment", but now they were interpreting it to
mean "contribute significantly to nonattainment."
EPA considered cost, which is a forbidden factor.
EPA impermissibly intruded on the statutory right of
States to come up with their own SIPs when they mandated NOx
EPA can set limits with their NAAQSs, but the States get
to decide how they will meet those limits in their SIPs.
EPA irrationally imposed uniform standards on all 22
EPA violated the nondelegation doctrine because their
determination was devoid of intelligible principles.
EPA had no particular reason for choosing $2k. They
could have chosen another dollar value. Without giving a strong reason
for choosing $2k they were being arbitrary and capricious.
The Appellate Court affirmed EPA's regulation.
The Appellate Court found that there was nothing in the
text of §110 to stop EPA from interpreting "significant"
in a different method than they had done in the past.
The Appellate Court found that EPA had to focus on
pollution that contributes "significantly", and that the word
should be interpreted to mean "cost effectively." The Court
wondered how EPA was to determine what was and wasn't
"significant" if they didn't consider costs.
The Court looked to an OSHA Statute that had interpreted
"significant" as meaning "what can be achieved
cost-effectively." Compare this ruling to Whitman v. American Trucking Ass'ns (531
U.S. 457 (2001)), in which industry argued that EPA erred when they did
not consider costs in coming up with their NAAQSs.
The Court found that some Statutes are very clear in
that costs cannot be considered, but this Statute was not one of them,
so it was ok to consider it.
The Appellate Court looked to their previous ruling in Virginia
v. EPA (108 F.3d 1397 (D.C. Cir. 1997)), and found that EPA cannot
tell States to adopt a specific approach to pollution control. However,
the Court found that EPA's NOx program reasonably establishes reduction
levels and leaves the control measure selection decision to the States.
The NOx plan does not mandate "specific source by
source emission limitations", and States that implement alternative
control measures will not be penalized so long as they meet their
The $2k test was used to figure out what the threshold
for NOx emissions should be, but the State had the choice of
how to meet that threshold.