U.S. Supreme Court Blocks EPA's 'Good Neighbor' Air Pollution Plan

(Reuters) — The U.S. Supreme Court blocked an Environmental Protection Agency regulation aimed at reducing ozone emissions that may worsen air pollution in neighboring states, handing a victory on Thursday to three Republican-led states and the steel and fossil-fuel industries that had challenged the rule.

The 5-4 decision granted requests by Ohio, Indiana and West Virginia, as well as U.S. Steel Corp, pipeline operator Kinder Morgan and industry groups, to halt enforcement of the EPA's "Good Neighbor" plan restricting ozone pollution from upwind states, while they contest the rule's legality in a lower court.

It was the latest ruling by the conservative-majority court restricting the powers of the EPA.

The EPA issued the rule at issue in March 2023 intending to target gases that form ozone, a key component of smog, from power plants and other industrial sources in 23 upwind states whose own plans did not satisfy the "Good Neighbor" provision of the Clean Air Act anti-pollution law, requiring steps to reduce pollution that drifts into states downwind.

The agency said the rule would result in cleaner air for millions of people, saving thousands of lives.

Conservative Justice Brett Kavanaugh, who authored the ruling, said the court granted the challengers' request because they are likely to ultimately prevail in the litigation, saying the EPA did not reasonably explain its actions.

Conservative Justice Amy Coney Barrett dissented, joined by the court's three liberal justices.

"The court today enjoins the enforcement of a major Environmental Protection Agency rule based on an underdeveloped theory that is unlikely to succeed on the merits," Barrett wrote.

The EPA said it was disappointed with the ruling but looked forward to defending the plan as the matter is further litigated. Thursday's action by the court "will postpone the benefits that the Good Neighbor Plan is already achieving in many states and communities," an EPA spokesperson said.

West Virginia Attorney General Patrick Morrisey said the decision "is correct but the EPA will keep trying to legislate and bypass Congress's authority -and it has been settled by the Supreme Court: the EPA must regulate within the express boundaries of the statute that Congress passed."

The challenge followed a major 2022 ruling by the court imposing limits on the EPA's authority under the Clean Air Act to reduce coal- and gas-fired power plant carbon emissions, undermining President Joe Biden's plans to tackle climate change. The court last year also hobbled the EPA's power to protect wetlands and fight water pollution.

The challenge to the "Good Neighbor" rule was brought by Ohio, Indiana and West Virginia - all targeted by the rule - as well as pipeline operators, U.S. Steel, regional electricity generators and energy trade associations. In their suit in the U.S. Court of Appeals for the District of Columbia Circuit, they argued that the EPA violated a federal law aimed at ensuring agency actions are reasonable.

The D.C. Circuit refused to block the rule pending its review, prompting the challengers to ask the Supreme Court to intervene.

Opponents have said the rule would impose unreasonable costs and destabilize power grids. The Justice Department, defending the EPA, urged the Supreme Court to consider the serious harms to public health that would result from blocking it.

Industry Reactions and Concerns

The ruling has garnered strong reactions from industry groups. Amy Andryszak, president and CEO of the Interstate Natural Gas Association of America (INGAA), expressed relief at the decision.

“The INGAA membership is pleased that the Supreme Court has granted our request for an emergency stay of the EPA’s ‘Good Neighbor’ Rule," Andryszak stated. "In writing the Good Neighbor Rule, among other issues, the Environmental Protection Agency (EPA) failed to consider potential adverse impacts of the rule on natural gas reliability. The scope and timeframe of implementation would result in natural gas service disruptions during times of year when down-stream users, including homes, businesses, and electric power plants, need energy the most."

Andryszak highlighted the increased energy demand driven by a move towards greater electrification of transportation and other end uses, plus the growth of data centers. “The Energy Information Administration reports that more than 40% of all electricity in the U.S. is generated by natural gas. The Good Neighbor Rule 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."

She also noted that the Supreme Court's decision hinged on the likelihood of the challengers' success in the litigation. “The Justices determined that the court is likely to find that the Good Neighbor Rule is ‘arbitrary’ or ‘capricious’ and therefore in violation of the Administrative Procedure Act. In particular, the EPA failed to address how the Good Neighbor Rule, which was designed to regulate emissions sources in 23 states, would properly function following judicial stays in 12 of those states."

'Open Season'

Environmental groups denounced the ruling. Sam Sankar, senior vice president of programs at environmental law group Earthjustice, called the ruling part of a growing pattern of anti-environmental decisions by the Supreme Court.

"The court's order puts thousands of lives at risk, forces downwind states to regulate their industries more tightly, and tells big polluters that it's open season on our environmental laws," Sankar said.

The rule implemented a federal program that applied to 23 states, but separate challenges in lower courts have already paused enforcement in 12 of them, including West Virginia.

During arguments in the case on Feb. 21, some of the conservative justices focused on the EPA's lack of explanation for how the plan can work when it now regulates just 11 states instead of 23 as intended. Liberal justices expressed concern about whether the case warranted emergency intervention by the Supreme Court at this time.

Some of the industry requests of the Supreme Court were specific. Kinder Morgan asked the justices to block the regulation as it applies to natural gas pipeline engines. U.S. Steel sought to prevent its enforcement against iron and steel mill reheating furnaces and boilers.

On Jan. 16, the EPA issued a proposed rule to enforce the "Good Neighbor" plan in five more states: Arizona, Iowa, Kansas, New Mexico and Tennessee.

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