While litigants await a decision in the U.S. Supreme Court case Ohio v. Environmental Protection Agency (EPA) that challenges EPA’s “Good Neighbor Plan,” on April 4, 2024, EPA announced its decision to partially deny petitions urging the agency to reconsider or modify that plan.

The four petitions EPA issued decisions on urged the EPA to reconsider or modify the Good Neighbor Plan, which requires power plants and other polluting industries located in upwind states like Ohio and Indiana to reduce ozone-forming emissions of nitrogen oxides (NOX) that flow to downwind states, thereby contributing to smog levels in those downwind states, according to the agency. 

EPA says its decision to partially deny the petitions is based on the second of two reasons listed by petitioners as reasons for EPA to reconsider or modify the Good Neighbor Plan. The reasons petitioners listed are:

• The plan has been “suspended in several states due to preliminary judicial stays of a predicate action,” so it should not apply in the remaining states.

• “The plan should not have been published in the Federal Register because it included states subject to these judicial stays.”

The plan was published in the Federal Register on June 5, 2023. However, before the Good Neighbor Plan was published in the Federal Register, the EPA revised the ozone “National Ambient Air Quality Standards” (NAAQS) in 2015, and states were required to submit revised “state implementation plans” (SIP) by 2018 to comply with the new, more stringent standards.

However, 21 states submitted SIPs in which they proposed to take no action to revise their SIPs because existing controls were adequate or that such revisions would not contribute significantly to nonattainment or interfere with maintaining existing federal ozone standards in other states.

As a result, EPA took two actions in 2023 to address states’ Good Neighbor obligations under the 2015 NAAQS. The first was that in February 2023, the EPA disapproved the submissions by the 21 states. The second occurred on March 15, 2023, when the EPA issued a “federal implementation plan” (FIP), the Good Neighbor Plan, covering the 21 states that refused to revise their SIPs and two additional states that had not submitted any revisions to their plans.

As of September 21, 2023, the Good Neighbor Plan’s “Group 3” ozone-season NOX control program for power plants is being implemented in Illinois, Indiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and Wisconsin.

However, a stay issued by the U.S. Court of Appeals for the District of Columbia Circuit prevents EPA from pursuing “SIP disapproval action(s)” for Alabama, Arkansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nevada, Oklahoma, Texas, Utah, and West Virginia. Despite that stay, states opposed to revising their SIPs appealed to the Supreme Court to issue an “emergency stay,” arguments were heard on February 21, 2024; a decision in that case is pending. 

Under the Clean Air Act, EPA must convene a proceeding for reconsideration of a proposed rule when it was impracticable to object to the rule during the comment period or the grounds for the objection arose after the comment period but during the period for judicial review; and an objection to the rule is of central relevance to the outcome of the rule, EPA says.

EPA said that while these petitions satisfy the first criterion for mandatory reconsideration, they do not satisfy the second because the objections they raise are not ‘centrally relevant’ to the plan's outcome, which is to reduce the transport of emissions from one state to another. 

The petitioners are individual companies, a coalition of companies, and a state agency, including United States Steel Corp. (USS), which filed its petition on August 4, 2023, and focused on the plan's judicial stays. USS’ petition said “the factual circumstances” underlying the plan “have changed dramatically since the close of the public comment period” and that “courts have stayed EPA’S disapproval of SIPs for ten states.” That EPA predicated the plan on coal- and oil-fired electric utility steam generating units (EGU) “emissions from 23 states and non-EGU emissions from 20 states,” and that the loss of this ‘central premise’ through judicial stays ‘justifies an administrative stay and a complete withdrawal or rewrite of the final rule.’”

EPA’s response to USS’ petition says, “There are currently 11 states in which the (Good Neighbor) plan is in effect, 12 states with preliminary stays pending judicial review of their SIP disapproval, and five other states for which the EPA proposed to disapprove SIP submissions and promulgate FIPs that, if finalized, would establish requirements for each of the states under the plan. The courts that have granted stays pending judicial review may later affirm the SIP disapproval or may remand the SIP disapproval as to particular states with or without vacatur. On any remand, EPA will have to act on that state’s SIP submission again by the court’s holdings. At any point, any state may submit a new SIP to the EPA, and the EPA will review that SIP. Ultimately, under the statute, every linked state must be covered by an approved SIP or an FIP, with the number subject to each potentially changing at any point.”

The petition filed by ALLETE, Inc. includes USS, Minnesota power companies, and Cleveland Cliffs as petitioners. It was also filed on August 4, 2023, arguing that the ten SIP disapproval stays issued by the time of their petition constitute “a substantial likelihood that the FIP will never apply to most or all these states.” 

The Arkansas Department of Energy & Environment petition was filed on August 2, 2023. It argues that EPA’s disapproval of its “SIP submission was stayed by the 8th Circuit Court of Appeals on May 25, 2023,” which was “11 days before EPA promulgated the FIP in the Federal Register on June 5, 2023. So, “there was no final decision disapproving Arkansas SIP in place on the date the FIP was promulgated,” and that “lack of predicate render the FIP for Arkansas invalid.”

The petition was filed by Hybar LLC, an Arkansas steel manufacturer, on August 4, 2023. It also argues that the 8th Circuit Court of Appeals’ stay of the SIP disapproval for Arkansas removed the legal predicate necessary to promulgate the (Good Neighbor) plan with respect to Arkansas and that “EPA lacked any authority to publish the federal implementation plan with respect to Arkansas.”

In response, EPA said that because “some petitioners styled their petitions as requests for mandatory reconsideration,” the agency “analyzed each of these petitions under that test,” and it concluded it would “deny these petitions even if it considered them to be more general petitions for reconsideration.”

Click here to read the EPA announcement to partially deny the petitions.