EPA et al. v. EME Homer City Generation LP et al., 134 S. Ct. 1584 (2014).

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Fourteen states, as well as a number of municipalities and energy industry groups, sued the EPA, arguing that the agency exceeded its authority when it created the Cross-State Air Pollution Rule (Transport Rule), which limits nitrogen oxide and sulfur dioxide emissions from upwind states whose emissions pollute the environment of downwind states.  Pursuant to this rule, each state was allocated an emissions budget.  At the same time this rule was created, the EPA also promulgated federal implementation plans (FIPs) for each state because it had previously determined the state implementation plans (SIP) were inadequate.  The states argued that the EPA could not issue federal implementation plans until the states had first been given the chance to develop a new SIP to comply with the emission budgets.  The industry groups also argued that the EPA unreasonably interpreted the Clean Air Act by prohibiting only amounts of emissions that “contribute significantly” to the pollution in downwind states.  The EPA, and nine states that intervened in support of the agency, argued that the rule was valid.

The Supreme Court rejected both arguments, holding that the Clean Air Act did not require the EPA to give states a second chance to file SIPs before implementing an FIP.  The Court also held that the EPA’s method of calculating and then determining emissions budgets was reasonable.