Third Circuit Rules Pennsylvania Power Plant Is Not a Good Neighbor in Precedential GenOn Decision

July 31, 2013
Diana A. Silva

Earlier this month, the United States Court of Appeals for the Third Circuit issued a precedential decision – GenOn Rema, LLC v. EPA, No. 12-1022, 2013 WL 3481486 (3d Cir. July 12, 2013) – which reaffirmed EPA’s ability to directly regulate stationary sources to address the interstate transportation of air pollution under the rarely utilized Section 126(b) of the Clean Air Act (“CAA”), even when a State Implementation Plan (“SIP”) process for the particular pollutant at issue is still pending. 

Section 126(b) of the CAA allows a downwind state to petition EPA for a finding that a source located in a neighboring state is interfering with the downwind state’s ability to comply with national ambient air quality standards (“NAAQs”).  In effect, Section 126(b) provides a parallel mechanism for EPA to directly regulate specific sources within a state, rather than first requiring an upwind state to adopt a SIP and related protocol to regulate those sources.  EPA may grant a Section 126(b) petition when a major source or group of stationary sources violates the “good neighbor” provision of the CAA, which prohibits emissions in one state from significantly contributing to nonattainment in another state, or which interferes with another state’s maintenance of the NAAQs. 

On September 17, 2010, shortly after the EPA revised the NAAQs to adopt stricter standards for sulfur dioxide (“SO2”) emissions, New Jersey submitted a petition to EPA under Section 126(b) of the CAA, alleging that the Portland Generating Station – a coal-fired power plant located along the Delaware River in Northampton County, Pennsylvania – emitted SO2 in amounts that significantly contributed to New Jersey’s nonattainment and/or interfered with the State’s ability to meet the stricter SO2 standards in four neighboring counties. 

EPA responded to New Jersey’s Section 126(b) petition on November 7, 2011, issuing a final rule that specifically determined that the Portland facility was violating the CAA’s interstate air pollution provisions, and required that Portland reduce its SO2 emissions by 81% within three years.  GenOn attacked EPA’s final rule as an arbitrary and capricious regulatory action, on the basis that EPA lacked the authority to directly regulate the Portland facility before Pennsylvania had completed its SIP process for the revised SO2 NAAQs, and arguing that EPA’s action violated the CAA’s cooperative federalism structure. 

The Third Circuit ruled that “Section 126(b) contains no temporal limitation on a state’s right to petition the EPA,” and that the language of the CAA does not contain any condition that would require EPA to wait until after the upwind state has completed its SIP process to issue a Section 126(b) determination.  Rather, delaying EPA’s decision on a Section 126(b) petition until after the upwind state’s SIP process is complete would violate the express statutory provision that requires EPA to rule on Section 126(b) petitions within 60-days.

The Third Circuit’s ruling in GenOn is yet another decision in the battle to regulate interstate air pollution, and follows in the wake of the D.C. Circuit vacating the Cross-State Air Pollution Rule, a challenge which is now pending before the U.S. Supreme Court.

 For more information, please contact Diana Silva at (484)-430-2347 or dsilva@mankogold.com.