A Hope for CAIR?

This week, the parties who successfully challenged the Clean Air Interstate Rule (“CAIR”) responded to two additional questions raised by the Court: (1) whether any party seeks vacatur of the rule and (2) whether the Court should stay the effectiveness of its decision pending EPA re-promulgation of the rule. Notably, North Carolina and 22 other states opposed the vacatur and asked the court to stay the effectiveness of its decision. However, industry representatives split on the issue – some demanded that the vacatur become effective, while others asked for a remand instead of a vacatur, which would allow EPA to implement CAIR next year, despite the successful challenges against it.

As reported previously, the U.S. Court of Appeals for the D.C. Circuit vacated CAIR earlier this year in response to challenges raised by the state of North Carolina and others regarding the assumptions on which the program was based. The program was designed by EPA to ensure that the emissions from power plants in one state do not interfere with efforts to attain the national ambient air quality standards in another state. Despite the significant air quality benefits promised by the program, the Court agreed with the challengers that each state’s emissions must be addressed individually, and that EPA’s attempt to use a regional trading program to reduce those emissions was not authorized by the Clean Air Act. Although Congress briefly debated a legislative fix for CAIR, those efforts were quickly forgotten as attentions turned to the ailing economy and the recent election.

EPA, the Utility Air Regulatory Group and the National Mining Association filed separate petitions for rehearing and rehearing en banc of the Court’s decision. On October 21, 2008, the Court requested responses to those petitions, asking whether the parties sought a vacatur and whether it should stay the effectiveness of its decision. Because such responses are only permitted under a court order, the Court’s request could mean that it is leaning towards granting the petitions for rehearing. However, since it only takes one judge on the Court to trigger additional briefing, the Court’s request does not necessarily suggest the Court as a whole is sympathetic to the petitioning parties. For example, the Court asked for similar briefing in the Clean Air Mercury Rule (“CAMR”) case, but shortly thereafter denied the petitions for rehearing.

Even if the Court agrees to remand instead of vacate the rule, or agrees to stay the effectiveness of its decision, it is unlikely that the Court will reconsider its opinion that CAIR itself is fatally flawed, given that the Court did not request briefing on that issue. If the Court remands the rule or stays the vacatur, EPA could implement CAIR on schedule at the beginning of next year, while simultaneously working to repair the flaws cited by the Court. However, if the Court issues a mandate making the vacatur effective, EPA will have to re-promulgate the rule entirely, the timing of which remains uncertain.